    [Senate Hearing 116-251]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 116-251

                         PERSPECTIVES ON THE LIVESTOCK
                              AND POULTRY SECTORS

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

                                    HEARING

                                   before the

                           COMMITTEE ON AGRICULTURE,
                            NUTRITION, AND FORESTRY

                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 25, 2019

                                   __________

                           Printed for the use of the
               Committee on Agriculture, Nutrition, and Forestry

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           Available via the World Wide Web: http://www.govinfo.gov/

                               ______

                 U.S. GOVERNMENT PUBLISHING OFFICE
     39-845 PDF              WASHINGTON : 2020

               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

                                  ----------

                         Wednesday, September 25, 2019

                                                                       Page

    Hearing:

    Perspectives on the Livestock and Poultry Sectors................     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...     2

                                   WITNESSES

    Houston, Jennifer, President, National Cattlemen's Beef
      Association; and East Tennessee Livestock Center, Sweetwater,
      Tennessee......................................................     6
    Kardel, Ron, Vice Chairman, National Turkey Federation; and West
      Liberty Foods Grower, Walcott, Iowa............................     7
    Lusk, Jayson, Ph.D., Distinguished Professor and Head, Department
      of Agricultural Economics, Purdue University, West Lafayette,
      Indiana........................................................     9
    Pfliger, Burton, Past President, American Sheep Industry
      Association; and Roselawn Legacy Hampshires, Bismarck, North
      Dakota.........................................................    11
    Thiele, Trent, President, Iowa Pork Producers Association; and
      KMax Farms, LLC, Elma, Iowa....................................    12
    Eaton, Shane, Member, United States Cattlemen's Association; and
      Eaton Charolais, Lindsay, Montana..............................    13
                                  ----------

                                    APPENDIX

    Prepared Statements:
        Houston, Jennifer............................................    38
        Kardel, Ron..................................................    42
        Lusk, Jayson, Ph.D...........................................    46
        Pfliger, Burton..............................................    49
        Thiele, Trent................................................    53
        Eaton, Shane.................................................    59

    Question and Answer:
    Houston, Jennifer:
        Written response to questions from Hon. Pat Roberts..........    72
        Written response to questions from Hon. Joni Ernst...........    74
        Written response to questions from Hon. John Thune...........    75
    Kardel, Ron:
        Written response to questions from Hon. Pat Roberts..........    81
        Written response to questions from Hon. Amy Klobuchar........    82
    Lusk, Jayson, Ph.D.:
        Written response to questions from Hon. Pat Roberts..........    84
        Written response to questions from Hon. John Thune...........    85
    Pfliger, Burton:
        Written response to questions from Hon. Pat Roberts..........    87
    Thiele, Trent:
        Written response to questions from Hon. Pat Roberts..........    90
        Written response to questions from Hon. Amy Klobuchar........    92
    Eaton, Shane:
        Written response to questions from Hon. Pat Roberts..........    93
        Written response to questions from Hon. John Thune...........    95

               PERSPECTIVES ON THE LIVESTOCK AND POULTRY SECTORS

                                  ----------

                         WEDNESDAY, SEPTEMBER 25, 2019

                                           U.S. Senate,
             Committee on Agriculture, Nutrition, and Forestry,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:03 a.m., in
    SD-106, Dirksen Senate Office Building, Hon. Pat Roberts,
    Chairman of the Committee, presiding.
        Present: Roberts, Boozman, Hoeven, Ernst, Hyde-Smith,
    Braun, Grassley, Thune, Fischer, Stabenow, Brown, Bennet,
    Gillibrand, Casey, Smith, and Durbin

     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 hearing of the
    Senate Committee on Agriculture, Nutrition, and Forestry to
    order.
        Today, we will hear about ``Perspectives on the Livestock
    and Poultry Sectors'' from a panel of industry leaders and
    experts.
        First, I want to thank all of you for taking the time away
    from your farms, ranches, and places of work to be here to
    share your perspective and to advocate on behalf of American
    agriculture.
        Many of you have devoted years of voluntary service in
    organizations that represent the livestock and poultry
    industries. I thank you for your dedication, and on behalf of
    the full committee, I know they share my strong feeling.
        My State of Kansas and every State in the United States is
    home to growers and ranchers who raise livestock and poultry
    that become the center of the dinner plate for consumers in the
    United States and all around the world.
        These industries are the backbone of American agriculture.
    Grain production, equipment manufacturing, veterinary services,
    livestock markets, and many other businesses that populate
    rural towns rely on this sector to support their own
    livelihoods.
        As my colleagues know, the cattle industry has played a
    significant role in the rich history of the State of Kansas, or
    if they do not, I am going to tell them now.
        Cattle were driven to cowtowns and then shipped to
    stockyards in Chicago and Kansas City. Among the famous Kansas
    cowtowns were Dodge City, one of my several hometowns in
    Kansas; Wichita; and Abilene, home of our great President,
    President Dwight D. Eisenhower. Those were the days.
        Our modern beef industry and the broader livestock and
    poultry industries have changed dramatically since the heyday
    of the cattle drives, but the importance of your industries to
    rural communities and American agriculture continues. Yet it is
    a business fraught with ever-evolving challenges. That is why
    you are here.
        Production cycles in the livestock and poultry sectors can
    span years. A single event, such as a hurricane, a wildfire--we
    just had one of those; it was a little different than a
    wildfire--a disease outbreak, the loss of a processing plant or
    an export market can have a ripple effect that sends shockwaves
    throughout the industry.
        When onerous regulatory burdens that often confront this
    sector are added to the mix, growers and ranchers can find it
    difficult to simply do what they do, and that is to raise
    livestock and care for their land. That is their first love.
        That brings me to the reason for having this hearing today,
    to hear from all of you about industry priorities, issues of
    concern, and potential opportunities.
        There is no shortage of challenges that you face. Today, I
    expect we will hear about everything from foreign animal
    disease threats to trade uncertainty--to trade uncertainty and
    then there is always trade uncertainty--to labor needs.
        We also have opportunities ahead of us. I look forward to
    hearing your views on the implementation of the new Farm Bill--
    as well, the Ranking Member, I know shares my interest--and
    also the implementation to bolster our animal disease
    preparedness infrastructure, and the pending reauthorization of
    the Livestock Mandatory Reporting Act, just to name two.
        I look forward to the testimony of our witnesses, and
    again, I thank you for joining us today.
        I now turn to my colleague, friend, and distinguished
    Ranking Member, Senator Stabenow, for any opening remarks that
    she may have.

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

        Senator Stabenow. Well, thank you very much, Mr. Chairman,
    for holding this important hearing, and welcome to all of you.
    Thanks for sharing your perspectives on the livestock and
    poultry sectors. As the Chairman indicated, you are very
    important to our economy, and we are very happy to have all of
    you here.
        We know that farming is the riskiest business there is.
    Whether it be farms, ranches, any part of the country right
    now, we are seeing everything from unexpected weather and
    market conditions to destructive pests and diseases. These
    challenges can have devastating effects on farm families and
    rural communities.
        We have seen bomb cyclones, wildfires, and flooding destroy
    herds that have taken years, if not even generations, to build.
    That is why we made the livestock disaster programs permanent
    in the 2014 Farm Bill and further expanded them in the
    Bipartisan Budget Act last year.
        Mr. Chairman, you may also recall that after the Kansas
    wildfires in 2017, a group of Michigan farmers came together to
    donate hay and supplies to ranchers in your State. When we met
    in Michigan for our field hearing, they were so happy and proud
    to have an opportunity to meet you directly. Since that time,
    they have formed a nonprofit to provide relief all across the
    country.
        In addition to weather, livestock producers also face
    threats from animal diseases. The 2015 avian influenza epidemic
    was one of the worst animal disease outbreaks in our history,
    claiming nearly 50 million birds and driving up the cost of
    food for consumers.
        Today, the outbreak of Newcastle Disease domestically, the
    threat of African Swine Fever abroad, and the persistence of
    Bovine TB in Michigan and other places, underscores the need
    for robust investment in preparation, coordination, and
    research.
        The 2018 Farm Bill took an important step by investing $300
    million over the next ten years in mandatory funding for animal
    disease prevention. This permanent funding will create a new
    National Animal Vaccine Bank, and a Disease Preparedness and
    Response Program to improve our ability to prevent and respond
    to the next outbreak. We also bolstered the National Animal
    Health Lab Network of diagnostic labs.
        In order to further safeguard our agricultural economy, Mr.
    Chairman, you and I worked with our colleagues, Senators Cornyn
    and Peters, to address the shortage of agricultural inspectors
    at our borders. The Protecting America's Food and Agriculture
    Act authorizes Customs and Border Protection to hire additional
    inspectors, who serve as the first line of defense against
    threats to our agricultural economy.
        Despite the risks facing our farmers, there are also some
    promising opportunities in the livestock sector. For example,
    two years ago, the Clemens Food Group opened Michigan's first
    new pork processing facility in decades. I was so pleased to be
    able to be there and see this incredible facility. The state-
    of-the-art plant in Coldwater, Michigan, employs about 800
    people.
        New opportunities like this help create markets and provide
    stability for our producers. However, I do have to note that
    the Administration's chaotic and unpredictable trade agenda has
    overshadowed the progress we have made. Farmers are seeing very
    real impacts on their bottom lines. I am concerned that
    American farmers will endure long-term loss in market share in
    some of our biggest markets.
        I agree that we need to hold countries accountable when
    they break the rules, but this Administration's--what I feel is
    a reckless approach--does not provide farmers certainty.
        To that end, I understand the urgency among many
    agricultural stakeholders to pass the U.S.-Mexico-Canada
    Agreement because they believe it will restore stability to
    these markets.
        I would just add two cautionary notes, because I think
    there are two things that are important to remember as we work
    to get the very best possible agreement with strong, meaningful
    enforcement provisions.
        First, NAFTA is in place now and producers need to know
    that the Administration will keep NAFTA in place until we have
    a new agreement--holding the devastating threat of withdrawal
    over the heads of farmers and other businesses is irresponsible
    and only adds to the instability.
        Second, even with the USMCA in place, President Trump will
    still be able to use tariffs as his enforcement tool of choice,
    if he chooses, meaning the instability, unfortunately, will
    still exist.
        Finally, one of the first bipartisan bills we worked on
    together when you became Chairman was the reauthorization of
    the Livestock Mandatory Price Reporting Act in 2015. Mandatory
    Price Reporting is a critical tool that provides information on
    current market conditions.
        Mr. Chairman, I look forward to working with you again to
    reauthorize this law and to ensure continued transparency in
    livestock markets. Thank you.
        Chairman Roberts. I now have the privilege of introducing
    our witnesses. Our first witness, Mrs. Jennifer Houston,
    president, National Cattlemen's Beef Association and East
    Tennessee Livestock Center in Sweetwater, Tennessee. Somebody
    has got to be writing country music about Sweetwater.
        [Laughter.]
        Chairman Roberts. Mrs. Houston is the president of the
    National Cattlemen's Beef Association. She has been active in
    the beef industry for over 30 years. She became a member of the
    first Tennessee Beef Industry Council back in 1986, serving
    twice as its chair. She has been an NCBA board member since
    1996, and she most recently served as chair of their Policy
    Division.
        Raised on a hereford farm in West Tennessee, Jennifer owns
    and operates the East Tennessee Livestock Center in Sweetwater
    with her husband, Mark. There, they hold weekly cattle sales,
    video sales, sales for graded feeder calves, and Holstein
    steers.
        Thank you for being here today, Jennifer, and thank you for
    your long work on behalf of the industry.
        Our next witness is Mr. Ron Kardel. It gives me great
    pleasure to recognize a real champion for agriculture, and I
    might add a person who, with her senior Senator, visits with
    the President of the United States about trade matters about
    every other week. She is a true champion for Iowa and for
    agriculture. Senator Ernst.
        Senator Ernst. Yes. Thank you very much. Whoa. That is
    pretty loud. Everybody hear me? Thank you.
        Well, it is an honor and a privilege to introduce today Mr.
    Ron Kardel, a turkey, corn, and soybean framer from Walcott,
    Iowa, and today he is here in his capacity as Vice Chairman of
    the National Turkey Federation.
        Back in Iowa, Ron has been farming for 45 years and also is
    one of the founders and currently the Vice Chairman of the
    Board of West Liberty Foods, a grower-owned cooperative.
        Ron, I welcome you and your wife Susie and daughter Abby
    here today as well. Thank you, ladies, for joining us. I really
    do look forward to your insights today, Ron. Thank you very
    much.
        Chairman Roberts. Thank you, Senator.
        Our next witness is Dr. Jayson Lusk, who is a distinguished
    professor and head of the Department of Agricultural Economics
    at Purdue University in West Lafayette, Indiana. Purdue is
    famous for its quarterbacks, one in particular who threw a
    touchdown pass over Kansas State in a bold move, but that is
    all right, Doctor.
        He is the Distinguished Professor and head of Agricultural
    Economics Department at Purdue. He earned his B.S. in Food
    Technology from Texas Tech University and received a Ph.D. in
    Agricultural Economics from Kansas State University.
        Since 2000, Dr. Lusk has published more than 220 articles
    in peer-reviewed scientific journals on topics including the
    economics of animal welfare and the impact of new technologies
    and policies on livestock and meat markets, and he served on
    the editorial councils of eight different academic journals,
    served on the executive committees of the Nation's largest
    agricultural economics association, and is a past president of
    the Agricultural and Applied Economics Association as well.
        Dr. Lusk currently resides in West Lafayette, Indiana, with
    his wife and two sons.
        Dr. Lusk, we look forward to your testimony. Thank you for
    coming.
        Our next witness is Mr. Burton Pfliger, who is a third-
    generation rancher and past president of the American Sheep
    Industry Association from Bismarck, North Dakota. He and his
    wife Patty operate the Roselawn Legacy Hampshires, where they
    run approximately 400 ewes. Burton has also served in
    leadership roles with North Dakota Lamb and Wool Producers and
    the Ag Coalition in North Dakota.
        In 2005, he was presented the North Dakota Master Sheep
    Producer Award.
        Thank you for joining us, sir.
        Our next witness is Mr. Trent Thiele, and again, Senator
    Ernst has the privilege of introducing our next witness.
    Senator?
        Senator Ernst. Yes. Thank you very much, Mr. Chair, and it
    is a pleasure to have not just one Iowan on the panel today but
    two, and so I would like to welcome Trent Thiele here today. He
    is from Elma, Iowa. Trent is the president of the Iowa Pork
    Producers Association. He is also a partner in KMAC Farms,
    where he manages 19 KMAX finishing barns in a wean-to-finish
    hog business that markets 60,000 head a year.
        Trent, thank you for taking the time to be here today as
    well. Welcome.
        Chairman Roberts. Thank you, Senator.
        What have we learned from the distinguished president pro
    tem? I understand you are going to grace our presence for a
    short period of time. Is there anything that you would like to
    say in preface of that?
        Senator Grassley. I am going to irritate you and be here
    for a longer period of time.
        [Laughter.]
        Senator Stabenow. Uh-oh. Uh-oh. Nice try.
        Chairman Roberts. Well, you know, that is being consistent.
        [Laughter.]
        Chairman Roberts. All right. Mr. Shane Eaton is a member of
    the United States Cattlemen's Association and Eaton Charolais
    cattle in Lindsay, Montana.
        To introduce our Montana friend, Senator Stabenow.
        Senator Stabenow. Well, thank you, Mr. Chairman.
        Nice try, Mr. Chairman, with Senator Grassley. It is always
    wonderful to have you here, Senator Grassley, in the committee.
        Welcome, Mr. Eaton. Mr. Shane Eaton is testifying this
    morning as a member of the U.S. Cattlemen's Association
    Marketing and Competition Committee. Shane manages his family's
    farming and ranching operation in Lindsay, Montana and also
    manages feedlots in Colorado, Nebraska, North Dakota, and
    Wyoming.
        Shane is also a director of the Montana Stock Growers
    Association, and we are pleased to have you with us.
        Chairman Roberts. We have no less than eight committee
    hearings today, and I thank the witnesses for coming. I thank
    those in the audience who have a keen interest in something
    that affects virtually every American.
        However, as a reminder to our witnesses, I am going to ask
    that the testimony be kept to under 4 minutes. Note that we
    always go over 5 minutes here, but for 4 minutes, if you can do
    that--and I know that is darn near impossible, but that is what
    we are faced with.
        So I may go tappy tap on the gavel. If you hit 5 minutes,
    we are going to send you to Dodge City to the hanging judge.
        [Laughter.]
        Chairman Roberts. Right off the bat, Mrs. Houston, please.

