[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                        EXAMINING OPPORTUNITIES FOR GROWTH 
                         AND INVESTMENT IN RURAL AMERICA

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

                                HEARING

                               BEFORE THE

        SUBCOMMITTEE ON COMMODITY EXCHANGES, ENERGY, AND CREDIT

                                 OF THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 15, 2021

                               __________

                            Serial No. 117-8


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

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-085 PDF                 WASHINGTON : 2022                     
          
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                        COMMITTEE ON AGRICULTURE

                     DAVID SCOTT, Georgia, Chairman

JIM COSTA, California                GLENN THOMPSON, Pennsylvania, 
JAMES P. McGOVERN, Massachusetts     Ranking Minority Member
FILEMON VELA, Texas                  AUSTIN SCOTT, Georgia
ALMA S. ADAMS, North Carolina, Vice  ERIC A. ``RICK'' CRAWFORD, 
Chair                                Arkansas
ABIGAIL DAVIS SPANBERGER, Virginia   SCOTT DesJARLAIS, Tennessee
JAHANA HAYES, Connecticut            VICKY HARTZLER, Missouri
ANTONIO DELGADO, New York            DOUG LaMALFA, California
BOBBY L. RUSH, Illinois              RODNEY DAVIS, Illinois
CHELLIE PINGREE, Maine               RICK W. ALLEN, Georgia
GREGORIO KILILI CAMACHO SABLAN,      DAVID ROUZER, North Carolina
Northern Mariana Islands             TRENT KELLY, Mississippi
ANN M. KUSTER, New Hampshire         DON BACON, Nebraska
CHERI BUSTOS, Illinois               DUSTY JOHNSON, South Dakota
SEAN PATRICK MALONEY, New York       JAMES R. BAIRD, Indiana
STACEY E. PLASKETT, Virgin Islands   JIM HAGEDORN, Minnesota
TOM O'HALLERAN, Arizona              CHRIS JACOBS, New York
SALUD O. CARBAJAL, California        TROY BALDERSON, Ohio
RO KHANNA, California                MICHAEL CLOUD, Texas
AL LAWSON, Jr., Florida              TRACEY MANN, Kansas
J. LUIS CORREA, California           RANDY FEENSTRA, Iowa
ANGIE CRAIG, Minnesota               MARY E. MILLER, Illinois
JOSH HARDER, California              BARRY MOORE, Alabama
CYNTHIA AXNE, Iowa                   KAT CAMMACK, Florida
KIM SCHRIER, Washington              MICHELLE FISCHBACH, Minnesota
JIMMY PANETTA, California            JULIA LETLOW, Louisiana
ANN KIRKPATRICK, Arizona
SANFORD D. BISHOP, Jr., Georgia

                                 ______

                      Anne Simmons, Staff Director

                 Parish Braden, Minority Staff Director

                                 ______

        Subcommittee on Commodity Exchanges, Energy, and Credit

                  ANTONIO DELGADO, New York, Chairman

SEAN PATRICK MALONEY, New York       MICHELLE FISCHBACH, Minnesota, 
STACEY E. PLASKETT, Virgin Islands   Ranking Minority Member
RO KHANNA, California                AUSTIN SCOTT, Georgia
CYNTHIA AXNE, Iowa                   DOUG LaMALFA, California
BOBBY L. RUSH, Illinois              RODNEY DAVIS, Illinois
ANGIE CRAIG, Minnesota               CHRIS JACOBS, New York
ANN M. KUSTER, New Hampshire         TROY BALDERSON, Ohio
CHERI BUSTOS, Illinois               MICHAEL CLOUD, Texas
------                               RANDY FEENSTRA, Iowa
                                     KAT CAMMACK, Florida

               Emily German, Subcommittee Staff Director

                                  (ii)
                                  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Delgado, Hon. Antonio, a Representative in Congress from New 
  York, opening statement........................................     1
    Prepared statement...........................................     2
Feenstra, Hon. Randy, a Representative in Congress from Iowa, 
  submitted report...............................................    55
Fischbach, Hon. Michelle, a Representative in Congress from 
  Minnesota, opening statement...................................     3
Rush, Hon. Bobby L., a Representative in Congress from Illinois, 
  submitted article..............................................    53

                               Witnesses

Polonius, Ines, Chief Executive Officer, Communities Unlimited, 
  Inc.; Vice-Chair, Board of Directors, Rural Community 
  Assistance Partnership, Fayetteville, AR.......................     5
    Prepared statement...........................................     7
Koneru, Ph.D., J.D., LL.M., Phanesh, Founder, President, and 
  Chief Executive Officer, Exela Holdings, Inc., Exela Pharma 
  Sciences, LLC, Lenoir, NC......................................    12
    Prepared statement...........................................    13
Fox, Hon. Bob, District 2 Commissioner, Board of Commissioners, 
  Renville County, MN; Vice Chair, Agriculture and Rural Affairs 
  Steering Committee, National Association of Counties, Franklin, 
  MN.............................................................    15
    Prepared statement...........................................    17
Erling, Todd M., Executive Director, Hudson Valley AgriBusiness 
  Development Corporation; President and Chief Executive Officer, 
  Farm and Food Growth Fund Inc., Hudson, NY.....................    20
    Prepared statement...........................................    21
Mattson, J.D., Kent D., Chief Executive Officer, Lake Region 
  Healthcare, Fergus Falls, MN; on behalf of Minnesota Hospital 
  Association....................................................    24
    Prepared statement...........................................    26

 
   EXAMINING OPPORTUNITIES FOR GROWTH AND INVESTMENT IN RURAL AMERICA

                              ----------                              


                         TUESDAY, JUNE 15, 2021

                  House of Representatives,
   Subcommittee on Commodity Exchanges, Energy, and Credit,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 11:03 a.m., via 
Zoom, Hon. Antonio Delgado [Chairman of the Subcommittee] 
presiding.
    Members present: Representatives Delgado, Plaskett, Axne, 
Rush, Craig, Kuster, Bustos, Fischbach, LaMalfa, Jacobs, 
Balderson, Cloud, Feenstra, and Cammack.
    Staff present: Lyron Blum-Evitts, Emily German, Ross 
Hettervig, Chu-Yuan Hwang, Anne Simmons, Ashley Smith, Paul 
Balzano, Caleb Crosswhite, Erin Wilson, John Konya, and Dana 
Sandman.

OPENING STATEMENT OF HON. ANTONIO DELGADO, A REPRESENTATIVE IN 
                     CONGRESS FROM NEW YORK

    The Chairman. This hearing of the Subcommittee on Commodity 
Exchanges, Energy, and Credit entitled, Examining Opportunities 
for Growth and Investment in Rural America, will come to order. 
Welcome, and thank you all for joining today's hearing. After 
brief opening remarks, Members will receive testimony from our 
witnesses today, and then the hearing will be open to 
questions. Members will be recognized in order of seniority, 
alternating between Majority and Minority Members, and in order 
of arrival for those Members who have joined us after the 
hearing was called to order. When you are recognized, you will 
be asked to unmute your microphone and will have 5 minutes to 
ask your questions or make a comment. If you are not speaking, 
I ask that you remain muted in order to minimize background 
noise. In order to get to as many questions as possible, the 
timer will stay consistently visible on your screen.
    And with that, welcome and good morning to everyone. I 
appreciate you all being here for this first hearing of the 
Subcommittee on Commodity Exchanges, Energy, and Credit for the 
117th Congress.
    I would also like to welcome the Members of this 
Subcommittee as my first hearing as Chairman in what I aim to 
be a productive and bipartisan tenure.
    Today's hearing will examine a topic many of us know 
intimately, the critical need and importance of investment in 
rural America.
    USDA analyses tell us that between 2010 and 2018, 
population growth in rural America has lagged behind the growth 
in our urban areas. Additionally, job growth in rural 
communities increased at just half of the rate it did in urban 
areas. I could go on with facts and figures about how many 
schools, hospitals, grocery stores, small businesses, and farms 
have closed in our rural communities in the last decade, but if 
you live in a rural community like I do, you already know that.
    This hearing is also not just about the typical economic 
drivers in rural communities, but about the infrastructure that 
is needed to serve those communities and support the critical 
role they play in the agricultural production and manufacturing 
industries. Our nation's aging infrastructure problem is 
exacerbated in rural communities.
    Inadequate access to high-speed internet impacts every 
level of a community, from students being able to do homework, 
farmers and ranchers utilizing precision agriculture 
technologies on their operations, all the way to how quickly a 
grocery store can process a transaction at their checkout.
    Our goal cannot just be to keep rural communities alive. We 
need to do the work to ensure that those communities are 
thriving and can succeed in a 21st century economy, and that is 
what I hope to get out of this hearing today.
    Our witnesses are working every single day to build 
thriving rural communities, including a witness from my own 
district in upstate New York. Their testimony today will help 
inform us on how we can strengthen rural development in the 
next farm bill and how we work with our partners at the USDA 
Rural Development as they continue to implement the 2018 Farm 
Bill.
    The daily lives and well-being of over 46 million people in 
rural counties across America are directly impacted by the kind 
of work we will do here today, and I want to ensure that every 
single one of those 46 million people can choose to stay in 
their rural communities for years and decades to come.
    [The prepared statement of Mr. Delgado follows:]

    Prepared Statement of Hon. Antonio Delgado, a Representative in 
                         Congress from New York
    Good morning, and welcome to this first hearing of the Subcommittee 
on Commodity Exchanges, Energy, and Credit for the 117th Congress.
    I would also like to welcome the Members of this Subcommittee as my 
first hearing as Chairman in what I aim to be a productive and 
bipartisan tenure.
    Today's hearing will examine a topic many of us know intimately--
the critical need and importance of investment in rural America.
    USDA analyses tell us that between 2010 and 2018, population growth 
in rural America has lagged behind the growth in our urban areas. 
Additionally, job growth in rural communities increased at just half of 
the rate it did in urban areas.
    I could go on with facts and figures about how many schools, 
hospitals, grocery stores, or small businesses have closed in our rural 
communities in the last decade, but if you live in a rural community 
like I do--you already know that.
    This hearing is also not just about the typical economic drivers in 
rural communities, but about the infrastructure that's needed to serve 
those communities and support the critical role they play in the 
agricultural production and manufacturing industries. Our nation's 
aging infrastructure problem is exacerbated in rural communities.
    Inadequate access to high-speed internet impacts every level of a 
community, from students being able to do homework, farmers and 
ranchers utilizing precision agriculture technologies on their 
operations, all the way to how quickly a grocery store can process a 
transaction at their checkout.
    Our goal cannot just be to keep rural communities alive--we need to 
do the work to ensure that those communities are thriving and can 
succeed in a 21st century economy, and that's what I hope to get out of 
this hearing today.
    Our witnesses are working every single day to build thriving rural 
communities, including a witness from my district in upstate New York. 
Their testimony today will help inform us on how we can strengthen 
rural development in the next farm bill and how we work with our 
partners at USDA Rural Development as they continue to implement the 
2018 Farm Bill.
    The daily lives and well-being of over 46 million people in rural 
counties across America are directly impacted by the kind of work we'll 
do here today, and I want to ensure that every single one of those 46 
million people can choose to stay in their rural communities for years 
and decades to come.

    The Chairman. I now would like to welcome the distinguished 
Ranking Member, the gentlewoman from Minnesota, Mrs. Fischbach, 
for any opening remarks she would like to give.

