[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
           
           
           
           
           
           
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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY


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

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

                              ----------                              

                     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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