    STATEMENT OF JENNIFER HOUSTON, PRESIDENT, NATIONAL CATTLEMEN'S
        BEEF ASSOCIATION; AND EAST TENNESSEE LIVESTOCK CENTER,
                         SWEETWATER, TENNESSEE

        Ms. Houston. Thank you, Chairman Roberts and other members
    of the committee, who have been helpful over the last few weeks
    as we have dealt with the recent fire at the Tyson plant in
    Holcomb, Kansas. NCBA supports the work of Secretary Perdue and
    looks forward to the results of the USDA investigation. All of
    these efforts show that Congress and the Administration
    understand this plant was a vital component of the beef supply
    chain, and we appreciate your getting a quick response and
    assistance from USDA and CFTC.
        This situation in Kansas highlights the importance of both
    inner-agency cooperation and the need for Congress to give the
    agencies the regulatory tools needed to address real-time
    issues. This is the reason NCBA strongly encourages the
    committee to continue its work to push for a much needed CFTC
    reauthorization and a timely mandatory price reporting
    reauthorization.
        These agencies are vital to having functioning cattle
    markets for our producers across the Nation. NCBA strongly
    supports mandatory price reporting and appreciates the work
    that USDA employees do every day to provide the cattle industry
    with market data that assists our members in making sound
    business decisions.
        We are currently updating our policy for this issue as we
    await USDA to conclude their study on the current five-area
    reporting regions, and with these findings, we will then work
    on advocating for sound enhancements that are backed by
    research. This is perhaps the most studied MPR reauthorization
    we have seen, and it shows that we want facts to drive the
    decisionmaking, not emotions. Mandatory price reporting has
    always had a consensus approach to its reauthorization, and
    NCBA hopes that it will continue to work in that fashion to
    achieve what is best for the livestock industry.
        The future success of the U.S. beef industry relies on
    competitive market access to a growing global consumer base in
    areas such as Asia. In 2018, we sold over $8 billion worth of
    U.S. beef to foreign consumers, with one-quarter of these sales
    coming from Japan. While demand for U.S. beef is strong in
    Japan, we cannot remain competitive if the restrictive 38.5
    percent tariff remains in place. NCBA strongly supports
    bilateral trade agreement.
        Likewise, the Chinese market holds a lot of promise for
    U.S. beef exports but not until we resolve the retaliatory
    tariffs and remove the non-science-based trade barriers on U.S.
    beef. We need Congress to ratify the U.S.-Mexico-Canada
    agreement to send a message to the rest of the world that the
    U.S. is open for business.
        Implementation of the 2018 Farm Bill is also very important
    to cattle producers, and we appreciate Congress' support for
    the creation of the Foot and Mouth Disease Vaccine Bank and
    support for voluntary conservation programs. We will continue
    to stress to USDA the importance of getting the FMD Bank up and
    running as quickly as possible to better protect our industry
    from foreign animal disease which remains a constant threat to
    our producers.
        Another industry issue that has been of great concern to
    our cattle producers is avian predation on livestock. Birds,
    such as black vultures, of which there are 4.6 million
    currently in the U.S., ravens, and double crested cormorants,
    all protected under the Migratory Bird Treaty Act, prey on cows
    during calving, often killing calves before delivery is
    complete. Indemnity programs, where applicable, do not
    adequately compensate for these issues. The U.S. Fish and
    Wildlife Service does issue depredation permits to affected
    farmers and ranchers, but the terms of the permit usually do
    not allow producers enough flexibility to protect their cattle
    herd.
        On behalf of all cattle producers and NCBA, thank you for
    allowing me to testify today. I am proud to lead and represent
    the members of NCBA as we fight tirelessly to improve the lives
    and business prospects of every single member of the cattle
    industry.
        As Henry Ford once said, ``Do not find fault. Find a
    remedy.'' That is exactly what NCBA will continue to do.

        [The prepared statement of Mrs. Houston can be found on
    page 38 in the appendix.]

        Chairman Roberts. I thank you, Madam President. You
    finished under time, and if I quit yapping, we can continue.
        I want to point out I am going to be meeting with the Tyson
    folks. We have been meeting with them for some time. The 3,500
    employees out there are still working. They are going to be up
    and running at the first of the new year, but from this point
    until now, they are taking every action that they know how to
    take to make sure that the market is not totally disrupted.
        Thank you for your testimony. We really appreciate it. Mr.
    Kardel?

        STATEMENT OF RON KARDEL, VICE CHAIRMAN, NATIONAL TURKEY
        FEDERATION; AND WEST LIBERTY FOODS GROWER, WALCOTT, IOWA

        Mr. Kardel. Good morning, Chairman Roberts and Ranking
    Member Stabenow, Senators Ernst and Grassley, and the other
    members of the committee. Thank you for the opportunity to
    share the turkey industry's perspective today.
        My name is Ron Kardel, and I am a turkey farmer from
    Walcott, Iowa, and Vice Chairman of the Board for West Liberty
    Foods. my farm, we raise about 4.2 million pounds of turkey
    each year for West Liberty Foods. I have been around the turkey
    industry since 1979 and currently farm on my family's
    homestead, which dates to the 1850's.
        I also serve as Vice Chairman of the National Turkey
    Federation, and last year, more than 244 million turkeys were
    raised in the U.S. The USDA projects that turkey meat
    production will reach 5.8 billion pounds this year.
        The turkey industry generates nearly 441,000 jobs. In order
    to support these jobs, we need to make sure policies coming out
    of Washington that affect us are commonsense and preserve
    America's ability to thrive. We look forward to working with
    Congress and this committee to address these issues.
        Exports. You have read my written testimony. So I will be
    quick and frank. Expanded trade has significant growth for our
    industry, which means more jobs in rural America, and reducing
    the uncertainty is imperative. Therefore, we strongly urge
    Congress to vote on USMCA this fall. It should not be a
    partisan issue, and we feel confident it will pass.
        We have a fantastic relationship with our business partners
    in Mexico and Canada, and ratifying this agreement will only
    improve that bond.
        In 2018, our industry exported $323 million of U.S. turkey
    products to Mexico. The agreement preserves access to Mexico
    and allows greater access for products going north to Canada as
    well. Please vote yes on USMCA.
        Disease prevention and response. In 2015, the poultry
    industry was devastated by high pathogen avian influenza,
    especially in my home State of Iowa, which was hardest hit.
    From high path AI to African swine fever, no country is immune,
    and we need to be prepared with an adequate number of qualified
    response teams to focus on prevention.
        The Farm Bill process created the National Animal Disease
    Preparedness and Response Program, designed to limit the impact
    of foreign diseases on livestock and poultry producers. We
    greatly appreciate the committee's work in realizing the risk
    and creating the program. It will pay great dividends
    protecting our industries moving forward. As the saying goes,
    an ounce of prevention is worth a pound of cure.
        Immigration. Most turkey plans are located in rural, low-
    unemployment areas. To fully staff these plans, producers must
    recruit from outside of their local areas and, in many
    instances, must rely on immigrant labor. Existing guest worker
    programs target only seasonal, on-farm labor, and non-
    agricultural manufacturing. We need workers in our plans year-
    round, and we stand ready to work with any and all parties to
    achieve a workable system. There is currently no single bill
    that is the silver bullet, but it is time to resolve the
    immigration debate for the good of America's economy.
        Research priorities. Finally, the meat and poultry
    industries have been working with the USDA, FDA, and academia
    to find innovative ways to combat diseases and conditions that
    impact food safety and overall animal health. Food safety and
    animal welfare are our top priorities, and we have committed
    hundreds of millions of dollars to these tasks.
        The partnership of the Federal Government is important to
    us. There is considerable expertise at the Agricultural
    Research Service, and we simply encourage the Federal
    Government to continue committing and, if possible, enhance
    resources to improve food safety and animal welfare.
        Again, thank you for the opportunity to testify, and I
    would be happy to answer any questions, if there are.