OPENING STATEMENT OF HON. MICHELLE FISCHBACH, A REPRESENTATIVE 
                   IN CONGRESS FROM MINNESOTA

    Mrs. Fischbach. Thank you, Mr. Chairman, and hello to my 
colleagues here in the room and on the Zoom, and welcome to all 
of our witnesses. It really is nice to be here for the first 
meeting of our Subcommittee.
    Like many of you, I represent a rural district. We are 
among the top ag-producing districts in the nation, and we are 
responsible for nearly half of Minnesota's agricultural sales. 
My district plays an important role in our country's ag 
economy, and there is real value in making sure that those 
rural communities have the tools that they need to grow and 
thrive. That is why I am so pleased to be here today discussing 
how USDA Rural Development can aid us in that pursuit.
    Over the past couple of months, I have spent a lot of time 
traveling in my district. I have met with local officials, 
business owners, farmers, and families, and many others, and 
one thing I can tell you is that rural America is facing many 
challenges right now, made all the more evident by COVID-19. 
The stark reality is that many rural communities are being left 
behind. The Agriculture Committee has talked frequently and 
forcefully about the importance of broadband connectivity 
shortfalls in our rural communities, but there are other 
challenges facing our constituents, including limited access to 
capital, worker shortages, aging infrastructure, and diminished 
access to healthcare services.
    If we can help meet those needs, it is all of our 
constituents who will reap the benefits. Not only do thriving 
rural communities benefit the ag economy, they benefit our 
entire country. Strong rural communities start with strong 
connectivity, but the needs of our rural communities do not end 
with broadband access, and I am grateful for the opportunity to 
explore ways by which we can support rural America.
    Over the past year, my Republican colleagues and I have 
offered many proposals, including several with bipartisan 
support, to bolster Rural Utilities Services, expand high-speed 
broadband programs, rebuild health education and public safety 
infrastructure, and more. We think that infrastructure can and 
should be a bipartisan success story, but we share Chairman 
Scott's deep concern and skepticism about plans to marry 
bipartisan infrastructure priorities to tax policies which will 
harm rural communities.
    USDA Rural Development plays an important role in growing 
rural communities and attracting new investment, whether it is 
supporting economic development, assisting with loans and 
grants for economic development, healthcare, and 
infrastructure, or assisting ag producers with their own 
operations. USDA Rural Development is well-positioned to make a 
difference for citizens, the citizens each of us represent.
    I join Chairman Delgado in welcoming all of our witnesses. 
The health of rural America can be found in hard work, 
innovative thinking, and strong partnerships that each of you 
bring to your communities, and I am looking forward to today's 
discussion.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. Thank you, Ranking Member Fischbach, and I do 
look forward to working alongside of you.
    The chair would request that other Members submit their 
opening statements for the record so witnesses may begin their 
testimony, and to ensure that there is ample time for 
questions.
    I am pleased to welcome such a distinguished panel of 
witnesses to our hearing today. Our witnesses bring to our 
hearing a wide range of experience and expertise, and I want to 
thank each and every one of you for joining us.
    Our first witness today is Dr. Phanesh Koneru. Dr. Koneru 
is the founder, President, and CEO of Exela Pharma Sciences in 
Lenoir, North Carolina. Founded by Dr. Koneru in 2005, Exela is 
a vertically integrated and fast-growing pharmaceutical 
manufacturer, marketer, and developer that today employs 380 
individuals from the Caldwell County area in Lenoir. Dr. 
Phanesh, thank you for joining us. I appreciate and look 
forward to your testimony.
    Our next witness is Ms. Ines Polonius. Ms. Polonius is CEO 
of Communities Unlimited, a community development financial 
institution and rural development hub serving rural communities 
in the southern United States. Communities Unlimited works with 
local leaders to create fair access to resources needed to 
sustain healthy communities, businesses, and families. 
Communities Unlimited provides direct assistance and capital to 
communities, small businesses, micro enterprises, as well as 
water and wastewater systems. Ms. Polonius, thank you for 
joining us this morning.
    Our third witness today is Mr. Bob Fox. Mr. Fox has served 
on the Board of County Commissioners for Renville County since 
2002. He also serves on the National Association of Counties, 
Agriculture, and Rural Affairs Steering Committee as Vice 
Chair, and is a member of the National Counties Association 
Board of Directors. Thank you, Mr. Fox, for joining us.
    Our fourth and--no, not final. Our fourth witness is Mr. 
Todd Erling, Executive Director from Hudson Valley AgriBusiness 
Development Corporation, and from my own congressional 
district. Hudson Valley AgriBusiness Development Corporation is 
the only economic development agency in the Hudson Valley with 
a specific focus on the viability of the agricultural economy. 
Hudson Valley AgriBusiness Development Corporation has also 
established the Farm and Food Funding Accelerator and the 
Incubator Without Walls to mentor over 260 businesses and 30 
technical assistance service providers. Mr. Erling is someone 
who also serves on my bipartisan locally-based agriculture 
advisory committee, and plays a critical, vital role in our 
community, helping rural and agricultural business access to 
tools they need to succeed. Mr. Erling, thank you. It is good 
to have you here.
    And last, but not least, to introduce our fifth and final 
witness today, I am pleased to yield to the gentlewoman from 
Minnesota, the distinguished Ranking Member of the 
Subcommittee, Mrs. Fischbach.
    Mrs. Fischbach. Thank you, Mr. Chairman.
    It is my pleasure to introduce Mr. Ken Mattson, the CEO of 
Lake Region Healthcare. Lake Region Healthcare is a rural, not-
for-profit provider that operates three hospitals, 11 clinics, 
an assisted living facility, and three surgery centers. Mr. 
Mattson holds a J.D. from the University of Minnesota Duluth, 
and has more than 2 decades in institutional knowledge and 
healthcare experience. He is testifying today on behalf of the 
Minnesota Hospital Association. Welcome, Mr. Mattson, and thank 
you so much for being here today.
    I would also like to give my personal welcome to 
Commissioner Bob Fox. Commissioner Fox and his wife live on a 
fourth-generation farm in rural Renville County in my district, 
and it is my pleasure to welcome him to the Committee today, 
too.
    Thank you. I yield back.
    The Chairman. I thank the gentlewoman for her remarks, and 
again, welcome to all of our witnesses today.
    We will now proceed to hearing from your testimony. you 
will each have 5 minutes. The timer should be visible to you on 
your screen, and will count down to 0, at which time, your time 
has expired.
    Dr. Koneru, please begin.
    Dr. Koneru. Good morning, Chairman Delgado and Ranking 
Member Fischbach. It is my pleasure and privilege----
    The Chairman. You need to unmute yourself. It looks like 
you might be frozen, Dr. Koneru.
    Dr. Koneru. Oh, yes.
    The Chairman. Are you still there?
    Dr. Koneru. Yes, I can hear you now. Hello? Can you hear 
me?
    The Chairman. We will come back to you, Doctor.
    In the interest of time, we are going to move on to Ms. 
Polonius. You can begin your testimony when ready.

     STATEMENT OF INES POLONIUS, CHIEF EXECUTIVE OFFICER, 
       COMMUNITIES UNLIMITED, INC.; VICE-CHAIR, BOARD OF 
             DIRECTORS, RURAL COMMUNITY ASSISTANCE 
                 PARTNERSHIP, FAYETTEVILLE, AR

    Ms. Polonius. Good morning. Thank you, Chairman Delgado, 
Ranking Member Fischbach, and Members of the Subcommittee for 
inviting me to testify about the opportunities for growth and 
investment in rural America, and there are many. Thank you to 
each of you for caring about people just like me who live in 
rural Arkansas and rural places throughout this country.
    My name is Ines Polonius, and I am the CEO of Communities 
Unlimited, the southern partner of the Rural Community 
Assistance Partnership.
    Communities Unlimited has been a certified community 
development financial institution since 2002, and functions as 
a rural development hub with 70 full-time staff serving seven 
states in the South, from Texas to Tennessee, a footprint that 
comprises 45 percent of America's persistent poverty counties. 
Sixty percent of people living in these persistent poverty 
places are people of color, and represent an important focus of 
our work. Communities Unlimited takes a holistic approach by 
integrating capacity building and capital products to ensure: 
targeting water and wastewater systems, and small businesses, 
local leadership teams, as well as small scale farmers.
    We are the southern representative of the Rural Community 
Assistance Partnership, a national network of nonprofit 
organizations with 300 on-the-ground technical assistance 
providers, helping to solve real problems to benefit more than 
3.4 million people in rural and Tribal communities in every 
state and territory each year. During 2020, RCAP leveraged more 
than $427 million in infrastructure funding, mostly in USDA 
infrastructure loans.
    Opportunities for investment are many. In the U.S., there 
are 140,000 active public water systems serving communities of 
less than 10,000 people. COVID-19 has exacerbated the 
challenges these systems face. A survey conducted by RCAP in 
May of 2020 indicated an estimated revenue loss of between $3.6 
to $5.5 billion for small rural systems across the country. A 
year later, we know that most systems expended all of their 
reserves and many are no longer financially able to keep up 
with the needed maintenance, nor loan payments.
    The Rural Equity Act, House Resolution 498, seeks to 
provide debt relief to borrowers of several Rural Development 
loan programs, including the Intermediary Relending Program, 
IRP. CU currently has an active IRP portfolio of about $1 
million to rural water and wastewater utilities. Six months of 
debt relief would provide over $75,000 to help systems rebuild 
their reserves and address immediate maintenance needs.
    Currently, Federal funding for USDA Rural Development 
programs makes up less than eight percent of the agency's 
annual discretionary budget, yet it is exactly these programs 
that are the lifeline right now to rural communities as they 
struggle to recover from the impacts of COVID-19. We need 
greater investment in rural water and waste disposal 
infrastructure through RD in the form of both loans, and more 
importantly, grants, as many systems can no longer afford to 
take on more debt. Existing water systems in financial 
difficulty need grant assistance, debt forgiveness, and loan 
restructuring included in the American Jobs Plan.
    There are many growth opportunities. Infrastructure is a 
driving factor for economic growth. As a nation, we are lucky 
to be a country of entrepreneurs. Rural America is no 
exception, where people start businesses every day to meet 
basic needs in our community, as well as turning great ideas 
into products.
    Today, we work with a young man in Pine Bluff, Arkansas, 
who launched an internet service provider to bring reliable 
broadband services to all communities in the Arkansas Delta. I 
know this Committee has previously analyzed the need for robust 
and affordable broadband in rural places. I can't overemphasize 
the importance of broadband for economic growth.
    We need strategic investments in the Rural Business 
Development Plan in the Rural Microenterprise Assistance 
Program to support entrepreneurs in creating locally-led 
ventures that will keep wealth local in the hands of rural 
people.
    Technical assistance is the connective tissue between USDA 
RD and rural beneficiaries in the community. Capacity building 
is needed at three levels. One, leadership teams are an 
important success factor to community resilience, especially in 
places with a part-time mayor and little staff. They need 
support and skill-building. Two, water and wastewater system 
boards of directors are elected volunteers, requiring training 
on regulations, financial management, and board management. 
Many entrepreneurs need skill building in areas like financial 
management and digital marketing to be competitive.
    Solving the challenges facing rural communities today, 
especially in persistent poverty areas in the South, requires 
adequate funding, a strong USDA RD, along with the capacity 
building to access that funding and then utilize it 
effectively. These are the building blocks of an economic 
recovery for rural America.
    I thank the Committee for inviting me to testify today, and 
look forward to answering any questions you may have. Thank 
you.
    [The prepared statement of Ms. Polonius follows:]

     Prepared Statement of Ines Polonius, Chief Executive Officer, 
  Communities Unlimited, Inc.; Vice-Chair, Board of Directors, Rural 
                               Community 
                Assistance Partnership, Fayetteville, AR
    Thank you, Chairman Delgado, Ranking Member Fischbach, and Members 
of the Subcommittee, for this opportunity to testify at this hearing 
entitled: ``Opportunities for Growth and Investment in Rural America.''
    My name is Ines Polonius, and I am the CEO of Communities 
Unlimited, the southern partner of the Rural Community Assistance 
Partnership (RCAP), a national network of nonprofit organizations 
working to provide technical assistance, training, capital and 
resources to rural and tribal communities in every state, territory and 
on tribal lands.
About Communities Unlimited
          For Reference: www.CommunitiesU.org
          Annual Report: AR2020--Communities Unlimited *
---------------------------------------------------------------------------
    * http://communitiesu.org/AR2020/.

    Communities Unlimited (CU) has been a Certified Community 
Development Financial Institution since 2002 and functions as a Rural 
Development Hub serving Texas, Oklahoma, Arkansas, Louisiana, 
Mississippi, Tennessee and Alabama, a foot print that comprises 45% of 
America's Persistent Poverty Counties. 60% of people living in 
persistent poverty counties are people of color and represent an 
important focus of our work. Communities Unlimited takes a holistic 
approach in its work with rural communities by integrating capacity 
---------------------------------------------------------------------------
building and capital products to ensure:

   Water and waste water systems are maintained and in 
        compliance.

   Strong local economies by starting and growing small 
        businesses.

   Diverse, local leadership teams that design community-based 
        strategies which we help them implement.

   Access to healthy foods by supporting small scale fruit and 
        vegetable growers and creating markets through local farmers['] 
        markets, access to urban markets and rebuilding local grocery 
        stores.

   Building regional partnerships to leverage additional 
        resources that CU alone cannot provide with a special focus on 
        broadband access.

    In March 2020, Communities Unlimited pivoted quickly to support 
rural communities and rural businesses navigate [COVID-19] by:

   Creating and deploying a disaster loan product for water and 
        waste water systems.

   Creating and deploying two disaster loan products to help 
        existing businesses pivot their operations and restart their 
        businesses after they had been forced to close.

   Purchasing $160,000 in produce from mostly Black-farmers who 
        had lost access to their restaurant, school and farmers market 
        customers to providing the vegetables to over 26 food pantries 
        in the Mississippi Delta that had run out of food for needy 
        families.

   Teaching leadership teams to effectively utilize Zoom for 
        their meetings while navigating issues caused by unreliable 
        broadband.

   As a Microlender and CDFI, CU was finally able to get 
        certified to make Payroll Protection Loans in February of 2021. 
        In a matter of 12 weeks, CU made 302 PPP loans for $4.3 million 
        across nine states in the rural South. Fifty-one nonprofit, 
        rural water and waste water systems benefited from PPP funds. 
        Of the 251 small businesses who received PPP loans, 12 were 
        Black farmers, 14 were day care centers. 67% of loans went 
        entrepreneurs of color. All of these beneficiaries had been 
        left out of the PPP rounds until CU and its partners reached 
        out to their community leaders.

   Communities Unlimited relied in part on RBDG funding in 
        Arkansas, Texas and Mississippi to help 165 small businesses, 
        85% of which were entrepreneurs of color, to navigate the 
        economic fallout of lockdowns and new health regulations. Only 
        3% of its entrepreneurs of color were forced to close their 
        businesses compared to national statistics that put that number 
        as high as 41% \1\ of Black-owned businesses forced to close 
        during the first wave of COVID alone.
---------------------------------------------------------------------------
    \1\ Fairlie, Robert W. ``The Impact of COVID-19 on Small Business 
Owners: Evidence of Early-Stage Losses from the April 2020 Current 
Population Survey.'' National Bureau of Economic Research, Working 
Paper 27309, June 2020, p. 2. See https://www.nber.org/papers/w27309.
---------------------------------------------------------------------------
About RCAP
          For Reference: www.rcap.org
          Annual Report: Rural Community Assistance Partnership (RCAP) 
        2020 Annual Report **
---------------------------------------------------------------------------
    ** https://2020report.rcap.org/
?mc_cid=c40cc3aaac&mc_eid=5fada9af09.

    Through RCAP's regional partners, more than 300 on-the-ground 
technical assistance providers build capacity that leads to sustainable 
and resilient infrastructure and strengthens rural economies. Our 
approach is grounded in long-term, trusted relationships with thousands 
of rural and tribal communities across the country.
    For over 40 years, the RCAP network has partnered with USDA to 
serve as the connective tissue between Rural Development staff and the 
communities they serve. RCAP assists rural communities with funding 
applications and supports every phase of the project planning and 
development process. We deliver training and technical assistance after 
construction is complete to help communities understand how to properly 
manage and operate their infrastructure in a fiscally sustainable 
manner. We work to ensure that RD borrowers are able to meet the terms 
of their Letters of Condition and that they are able to stay current on 
their loan payments.
    Last year, RCAP served more than 3.4 million rural and tribal 
residents in more than 2,000 of the smallest, most distressed 
communities. On average, the communities we served had fewer than 1,500 
residents, with a Median Household Income at 50% of the national 
average. We served more than 40 percent of America's persistent poverty 
counties, and almost 300,000 individuals from indigenous communities.
    In 2020 alone, the RCAP network through our technical assistance 
helped rural communities across the country leverage approximately $427 
million in infrastructure funding, most of which came in the form of 
USDA infrastructure loans.
[COVID-19] and Climate Change Impacts on Rural Communities:
    The talent, innovation, and resiliency of America's rural areas 
will play a central role in the future of the U.S. economy as we 
recover from the COVID-19 Pandemic.
    COVID-19 has further exacerbated the challenges rural communities 
already faced, as they had not yet fully recovered from the 2008 
recession and as of 2019, employment in non-metro counties had not yet 
returned to 2008 levels. Rural communities also lag other areas on 
indicators of poverty, health, and education. This is especially true 
in America's persistently poor counties where more than 20% of the 
population has lived in poverty for over 30 years. We cannot allow more 
rural counties to slip into persistent poverty because the current 
economic recovery leaves them behind once again. Many distressed rural 
communities are those where racial inequities dominate. Rural areas 
have always served as the backbone of this country and will continue to 
be a core measure of the success as the country seeks to rebuild after 
COVID-19.
    Since the beginning of [COVID-19], thousands of rural places not 
only struggled with the impact of the disease and its economic fall-out 
but at the same time were impacted by hurricanes, flooding, tornados 
and the polar vortex which devastated hundreds of water and waste water 
systems in the South. We learned that communities where we had built 
strong leadership teams to support elected officials proved more 
resilient by accessing Federal and state resources to move more quickly 
from crisis to recovery.
    To better understand the pandemic's impact on rural and Tribal 
communities, RCAP conducted a survey in May 2020. The responses we 
received were startling. More than 31 percent of communities estimated 
they would not be able to continue to cover all water utility costs for 
more than 6 months, due to an estimated revenue loss of between $3.6-
$5.5 billion for small systems. A year later, we know that most systems 
expended all of their reserves and are no longer financially able to 
keep up with needed maintenance nor improvements.
    Perhaps even more alarming, more than 43 percent of communities 
surveyed said they rely on one full-time staffer or less, leaving many 
communities at risk if that staffer fell ill.
    Infrastructure is a driving factor for economic growth and USDA 
Rural Development features a portfolio of infrastructure and small 
business programs tailor made to rural businesses and communities. 
Given that businesses in rural communities are essential to the success 
of rebuilding the economy, and that the USDA Rural Development programs 
are the programs most specifically tailored to the capacity and reality 
of rural places, we urge you to focus more resources on the Rural 
Development programs, especially grant programs, that ensure that the 
smallest and lowest resourced communities do not bear the burden of 
debt financing for their recovery.
Success in RD Water Infrastructure Programs--More Investment Needed
    RD's water and wastewater programs are a key component of economic 
development in rural America. The lack of reliable infrastructure, 
funded by RD, that delivers clean drinking water for household needs, 
sufficient quantities of water to support local industry and small 
businesses, and sanitary sewers to remove sewage and industrial 
[byproducts] to protect public health, forces local employers to 
relocate and close factories and prevents small businesses from 
starting. The entrepreneurs and small business owners who are the 
engines of our economy cannot open new businesses, shops or restaurants 
on Main Street without basic services.
    Example: City of Charleston, Mississippi. In 2014, the local Sonic 
in Charleston, an important contributor to local sales taxes and jobs, 
closed temporarily as sewer regularly backed up on the restaurant's 
property due to city's much needed sewer collection system 
improvements. The Mama Lou Diner on main street received many 
complaints of the smell of the sewer that was often visible on their 
property. No one wanted to open a new business in downtown Charleston 
for the same reason. The city needed $450,000 to make necessary 
improvements. With a population of 1867 people with a median income of 
$25,395, the city could not take on debt to solve the problem. They 
applied for a grant in 2015 but were not able to secure the funds until 
2018 and have since addressed the problem.
    Infrastructure is the foundation of economic development, and to 
promote economic growth in rural America, we need to be able to ensure 
that the basic needs of businesses and residents including safe 
drinking water and sewer services are met. Currently, Federal funding 
for rural development programs makes up less than 8% of USDA's annual 
discretionary budget yet it is exactly these programs that are a 
lifeline to rural businesses, rural water and waste water systems--
rural communities as a whole--as they struggle to recover from the 
impacts of [COVID-19].
    Opportunities for continued economic growth in rural communities 
are substantial. [COVID-19] taught us all how to work virtually. Young 
people from rural communities want to take their jobs and lives back to 
their hometowns in Rural America. They need access to reliable and fast 
broadband. Agricultural production, energy development and operations, 
alternative energy pursuits, and tourism are all vibrant economic 
sectors that depend on rural communities; rural communities that need 
water and wastewater utilities, essential community facilities, 
affordable housing, and broadband availability that are in part made 
available through RD programs.
    The Water and Environment Programs at RD have enjoyed tremendous 
success over the past few decades. The agency boasts a portfolio of 
more than 13,000 active water/sewer loans, more than 19 million rural 
residents served, and a delinquency rate of just 0.10% in 2020. This 
success is partly attributable to the field presence RD has 
historically maintained in rural areas. With staff in field offices 
throughout the country, RD is uniquely positioned to evaluate the 
credit-worthiness of small utilities and is able to distribute Federal 
funds quickly and efficiently to areas of great need. Staff reductions 
in RD offices across every state have started to hinder the ability of 
RD to serve rural communities with critical services. In drought years, 
or after natural disasters, community leaders benefit from being able 
to turn to a local RD staffer that they know and trust and who is 
familiar with their system and its needs.
    To build on these successes, Congress should include additional 
infrastructure dollars toward the water and wastewater loan and grant 
programs, the technical assistance and training grant program, and the 
water infrastructure revolving loan fund program.
Technical Assistance is Key to Ensuring RD's and Rural Communities' 
        Success
    Despite RD's many successes, a substantial number of small, low-
income towns, counties, and rural small businesses have difficulty 
accessing RD programs. The application process and eligibility 
requirements for each program are slightly different, and each pose 
unique challenges. Local leaders are most often volunteers who lack 
professional staff and the resources to find out what funding sources 
are available or the requirements for funding eligibility. Their first 
look at the Letter of Conditions on an RD loan or grant can seem 
overwhelming and discourage worthy applications. With help from an 
experienced technical assistance provider, however, even communities 
with no staff and limited planning resources can develop the local 
leadership capacity to manage needed infrastructure and community 
projects. Technical assistance plays a vital role in ensuring that the 
programs serve the communities they were designed to benefit in a cost-
effective manner.
    As a nation we are lucky to be a country of entrepreneurs. Rural 
America is no exception where people start businesses every day to meet 
basic needs in their communities as well turning great ideas into 
products. They start day care centers to take care of kids and allow 
parents to get to their jobs, often in the next micropolitan or 
metropolitan area. Communities Unlimited is fortunate to work with a 
young man in the persistently poor community of Pine Bluff, Arkansas 
who acquired the technology skills to launch an Internet Service 
Provider (ISP) with a vision of bringing reliable broadband services to 
all of the communities in the Arkansas Delta.
    Example: Communities Unlimited provided both intensive technical 
assistance and a small working capital loan to a nurse practitioner who 
started an urgent care facility in Clarksdale, Mississippi in the heart 
of persistent poverty in the Mississippi Delta. The Black, female nurse 
practitioner has a deep understanding for the health care needs of 
children and families in the Delta. In addition to creating eight 
needed job, she has become a critical lifeline for hundreds of families 
since the beginning of COVID19. Today, she is working with Communities 
Unlimited on a ``prescription food program'' that provides food 
insecure children with a ``prescription'' to a box of fresh produce for 
the whole family that they can pick up from a local farmer who brings 
his farm stand right to her parking lot. These are the innovative 
business owners who improve the quality of life for others while 
creating needed jobs.
    Additionally, rural disadvantaged entrepreneurs and small 
businesses supported by affordable, local technical/managerial 
assistance are more likely to launch businesses. Technical assistance 
is the best loan risk mitigation tool and characteristics of sound 
Technical Assistance include:

   One-on-one assistance, not classroom training.

   Problem solving, not generic tools.

   Longer-term engagement, not single counseling session.

   Accountability partner, not just a list of recommendations.

    Last, I want to emphasize the opportunity to target resources in 
ways that will optimize the best long-term outcomes, especially for 
distressed rural places, including technical assistance, capacity 
building, and evaluation. Many disadvantaged rural entrepreneurs do not 
have strong financial management skills. You can't learn financial 
analysis and cash-flow management until you are in business school. 
This is geographically and financially out of reach for many motivated 
entrepreneurs. Strong financial management mitigates the risk for 
capital investments and technical assistance is key. We urge the 
Committee to focus investments that will support local-ownership and 
control. Only with these types of strategic investments in RD programs 
like the Rural Business Development Grant and the Rural Microenterprise 
Assistance Program will people in rural communities be able to access 
and create locally-led strategies that will keep wealth in the hands of 
rural people.
Key Infrastructure Investment Priorities for Rural Communities:
    We urge the Committee to prioritize investments for rural 
underserved communities in infrastructure related legislation through 
USDA-Rural Development. We know that tough decisions will need to be 
made throughout this process, and RCAP urges you to ensure that rural 
and tribal areas are prioritized through robust investment in USDA 
Rural Development programs.
    Specifically, we urge you to consider increasing infrastructure 
funding for the following programs, all of which serve as crucially 
important support for rural communities and help leverage critical 
Federal infrastructure dollars for rural communities:

   Invest in Rural Water and Waste Disposal Infrastructure 
        through USDA-Rural Development: Include $10 billion for water 
        and sewer systems as outlined in the American Jobs Plan (AJP). 
        Provide at least $3 billion in loans and $2 billion in grants 
        to USDA's Water Environment Programs per year.