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

        Chairman Roberts. Thank you, Mr. Kardel, and you are right
    on time as well. You are four for four in--whispering over here
    to my partner with regards to--I do not know who is riding. Are
    you leading the team, you know, the stagecoach, or am I now?
        Senator Stabenow. Yes. I am not. You are.
        Chairman Roberts. Okay. Four for four. You mentioned four
    very important things that we have to consider, and I know you
    have a deep background on all four. I really appreciate your
    testimony. Dr. Lusk, welcome to the committee.

     STATEMENT OF JAYSON LUSK, Ph.D., DISTINGUISHED PROFESSOR AND
    HEAD, DEPARTMENT OF AGRICULTURAL ECONOMICS, PURDUE UNIVERSITY,
                        WEST LAFAYETTE, INDIANA

        Mr. Lusk. Chairman Roberts, Ranking Member Stabenow, and
    members of the committee, thank you for inviting me here today.
    My name is Jayson Lusk. I am a Distinguished Professor and head
    of the Agricultural Economics Department at Purdue University.
    I am going to focus my remarks on a few economic issues facing
    the livestock and poultry industries.
        Population and income are two key drivers of meat demand,
    but slow population growth and concerns about an economic
    slowdown indicate the potential for weakening demand in this
    country. Health, environment, and animal welfare criticisms,
    coupled with emerging plant-and lab-based alternatives are also
    significant headwinds.
        These factors suggest meat demand growth is largely
    expected to occur outside the United States. Having access to
    consumers in other countries has become increasingly important
    to the livelihood of U.S. livestock and poultry producers. The
    U.S. exported about 12 percent of beef, 22 percent of pork, and
    16 percent of poultry production last year. Thus, trade
    agreements are important to help U.S. producers reach consumers
    that value their products most.
        Some producers have expressed concerns about competition
    from imports, but the U.S. is a net exporter of meat and
    poultry, and the types and qualities of meat we export tend to
    differ from what we import.
        There have also been some calls to renew mandatory country
    of origin labeling; however, to the extent consumers are truly
    willing to pay a premium for U.S.-labeled meat, there remain
    opportunities for private entities to take advantage of this
    market opportunity.
        The current authority for livestock mandatory price
    reporting is set to expire. It is important for this policy to
    continue to modernize and be agile and responsive to the pace
    of change in this industry.
        One challenge is the dwindling share of cattle and hogs
    sold in cash markets, which serve as the base price in formula
    contracts. There are significant benefits to formula contracts,
    and more producers have voluntarily chose this marketing method
    over time. Questions remain about the volume of transactions
    needed in the cash market to facilitate price discovery.
        Last month, a fire at a packing plant in western Kansas
    renewed discussions about packer concentration. An unexpected
    reduction in processing capacity reduced demand for cattle,
    thereby depressing cattle prices. The need to bring in
    additional labor to increase Saturday processing involved
    additional costs that pushed up the price of wholesale beef.
    These price dynamics, while detrimental to producers are not
    surprising and are not inconsistent with the model of
    competitive outcomes and the fundamental workings of supply and
    demand.
        I urge this committee to pay close attention to emerging
    animal disease issues. African swine fever has caused
    significant disruption to the Chinese hog supply, and the
    impacts are reverberating through global agricultural markets,
    reducing demand for U.S. soybeans, and inducing substitution
    toward beef and poultry.
        Our pork exports to China have increased, but they are not
    what they could have been had China not raised tariffs. If a
    similar outbreak of African swine fever were to occur here,
    U.S. pork producers could stand to lose about $7 billion a
    year.
        This, of course, is not the only concern. An outbreak of
    foot and mouth disease or a return of avian influenza could
    have similar devastating impacts; thus, there is a need for
    additional funding for research to combat foreign animal
    disease.
        Finally, there is also a need for funding to improve the
    productivity of livestock and poultry sectors. Productivity
    growth is the cornerstone of sustainability. Had we not
    innovated since 1970, 11 million more feedlot cattle, 30
    million more market hogs, and 8 billion more broilers would
    have been needed to produce the amount of beef, pork, and
    chicken U.S. consumers actually consumed last year.
        Innovation and technology saved the extra land, water, and
    feed these livestock and poultry would have required as well as
    the waste and greenhouse gases that they would have emitted.
        Investments in research to improve the productivity of
    livestock and poultry can improve producer profitability,
    consumer affordability, and the sustainability of our food
    supply.

        [The prepared statement of Mr. Lusk can be found on page 46
    in the appendix.]

        Chairman Roberts. Thank you very much for your testimony,
    sir. Everybody has been on time, which I truly appreciate.
        Our next witness, Mr. Pfliger, why don't you continue.

      STATEMENT OF BURTON PFLIGER, PAST PRESIDENT, AMERICAN SHEEP
    INDUSTRY ASSOCIATION; AND ROSELAWN LEGACY HAMPSHIRES, BISMARCK,
                              NORTH DAKOTA

        Mr. Pfliger. Good morning, Chairman Roberts, Ranking Member
    Stabenow, and members of the committee. Thank you for this
    opportunity to speak to you today. I am Burton Pfliger, a North
    Dakota sheep producer and past president of the American Sheep
    Industry Association.
        As more and more consumers are finding a place for American
    lamb on their dinner plate and the value in the wool clothing
    they wear, this rediscovery has translated into an increase of
    over 10,000 sheep operations and a great story for the American
    sheep industry.
        I want to start out by expressing our strong support for
    the U.S.-Mexico-Canada Agreement. Mexico and Canada are two of
    our largest export markets for U.S. lamb, and both markets are
    pacing over 50 percent ahead of last year on volume. We urge
    Congress to act swiftly to ratify this agreement.
        I would also like to touch on the ongoing issue with China.
    China has traditionally been our largest market for pelts and
    wool. In fact, prior to trade disruption, 72 percent of raw
    wool and 80 percent of pelts went to China. We have seen those
    numbers drop off dramatically, and now producers are being
    charged a pelt disposal fee by the packer. In a low-margin
    business, what once was an asset is now a liability.
        Unfortunately, USDA's wool loan deficiency payment, which
    should help offset unshorn lamb pelt credit, is not providing
    any relief.
        We appreciate this committee working with stakeholders in
    advance of the reauthorization of mandatory price reporting.
    Price reporting and transparency are incredibly important
    because Federal lamb price insurance products, LRP-Lamb, rely
    on USDA price reports. LRP-Lamb is our industry's primary risk
    protection, as neither lamb nor wool are traded on the
    commodity markets. Our industry lost this risk protection in
    2016 due to packer consolidation and lack of full reporting.
    Although currently restored, we are constantly at risk of
    losing LRP unless we can resolve issues around confidentiality.
        We urge this committee to take a hard look at
    confidentiality in this reauthorization and give producers
    needed flexibility to ensure access to price reports.
        We thank this committee for their work on the 2018 Farm
    Bill and continue to work with USDA on the implementation of
    key programs. We greatly appreciate the support for the
    National Sheep Improvement Center.
        We also strongly support the FDA's Minor Use Animal Drug
    Program. While minor use is part of the fam bill under animal
    disease prevention, that only addresses part of the needs of
    our industry. We urge funding from minor use drug research.
    This is not just about developing new technologies. Much of it
    is about giving producers access to technologies currently
    being used by our international competition but not labeled for
    use in the United States.
        Finally, I would like to stress the importance of livestock
    protection and USDA Wildlife Services. Coyotes, mountain lions,
    wolves, and bears kill tens of thousands of lambs and calves
    each year and cost producers more than $232 million. One of the
    most important tools we have to protect against these losses
    and save the lives of our livestock is the M-44. Despite
    enhanced guidance from Wildlife Services on the use and the
    placement of these tools, these products continue to come under
    attack.
        After a successful interim decision, the EPA Administrator
    has announced a reevaluation of this tool. This is not being
    driven by science but rather in response to pressure from all
    those who oppose all predator control. The M-44 is the safest,
    most humane, and most target-specific tool we have to control
    coyote populations during lambing, and without it, producers
    like myself would not stay in business.
        Thank you for your support for the livestock industry, and
    I look forward to any questions.

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

        Chairman Roberts. Thank you, sir. Again, right on time. Mr.
    Thiele?

       STATEMENT OF TRENT THIELE, PRESIDENT, IOWA PORK PRODUCERS
              ASSOCIATION; AND KMAX FARMS, LLC, ELMA, IOWA

        Mr. Thiele. Chairman Roberts, Ranking Member Stabenow, and
    members of the committee, I appreciate the opportunity to
    discuss issues of critical importance to the U.S. pork
    producers. My name is Trent Thiele. I am the president of the
    Iowa Pork Producers Association and a hog farmer from Howard
    County, Iowa.
        I am also here today on behalf of the National Pork
    Producers Council, a national association representing the
    interest of 60,000 U.S. pork producers.
        First, U.S. pork producers need trade certainty and
    ramification of the USMCA trade agreement. Last year, more than
    40 percent of the U.S. pork exported went to Canada and Mexico.
    U.S. pork producers urge Congress to ratify USMCA.
        The trade agreement reached last month in principle with
    Japan is also critical. Japan is our largest value export
    market. We have watched helplessly as international competitors
    have taken our market share. The U.S. agreement with Japan will
    put us back on a level playing field, and it is critical that
    we implement this deal as soon as possible.
        While Japan represents positive news for industry, U.S.
    pork producers are sustaining significant losses, over $1
    billion annually due to the ongoing trade dispute with China.
    While Chinese State media reports have suggested tariff relief
    for the U.S. pork, we need to remove market access uncertainty
    and gain permanent competitive access to China.
        China holds more potential than any other market in the
    world for increased U.S. pork sales, given the challenges it
    faces with African swine fever. The prevention of foreign
    animal diseases that would cutoff our export markets and cause
    catastrophic damage to our rural economy is another top
    priority.
        The risk of ASF, a deadly disease affecting only pigs, is
    growing as outbreaks continue in Europe, China, and other parts
    of Asia.
        NPPC has worked closely with the USDA and Customs and
    Border Protection to strengthen biosecurity at our borders, and
    we are grateful for their strong response.
        We think even more can be done. We ask for your support for
    appropriations funding for 600 additional CBP agricultural
    inspectors at our borders.
        Foot and mouth disease represents another risk that would
    do serious damage to the U.S. economy. Unlike ASF, vaccines do
    exist, but the U.S. does not have enough vaccines to respond to
    an outbreak.
        As you know, the 2018 Farm Bill includes mandatory funding
    for the development of vaccine bank. We ask Congress to support
    USDA implementation of the Farm Bill, as intended.
        The competitive strength of U.S. livestock also depends on
    establishing a new technology: gene editing. Gene editing
    promises significant animal health benefits, while other
    countries are moving quickly to grab a competitive advantage by
    establishing a regulatory structure that supports the
    development of this technology. The U.S. is falling behind.
        We ask you to support moving oversight of gene editing
    livestock on American farmers from the FDA to the USDA. Pork is
    one of the United States' most successful and competitive
    products. Unfortunately, U.S. pork producers are facing serious
    headwinds addressing these challenges. We will make U.S. hog
    farmers even more competitive by expanding production, fueling
    job growth, and contributing to rural communities.
        Thank you for the opportunity to testify, and I look
    forward to any questions.