   Support Existing Water Systems in Financial Difficulty to 
        Due COVID-19: Provide grant assistance, debt forgiveness, and 
        loan restructuring included in the American Jobs Plan.

   Support Technical Assistance Funding to Leverage 
        Infrastructure Dollars in Rural America: Increase funding for 
        Rural Water Technical Assistance Resources available to RCAP 
        and other organizations at USDA-Rural Development

     USDA: $50 million for the overall Rural Utility 
            Service Technical Assistance and Training Grant account, 
            and specifically $25 million for the set aside within this 
            account reserved for multi-state regional technical 
            assistance serving populations of 3300 or below.

   Invest in Community Facility Grants at USDA-Rural 
        Development, include $30 million for Community Facilities 
        Technical Assistance and Training. With the additional funding, 
        waive funding caps for national applications in scope.

   Enhance the Rural Community Development Initiative program 
        (RCDI), waive funding caps for applications national in scope 
        and reduce matching requirements for projects in persistent 
        poverty counties where private sector dollars are unavailable.

   Support USDA's Rural Business Development Grants (RBDG), 
        waive funding caps for national applications in scope.
Conclusion
    In closing, CU and RCAP work with rural communities and partners 
across the country to advocate for and generate economic opportunities 
for rural areas. The services provided through these programs deliver 
critical assistance in the small and disadvantaged communities where it 
is most needed. Solving the challenges facing rural communities 
requires a multi-pronged approach that includes adequate funding, along 
with steps to ensure that funding is available to all communities that 
truly need it, and a comprehensive approach to technical assistance to 
maximize the efficiency and effectiveness of RD's programs. It also 
includes an emphasis on community economic development and cost-
effective investments in infrastructure that provide maximum return on 
Federal investments.
    The services provided through USDA-Rural Development programs will 
deliver critical assistance in the small and disadvantaged communities 
where it is most needed, especially as our country continues to respond 
to the COVID-19 Pandemic.
    I thank the Committee for inviting me to testify today, and I look 
forward to working with you and happy to answer any questions you may 
have.

    The Chairman. Thank you, Ms. Polonius for your testimony.
    Now we are going to try to see if we can connect with Dr. 
Koneru. Please begin when you are ready.

       STATEMENT OF PHANESH KONERU, Ph.D., J.D., LL.M., 
    FOUNDER, PRESIDENT, AND CHIEF EXECUTIVE OFFICER, EXELA 
     HOLDINGS, INC., EXELA PHARMA SCIENCES, LLC, LENOIR, NC

    Dr. Koneru. Good morning, Chairman Delgado and Ranking 
Member Fischbach. It my pleasure and privilege to be here 
[inaudible] of Exela. I have founded Exela back in 2005 and now 
we are almost 16 years in the company. And since 2008, we have 
been in Lenoir, North Carolina, and we have been manufacturing 
pharmaceuticals since 2010.
    Exela is a specialty pharmaceutical company that 
manufacturers injectable pharmaceuticals. Pharmaceutical 
manufacturing, injectables are probably one of the most complex 
pharmaceutical products to manufacture: a lot of high-
technology and a lot of contamination controls, so it requires 
high technology investments, and also equipment and training of 
the people.
    We have today about close to 500,000\2\ of operating space 
at Exela, and we started with a small 20,000\2\ building back 
in 2008 in Lenoir. Since then, we have been building, and a lot 
of that was made possible by the investments that we made 
through private sources, personal funds, as well as a 
significant portion coming from USDA loans. USDA B&I loans have 
helped us tremendously at the right time to actually take the 
next step and go further. Today, we have almost 400 employees 
and with high-paying jobs. Our average salary today is roughly 
about $59,000, which is pretty high for any community, except 
on the coastal sides. But, we are willing to actually increase 
our salaries more to make sure that we get the right talent, 
and also incentivize people to join our company.
    Today, we have made a lot of investments in the company, 
and we are invested in close to $400 million so far in the 
company. We have invested and reinvested every dollar we made 
in the company, and we borrowed a significant portion of it. 
And with all that investment, we built a significant 
infrastructure in the manufacturing. We are recognizing the 
manufacturing infrastructure as crucial for the national 
strategic purposes, as well as making sure that our patients 
are taken care of with their needed medicines.
    Because of all of that investment today, we are in a 
position to actually help the COVID vaccine fighting. We are 
about 2 weeks away from manufacturing commercial production of 
COVID vaccine from our place, which is a significant 
achievement. We cannot name the partner because we don't have 
the authority to name the partner publicly, but we are very 
close to actually commercializing the product. All of that has 
been made possible by the investments and the commitments we 
have made to the infrastructure building.
    We have--even the story is successful, but we have a lot of 
uphill battles that we had to fight. There are two major 
battles we are still fighting today. One of them is the 
funding. We couldn't get investments in significant amounts 
from any banks. We can't even get a bank loan today in a 
traditional sense because our company is growing--fast growing, 
and we don't have the traditional, steady revenues that banks 
would like to see. So, we have relied on USDA support, and also 
private lending. And of course, private lending costs a lot of 
money, and investments and millions of dollars we pay in 
interest. And that can be helped by raising the limits at the 
USDA loans. As a minimum today it is $25 million. We would like 
to see that minimum to be raised to at least $50 million, if 
not $100 million. That would help really fast-growing, small 
companies like ours that require a lot of infrastructure 
investments.
    The second struggle we have is with the manpower. Today, it 
is very hard to find people in the rural communities. As some 
of you know, we need to really incentive people to come to 
rural areas or remain in the rural areas. That can start with 
the college students where students go to college in other 
states and other towns, but they should be incentivized to come 
back and build families and work in the rural areas. That is 
the only way we can solve this problem, and a strong rural 
economy is significant for the country's growth.
    Thank you very much. My time is up. I appreciate it.
    [The prepared statement of Dr. Koneru follows:]

  Prepared Statement of Phanesh Koneru, Ph.D., J.D., LL.M., Founder, 
  President, and Chief Executive Officer, Exela Holdings, Inc., Exela 
                    Pharma Sciences, LLC, Lenoir, NC
    Respected Chairman Delgado and Ranking Member [Fischbach],

    My name is Phanesh Koneru. I am the founder, President & CEO of 
Exela Pharma Sciences. I was a pharmacist by training. I have a PhD in 
Biomedicinal Chemistry from the University of Southern California, a J. 
D., from the University of San Diego, and an LL.M. from Columbia 
University School of Law. It is my privilege and honor to present my 
testimony here today.
    Exela is a fast growing pharmaceutical manufacturer of sterile 
injectable products. We have now almost 400 employees. We began 
building our manufacturing in Lenoir, Caldwell County, North Carolina, 
in 2008. The unemployment rate was about 17%, many jobs were lost to 
outsourcing of the furniture industry to China. The average wage in the 
county was around $28,000 per year.
    Exela is a fine example of how a USDA B&I loan program can help a 
small company to build advanced pharmaceutical manufacturing facilities 
of national strategic importance in a rural community and create 
hundreds of high paying jobs. We started with the purchase of a small 
moth-balled building. We converted that into an FDA cGMP building in 2 
years initially with personal funds, local/state grants and private 
equity investment. Since then our growth was funded primarily by 
private lenders (about $150 million), and several USDA B&I guaranteed 
loans (about $90 million). Exela may be the largest borrower under the 
USDA B&I loan program.
    Over the years, Exela has become a strong contributor to the local 
economy. We are a pride to the City of Lenoir and the Caldwell County. 
Exela has won awards from our customers, the local city, county, and 
the state governments. I have listed them in my resume which is 
attached.* The county unemployment prior to COVID-19 was around 4.5%. 
Exela played a significant role in that turnaround. The average wage in 
the county today is around $41,000, that is almost a 50% increase in 
about 13 years. The average salary at Exela is about $59,000, which is 
very competitive in most markets. Based on the strength of our 
employment base, several nationally known companies moved into Lenoir 
in the past few years--Chick-fil-A, Hampton Inn, Starbucks, MDI 
Trucking, etc. Today, Lenoir and Caldwell County are thriving.
---------------------------------------------------------------------------
    * Editor's note: Dr. Koneru's resume is retained in Committee file.
---------------------------------------------------------------------------
    We realized long ago that large scale modern pharmaceutical 
manufacturing infrastructure within the United States is of national 
strategic importance. That was the impetus for us to begin building 
such infrastructure at Exela since 2008. We invested over $400 million 
since we started--every dollar borrowed and/or earned was invested and 
reinvested in the company. Because of the investments, Exela is now in 
a position to make an impact in the nations' fight against the COVID-
19. Exela is collaborating with a leading COVID-19 vaccine manufacturer 
and is just a few weeks away from producing first commercial batches of 
the vaccine. Exela expects to manufacture anywhere between 100 to 300 
million doses in the next 12 months for both the U.S. and international 
markets. I strongly believe that at least some of the vaccine Exela 
manufactures will be used to fulfil President Biden's pledge, announced 
on June 10, 2021, to donate several hundred millions of doses to lower 
income countries. This remarkable feat has been achieved with 
practically no government grants or loans designated to combat the 
pandemic.
    While Exela thus far has been successful, its journey has been 
anything but easy. There was practically no pharmaceutical cGMP 
manufacturing talent available in Lenoir. Even today, we are struggling 
to find talent. We are willing to hire with no experience and train 
them. We factor in the first 6 months of a new employee as all 
training, with no meaningful returns to Exela. Still, it is a struggle. 
Often we are using headhunters and paying above-the-norm salaries and 
incentives to relocate talent. This is a significant issue for Exela's 
growth.
    One recommendation I would like to make is that the USDA 
aggressively create a college and high-school scholarship program to 
encourage students to remain in or come-back to the rural area upon 
graduation. Such scholarship program may entail cancellation of a 
certain portion (10-25%) of their student loans if the students work in 
a rural area for 5 years after graduation. These savings will allow 
students to start their careers and families with lower debt burden and 
hopefully enable them to settle down and raise families, thereby 
raising the overall standard of living for the entire community.
    Pharmaceutical industry offers some of the highest value long-term 
manufacturing jobs. As the recent pandemic events made it evident, such 
manufacturing is of national strategic importance. To attract such jobs 
to the rural communities, aggressive investment by the USDA is 
essential. Pharmaceutical manufacturing is a capital-intensive industry 
with investments typically range into tens if not hundreds of millions 
of dollars. The returns are not immediate--typical lag time from 
breaking ground to commercialization is about 4-5 years due to the long 
lead times for the equipment and FDA approval requirements. Private 
equity or private lending are the only realistic vehicles because 
traditional bank loans are impossible to get during the startup through 
growth phase. Even today, Exela cannot obtain traditional bank loans.
    The current limitation of USDA B&I guaranteed loans is $25 million. 
While this amount will benefit smaller companies, a fast-growing mid-
size company would need a larger loan. In our case, we have to invest 
in modern high-speed equipment, modern manufacturing clean rooms, and 
hire and train hundreds of employees. It could not be done with smaller 
loans. We had to get private loans with very high interest rate to 
support the growth. It would be extremely beneficial and most 
immediately impactful to raise the loan amount for the Fiscal Year 2022 
to at least $50 million and even to $100 million. At minimum, this 
would help save millions of dollars in interest alone that is otherwise 
paid to private lenders at rates as high as 15%.
    During the recent pandemic hundreds of billions of tax payers' 
money was provided to many companies. However, other than the PPP loan 
through the CARES Act, which Exela used in its entirety to cover 
payroll expenses only, Exela was unable to obtain any funding from 
governmental sources. It could not even refinance its current millions 
of dollars of private loans with high-interest (almost 15%) rate due to 
the rigid, unrealistic lending rules as existed in the Main Street 
Lending Programs. The specific needs of high growth-phase businesses in 
general and those in the rural areas in particular, were ignored by 
Congress. In addition, COVID-19 did impact Exela's and other rural 
businesses, in a disproportionate way. For example, due to the rapidly 
expanding lead times and increasing costs, Exela has to invest in 
holding more inventory (almost double the usual) and purchase the 
inventory at almost twice the cost in some cases. Yet, Exela was unable 
to receive any governmental relief. This was disappointing. Exela hopes 
sincerely that this Committee will take notice and persuade Congress to 
make changes.
    In summary, the USDA should invest more aggressively in rural 
communities to bring high-paying sustainable high-quality manufacturing 
jobs such as pharmaceutical manufacturing. Such investment should 
include incentives to high-school and/or college students to find 
employment in the rural communities for a certain time. Additionally, 
the USDA should invest with small companies to fuel their growth with 
less debt burden by way of low interest loans with less restrictive 
underwriting criteria. USDA should increase the B&I loan limit to at 
least $50 million or even to $100 million effective with the Fiscal 
Year 2022 plan. Exela's success story proves that a lot more success is 
achievable if these changes are made. We at Exela are willing to do 
more.
    Thank you for listening to my testimony.