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

        Chairman Roberts. Mr. Thiele, thank you very much. Again on
    time. That is amazing.
        Mr. Eaton, all the way from Montana.

      STATEMENT OF SHANE EATON, MEMBER, UNITED STATES CATTLEMEN'S
           ASSOCIATION; AND EATON CHAROLAIS, LINDSAY, MONTANA

        Mr. Eaton. Chairman Roberts, Ranking Member Stabenow, and
    members of the committee, thank you for holding this important
    hearing and for your work in passing, in a bipartisan fashion,
    the 2018 Farm Bill. The bill contains essential safety net
    programs, improvements to conservation title, and funding for
    animal vaccine bank, a needed shot in the arm for agriculture.
        U.S. ranchers are committed to producing a high-quality,
    healthy product that meets and exceeds environmental standards,
    along with ensuring both working lands and open spaces for
    public recreation and enjoyment. When ranch families are
    successful, everyone benefits.
        That being noted, U.S. ranchers are facing unprecedented
    challenges to their livelihood. Markets are unnecessarily
    distorted. Irregularities influence the daily cattle market,
    resulting in a lack of competition and true price discovery.
        We can address these challenges in three areas, the first
    being trade. Exports are critical, and we are pleased to see
    progress on an FTA with Japan.
        When it comes to China, instead of timeliness and
    certainty, we deal with tariffs and trade embargoes. The China
    trade talks needed a definitive timeline. Our domestic meat
    counter reflects the reality of a global trade. Congress can
    and should implement a truth-in-labeling program for meat.
    Confusion at the meat counter undercuts both the U.S. producer
    and the consumer.
        Second, transportation. This Congress has worked in a
    bipartisan manner to modernize hours of service rules. Let us
    continue this effort and finalize a livestock transportation
    solution.
        Third, marketplace governance. Everyone is well aware of
    the recent packing plant fire. This incident shined a spotlight
    on a marketplace void of fundamentals and functionality. While
    the packers and stockyards investigation takes place, we offer
    the additional points for consideration.
        Create a CME cattle working group for improving the
    operations linked to CME cattle contract. Link the CME live
    cattle contract to the USDA weekly choice spread quality
    percentages. Give the long the right to deliver in a CME cattle
    contract. The CME should utilize real-time information and data
    for calculating the feeder index, and, finally, the CME should
    install a time-delay speed bump to level the playing field for
    all traders.
        This committee is tackling the reauthorization of mandatory
    price reporting. We need a new division for non-native live
    cattle in mandatory price reporting, which would instantly
    bring the need of price discovery to live cattle trading. Non-
    native feeder cattle imported into the United States today are
    reported as domestic, not as imported. Notably, these cattle do
    not meet the CME contract specifications for live cattle
    delivery and for calculating the feeder index.
        Most egregiously, Mr. Chairman, these cattle can negatively
    influence the live cattle trade, the cash trade, the base price
    for formula cattle, and the futures market.
        This glaring loophole could be fixed by this committee in a
    bipartisan fashion to create a competitive playing field for
    producers.
        Finally, undue preferences and business justification
    provisions are often tossed around as a regulatory burden when,
    in actuality, there is a clear need to clarify the Packers and
    Stockyards Act definitions. If these key obstacles and
    loopholes are not addressed, the U.S. domestic cattle
    production and rural communities, as we know them, will
    collapse and go the way of other livestock sectors, becoming
    corporate contract growers.
        In conclusion, thank you for your time and leadership. We
    ask this bipartisan committee for bold and immediate action.
    The U.S. Cattlemen's Association and its membership is ready to
    advance solutions. I look forward to your questions.

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

        Chairman Roberts. Right on time, Shane.
        Mr. Eaton. Thank you.
        Chairman Roberts. I am glad you came back.
        I am the only one here, other than Mr. Grassley, that
    understood that. There was a movie sometime back with Alan
    Ladd. He was Shane.
        Senator Stabenow. Shane, yes.
        Chairman Roberts. We said, ``Come back, Shane.'' He never
    did until right now.
        [Laughter.]
        Chairman Roberts. I had to get that out of my system.
        Jennifer, in your testimony, you described a USDA study on
    cattle Livestock Mandatory Reporting, or LMR, that is being
    conducted. Knowing this is a very technical piece of
    legislation, I am interested in hearing a bit more from you on
    this study, how you anticipate it may inform any change to LMR
    that your organization may wish to pursue.
        Ms. Houston. Mr. Chairman, we actually continue to await
    the results of the study. We want to see the facts that are
    discovered. We want this reauthorization and us to look at our
    policy at NCBA as well as any suggestions we offer for
    improvements to the mandatory price reporting to be based on
    the facts that are found that are out in the market and also
    that it be something that benefits producers from all parts of
    the country.
        Chairman Roberts. Dr. Lusk, we have heard several of the
    producers on the panel mention the importance of timely
    reauthorization of the Livestock Mandatory Reporting, or LMR.
    From the perspective of an economist, can you describe the
    value of the data generated by LMR, please?
        Mr. Lusk. Sure. So earlier in my testimony, I remarked on
    the number of cattle that are being marked in cash contracts
    versus forward contracting. One of the reasons we know that is
    due to mandatory livestock price reporting.
        So, certainly to economists and industry analysts like me,
    we have access to more and better detailed data than probably--
    on the U.S. livestock industries than probably analysts in any
    other part of the world.
        One benefit of these markets in terms of helping facilitate
    market convergence is that they provide some level of trust in
    the price reporting at least in the cash market that serve as
    the base for some of these formula contracts, and so that has
    helped facilitate market convergence.
        At least when this policy was first passed in the late
    1990's, there was probably a little bit of over-optimism about
    what this policy could accomplish, but at the same time, I
    think there is good evidence that this policy has helped
    facilitate convergence of regional markets, which suggest we
    are probably doing a better job at price discovery than was the
    case in the past.
        Chairman Roberts. Thank you, sir.
        I have got a question for all the producers on the panel
    that mentioned Livestock Mandatory Reporting reauthorization.
    Included in the 2015 reauthorization was a directive by the
    Congress for the Department of Agriculture to issue a report
    that describes potential changes industry may wish to consider
    in the 2020 reauthorization.
        To complete this study, the Department conducted 10 public
    meetings with 14 industry stakeholder groups over a year-long
    period. I am interested if the topics you raised today
    regarding the LMR reauthorization were discussed at these
    meetings and if they were included in the report to Congress,
    and we can just start with President Houston.
        Ms. Houston. Yes, sir. We talked, but it is such an
    important tool to U.S. beef producers. So we feel comfortable.
        Chairman Roberts. Mr. Thiele?
        Mr. Thiele. Yes, sir. We do believe the importance in this
    as well.
        Chairman Roberts. Mr. Eaton? Shane.
        Mr. Eaton. Yes. Mr. Chairman, I cannot speak to that
    report, but I could speak to the Congressional Research Service
    from November 2015, when we took information from different
    stakeholders and groups in the industry.
        National Farmers Union wanted to have LMR look into
    reporting on imported cattle that were going into feedlots. R-
    CALF was looking to find transparency in the reports, more
    transparency, which reflects on the proposal put forth in my
    testimony for a non-native division in MPR.
        NCBA at the time had a policy to allow the Agricultural
    Marketing Service to look into the discount specifically for
    Mexican and Canadian cattle and to made definition changes, as
    needed.
        So I think there is industry backing to transform MPR to
    accurately report the discounts that are in the trade today,
    especially after what the professor said when we have 15 to 20
    percent of the cattle traded into cash each week.
        Chairman Roberts. I appreciate that.
        Mr. Pfliger, I did not mean to jump you. Go ahead.
        Mr. Pfliger. Our biggest discussions with USDA centered on
    the confidentiality issues that surround MPR, livestock
    Mandatory Price Reporting. To date, those changes have not been
    offered to the industry.
        In the 2015 reauthorization, we offered several changes,
    and some of those were accepted. One of them was lowering
    thresholds from 50,000 to 35,000 head for reporting entities,
    lowering the importers to 1,500 tons, and allowing the
    definition of cooperatives to report. That has added to the
    number of reporting parties, and stabilized and actually
    brought our Mandatory Price Reporting back online after we lost
    it in 2016.
        The current renewal without changes may not allow that
    continued reporting through 2025 when it is set to again be
    reauthorized.
        Chairman Roberts. I appreciate that.
        Thank you to all the witnesses.
        Senator Stabenow?
        Senator Stabenow. Thank you very much, Mr. Chairman.
        First of all, a question to Ms. Houston and Mr. Eaton on
    voluntary conservation measures. In Michigan we are surrounded
    by the Great Lakes. Our waterways are incredibly important to
    us, and agriculture has a really important role to play as we
    look at efforts in terms of protecting and addressing issues
    regarding our water.
        In your testimonies, both of you touched on the importance
    of voluntary conservation programs administered by NRCS. I am
    wondering what are some examples of how animal agriculture is
    voluntarily reducing the sector's impact on the environment,
    and what do you see are some of the barriers that producers
    face to adopt additional conservation practices?
        Ms. Houston, I will start with you.
        Ms. Houston. Thank you.
        Yes. U.S. cattle producers obviously are some of the most
    environmentally minded people there are, and the use of the
    tool, having the tools at NRCS to use voluntary conservation
    practices and to work with. People in the field, obviously, we
    feel there is need for more boots on the ground to help our
    farmers and ranchers get their conservation plans, but much
    more use of things, riparian areas, fencing off streams, some
    of the tools, and even the cost share that are provided by NRCS
    and other things certainly help us to move forward at an even
    quicker pace. It is certainly to our benefit to do these
    conservation methods because they include soil health, whether
    it is cover crops or whatever.
        So voluntary conservation methods are something that we use
    on a daily basis and will continue to do so as we work to leave
    our land in better shape than it was when we got it.
        Senator Stabenow. Great. Thank you.
        Mr. Eaton?
        Mr. Eaton. Thank you, Ranking Member.
        Ranchers and farmers are front-line environmentalists,
    period, and we are out there every day. We are working with the
    land. We are working with the soil. These partnerships we have
    with NRCS over the past decade, there has been tremendous
    strides, cost-share programs where people have been able to
    rotate their pastures, rotate around bird habitat at hatching
    periods. Like Ms. Houston said, we take care of riparian areas.
        I know I have had my kids out planting trees. We go out and
    do that and try to make improvements.
        The big barrier, honestly, is the problem I am here today
    to address is the tremendous drop in income to ranchers and
    farmers over the last four years. When you have your income
    reduced down in the margins so tight, the first thing to go are
    the extra things, and then that looks toward environment.
        Senator Stabenow. Thank you very much.
        Mr. Eaton. Yes.
        Senator Stabenow. Changing gears a little bit, my colleague
    Senator Crapo and I have introduced and been working on the
    issue of access to veterinarians for some time, which I know is
    a real challenge, particularly in more remote areas. We have
    had for some time the Veterinary Medicine Loan Repayment
    Program Enhancement Act to create stronger incentives for
    people to go into veterinary medicine, particularly in
    underserved areas.
        So, as we look at all the challenges now that relate to
    animal disease, we have the Veterinary Feed Directive to ensure
    that antibiotics are used judiciously and only when appropriate
    for animal health. As we look at the relationship between
    producers and veterinarians, I know that for many producers in
    remote areas or smaller cow-calf producers are a challenge
    particularly for this.
        So I wondered if each of our producers would speak to your
    experience. Do livestock producers in your State have adequate
    access to veterinary care, and do you think we should be moving
    to expand programs to address shortages?
        Ms. Houston?
        Ms. Houston. Certainly in my area in Tennessee and across
    the Nation, there are areas when they are certainly
    underserved.
        Part of this is because our vet schools graduate--a lot of
    them tend to gravitate to a more lucrative part of the
    profession, which is small animal, companion animal care.
        In addition, they are out servicing farmers, and farmers do
    not have the money to pay. A lot of our vet students graduate
    with pretty crushing debt. So it is certainly in areas.
        I am near a vet school. It is not really a problem for
    myself, but where I grew up in West Tennessee, it is a problem.
    Sometimes the vets two counties over or in other parts of the
    U.S., it is even further. So it certainly is a problem.
        Senator Stabenow. Yes. Mr. Kardel?
        Mr. Kardel. Yes, it is a continuing problem.
        Where we personally live, while there are perhaps a lot of
    hogs and cattle, there are no veterinarians available for the
    turkeys that we produce.
        Consequently, West Liberty Foods, the company we sell our
    turkeys to and own part of, we hired a full-time veterinarian
    to have on staff. The only problem was we had one application.
        Senator Stabenow. Wow.
        Mr. Kardel. So it is hard to pick what you think are the
    best and brightest when you only have one to choose from. So,
    yes, it is a continuing problem, and I have nothing against the
    vets that choose companion care, but us as farmers, we do need
    access to large animal and commercial livestock.
        Senator Stabenow. Thank you.
        What is happening in the sheep industry?
        Mr. Pfliger. Thank you, Ranking Member.
        The sheep industry is not unlike that that has been
    described. Certainly, there is a shortage in veterinarians.
    When we were in the hall, jokingly, we said there were three
    tiers in the veterinary system. You have the dog and cat, which
    is the high dollar, the companion animals. Then you have the
    midlevel, the mid-range veterinarian. Those are some of your
    large animals. Then you have the lower end of veterinary care,
    which is the sheep and the turkeys and the poultry, which are
    suffering for veterinarians who are not only willing but
    knowledgeable enough about those industries to practice
    veterinary medicine.
        Senator Stabenow. Right. Thank you.
        All right. Pork producers?
        Mr. Thiele. So I am here from the pork producers, and we
    are pretty fortunate to have a great college right in our
    State, Iowa State. We seem to have a lot of interest in pork
    producing vets right now.
        Right now, realistically for us, it seems like we are all
    right, but I can see the concerns of everybody else of needing
    more vets.
        I agree 100 percent that we do need to have vets to help
    everybody know how to use their antibiotics judiciously all the
    way through. So thank you.
        Senator Stabenow. Thank you.
        Mr. Eaton?
        Mr. Eaton. Yes. I appreciate the bipartisan work you are
    doing on this because animal health leads to food security
    which leads to national security. We need to have vets out in
    the field. They can ensure we can produce the products to get
    to the consumers in this Country.
        Senator Stabenow. Thank you, Mr. Chairman.
        Chairman Roberts. I have been instructed by staff to remind
    all members that there are a lot of activities occurring in the
    Senate this morning, if you did not know that. So please be
    mindful of everybody's time.
        Senator Ernst, I did not mean to pick on you.
        Senator Ernst. Okay. Outstanding. Yes, we are hopping
    committee to committee, but thank you very much, everyone, for
    being here and being willing to share your perspectives and
    your knowledge from your various industries.
        You have done a great job in highlighting that our farmers
    in ag communities have really been dealing with what we would
    call the perfect storm of circumstances.
        I noticed that each of you had mentioned the importance of
    trade specifically, and it is important to understand exactly
    what passing the USMCA or a trade agreement with Japan or a
    trade agreement with China would mean not only to the overall
    industries that you represent, but then also to you
    individually.
        If we could, just very briefly again, so we can keep things
    moving, if you would please just State the impact to your
    individual industry.
        Ms. Houston, if we could start with you, please.
        Ms. Houston. Obviously, the beef industry trade with Mexico
    and Canada accounted for about $1.85 billion last year. For
    each fed animal, ready for harvest, U.S.-Mexico trade alone, 70
    bucks.
        So, as a person who is in the livestock marketing industry
    for feeder calves, which is what Tennessee is known for, that
    certainly translates to significant dollars back in the hands
    of my producers and all our producers.
        It is not only the dollars, which are certainly important.
    It is also the mix of products, the fact that they add value to
    certain cuts that are not so valuable in the U.S.
        Senator Ernst. Thank you.
        Mr. Kardel?
        Mr. Kardel. Yes. The USMCA is the obvious answer to your
    question because that could be done tomorrow, and we could have
    some definition and clear view of what is coming.
        Everybody likes to reference China, and China is important,
    but from the poultry perspective, since the avian influenza
    outbreak, we have been banned from China. So the trade war
    could be over tomorrow, and we still would not be able to get
    poultry into China. So that needs to be moving forward on
    several fronts.
        Prior to the outbreak of avian influenza, there was a good
    market for us and an expanding market for us. So, yes, that for
    us and poultry, that is a double-edged thing. It is the trade
    ban, the trade war, and the avian influenza ban.
        For us, India is marginally open, and we need that door
    swung wide open in order to get access to here.
        As was referenced before, the Japan Trade Agreement is
    good, and for us, the potential there exists for some value-
    added product going in, which for us would be huge.
        So if you add up those countries I just mentioned, that is
    a lot of mouths to feed, and we would sure like to help feed
    them.
        Senator Ernst. Sure would. Thank you.
        Mr. Pfliger?
        Mr. Pfliger. Thank you.
        The sheep industry is somewhat unique in that we were
    excluded from the Japan market since 2003 when the BSE took
    over that market, and we pushed hard to get that reinStated and
    only recently within the last few years have been able to do
    that.
        Bottom line is that the trade with China has had a big
    impact on our wool and our sheepskins. We have had an 85
    percent drop in the value of wool that is moving to China and
    an 84 percent drop by volume. That is 85 percent wool value and
    sheepskins have dropped 67 percent by value and 40 percent by
    volume.
        I guess one key important thing that we appreciate about
    the Farm Bill is the foreign market development program that
    has allowed us to look at keys to developing new markets as we
    move down this road, but we are very thankful for that as part
    of the Farm Bill as well.
        Senator Ernst. Excellent.
        Mr. Thiele, I am going to have to end with you, just very
    briefly. Thank you.
        Mr. Thiele. Okay. Thank you.
        So for the pork producers, 40 percent of our exports go to
    Mexico, and to China, we have lost $8 a head this last year.
    Every year, we will lose $8 a head due to the trade dispute. So