    The Chairman. Thank you, Dr. Koneru, for your testimony. It 
is very much appreciated.
    Next up, Mr. Fox. Please begin when you are ready.

 STATEMENT OF HON. BOB FOX, DISTRICT 2 COMMISSIONER, BOARD OF 
COMMISSIONERS, RENVILLE COUNTY, MN; VICE CHAIR, AGRICULTURE AND 
                    RURAL AFFAIRS STEERING 
   COMMITTEE, NATIONAL ASSOCIATION OF COUNTIES, FRANKLIN, MN

    Mr. Fox. Chairman Delgado, Ranking Member Fischbach, 
Members of the Committee, my name is Bob Fox and I serve as 
Commissioner for Renville County, Minnesota, and Vice Chair of 
NACo's Ag and Rural Affairs Steering Committee. It is an honor 
to participate in today's hearing.
    For today's purposes, it is important to understand some of 
the historical challenges facing rural communities. Ongoing 
population losses are reducing the rural tax base, which has a 
direct effect on our ability to provide core services. 
Additionally, 43 states are imposing significant limitations on 
county's abilities to increase local taxes.
    The Great Recession also continues to plague rural 
counties. In 2016, nearly \1/2\ of our nation's 3,069 counties 
were still struggling to recover. As COVID-19 hit, over 800 
counties had yet to return to pre-recession general revenue 
levels, most of which had a population of less than 50,000.
    General revenues are the backbone of our county funding 
because they are not restricted to a particular activity. Most 
state and Federal funding is becoming insufficient and too 
restricted to help cover mandated county services. Roughly 93 
percent of state and Federal funding used by counties are 
restricted to a specific function. Between 2007 and 2013, 59 
percent of the counties reported that these grants are covering 
a smaller percent of county expenses.
    Matching requirements place many Federal resources just out 
of reach. Counties are increasingly forced to fund mandated 
services with general revenue dollars.
    For FY 2021, Renville County's budget centered around main 
street businesses and our agricultural community. We provided a 
budget increase of only three percent through a local levy. The 
flexibility of that local levy helped us meet the 
infrastructure needs not being met by state and Federal 
programs.
    While we applaud the American Rescue Plan Act for including 
$61.5 billion in direct Federal aid to the county governments, 
it is important to remember the U.S. Treasury currently 
prevents local governments from using these lost revenue funds 
as a non-Federal match. As rural counties look for ways to 
leverage our dollars, many of the USDA grant and loan programs 
mentioned today will remain out of reach.
    Counties are the front line in our nation's defense against 
COVID-19. Counties we own or operate more than 4,000 public 
hospitals, public health departments, or essential health and 
emergency centers. Renville County opened a new hospital in 
September of 2015 made possible by $19 million USDA Rural 
Development Community Facilities direct loan, and a $4.75 
million loan guarantee. By March 2020, Renville County Public 
Health opened our emergency operations center in partnership 
with emergency management and the county hospital. Major 
priorities for our county include community mental health, 
continued daycare support, and a reliable nutritional support 
for residents. That same year, our hospital partnered with a 
larger health system, which helped us provide drive-through 
COVID-19 testing.
    Counties are also fighting a war against crumbling 
infrastructure. Each year, counties invest more than $100 
billion in our nation's roads, bridges, transit, and water 
systems.
    Prevention, mitigation, and vaccination expenses have far 
exceeded the revenue for the vast majority of counties. Making 
matters worse, long-term unemployment levels topped four 
million in January 2021, thus increasing demand for local 
public services. Local governments are now forced to respond to 
these needs with one million fewer workers than a year before.
    Counties continue to deliver critical investments despite 
inadequate and restrictive Federal resources. We desperately 
depend on a number of programs at the USDA Rural Development. 
Roughly 98 percent of rural Americans receive their drinking 
water from a small system and depend on USDA Rural Water and 
Wastewater Program. Meanwhile, USDA Electric Loan Program 
helped provide safe, reliable, electric infrastructure to more 
than 90 percent of the nation's counties suffering from 
persistent poverty or upped migration. Broadband also proved to 
be a critical utility through the pandemic. Roughly, 77 percent 
of small counties are experiencing the internet below the FCC's 
minimum standards, according to a 2020 NACo study. In 2011, 
Renville County, as part of a regional effort, began working 
with providers that helped serve portions of McLeod, Nicollet, 
Renville, and Sibley Counties. We also secured a grant only 
covering about 40 percent of the total project cost to extend 
middle mile fiber through Renville County. Using CARES funds, 
we were then able to extend service to our weakest areas and 
help residents forced to learn and work from home.
    At least 18 states imposed strict restrictions preventing 
local governments from making similar investments and 
partnerships in local broadband infrastructure. Many of these 
restrictions prevent local government from providing affordable 
alternatives, or creating a public-private partnership. USDA's 
ReConnect Program is critical for rural counties seeking to 
expand and improve connectivity. The steep 25 percent non-
Federal match makes the resource difficult for many rural 
counties.
    Slow economic recovery and the Treasury's rulings on 
matching requirements will encumber our ability to bridge the 
rural digital divide.
    In closing, local government needs a strong Federal partner 
that can provide reliable, direct, and flexible funding. If 
local governments cannot meet the steep fiscal or operational 
requirements to leverage USDA programs, our collective efforts 
to address rural America's challenges are done in vain.
    Thank you for the opportunity today, and I look forward to 
your questions.
    [The prepared statement of Mr. Fox follows:]

 Prepared Statement of Hon. Bob Fox, District 2 Commissioner, Board of 
 Commissioners, Renville County, MN; Vice Chair, Agriculture and Rural 
Affairs Steering Committee, National Association of Counties, Franklin, 
                                   MN
Welcome and Introduction
    Chairman Delgado, Ranking Member Fischbach, and Members of the 
Committee, my name is Bob Fox and I serve as Commissioner for Renville 
County, Minnesota and Vice Chair of the Agriculture and Rural Affairs 
Steering Committee for the National Association of Counties (NACo). It 
is an honor to participate in today's hearing on behalf of Renville 
County, NACo and our local intergovernmental partners across rural 
America.
    Renville County is 982\2\ miles of some of the finest agricultural 
land that sets above the Minnesota River Valley. We hope to be one of 
the top producing counties in Minnesota of sugar beets and corn, 
depending on how Mother Nature treats us with warm sunshine and 
adequate moisture. Our eastern border sets 80 miles from the Twin 
Cities metro, while our western border is less than an hour drive to 
South Dakota.
    While Renville County's story is unique, the overall challenges we 
face--which I will outline in my remarks today--are shared by rural 
counties everywhere.
State of Rural America
    As our nation transitions to a post-COVID economy, it is important 
to understand the historical challenges facing rural counties preceding 
the COVID-19 pandemic.
    Many rural counties continue to struggle with population retention. 
Ongoing population losses reduce our tax base, which has a direct 
effect on our ability to provide core services and fund infrastructure 
projects. Local property taxes are also the major source of revenue for 
counties so adverse trends in property values are significantly 
impacting county revenues and expenditures. And even when local 
governments need to raise revenue, 43 states impose some type of 
limitation on counties' ability to increase local taxes.
    As COVID-19 hit, many rural counties continued to struggle from the 
2008 Recession. In 2016, NACo reported on the Recession recovery of 
county governments and found nearly half of our nation's 3,069 counties 
had yet to fully recover from the Great Recession. By 2020, over 800 
counties entered the COVID-19 pandemic without returning to Pre-
Recession general revenue levels--most of which (79 percent) had a 
population of less than 50,000.
    General revenues are the backbone of county funding because they 
are not restricted to a particular activity and provide flexibility to 
county boards in allocating funds to needed services. Unfortunately, 
state and Federal funding is increasingly insufficient to help cover 
mandated county services. Most often, about 93 percent of the state and 
Federal funding used by a county is restricted to a specific function 
(capital and operational grants and contributions, called ``dedicated 
grants''). Fifty-nine (59) percent of counties recorded dedicated 
grants covering a smaller percent of county expenses between 2007 and 
2013.\1\
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    \1\ https://www.naco.org/articles/counties-still-challenged-
recession%E2%80%99s-recovery.
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    Matching requirements also place many Federal grant and loan 
programs just out of reach for rural counties. Despite significant and 
historic appropriations to critical programs, matching requirements 
make leveraging Federal resources impossible for many rural counties. 
Subsequently, counties are increasingly forced to fund mandated 
services with general revenues and charges.
    In Renville County, our 2021 budget concerns centered around main 
street businesses and the agricultural community. We provided our 
residents with a budget increase of only 2% through a local levy. The 
flexibility of local levy dollars helped Renville County meet the 
infrastructure needs that were not being met by state and Federal 
programs.
    We applaud the American Rescue Plan (ARP) Act for including $61.5 
billion in direct Federal aid to county governments in recognition of 
revenue losses due to the pandemic. However, throughout my remarks 
today, it is important to remember the U.S. Treasury is preventing 
local governments from using our ARP lost-revenue funds as a non-
Federal match. As rural counties look for ways to leverage this 
critical assistance--many of the USDA grant and loan programs mentioned 
today will remain out of reach.
County Role and the COVID-19 Pandemic
    Counties are responsible for delivering a broad array of programs 
and services that provide a foundation for strong and stable economies. 
To achieve this outcome, counties make significant investments in our 
nation's essential infrastructure; maintain our nation's justice and 
public safety system; and support public health through funding for 
hospitals and mental health programs.
    Collectively, counties own or operate over 1,000 public hospitals, 
1,900 local public health departments, more than 800 long-term care 
facilities, and 750 behavioral health departments. Additionally, we are 
responsible for other essential functions including emergency 
operations centers, human services, jail management, 911 services, 
veterans' services, coroners, and medical examiners.
    Renville County opened a new hospital in September 2015. The RC 
Hospital and Clinic was made possible by a $19 million USDA Rural 
Development Community Facilities direct loan, and a $4.75 million 
Community Facilities loan guaranteed through a partnership with AgStar 
Financial Services.
    By mid-March of 2020, Renville County had opened our emergency 
operation center. County Public Health took over as the lead public 
health responder in partnership with Emergency Management. The 
Emergency Operation Center operates on a ``worst-case-scenario'' plan 
and can accommodate 30 in-patients by diverting other spaces for 
patient care. Public Health's major priorities for the hospital 
included: community mental health, continue daycare information and 
support, as well as assuring safe and adequate food supply for 
residents of the county.
    In May 2020, our hospital moved forward with a new partnership with 
a larger health system which helped us offer drive-through testing for 
COVID-19 at our hospital and two satellite clinics.
    While serving as our nation's front-line defense against the COVID-
19 pandemic, counties are also fighting a war against crumbling 
infrastructure. Collectively, counties invest more than $100 billion 
each year in our nation's roads, bridges, transit, water systems and 
other public facilities to help facilitate commuters and shipping goods 
around the globe.
    Unfortunately, the costs incurred by local governments in response 
to the COVID-19 pandemic vastly outpaced revenues. In a recent survey 
on the fiscal health of counties, NACo found that 74 percent of county 
respondents faced significant challenges in providing core services to 
residents due to increased expenses from combating the public health 
crisis. Prevention, mitigation, and vaccination expenses far exceeded 
the declining revenues for the vast majority of counties.
    Additionally, long-term unemployment levels topped four million in 
January 2021--representing roughly 40 percent of the ten million 
unemployed Americans. Long-term unemployed individuals have 
exponentially increased the demand for local public services throughout 
the pandemic while local governments seek to respond to these needs 
with one million fewer workers than the year before.\2\
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    \2\ https://www.naco.org/sites/default/files/documents/
COVID%20Financial%20and%20Eco
nomic%20Impacts.pdf.
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County COVID-19 Recovery
    As I mentioned earlier, many counties that were experiencing 
economic hardship pre-coronavirus, appear to have experienced 
exacerbated economic impacts during the coronavirus recession. 
Specifically, rural America's recovery from the 2008 recession was 
woefully incomplete as COVID-19 hit in 2020 with unemployment in non-
metro counties far below 2007 levels.
    In August 2020, eighty-one (81) percent of counties reported 
unemployment levels above a healthy level of unemployment (defined by 
the Federal Reserve to be about 4.5 percent). This amount includes 19 
percent of counties reporting local area unemployment rates far above 
the national average of 8.4 percent.\3\
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    \3\ https://www.naco.org/resources/featured/local-area-
unemployment-statistics-economic-analysis-covid-19.
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    In July 2020, NACo estimated counties would experience a $202 
billion budget impact due to COVID-19 through FY 2021, derived by 
increased expenditures and losses within tax and non-tax revenue 
streams.\4\
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    \4\ https://www.naco.org/articles/county-budgets-see-202-billion-
covid-19-impact.
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    While the financial impact has varied by county, most counties have 
incurred unforeseen expenditures brought on by the pandemic. As such, 
stabilization of county budgets will be key in county economic 
recovery.
Infrastructure/Resource Needs in Post-COVID Economy
    As owners of 45 percent of public roads and almost 40 percent of 
the National Bridge Inventory who also directly support 78 percent of 
the nation's public transit systems and 34 percent of public airports, 
counties are stepping up at the local levels to deliver critical 
projects for our residents despite a lack of Federal investment and 
many state laws that prevent us from raising local taxes to support 
these efforts.
    More than 98 percent of rural Americans receive their drinking 
water from small systems, the cost of which to operate and maintain is 
significantly higher than urban areas. The U.S. Department of 
Agriculture (USDA)--Rural Development's Water and Wastewater Program is 
critical to helping small communities improve existing infrastructure, 
protect their drinking water resources, and comply with Federal 
drinking water regulations. Counties urge you to increase funding for 
this program to assure that the highest quality drinking water and 
sanitation services are available to rural America during the pandemic.
    USDA-Rural Development's Electric Loan Program is a $46 billion 
portfolio that helps nearly 700 borrowers in 46 states finance safe, 
modern, and efficient infrastructure. USDA-Rural Development's financed 
electrical systems provide service to more than 90 percent of the 
nation's counties that are identified as suffering from persistent 
poverty, out-migration, or other economic hardships. The program also 
provides financial assistance through High Energy Cost Grants to rural 
communities with extremely high energy costs to acquire, construct, 
extend, upgrade and otherwise improve energy generation, transmission 
or distribution facilities. Counties urge you to fully fund these 
programs that are critical to maintaining services to millions of rural 
Americans during the crisis.\5\
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    \5\ [https://www.naco.org/sites/default/files/documents/
NACo%20leadership%20letter_
4.6.pdf].
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    Last, the COVID-19 pandemic underscored the true utility of 
broadband service. As the pandemic increased demands in teleworking, 
virtual learning and telemedicine, counties turned to public hotspots 
to meet the needs of residents. Although a concern for many years, when 
the COVID-19 pandemic sent everyone home to work and learn online, a 
rapidly growing number of people learned what many already knew--the 
nation's information technology infrastructure was insufficient. In 
both rural and urban counties, residents do not have the level of 
access needed to run businesses, take classes, operate machinery, and 
practice medicine.
    While the digital divide exists in communities of all sizes, rural 
counties were disproportionally impacted by the lack of connectivity 
throughout the pandemic. In a 2020 study entitled ``Understanding the 
True State of Connectivity,'' NACo reported that roughly 77 percent of 
small counties (0-50k in population) were--on average--experiencing the 
internet below the FCC's definition of a minimum standard for broadband 
service (25Mbps/3Mbps).\6\
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    \6\ https://www.naco.org/resources/page/understanding-true-state-
connectivity-america.
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    In 2011, Renville County started conversations with neighboring 
Sibley County on how to bring internet to residents with speeds capable 
of meeting the demands of the 21st century. We worked with two local 
phone companies to improve their services and secured a new provider to 
work on a joint project that touched portions of McLeod, Nicollet, 
Renville, and Sibley Counties.
    Additionally, we secured a state grant--covering roughly 40% of 
total project costs--to extend middle mile fiber through Renville 
County. With the middle mile secured, we used COVID-19 funds to partner 
with two providers to extend service to our weakest areas. The expanded 
footprint provided service to children and parents forced to learn and 
work from home due to the COVID-19 pandemic.
    Understandably, the industry--beholden to shareholders and profit--
must direct their attention to markets that can maximize their return 
on investment. Fortunately, our public-private partnership was able to 
help attract the industry to markets that would have otherwise remained 
underserved or overlooked.
    Not all counties, however, have the ability to leverage 
partnerships like ours. Currently, over 18 states impose strict 
restrictions preventing local governments from making much-needed 
investments in local broadband infrastructure and services. By 
restricting local governments from making the initial investments in 
broadband networks, we are effectively preventing local governments 
from providing an affordable alternative to service or partnering with 
ISPs that could lease networks in otherwise cost-prohibitive 
communities.
    Programs like USDA's ReConnect Program are critical for rural 
counties seeking to expand and improve connectivity. In FY 2020, USDA 
awarded 87 individual grant awards totaling over $673 million under the 
ReConnect Program. However, with an average award of $6.04 million for 
fully funded projects, the 25 percent non-Federal match would require 
roughly $1.5 million before a rural county could leverage ReConnect 
resources. You can see how slower economic recovery coupled with 
Treasury's ruling on non-Federal matching eligibility will further 
prevent rural counties from addressing the digital divide.
Closing
    In closing, local governments need a strong Federal partner that 
recognizes our unique roles and responsibilities. This requires 
reliable, direct, and flexible funding and financing that can be 
adapted to meet the needs and challenges facing our rural counties.
    The host of USDA Rural Development grant and loan programs are 
critical to rural counties across the country and demand significant 
attention and appropriation. However, if local governments cannot meet 
the steep fiscal or operational requirements to leverage these 
programs--our collective efforts to address the challenges facing rural 
America are done in vain.
    Thank you for the opportunity today and I look forward to your 
questions.