    that adds up to be some pretty real money in my operation.
        With that, I think that is all I want to say. Thank you.
        Senator Ernst. Okay. Well, I have 30 seconds, Mr. Eaton, if
    you would like to contribute.
        Mr. Eaton. I would like to contribute. Thank you.
        The expansion of beef into Europe is a really good deal.
    The Japanese progress is positive, but with this China trade
    talk, we get big swings in the market. As producers back home
    see these swings, our bankers see these swings, it is hard for
    them to manage risk, to get an operating loan, to figure out
    break-evens. So that is why this uncertainty really hits home.
        U.S. Cattlemen's Association is split on the USMCA for the
    basic reason that we do not have any truth in labeling
    negotiated within the agreement, so we do not have a firm
    position on that.
        Personally, our family lost a sizable investment when the
    Chinese said that they originally thought they were going to
    take product. We invested in a venture, and then when the
    tariffs came on and everything stopped, we lost everything.
        So there has been an effect out there for small producers
    wanting to take advantage of that market.
        Senator Ernst. Great. Thank you. I appreciate the input.
        Thank you, Mr. Chair.
        Chairman Roberts. We thank you, Senator.
        Senator Smith?
        Senator Smith. Thank you, Chair Roberts and Ranking Member
    Stabenow. Thanks to all of you for being here today. It is very
    interesting.
        I want to just followup briefly on Senator Ernst's line of
    questioning maybe with Mr. Thiele, just to note that, of
    course, pork is a big deal in Minnesota. About 10 percent of
    Minnesota's total exports are pork.
        I think there is something that people do not really
    understand about the impact of these tariffs and trade wars,
    which is that once we find an agreement, it is not as if those
    markets just flip back on like a flip of the switch.
        If you look at what has happened, this, I think, makes this
    point. Brazil is quickly filling the need that China has for
    pork, and according to the USDA, Brazil has increased its
    market share in China from just four percent in 2017 to 13
    percent in 2018. Those numbers are specific to pork, but this
    shift in market share is not just going to recover overnight.
    So I appreciate the question that Senator Ernst is asking about
    this.
        Actually, there are so many things I want to ask. Let me go
    to this. Several of you have mentioned--Dr. Lusk and others
    have mentioned the impact of concentration in the livestock
    sector and the whole ag sector on farm income. I have seen
    numbers that talk about how a generation ago, farmers kept
    about 37 cents out of every food dollar, and now that number is
    down to about 15 cents.
        Mr. Eaton, you mentioned this as well.
        Let me start maybe with Dr. Lusk. Could you just talk a
    little bit more about how concentration is affecting this
    decline in farm income and sort of how you see that economic
    issue?
        Mr. Lusk. There is certainly no doubt that these industries
    at the packing level are concentrated, and the concentration
    has increased over time. There is a lot more debate about the
    impacts of that concentration, whether it has been positive or
    negative.
        I would caution relying too much on, say, farmer's share of
    the retail dollar, in part, because a lot more happens after
    the farm today than happened in the past. There is larger cost
    in transportation. There is more marketing that happens now,
    and we transport these products further. I think it is
    important to evaluate these situations on a case-by-case basis.
        One of the driving reasons for increased concentration is
    the ability of packing plants to get economies of scale, to
    produce at minimum cost efficiencies, and this helps consumers
    in the sense that it makes our meat more affordable than it
    would have been otherwise.
        As you mentioned, there are some possible negative
    consequences. I do not think one can make blanket statements--
    --
        Senator Smith. Sure.
        Mr. Lusk [continuing]--about the impacts of concentration
    without looking at it on a case-by-case basis, but I am going
    to be a good economist and tell you that there are pros and
    cons.
        Senator Smith. You are going to tell me it is complicated?
        Mr. Lusk. Yes.
        [Laughter.]
        Senator Smith. It is complicated.
        Well, what I worry about is just the lack of--the decline
    in power that the producer represented by the folks at this
    table have in this more concentrated industry.
        Mr. Eaton, you talked about kind of the shift toward
    corporate contract growers and the impact that that had. Could
    you just talk to me a little bit more about that?
        Mr. Eaton. Well, I think that is where the industry is
    heading. We have 15 to 20 percent of the cattle traded in cash
    every week.
        As a producer, I can tell you that the consolidation has
    produced lower prices due to lack of competition. When we sell
    fat cattle in western Nebraska, Colorado, we generally have one
    packer in the market, even though there are four packers there,
    because they have captive supply----
        Senator Smith. Right.
        Mr. Eaton [continuing]--or these formula contracts that
    have no premium or discount associated with them, and they are
    able to use a loophole in the Packers and Stockyards Act
    because we have not defined those definitions clearly enough as
    the industry has changed.
        So, yes, I can tell you that it has resulted in lower
    prices. So that me, as a feeder, when I go to a producer, I am
    not going to bid them up any higher on their calves. The
    producers in Minnesota are going to feel it.
        Senator Smith. Yes.
        Mr. Chair, I know that this is not specifically an issue
    directly related to this committee in terms of our
    jurisdiction, but I think that it does have a lot to do with
    the overall health in the ag sector and something I am really
    worried about.
        I just want to quickly ask one more question. We were
    talking about animal health and human health. We are talking
    about African swine fever and the avian influenza, which was a
    huge deal in Minnesota.
        I would like to just--maybe Doctor--I am not sure exactly
    who would be the best. How does the approach, the one health
    approach that I am working on with Senator Young from Indiana,
    to bring sort of a kind of integrating animal health and human
    health together as we think about animal health and human
    health? Do you think that that is a good approach?
        Mr. Lusk. So I will comment very briefly on that, and that
    is, I think as African swine fever as pointed out, the diseases
    do not know boundaries.
        Senator Smith. Right.
        Mr. Lusk. We certainly see that that disease is spreading,
    and it is a threat to producers here. So approaches that allow
    us to improve animal health across the globe are beneficial to
    us here in the United States.
        Senator Smith. Thank you.
        Thank you, Mr. Chair.
        Chairman Roberts. Thank you very much.
        We turn now to Senator Fischer.
        Senator Fischer. Thank you, Mr. Chairman.
        I thank all of you for being here today. I am a livestock
    producer as well. My family has a cattle ranch in the Nebraska
    Sandhills, and we have a cow-calf business there.
        Dr. Lusk, many of our witnesses have touched on the Holcomb
    fire and its impact on cattle markets, and things, as you know,
    are rough right now in the ag economy.
        In my area, we had a drought for eight years. Now we have
    plenty of rain, but obviously, cattle prices are down the last
    six years.
        We have trade wars. We have rising input cost. We see
    extreme weather all across the State of Nebraska. So this list
    goes on and on and on.
        To add to this, fed and feeder cattle prices are down, and
    box beef prices are up. The packer margin is high. Nobody is
    going to argue with that, I would doubt.
        In your testimony, you say that this can be expected, and
    that with a reduction in packing capacity due to the fire,
    cattle demand is reduced and cattle prices suffer. Because of
    the demand for beef has stayed the same, wholesale beef prices
    have increased.
        So using your modeling that you have, when this facility
    comes back online and packing capacity is going to be restored,
    prices should come back up, correct?
        Mr. Lusk. Certainly, over the long run, I think that extra
    margin that you referred to is the incentive needed to induce
    more packing capacity to come online, whether it is additional
    slaughter on weekends, conversion of plants that are currently
    processing, say, cows transitioning to steers and heifers.
    Those things cost extra money, and those heightened margins are
    what will induce the industry eventually to try to add back
    some of that capacity.
        So the question is how quickly will that--how long does
    that take? How quickly will it occur? I do not know the answer
    to that, but I think the incentives in the system are there to
    eventually add back some capacity over time.
        Something that will probably be in response, you talked
    about the cattle prices, and a lot of that corresponds to
    inventory and changing inventory over time with the cattle
    cycle. To the extent there are more cattle coming online, that
    will also probably over time produce an inducement to add some
    more packing capacity.
        Senator Fischer. Certainly, we hope it is sooner rather
    than later, because if those prices do not come up, I think we
    can begin to explore some of the other factors that may be at
    play in this arena.
        For time's sake, though, I am going to move to Ms. Houston.
    I am happy to have you here today. The time is limited, so I am
    going to be brief.
        Based on a recent Farm Bureau analysis, I see that packer
    margins have significantly increased since the fire. We know
    the margin is the difference between the price they buy cattle
    at and the price they sell the wholesale beef at. So I think it
    is safe to say that, at least right now, packers are doing all
    right. They are doing okay, and suppliers are getting hit and
    getting hit hard.
        I am looking at last week's close. Fed cattle down. Feeder
    cattle down. Wholesale prices up. So I just want to be clear on
    this. Who is being hurt right now, and are you hearing from
    these folks?
        Ms. Houston. Certainly, we are hearing from our members.
        I think at this point, probably the feedlot, the feeders
    are getting hurt the most. It is trickling down obviously to
    the cow-calf producer too.
        We do realize that it is part of the cycle, as Dr. Lusk
    said, in numbers. Luckily, though, a lot of the capacity was
    being able to take up, whether it was by more Saturday kill.
        So we could even be in a worse situation. It is certainly
    not a good one, but there was a long time when packers did not
    have a lot of margin and other parts are making a lot more
    money. So we hope things will stabilize pretty soon.
        Certainly, the optics to our members are bad and especially
    when the ones that are feeling hurt because of floods in
    addition to fires, all these other things. This is just one
    extra thing that we certainly did not need in the beef
    industry.
        Senator Fischer. Right. Well, I hope NCBA continues to
    advocate for us. It is important.
        Mr. Eaton, I want to give you the opportunity to comment on
    this issue as well. What are you hearing from your members, and
    do they believe that other factors are at play here?
        Mr. Eaton: Thank you, Senator.
        When the fire happened, we had two and a half days of the
    futures going straight down, and to your question, will the
    prices go up when the plan opens up, you should pay attention
    and see if the futures go up for two and a half days because I
    do not think they will.
        The members, they are very concerned because the packers
    created this additional margin, the cutout went out $22 the
    first 3 days after the fire before a fat calf was even
    purchased. Then we lowered the fat cattle price $7, and they
    maintained that margin going ahead, weeks ahead.
        So there is severe frustration that they captured this
    margin and have kept it, even as the prices for the cutout have
    come down recently.
        Senator Tester has asked the Chief Economist to look into
    the pricing mechanisms, that they are transparent in
    determining true price discovery, and I would ask that you join
    on that with Senator Tester and we look into that.
        Yes, our members are very worried about the way things
    turned out.
        Senator Fischer. I look forward to working with all of you
    folks in making sure that we have a fair market to be able to
    sell our products to.
        Thank you very much.
        Chairman Roberts. I thank you, Senator.
        Senator Durbin?
        Senator Durbin. Thank you, Mr. Chairman. I feel in this
    position like I have been culled out of the herd.
        [Laughter.]
        Senator Durbin. I thank our guests for joining us.
        On August the 7th, 680 people were arrested at seven
    different food processing plants in the State of Mississippi.
    They included five poultry plants. That was the largest raid,
    immigration raid in the United States, since May 2008 when the
    Postville, Iowa, processing plant was raided. It is not
    uncommon. It happens with frequency, and it reflects a reality
    which a couple of you have alluded to in your testimony.
        When you go to meet in poultry processing plans in Illinois
    or anywhere across the United States, you will find a lot of
    immigrant workers. Many of them are undocumented. They take
    these jobs because they are hot, dirty, sometimes dangerous,
    and the local folks do not want them.
        What I am finding, I might just add parenthetically, when I
    was working my way through college, I worked in a meat
    processing plant, a pork processing plant in East St. Louis,
    Illinois. It was good pay but tough work, and I had no doubt
    that I was going back to college at the end of every summer.
        The point I am getting to is this. Mr. Kardel, you
    mentioned it specifically. Thank you. We have got to have an
    honest conversation about immigration here. The notion that
    this immigration issue is being driven on one side only by the
    liberals and the faith community ignores the reality. Immigrant
    labor, migrant labor is critical for agriculture in America. It
    is critical for each one of you.
        In Illinois, I have people with orchards who say if you do
    not have the workers to pick these peaches and apples, I am
    going out of business.
        Dairy farmers, third generation, no kids left in the family
    who are interested in it. If I do not get migrant workers to
    come in here, we are done.
        We have got to have a more honest conversation about this,
    and I have got to ask you all to step up your game a little
    bit. This notion that we only can accept engineers with high-
    tech degrees as immigrants in this country, well, my mom would
    not have come to this country under that standard. Many people
    would not. We need folks who will do hard, tough work, and
    immigrants historically have done it.
        Let me open the floor for a minute and see if anybody wants
    to comment.
        Mr. Kardel. Well, first of all, I do not care to comment on
    what happened in Mississippi. That is their problem, and I do
    not think that is up to us to go there.
        I do not think this is just an agricultural issue.
    Everywhere you go, whether it is retail, whether it is the
    convenience store, there is a Help Wanted sign there. We need
    employees.
        The frustration for us is that we have businesses in the
    United States that need employees, and we have people that want
    to come here, and we do not get it accomplished. It should be a
    perfect marriage, and it does not happen.
        So what is needed, we needed a streamline visa approval,
    one that works, and in our case with poultry processing, a lot
    of people say, ``Well, why don't you automate?'' We are, and we
    are doing it, but we need people now. The automation takes
    time. It is expensive. We need people now, and there are people
    that want to come here.
        Again, referencing West Liberty Foods, we utilize two
    government programs to monitor our employees. One is E-Verify,
    and the other one is the IMAGE program. They work great, but we
    need people.
        Senator Durbin. I get the same message back from the
    restaurant industry, hotel industry, nursing home industry.
    This notion that we ought to just close our borders, we are
    done, we do not need any more legal immigration in this country
    is wrong, and it is unfair. So I hope that folks in the
    agricultural side will speak up.
        Let me raise an issue, if I can, that has not been raised
    and is kind of rare in this committee. There is a conversation
    under way in some parts of America about global warming and
    climate change, and I have engaged my farmers in Illinois to
    join in the conversation.