    The Chairman. Thank you, Mr. Fox. I appreciate your 
testimony. Okay. Are we back? We good? All right.
    Next up, our friend and constituent, Mr. Erling, please 
begin when you are ready.

STATEMENT OF TODD M. ERLING, EXECUTIVE DIRECTOR, HUDSON VALLEY 
                   AgriBusiness DEVELOPMENT 
          CORPORATION; PRESIDENT AND CHIEF EXECUTIVE 
      OFFICER, FARM AND FOOD GROWTH FUND INC., HUDSON, NY

    Mr. Erling. Thank you, Congressman. Mr. Chairman, Ranking 
Member Fischbach, and Members of the Subcommittee, thank you 
for holding this hearing on examining opportunities for growth 
and investment in rural America. I also want to thank the staff 
that supports this Committee and the staff that supports each 
and every one of you as Members. They are invaluable teammates 
with us out here in the rural economy and rural communities, 
and I don't want to go on without the opportunity to recognize 
the role they have played supporting this organization and the 
communities that we are responsible for.
    But most importantly, I really want to thank you for the 
opportunity to testify. As the Chairman mentioned, I am the 
Executive Director of a regional nonprofit that focuses on 
agriculture, local food systems, ag-related and ag-dependent 
businesses as economic development, and with community 
development tools and programs.
    Sitting here today listening to my fellow witnesses, it is 
interesting to see the legacy and the hierarchy. We have 
counties represented, we have regions represented, we have 
individual entrepreneurs represented. And when I began in this 
position, I was actually a deputy director of an individual 
county economic development office. I was fortunate enough to 
have the background in community and affordable housing 
development prior to moving into that position, and since then, 
have carried those perspectives and that holistic systems 
approach into looking at agriculture and rural development, and 
identifying the needs and creating solutions with partners not 
only from the county level, county economic development 
offices, industrial development agencies, but also state and 
Federal. And you hear the alphabet soups that we all work in. I 
really appreciate the CDFI opportunity. Another opportunity I 
want to talk about is not only SBA, but EDA, Economic 
Development Administration, but we really need all the arrows 
in the quiver, all the tools in the toolbox to address not only 
our rural but also our urban challenges. Because many of them 
are overlapping, and many of them have similar common 
denominators. However, some of them don't have tools to address 
the challenges.
    When we look at rural economic development, when we look at 
rural community development, we are really talking about rural 
urban relationships, and the flow between capital and the flow 
between people, goods, and services from our urban areas into 
our rural areas, and vice versa. That actually has been 
recognized through several of the witnesses' testimony we have 
had so far.
    At Hudson Valley AgriBusiness, I have been lucky enough to 
be part of a founding group of pure organizations that 
represent upstate New York and New England, and the 
Agricultural Viability Alliance. And some of the common 
denominators and challenges that this Subcommittee as well as 
USDA Rural Development can help us with are one-on-one business 
technical assistance. Helping our rural entrepreneurs have the 
same tools that urban and suburban entrepreneurs have through 
small business development centers, through some of the other 
best practices that we have seen with strategic planning, 
access to accounting, access to human resources, and the 
ability then to take and implement not only the expertise, but 
marrying that to capital sources and capital programs like 
CDFIs, like EDA rural development programs, like USDA B&I 
programs.
    And so, I really just want to highlight the fact that the 
CARES Act, the Rebuild America efforts through the ARPA, our 
annual budgets as well as our farm bills, have a hole. We 
really do not have a square peg for a square hole or a round 
peg for a round hole for BTA, business technical assistance. 
And many of us make it work through LFPP and other programs, 
but if we could establish some standalone business technical 
assistance programs that not only support best practices and 
developing a Rolodex of service providers and agencies, but 
also have year over year funding opportunities that we can 
count on, similar to block grant funding for urban areas.
    And with that, I just want to wrap up by talking about the 
Rebuild Rural America Act (H.R. 2361) that has been introduced. 
This would be a real opportunity for our rural communities to 
have similar tools and strategies of year over year funding to 
implement strategy that was created by the rural communities, 
knowing that there is multi-year opportunity and flexibility 
not only for the hard infrastructure, but the soft 
infrastructure. Business technical assistance at the core is 
about humans, their expertise, and the relationships that 
happen year over year to implement the strategies and to tackle 
the challenges that happen in an entrepreneur or business or 
community's lifespan.
    So, with that, I just want to say I am open for any and all 
questioning. I really can't wait to connect with some of our 
other witnesses offline, and thank you again for this 
opportunity.
    [The prepared statement of Mr. Erling follows:]