        Now, most farmers and Farm Bureau, for example, and other
    groups come see me and start off by saying they do not trust
    the Environmental Protection Agency. They think they are
    mettlesome and get in the way of sound agriculture.
        Yet, I will tell you 20 years ago, there were not many
    farmers who could predict if they could set aside a 20-foot by
    20-foot patch on their farm and put up a wind turbine and make
    several thousand bucks a month as part of the solution to the
    climate crisis we face.
        What kind of conversation is under way when it comes to
    livestock and the future when it comes to climate change in
    terms of waste and manure management or rotational grazing? Are
    you in this conversation?
        Ms. Houston. Absolutely. We have a U.S. Roundtable for
    Sustainable Beef, where we talk about not only is beef
    production not part of the problem. It is part of the solution,
    not only because we have become more efficient--and I think as
    was alluded to in one of the testimonies, we are producing 33
    percent more beef with the same number of cattle as compared to
    1970 but also the carbon sequestration that is done by our
    grasses. If that all is taken into effect--and our own EPA said
    that beef cattle account for less than two percent of the
    greenhouse gases. If we take into effect the grasslands that
    our cattle graze on, our livestock graze on, as well as all the
    land that we use that is not useful--it is marginal land or
    just totally unsuitable for something else and a cow with their
    four-compartment stomach can take it and convert it into high-
    quality protein.
        So, certainly, in the beef industry, we have this
    conversation all of the time and want the rest of the world to
    know that we are part of the solution.
        Senator Durbin. Thank you, Mr. Chairman.
        Chairman Roberts. Thank you, Senator, for raising such
    pertinent issues that we all have to face.
        Coop, you are up.
        Senator Thune. Thank you, Mr. Chairman, and thank you,
    Ranking Member Stabenow.
        Thank you to the panel for being here. As has already been
    pointed out, this is a tough, tough set of conditions for
    people in farming and ranching in addition to you have got
    difficult weather conditions, low commodity, livestock prices,
    market uncertainty, and this fire last month contributed
    greatly to that.
        I have heard from a lot of ranchers who are concerned about
    the integrity of the cattle market following the fire. The fact
    that losing just one beef plant in the United States created so
    much volatility in the cattle marketplace, including decreased
    cattle prices for producers and increased beef prices to me is
    deeply concerning.
        I think transparency in these markets is really important,
    and, Dr. Lusk, I will ask you this question. Maybe take it for
    the record so I can ask a couple other questions.
        As we consider livestock mandatory reporting
    reauthorization, suggestions that you would have to improve
    accounting for the decreasing portion of cattle and hogs that
    are sold in negotiator cash markets, and then anybody else
    wants to comment on that, I would welcome it too.
        Ms. Houston, Mr. Eaton, you both mentioned the Tyson plant
    fire that occurred last month in your testimony. Given your
    personal involvement in the cattle market, what are your
    thoughts about the volatility that followed that fire, and do
    you think that USDA's investigation into beef pricing margins
    is an adequate response, or are there other actions that we
    should be taking?
        Ms. Houston. I do. Immediately after the fire, NCBA
    certainly went to USDA and asked for their cooperation on a
    number of different issues. One was flexibility of inspectors,
    if needed, in different plants or over hours. We also asked for
    there to be immediate oversight from both the CFTC and USDA on
    what happened in the market, to be sure that things were
    happening.
        So I do believe the Secretary. I have full-faith in his
    investigation that he is going to use not only the resources of
    USDA but possibly outside resources, such as Dr. Lusk and other
    market analysts, to find out what has happened, and then we
    can--once we know the facts.
        There is a lot of emotion right now and a lot of people
    hurting. I think I really have faith that this investigation
    will bring out the facts of what did happen.
        Senator Thune. Mr. Eaton?
        Mr. Eaton. Yes. Thank you, Senator.
        I think we should wait for the investigation and to see
    what they come up with, but I think there are some things we
    can suggest that they look into as well.
        I know in my personal experience in feeding cattle, there
    was lack of transparency issues a few weeks after the fire that
    negatively influenced the cash trade, and that goes back to the
    recommendations the U.S. Cattlemen's Association are making in
    regards to the non-native division of mandatory price
    reporting.
        I think we should not make these opinions on emotion and
    look at the facts, but not clearly defining the Packers and
    Stockyard Act definitions for what is a formula contract and
    what is a cash trade, how do we get more cash trade back into
    the market. These ``bonus buys'' or ``top sales'' where major,
    corporate feeders can get a dollar over the weighted average,
    where there is no account for premiums or discounts, it is just
    one dollar and I get all your inventory as a packer. That has
    been a problem, and that has taken the competitiveness out of
    the industry.
        Senator Thune. What is the cash market now represented as a
    percentage of the total?
        Mr. Eaton. Fifteen to 20 percent. You can take Texas,
    Oklahoma, for instance. You have 4-, 5,000 head out of 80,000 a
    week traded in the cash. We traded in the cash. So you just
    think about that as a businessperson, where if you have such a
    small number that can be influenced, that will influence the
    rest of the cash trade or the formula base price, we need to
    have all the transparency we can get as producers.
        Senator Thune. Yes. Agreed.
        Mr. Eaton. We need a referee.
        Senator Thune. You spoke about--and I would tell you that
    like you, I was opposed to the repeal of COOL, Country of
    Origin Labeling, in 2015. You spoke in your testimony about a
    loophole that has allowed imported cattle or beef to be labeled
    products of the USA. What are your recommendations for
    addressing that loophole?
        Mr. Eaton. Yes. So my loophole is not about beef. It is
    about actually reporting live cattle, and I know it is a little
    bit confusing if you are not super familiar with it. Mandatory
    price reporting has two divisions--imported and domestic. The
    CME does not--in the feeder index--does not include imported
    feeders in calculating the feeder index, which is the price
    your ranchers are going to get paid off of. The live cattle
    futures contract does not allow foreign-born fats to be
    delivered against the contract.
        As a producer, I have to sign an affidavit attesting to the
    fact that they were born and raised in the U.S.
        So what is happening today, USDA does not report in the
    domestic trade, these imported feeders that come into Nebraska,
    Texas, wherever, and get fed to slaughter weight, they do not
    report them separately. So these imported feeders, even though
    they are not able to be delivered against a contract, are
    influencing the price for the producers in South Dakota, and I
    will tell you they are influencing negatively.
        So that is why we need this new division. It has been a
    loophole since the inception of Mandatory Price Reporting, and
    like I told the Chairman, in 2015 we had several other industry
    groups wanting to look at this. We have come with a specific
    answer on how to fix it.
        Senator Thune. All right. Good. Thank you. We will take
    that to heart.
        Mr. Chairman, thank you.
        Chairman Roberts. Senator Braun?
        Senator Braun. Thank you, Mr. Chair.
        I have been involved in agriculture for a long time. I was
    a turkey farmer or half owner of an operation from 1979 to
    2012, recently a part owner of a registered cattle herd and
    found out how hard it was to fatten out pigs back in the early
    1980's. I probably lost more money in a short period of time
    back then when it was a deer, as now as well, but I remember
    the hard lesson.
        Chronic overproduction of row crops in this country, to me,
    there are so many issues besetting farmers, especially since
    many where I am from, Southern Indiana, have specialized either
    in livestock or poultry production or even row crop production.
    Many of the farms that did several things seem like they are
    specialized.
        I am worried about the status of the family farm, simply
    because it is being challenged in so many directions. Never
    before have we had acres come on stream like they are coming on
    in all continents to compete with soybeans and corn. Livestock
    and poultry production may be a new trend where many that
    specialized only in growing beans or corn--of course, there is
    not much wheat production in a lot of places in our country
    now. That market has been chronically oversupplied.
        Do you think the transition can be made for many grain
    farmers to get back into the livestock or poultry business as a
    way to get a better return on their time and their acres?
        I am just curious. I am looking for answers because input
    costs are historically high. All of a sudden, all the folks
    selling this stuff are now owned by fewer and fewer large
    corporations. Those prices do not seem to come down.
        I do see low grain prices for a long, long time, which may
    be a way to make money on the farm by walking it off the farm
    or feeding it to poultry.
        I think I would like to start with Dr. Lusk. What is your
    thinking on how farmers migrate through the current troubles?
    Anyone else that wants to weigh in.
        Mr. Lusk. Well, certainly there is a lot of difficultly out
    there in the farm sector right now, and to kind move a little
    bit away from specialization, in some ways, it makes more sense
    if you have a hog or poultry operation on a corn and bean farm.
    It acts as sort of a natural hedge because when those prices
    are low, your input costs go down for your livestock or poultry
    operation. So that makes some sense.
        One thing that fights against that is--one of the reasons
    farms have become more specialized over time is just increasing
    sophistication of all of these sectors, the ability to
    understand all the dynamics and be able to adopt the latest
    technologies.
        I think it has been one of the reasons that all of us here
    have talked a lot about trade is if we are going to have the
    high levels of production here, one answer is higher consumer
    demand. As I mentioned, it is not like population----
        Senator Braun. Which is always tricky creating that.
        Mr. Lusk. That is right.
        Population does not look like it is going to grow
    exponentially here in this country, and so the other driver
    there would be income. I think that is an important component
    here, particularly when we are talking about meat consumption.
    Generally, across the world when incomes grow, this is one of
    the first things consumer add to their diets. So just thinking
    about ways we can increase economic prosperity across the globe
    is one----
        Senator Braun. The other side of the equation would be on
    the supply side, and like everyone who is raising something, to
    comment, are we the low-cost producers of pork and turkey and
    cattle? When you go through markets that are tough, that is
    always your protection. You do it better than your competition.
        I would love to hear how we stack up against our
    international competitors.
        Ms. Houston. Certainly, in the beef industry, we are the
    gold standard with the efficiency that we have. A lot of us
    came through college with animal science degrees or ag degrees,
    that was the whole goal is to become more efficient. We are,
    and we can produce our high-quality beef quicker and better,
    just like I talked about with so many less cattle, the same
    amount of beef on the market.
        As to your thing about using the grain, I think we do have
    farmer feeders that certainly use that. I have some of my
    customers that they made the decision this year to feed cattle,
    and it is a year-to-year decision. So it does give them one
    more option as they look at how they market their grain,
    whether it is through cattle or whatever. It has its
    challenges, as Dr. Lusk said, but it is an option. The
    diversity is usually not a bad thing on the farm.
        Senator Braun. How about the turkey business? Do we produce
    turkeys more competitively than anyone else?
        Mr. Kardel. Well, I guess the best answer to your question
    is when the markets are open, we are able to export to other
    countries. So, obviously, we are competitive or we would have
    no exports.
        To your question about the specialization of farmers, my
    opinion is, as a farmer, I think that has happened since we got
    here, since the first person landed in this country. The number
    of farmers has been shrinking ever since, and I think it will
    continue to. I do not think it is a bad thing. It frees up the
    citizens to do other things, whether it is engineering or
    medical or whatever. I think it is an evolution. Can it go to
    zero? No, but----
        Senator Braun. Thank you.
        I am out of time. I would invite any one of you to engage
    my office to where we could talk about it more in detail. I
    would love to hear more with less of a time constraint.
        Thank you.
        Chairman Roberts. Thank you, Senator Braun. Thank you for
    your firsthand experience and reiterating that.
        It is now my privilege to recognize the distinguished
    president pro tem, the Chairman of the powerful Finance
    Committee and a terribly important person here on the
    Agriculture Committee.
        Senator Grassley. I suppose I should recognize the wisdom
    of the Chairman by inviting two Iowans, representing 88,000
    Iowa family farmers to come and give their testimony because we
    lead in agriculture. So thank you for your wisdom.
        Chairman Roberts. I may take your time back if you do not
    quit.
        [Laughter.]
        Senator Grassley. Three questions. One to Ron and one to
    Mr. Thiele and also to you. I am going to start out with Ms.
    Houston.
        Could you speak more about whether there are specific
    changes that need to be considered in the next CFTC
    reauthorization to make sure that the CFTC has the appropriate
    flexibility to fairly regulate transactions by everyone from
    small farmers to big operators?
        Ms. Houston. I really cannot speak to specific changes. We
    just value the role of CFTC to provide that oversight for our
    markets.
        Senator Grassley. I will accept that answer since you do
    not have any suggestions, but I have heard from cattlemen in
    Iowa about the problems of all the trading that goes on in the
    last half hour of a day and some people having some advantage
    over other traders as well, so that is the reason I asked that
    question.
        Ms. Houston. Well, we did have a two-year working group
    that worked with both the CME and the CFTC on a lot of these
    problems. We solved a few of them, and some of them, I think,
    are just--certainly on futures market, how trading goes on, it
    is just a very different world than it was when we had pit
    trading.
        So we have looked at this, and we also hear from our
    members all the time about this issue and how it can be better.
        Senator Grassley. Well, let me followup on that. Have you
    through your study of your association came to the conclusion
    that nobody has a fair advantage over anybody else?
        Ms. Houston. During our study, we found no wrongdoing. We
    asked the CFTC very specifically to look into that. It is
    volatile--that was really sort of the key of the study, the
    working group at that time, was the volatility of the market,
    and no wrongdoing at that time was found.
        Senator Grassley. Ron, it has been three years since--I
    think it has been three years since we had all these deaths
    because of high path avian influenza. So we ought to review
    whether or not the government is ready for another one.
        In your experience, what did the government do to be
    helpful, and what do we need to do better? Do you think we are
    on a path to doing better if we have another outbreak?
        Mr. Kardel. I think we are on a path to better. Yes. If
    nothing else, we had a learning experience in Iowa, and the
    animal disease preparedness bill helps in that regard.
        As you know, Senator, being in Iowa when millions of
    animals are dying, it is not a pretty sight. So what we need--
    and it is being established are labs throughout and
    laboratories that can be taken to the site so the disease can
    be identified immediately. Along with that would be equipment,
    whether it is to disposal or whatever, and the ability to