Prepared Statement of Todd M. Erling, Executive Director, Hudson Valley 
  AgriBusiness Development Corporation; President and Chief Executive 
          Officer, Farm and Food Growth Fund Inc., Hudson, NY
    Mr. Chairman, Ranking Member Fischbach, and Members of the 
Subcommittee, thank you for holding this hearing on examining 
opportunities for growth and investment in rural America and for 
allowing me to testify. My name is Todd Erling and I serve as Executive 
Director of Hudson Valley AgriBusiness Development Corporation located 
in Hudson, New York.
    Hudson Valley AgriBusiness Development Corporation is dedicated to 
promoting balanced, market-based solutions that lead to enhanced 
agricultural entrepreneurship, rural economic growth, and community 
enhancement throughout our Hudson Valley communities. We are the only 
economic development agency in the Hudson Valley with a specific focus 
on the viability of the agricultural economy in the region and assist 
eight rural counties in their efforts to provide economic and community 
development opportunities for their residents. Our charge is to enhance 
the agricultural sector in the region by assisting both new and 
existing agribusinesses and supporting policies and regulations that 
recognize and support New York State's agricultural and rural economy.
    Our services are carefully designed to support the Hudson Valley as 
an attractive, viable region for agriculture and to foster growth and 
development of the agricultural sector through a creative program of 
business technical assistance (BTA) that may include strategic 
planning, business planning, land access, marketing, promotion and the 
provision and coordination of financial and other resources. Since our 
inception, we have assisted over 260 businesses with a wide range of 
individualized services such as access to capital, business 
development, financial planning, and market readiness preparation, and 
have expanded our network of farms, restaurants, and producers to over 
600 businesses and counting.
    Hudson Valley AgriBusiness Development Corporation is also a 
founding member of the Agricultural Viability Alliance. The Alliance is 
a multi-state regional coalition focused on increasing the number and 
economic viability of farm and food businesses in rural communities 
throughout New England and the Hudson Valley by bringing together 
providers and to address shared challenges, facilitate more uniform 
high-quality coverage, and more effectively share and expand limited 
resources.
    Working together with the Alliance and our partners at American 
Farmland Trust, Hudson Valley AgriBusiness Development Corporation has 
been at the center of an effort to mobilize Federal resources in 
support of rural communities, agriculture and food businesses' recovery 
efforts following the unprecedented economic challenges faced during 
the COVID-19 pandemic. Our rural communities are economically 
vulnerable on our best days, facing challenges ranging from underfunded 
schools, lack of access to capital, diminished business and financial 
planning capabilities and insufficient infrastructure--including access 
to high-speed broadband. The strain of the economy ravaged by a global 
pandemic brought agriculture and food businesses, which often serve as 
the anchor for rural communities, to the brink of collapse. In New York 
alone, 43% of farms report to have lost substantial sales during the 
pandemic. More than \1/3\ of farms and agribusinesses (37%) are 
experiencing severe cash flow issues and almost \1/2\ (47%) say they 
have significantly reduced spending to local vendors and suppliers or 
will do so in the future. A combination of Federal investment in the 
areas noted above combined with a commitment to business development 
could not only assist rural areas in recovering economically from 
COVID-19, but lay the foundation for sustained economic growth into the 
future.
    COVID-19 has impacted farm and food businesses unevenly: some had 
their markets disappear overnight, like farms and food hubs that supply 
restaurants and schools, while others have seen demand skyrocket, such 
as those with on-site or online retail operations. Yet all farmers have 
had to adjust to fundamentally changed market conditions, and even 
businesses with increased demand have dealt with processing disruptions 
and labor shortages, requiring significant and sometimes complex 
workarounds that impact profitability. Although state and Federal 
support such as the Payment Protection Program (PPP) and the 
Coronavirus Food Assistance Program (CFAP) have been helpful, aid has 
still failed to reach everyone, leaving many entrepreneurs in a deep 
financial hole with no increased resilience to future disruptions.
    Business planning and financial literacy skills are more important 
than ever as farm and food entrepreneurs are forced to adapt. While 
producers excel at the production side of their business, many--
especially mid-sized and smaller operators--lack the training and 
knowledge to assess their finances, pivot their business strategy, or 
even access government funding. Indeed, many farmers were unable to 
receive Coronavirus relief because of inadequate recordkeeping. One-on-
one BTA is a proven way to develop these skills and improve long-term 
business viability. Across the country, agricultural service 
providers--including nonprofits, private consultants, state agencies, 
and extension eervices--are playing pivotal roles in providing the 
individualized assistance needed to build and sustain profitable 
enterprises.
    BTA typically consists of financial literacy coaching, including 
the skills and recordkeeping needed to successfully access capital; 
management skills, such as strategic planning and human resources; new 
enterprise development; marketing and sales; succession planning; and 
even IT issues like accessing high-speed internet. Some organizations 
provide a range of services, while others specialize in an area such as 
land transfer and succession--but all forms of BTA give the recipient 
the skills, knowledge, and confidence to help their business succeed 
long-term. All businesses are unique, and thus require support tailored 
to their specific needs, including their scale, stage of business, and 
markets. To be effective, this support needs to be sustained over time. 
The Alliance has a large and growing pool of data showing BTA's lasting 
impacts on business viability and the broader economy. Vermont's Farm & 
Forest Viability Program found that 2 years of business planning 
support can generate a 62% increase in net income, significant 
improvements in business skills, and marked annual growth in full-time 
employees. The Carrot Project's research shows similar results, with 2 
years of business advising increasing net income by more than 50% for 
start-up and early-stage farms, and increased confidence in financial 
management. At Hudson Valley AgriBusiness Development Corporation, we 
also demonstrated its positive impacts on rural communities, with 19 
graduates of our Farm and Food Funding Accelerator program creating 206 
jobs and making purchases from 125 other regional farms--all barely a 
year after completing the program. Sixteen of these businesses secured 
over $1.1M in capital leveraging a $200,000 Federal investment in BTA 
by more than five-fold.
    The value of BTA goes beyond a pandemic recovery strategy, offering 
an opportunity to directly support BIPOC (Black, Indigenous, and People 
of Color), women, and LGBTQI+ farm and food entrepreneurs--many of whom 
face systemic barriers to entry, discrimination, and other challenges, 
especially in rural areas. There is an acute need for culturally 
informed, highly-tailored BTA that is ideally provided by members of a 
specific disadvantaged community to help address this long history of 
exclusionary practices and agricultural land loss. There is also demand 
for this type of assistance from veterans, who represent a growing 
cohort of entry-level producers.
    BTA also offers a tool for increasing resilience at the individual 
and community levels. The pandemic exposed the fragility of a highly 
centralized national food system and its reliance on a shrinking number 
of processing and distribution facilities. Providing customized support 
to these businesses in the middle of the supply chain supports job and 
wealth creation across America, while making supply chains more 
resilient to disruption.
    Farm and food businesses also need increased resilience to 
withstand the impacts of climate change. A recent USDA survey showed 
that ``the majority of growers believe that they do not have the 
financial capacity, knowledge or technical skills to deal fully with 
the threat extreme weather presents to the viability of their farm,'' a 
gap which can be addressed through BTA. Conservation practices improve 
soil health, mitigating against climate change impacts like erosion 
from heavy rains and drought while also sequestering carbon and 
improving air and water quality. Farmers and ranchers with stronger 
business skills are more likely to have the capital and the long-term 
planning abilities needed to invest in on-farm conservation and will be 
better able to respond to changing markets, growing conditions, and 
more.
    BTA has also proven effective in addressing the transfer of 
agricultural land, both through succession planning for exiting farmers 
and landowners and through mentoring and land access support for 
beginners. With as much as 40% of American farmland likely to change 
hands in the next 20 years, BTA is a vital tool to keep land in farming 
and expand opportunities for a more diverse next generation.
    Beyond assistance to individual businesses, the Federal Government 
must commit to the mobilization and coordination of resources for rural 
America in a similar manner we see our national government deliver 
support for our urban communities. Indeed, while the specific 
challenges faced in rural and urban communities may differ, the effects 
they have on their populations are the same. Institutional poverty, 
failing infrastructure and a lack of sustainable growth cripple 
neighborhoods, urban and rural alike. Agencies like the Department of 
Housing and Urban Development administer billions of dollars in Federal 
assistance to help urban communities develop and overcome such 
challenges. COVID-19 has shown us that now is the time for a similar 
effort aimed at our rural communities.
    The Rebuild Rural America Act was introduced in both Houses of 
Congress earlier this year and provides a roadmap for sustained 
strategic investment in our rural communities that are modeled after 
successful programs aimed at urban areas. The legislation would create 
a dedicated stream of Federal funding for rural communities and would 
provide guaranteed block grants to create a predicable, locally-
controlled planning process, enabling multi-year programs to confront 
the institutional economic challenges faced in rural America. This 
combination of planning and training incentives and a predictable 
stream of Federal funds creates a path for sustainable development that 
will insulate rural communities from extreme impacts of economic 
fluctuation and chip away at the institutional challenges that limit 
their growth and opportunity.
    Our experience in BTA has shown us that developed ``soft 
infrastructure'' (business development, financial literacy, job 
training) effectively positions businesses to access additional state 
and Federal resources. Indeed, we've seen clients who receive BTA 
services go on to access USDA Value-Added Producer Grants, which could 
then be leveraged to secure NYS Empire State Development grants. The 
investment in soft infrastructure through BTA and other Rural 
Development programs is a start. But linking Rural Development efforts 
to other existing Federal efforts, such as U.S. Department of Treasury 
Community Development Financial Institution and U.S. Department of 
Commerce Economic Development Administration programs, will deliver a 
sustainable benefit and prove to be cost-efficient over time.
    And coordinated with state resources, the programs of the Rebuild 
Rural America Act and other Federal initiatives, can be leveraged to 
expand the impact on our rural communities. As we see in the operations 
of our existing Rural Development programs, effective collaboration 
with state rural and agriculture offices can be a winning combination. 
Whether its infrastructure funding, business development programs or 
broadband deployment models, when our state and Federal programs 
complement each other, we all get more bang for our buck.
    Thank you for this opportunity to share thoughts with you on 
strategies for advancing economic opportunity in our nation's rural 
communities. I look forward to continuing to work with this Committee 
and with our Federal leaders to ensure that we are providing the 
necessary resources to our rural communities and their agriculture and 
food related businesses so they can remain a viable part of our 
country's diverse fabric.

    The Chairman. Thank you, Mr. Erling, for your testimony.
    Next, we have Mr. Mattson. Please begin when you are ready.

 STATEMENT OF KENT D. MATTSON, J.D., CHIEF EXECUTIVE OFFICER, 
    LAKE REGION HEALTHCARE, FERGUS FALLS, MN; ON BEHALF OF 
                 MINNESOTA HOSPITAL ASSOCIATION

    Mr. Mattson. Good morning, Mr. Chairman, Ranking Member 
Fischbach, and Members of the Subcommittee. Thank you for 
providing the opportunity to speak on this important topic 
today.
    I am the CEO of Lake Region Healthcare. We are a not-for-
profit private healthcare organization located in west central 
Minnesota. I am testifying today on behalf of the Minnesota 
Hospital Association. I am not a clinical individual. I am an 
attorney by training, but I have been in the healthcare 
industry for over 20 years. I am, though, the son of a nurse 
who worked for decades at our organization as a nurse leader. I 
have a deep passion and commitment to rural Minnesota and rural 
healthcare. I am blessed to lead an organization that has been 
one of the many healthcare organizations that has been 
continuing on the frontline of this pandemic, taking the lead 
in responding to COVID-19 for over 17 months now. We partnered 
through that, though, with public agencies, both for our 
services and funding, and we are proud and pleased to continue 
in this effort for the foreseeable future.
    As I mentioned, we are a nonprofit healthcare organization. 
We are made up of three hospitals. One is a larger community-
based not-for-profit hospital located in Fergus Falls, 
Minnesota, and the second is a critical access hospital located 
in Elbow Lake, Minnesota. We have 11 clinic locations in 
communities across west central Minnesota, as well as an 
assisted living facility and three surgery centers, one in 
Fergus Falls, and another in Morris, Minnesota. Together, our 
enterprise has about 1,100 staff members and about 110 primary 
physicians and providers.
    I believe that hospitals are one of the basic physical and 
organizational facilities needed for communities to thrive, no 
matter the size, location, or demographics. Hospitals and 
health systems are the cornerstones of communities in our 
country, including in particular in rural Minnesota.
    This is especially true that we have seen over the last 17 
months. Not only do hospitals and health systems provide 
accessible and high-quality care in our remote areas, but 
through the pandemic, we have responded to a healthcare crisis 
that nobody in our generation has seen. In addition, we are 
major employers in our regions that provide reliable, good-
paying jobs, but we also serve low population areas that have a 
disproportionately aging population with increased medical 
needs and limited mobility. We have growth in our core county 
over the upcoming years, but that growth is primarily an aging 
population, which is going to put additional demands on our 
systems.
    Over the past year, rural hospitals answered the call to 
service during the COVID-19 pandemic. We have been on the 
frontlines not only taking care of patients that have come to 
our facilities, but also to try to control the spread of the 
virus through testing, contact tracing, and vaccine deployment. 
In addition, we have been a trusted resource for public health 
information for our neighbors and in our communities.
    We know that rural hospitals and health systems face 
enormous challenges. This includes declining reimbursements, 
increased costs, difficulties recruiting and retaining our 
healthcare workforce, and limited access to capital. In fact, 
the Minnesota Hospital Association reported that 31 of the 
Minnesota hospitals, which is about 41 percent of all Minnesota 
hospitals, had negative operating margins, and all but three of 
those were in rural areas.
    Over the years and today, rural hospitals continue to face 
the need to update and replace outdated facilities. These large 
expenses can be a huge burden, given our lack of access to 
capital. We have limited size. We have a limited population 
base, and we have razor-thin margins. So, oftentimes we are 
unable to access capital through traditional methods. So, this 
makes investments from Congress that create loan and grant 
opportunities for rural healthcare systems critically important 
to our future. At a critical access hospital in Elbow Lake, we 
were the thankful beneficiary of a USDA Community Facilities 
Direct Loan and Grant Program. In 2013, we finished 
construction of the Prairie Ridge Healthcare Facility in Elbow 
Lake. It is a 53,000\2\ state-of-the-art hospital, which 
replaced an aging 1960s facility that had long ago outlived its 
useful life. The upgrade was a complete game changer for us. It 
enhanced patient safety and accessibility, expanded services 
such as general surgery, orthopedics, and obstetrics, and 
upgraded technology to better serve our patients in those local 
communities.
    Before our facility was constructed, we had about 11 
providers. Since then, we have been able to recruit and retain 
37 new providers. In addition, we staff about 120 nursing 
operations, facilities, and administration staff, and Prairie 
Ridge provides outreach to other communities adjacent to us. We 
are not a large facility, but we do take care of a large 
population base, so we are thankful for the program.
    I am, again, happy to answer any additional questions that 
may come up from Members of the Subcommittee today.
    [The prepared statement of Mr. Mattson follows:]