    transport that equipment where it is needed, when it is needed
    in a timely fashion.
        I think the thing we learned the most especially in Iowa
    was that a rapid response is the most important. There was too
    much delay in making decisions from the government to put the
    animals down, and the sooner the animals were put down, the
    quicker the disease subsided.
        We will need further research in regards to disposal
    techniques, whether there is something new, something better,
    and learn how these diseases got here, how they evolved. How do
    we get ahead of them, whether it is the avian influenza or, for
    example, salmonella, which is everywhere? We need to study its
    effects, how it is here, how we get in front of it and minimize
    it to the greater extent.
        Senator Grassley. Trent, trade is important not only for
    your industry but for all of Iowa agriculture, and foreign
    disease outbreaks would cutoff our markets and have cutoff our
    markets. It would be devastating to the rural community.
        In your experience, let us say with Porcine diarrhea or
    African swine fever running rampant in China, what did the
    government do to be helpful, and what do we need to do better?
        Mr. Thiele. Okay. Some of the things that we can improve on
    would be our FMD bank, vaccine bank. That would be a very
    important tool for us producers in case we would get foot and
    mouth disease here. There is vaccine already for foot and
    mouth, but we do not have nowhere near enough dosage to cover
    all of our animals in the United States, and to add 600 ag
    inspectors at our borders to help inspect the containers of
    meat products or foot products coming in or even some of our
    feed products coming in.
        Then one more thing I had was our gene editing is a tool
    that we are having come forward. It will allow us to edit some
    of the faults of the animals out, so they are not susceptible
    for certain diseases, and it will also decrease the need for
    some of the antibiotics. Those are three of the important
    things that we can be doing different.
        Senator Grassley. Thanks to the three of you for having a
    dialog with me.
        Mr. Chairman?
        Chairman Roberts. Senator Hoeven?
        Senator Hoeven. Thank you, Mr. Chairman.
        I want to begin with Mr. Pfliger. Thank you for being here,
    a producer from North Dakota.
        With regard to the livestock, in regard to raising sheep
    and the Ag Market Service, I guess they are no longer
    publishing lamb formula purchases because of the concentrated
    market, and so the suggestion from AMS is to release a
    comprehensive report that would produce the price based on
    various reporting attributes.
        Is that something that you think would be helpful? Do you
    have other recommendations? What would be helpful in that
    regard?
        Mr. Pfliger. We did support that recommendation, like we
    talked about for the 2015 reauthorization. We supported the
    threshold lowering as well.
        We also talked about posting the price data in arrears so
    that it would not influence the market so much; in other words,
    a little bit later timeline on that. Those are the things that
    we did support.
        We always are on the verge of losing this because we have
    such a few players in the lamb industry market, so it is very,
    very important to us.
        We also looked at other ways, instead of the 3/70/20 rule
    proposing, I think Joe Parcell and Glynn Tonsor who may have
    worked at Texas A&M did a study for us about confidentiality
    solutions moving to the 3/80/20 or something like that, so to
    increase the level of participation for the reportable parties.
        Senator Hoeven. Also, you mentioned in your testimony that
    EPA has decided to reevaluate the compound sodium cyanide to
    control predators, and I understand that is important in the
    sheep industry. What are some of the consequences you would
    face if it is not available, and how do you ensure that you
    have proper wild predator control while also protecting humans
    and domestic animals?
        Mr. Pfliger. Well, it is currently under reevaluation. It
    is an important tool. Sheep producers carry the water on this
    important issue every year. For Wildlife Services funding, we
    have a coalition of 200-plus organizations that sign on to a
    letter.
        I explained to the lady yesterday, I did a TV interview for
    Gray media, that if you have a female coyote who is denned up
    and happens to be whelping pups at the time that you are
    lambing and she is killing 14 to 15 of your lambs every week to
    feed her pups, that is a huge economic impact on you.
        So these tools are only utilized on predators that are
    problem predators. We utilize all kinds of non-lethal predator
    control throughout our industry, but this one is just a tool
    that is utilized to control those real problem predators that
    continue to damage us during our most vulnerable times of the
    year.
        Senator Hoeven. Thanks, and thanks for being here as well
    and representing the industry.
        This next question is for Ms. Houston and Mr. Eaton. All
    the time, we hear about the challenges of transparency and
    competition in the cattle industry, particularly in terms of,
    obviously, buying and selling cattle. What are your
    recommendations to address it? What are the solutions?
        Obviously, we have been talking about it here this morning,
    and it is a real concern right now in terms of what is going on
    for our cow-calf producers and so forth. What can we do so that
    there is competition and transparency in a way where we feel
    the markets are working, and that the producer can have
    confidence in the markets?
        Ms. Houston. Well, first of all, there are different parts
    of the market. There are different levels of transparency.
        We own a livestock option market. So I am certainly a
    proponent of transparency, and that is the number one way that
    you get transparency is an option-type system.
        There are a lot of regional differences. Our Southern
    Plains, there are more formula cattle, but a lot of them are
    happy with it.
        As part of the working group I mentioned, there was a fed
    cattle exchange that was started to try to sell more fed cattle
    at auctions at a larger cash price. It basically has not gone
    very far because of lack of participation from farmers and
    ranchers. So it is not a one-size-fits-all solution. If I had a
    solution, I would have offered it a long time ago. It is
    something we need to look into, and we look forward to what
    USDA is going to find out.
        Just to be honest, our industry has not 100 percent agreed
    on what the solutions are and how much transparency is needed.
        Senator Hoeven. That is a really good point you finished
    on. It would help us help you if you all could kind of get
    together in that regard, right?
        Ms. Houston. Well, we are independent farmers and ranchers.
    That is why we do what do. We do not agree on a lot sometimes.
        Senator Hoeven. I know it. I love that about them, and so
    does our Chairman. We love the independence of our ranchers,
    but it would be good if we could get together on some good
    solutions.
        Your turn, Mr. Eaton.
        Mr. Eaton. Senator, thank you.
        I talked earlier a couple times about the 2015
    Congressional Research Service where several of the major
    industry groups were together on looking into the problems with
    imported cattle and the discounts that affect the price for
    U.S. cattle producers and how it is reported in the USDA
    reports for lowering the weighted average. That would bring a
    tremendous amount of transparency.
        As far as competition, in the feeder cattle side, we have
    tremendous competition. As a cattle buyer, you see it every
    day. Ms. Houston sees it in her sale barn.
        In the live cattle side, we do not see it because we have
    not defined the rules in the Packers and Stockyards Act---or
    definitions in the Packers and Stockyards Act to where these
    formula contracts that are put together by packers that do not
    account for premiums or discounts but tie up tremendous amount
    of inventory take the packers out of the competitive situation.
    That is one thing that packers have told me after the run-up in
    1913 and 1914, that they do not want to be in a competitive
    situation. That is why they want to put this inventory in their
    pocket, so they do not have to compete next week against
    another packer.
        In our situation in western Nebraska, Colorado, like I said
    before, we will have mainly one packer in the market every
    week, so that is not competition.
        So those are a couple of things we can do together to
    answer those questions.
        Senator Hoeven. Have the Cattlemen's Associations worked to
    try to come together on some recommendations? Because I think
    that would be helpful.
        Mr. Eaton. Mandatory Pricing Reporting is up for
    reauthorization this year, and that is why we have come with
    these solutions.
        Senator Braun--or I am sorry--Senator Grassley talked about
    his producers getting worried about the futures and how they
    are traded. We recommend a speed bump, a time delay to give us
    a level playing field.
        You are right. There are different interests in the
    industry, and quite frankly, U.S. Cattlemen's Association is
    representing those participants in the industry that are
    Schedule F taxpayers, people that are not stakeholders. They
    have everything invested, compared to somebody that is in a W-2
    situation at a different end in the industry.
        So that is where we are going to have difficulty coming to
    these conclusions. I will tell you what, there is a tremendous
    amount of frustration back in Montana and North Dakota about
    not seeing things happen in the way that benefit those that pay
    in a Schedule F.
        Senator Hoeven. Yep. That is why I asked the question.
        Mr. Eaton. You bet.
        Senator Hoeven. Thank you.
        Chairman Roberts. Senator Boozman?
        Senator Boozman. Thank you, Mr. Chairman, and thank you and
    Ranking Member Stabenow for holding this important meeting.
        I asked the team to tell me exactly what was going on in
    Arkansas in regard to animal production. Sixty percent of the
    cash sales in Arkansas are animals and animal products. We are
    a pretty big ag State and do lots of different things. We are
    No. 2 in broiler production, No. 3 in catfish production, No. 5
    in turkey production, No. 11 in beef cattle production, with
    over 28,000 farms just in that area. So it really is a very,
    very important topic.
        Dr. Lusk, in your testimony, you mentioned several
    headwinds that livestock and poultry sectors are facing. Where
    do you see the opportunities?
        Mr. Lusk. Not to beat a dead horse, but some of the trade
    issues are opportunities in area where we project to be
    increasing population growth and income.
        Senator Boozman. What would those be specifically?
        Mr. Lusk. Yes. I mean, I think before some of our--before
    the most recent years, China was largely viewed as one of those
    areas that was both increasing in population and income and so
    was viewed as a large market opportunity there, but Sub-Saharan
    Africa is where we are going to expect most of the population
    growth and they need an income that can support high-value
    protein in their diet. So I think that is going to be a
    challenge.
        One thing we have not talked a lot about here so far is the
    other way to compete is on quality. We tend to think about beef
    or pork or turkey as a single commodity, but they are not.
    There are different qualities we can produce, and that is a
    margin of competition that I think will be increasingly
    important in the United States as consumers have incomes that
    can support satisfying their own wants and desires out of the
    food system. There will be opportunities for producers to
    provide niche products, particular qualities, particular market
    segments. So I think that is an opportunity for different areas
    of meat and livestock, poultry sectors.
        Senator Boozman. In your testimony, you mentioned that the
    livestock mandatory reporting must continue to modernize as the
    industry changes. What suggestions do you have for us at the
    committee level to look at we reauthorize that statute?
        Mr. Lusk. So I do not have anything specific to suggest,
    other than looking at some of the changes that have happened in
    the past as new products are brought online that were not
    anticipated when the acts were reauthorized, the ability to
    respond to those new products as they come in.
        I think Mr. Eaton has mentioned some issues, even on
    different kinds of cattle that maybe you did not think about at
    the time, and to the extent there could be flexibility built in
    and the ability to respond to some of those changes that are
    not anticipated, that we do not know about right now, but we
    know the industry is going to change. We know that new products
    will be innovated. We know there will be different qualities.
    How can we report prices on those in the future? So I think
    that is my general recommendation is to think about ways you
    can build in some flexibility to respond to things we know that
    are going to be different three or four years from now.
        Senator Boozman. Very good.
        Ms. Houston, you mentioned in your testimony that cattle
    farmers and ranchers need more tools to control predatory birds
    during calving season. This is a huge issue in Arkansas, and I
    am sure around the country. Could you, and Mr. Eaton perhaps,
    comment? We discussed it a little bit with Senator Hoeven with
    sheep and things. Can you comment on what those tools should
    be? Any ideas?
        Ms. Houston. I guess when I say tools, I mean flexibility,
    permitting things such as that. We have got over 100 black-
    headed vultures on our farm. They just wait to look for that
    vulnerability. It is a huge problem in Tennessee and Arkansas.
        So I think the access to speedy permits. We can get
    permits, but you have to prove ahead of time that you have
    exhausted all nonlethal possibilities, and meanwhile, as you
    know, calving season, we have worked hard to get them in a very
    small defined time. So calves are coming quickly, and this is
    happening quickly. So it takes a long time to get a permit,
    even though some of our farm bureaus have stepped in and gotten
    blanket permits. It still is a time. So we need something,
    because the paperwork is not going to save our calves. We just
    need a quicker way to do what we need to do and not a cap on
    what we do because a lot of that depends on the population of
    vultures on your farm. Getting rid of five out of a hundred is
    probably not going to help me a lot.
        Senator Boozman. Mr. Eaton, I do not know if you all have
    the vulture problem. I know you have got similar problems.
        Mr. Eaton. We have got a little different problem than
    vultures, Senator. We have bears and wolves. They are starting
    to move out of western Montana and eastern Montana.
        Senator Boozman. The vultures are vicious.
        Mr. Eaton. Right. We have customers in Florida, and they
    tell us that it is not a very good deal.
        Senator Boozman. It is huge.
        Mr. Eaton. If we go back to mandatory pricing reform for a
    second, another situation we can look at doing, that we need to
    do, is we do the weighted average on the cattle to trade in
    zero to 30 days, given that they are reported in zero to 14 and
    15 to 30. We should only be reporting, for transparency
    purposes, the cattle that are traded in zero to 14 days,
    because that is more accurate and timely and what the producer
    is going to get.
        We need to really look at changing this, because as the
    industry has changed, there is more cash trade in the North.
    Wyoming, South Dakota are not included today in the five-State
    area weighted averages, and that is something that I would
    suggest this Committee look into and add them in there because
    that is where the cash trade is taking place.
        Senator Boozman. Very good.
        Thank you, Mr. Chairman.
        Chairman Roberts. That will conclude our hearing today.
    Thank you to each of our witnesses for taking time to share
    your perspectives on issues of importance to the livestock and
    poultry sectors. This has been a very informative hearing. I
    want to thank each of you again for taking time out of your
    valuable schedule to come and offer suggestions to us. They
    have been good suggestions. You have been very responsive, and
    I truly appreciate it.
        To my fellow members, we would 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., on
    Wednesday, October 2.
        The committee is adjourned.
        [Whereupon, at 11:55 a.m., the committee was adjourned.]

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                                A P P E N D I X

                               September 25, 2019

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                             QUESTIONS AND ANSWERS

                               September 25, 2019

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