 Prepared Statement of Kent D. Mattson, J.D., Chief Executive Officer, 
   Lake Region Healthcare, Fergus Falls, MN; on Behalf of Minnesota 
                          Hospital Association
    Chairman Delgado, Ranking Member Fischbach, and Members of the 
Committee, thank you for providing me the opportunity to speak on this 
important topic. My name is Kent Mattson and I am the CEO of Lake 
Region Healthcare, a rural healthcare organization located in West 
Central Minnesota. I will be testifying on behalf of the Minnesota 
Hospital Association.
    I have been the Lake Region Healthcare Enterprise CEO since May of 
2020 and have worked within the organization for over 20 years. Lake 
Region Healthcare is made up of two hospitals, a PPS community-based 
not-for-profit hospital in Fergus Falls and a critical access hospital 
located Elbow Lake. We have eleven clinic locations in communities 
across west central Minnesota as well as an assisted living facility 
and two surgery centers, one in Fergus Falls and another in Morris. Our 
team is made up of over approximately 1,100 staff members and roughly 
110 physicians and providers.
    I believe that hospitals are one of the basic physical and 
organizational facilities needed for communities to thrive. No matter 
the size, location, or demographics, hospitals and health systems are 
the cornerstone of communities across our country.
    This is especially true in rural areas. Hospitals and health 
systems provide accessible and high-quality care in remote areas, we 
are major employers that provide good paying jobs, and we serve low 
population areas that have a disproportionally aging population with 
increased medical needs and limited mobility.
    This past year, our rural hospitals answered the call to service 
during the COVID-19 pandemic. We have been on the front lines helping 
to control the spread of the virus through testing, contact tracing, 
and vaccine deployment and treating those patients who got COVID-19. We 
have also been a trusted source of public health information for our 
neighbors in our communities.
    We know that rural hospitals and health systems face enormous 
challenges. This includes declining reimbursements and increased costs, 
difficulties recruiting and retaining our health care workforce, and 
limited access to capital. In fact, the Minnesota Hospital Association 
reported that of the 31 Minnesota hospitals with negative operating 
margins, all but two were in rural areas.
    Rural hospitals also face the need to update or replace outdated 
facilities. These large expenses can be a huge burden given our lack of 
access to capital. With our limited size and razor thin margins, we are 
often unable to access the needed funding through traditional methods. 
This makes investments from Congress that create loan and grant 
opportunities for rural health care systems critically important. At 
our critical-access hospital in Elbow Lake, we were the thankful 
beneficiary of a USDA Community Facilities Direct Loan and Grant 
Program.
    In 2013, we finished construction on the Prairie Ridge Healthcare 
Facility. This 53,000\2\ state-of-the-art hospital replaced an aging 
and deficient facility that was built in the 1960's, and which had long 
ago outlived its useful life. This upgrade was a complete game changer 
that vastly enhanced patient safety and accessibility, expanded 
services such as general surgery, orthopedics, and obstetrics, and 
upgraded technology to better serve patients in our local communities.
    Prairie Ridge is now serviced by 49 onsite physicians, advanced 
practice providers, and certified registered nurse anesthetists. We 
have been able to recruit and retain 37 new providers since we 
announced the new facility. In addition to a strong provider team, 
Prairie Ridge also employs an additional 120 nursing, operations, 
facilities, and administrative staff. And Prairie Ridge provides 
outreach to other surrounding rural communities.
    Per year, Prairie Ridge averages roughly 190 ambulance runs, 660 
surgeries scopes, 25,000 lab tests, and 18,000 provider visits. And I 
am proud to say, the Prairie Ridge Clinic has administered over 3,000 
COVID Vaccinations.
    The positive impact this facility upgrade has had on the community 
cannot be overstated. In addition to the expanded health care services 
and good paying jobs, the Prairie Ridge facility has become a major 
source of pride and a community hub. For example, it hosts the Grant 
County Veterans Memorial, there is a community room open for public 
use, and there is even a dining cafe.
    None of this would have been possible without a $16 million loan 
from the USDA Community Facilities Direct Loan and Grant Program. That 
money gave us the financial viability to make this incredible project 
come to life. We truly are a success story that should be replicated in 
communities across the country.
    Beyond the physical infrastructure needs of hospitals, I also would 
encourage the Committee to consider strong investments in broadband 
that will ensure all people have access to telehealth services 
regardless of their [Zip C]ode. This pandemic has illustrated the 
importance of telehealth services particularly around mental health and 
specialty care.
    Without high-quality facilities and a strong infrastructure system, 
our rural hospitals will not be able to carry out our mission to serve 
our communities and patients. We stood up an responded to the call to 
action from the [COVID] crisis, and must be able to stand ready to 
respond to the next public health crisis, in addition to serving our 
populations, day in and out. In closing, I want to thank the Committee 
Members for your service to our country and for your support to rural 
hospitals and health systems. I look forward to answering your 
questions.
                               Appendix A
Prairie Ridge Healthcare Facility Information
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Location: Elbow Lake, MN
    Built: 2013 (Photo above)
    Size: 53,000,\2\
    Replaced aging and deficient 26,000\2\ facility (photo below). 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Improved Patient Safety, Privacy, and Accessibility
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Safety and accessibility took a high priority in the design of the 
new facility. Corridors, doorways, and bathrooms give easy wheelchair 
access throughout the building while advanced medical equipment is 
integrated with safety features. All ten hospital rooms are equipped 
with Medcare ceiling lifts; making it easier to move patients 
throughout the room. This same lift system is also implemented in the 
Rehabilitation Department providing valuable aid to physical therapists 
in enabling patients to restore their strength. The layout of the new 
facility also allows for different areas to be locked down after hours 
or in case of an emergency. The drive-through Emergency entrance 
enclosed within the building serves for convenience, safety, and 
privacy for ambulance and emergency drop off. Prairie Ridge's 
technology within the new hospital provides a safer environment for 
staff, patients, and visitors giving peace of mind to families.
Expanded Services
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    It is important to Prairie Ridge that we offer services close to 
home while also promoting jobs to families in our rural community. The 
new facility has aided in the ability to add several Family Practice 
providers and expanded services in the areas of General Surgery, 
Orthopedic Surgery, and Obstetrics.
Upgraded Technology
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    State-of-the-art technology results in quicker test results and 
more efficient use of our patients' time. Electronic exam tables and 
patient lift systems increase comfort and safety. New microscope 
technology, incubators, and automated analyzers produce consistent 
results while lab technicians are free to perform other tasks. 
Ultrasound, Dexascan, MRI, and mammogram technologies will continue to 
be utilized in addition to a new CT Scanner, Digital X-Ray, and a 
mobile X-Ray Unit to scan patients at bedside. This technology lets our 
patients have a shorter visit with faster, more detailed results. 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Wireless and Mobile Health access allows our providers to practice 
untethered; providing portable access to patient electronic medical 
records. The use of iPads, flatscreen monitors, and other devices 
change the way they collect, examine, and deliver healthcare 
information. Multiple areas within the hospital offer a full suite of 
audio, video and web conferencing designed to meet the needs of our 
ever-changing healthcare arena. The Nurse Call System not only connects 
patient to nurse but also networks emergency response communication 
throughout the building. Prairie Ridge recognizes that our patients are 
entitled to the benefits of cutting-edge technology; giving assurance 
of quality and confidence in our rural community.
Community Impact
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    In addition to bringing healthcare close to home for this rural 
community, the Prairie Ridge Campus has become a point of community 
pride. It hosts the Grant County Veterans Memorial, a community meeting 
room, and an open dining cafe.
Key Statistics
    Prairie Ridge is serviced by a total of 49 onsite Physicians, 
Advanced Practice Providers, and CRNAs. Since opening the new facility 
in 2013, Prairie Ridge has been able to recruit and retain 37 new 
providers to continue to provide and/or expand services for family 
practice/primary care, surgical services, and other specialty care 
services. In addition to a strong provider team, Prairie Ridge employs 
an additional 120+ nursing, operations, facilities, and administrative 
staff.
    In addition to serving the Elbow Lake community, Prairie Ridge 
provides outreach to Morris, Evansville, Hoffman, Herman, and other 
surrounding rural communities such as Wendell, Hancock, Ashby, and 
Barrett. Annually, Prairie Ridge Averages * 189 Ambulance Runs, 663 
Surgeries/Scopes, 25,547 Lab tests, and 18,423 Provider Visits. To 
date, the Prairie Ridge Clinic has administered 3,092 COVID 
Vaccinations.
---------------------------------------------------------------------------
    * Average over the last 4 years.

                          Service Lines Offered
 
 
 
                           Allergy/Immunology
 
Asthma and allergic condition        Allergy testing for medications
 clinic consults for pediatrics and  Allergy shots
 adults
Skin scratch testing for 64 food/
 environmental antigens
 
                           Ambulance Services
 
                               Cardiology
 
Clinic Consults (A-fib, Syncope,     Cardiac rehabilitation
 Cardiomyopathy)
Cardioversions                       Cardiology clinics
Cardiac stress tests                 Pacemakers--dual and single chamber
Treadmill Stress Tests               ICDs--dual and single chamber
Nuclear Med Stress Tests--Standard   Cardiac resynchronization therapy
 treadmill                            device implants
Cardiolyte treadmill                 Implanted Cardiac Loop Recorders
Chemical stressing stress tests      Cardiomem implants
 (LEXI SCAN)
EKG stress tests                     Synchronized cardioversion
Pacemaker insertions and             Interpretation of echocardiogram
 programming                          and stress tests
Pacemaker clinic                     Tilt Table Testing
Carotid massage                      Teleheart Consults
 
                        Colonoscopy and Endoscopy
 
EGD--diagnostic, screening,          Bronchoscopy--diagnostic with
 rescreening, ph testing,             brushings, washing, and biopsies
 esophageal manometry                Flex sig
 
      Diabetes Management (Group and Individual Sessions Available)
 
                         Dietitian (Elbow Lake)
 
Weight Loss                          Diabetes
Heart disease                        Cholesterol
Renal disease
 
              Emergency Department (Level 4 Trauma Center)
 
                           Inpatient Services
 
                        Interventional Radiology
 
Clinic consults for pain disorders/  SI joint, shoulders, hips
 vascular interventions               (trochanteric, intraarticular),
Radiology consultations provider-     knee, wrist, etc.
 provider
Vascular follow up after vascular    Trigger point injections
 interventions.
Soft tissue biopsies                 Radio frequency ablations
US guided Fine needle thyroid        Cervical, thoracic, and lumbar
 biopsies                             spine
US guided fine needle breast         Associated median branch blocks of
 biopsies with and without axillary   cervical, thoracic, and lumbar
 lesions.                             spine
Bone marrow biopsies                 Genicular RFA for knee pain
PICC Placement                       Thoracentesis
Port Placement                       Paracentesis
Blood patch                          Tunneled drainage catheter
Epidural steroid injections           placement for chronic ascites or
                                      pleural fluid accumulation
Cervical,thoracic, and lumbar        Chest Tube Placement
Loop recorder placement              Pacemaker implant: single and dual
                                      chamber
Joint injections
 
                           Laboratory Services
 
                            Observation Stay
 
                          Occupational Therapy
 
Certified lymphedema especially      Cognitive testing with follow up
 post-surgical                        meeting for education/strategies/
Hand therapy                          recommendations
Pediatrics for feeding,              LSVT BIG for Parkinson's
 neurological disorder, weakness,    Concussion management
 behavior modification, tone
 reduction, post-surgical upper
 body
 
                     Orthopedicsand Sports Medicine
 
                           Outpatient Services
 
Radiofrequency ablation              Infusions
Blood transfusions                   Radiologically guided injections
Epidurals                            General injections
IV therapy                           Protime clinic
IV antibiotics                       Medication administration with
                                      monitoring
 
                             Telepsychiatry
 
                            Physical Therapy
 
                      Pre-Post-surgical conditions
 
    (Joint replacement, back and neck surgery, Knee scope, ACL, ankle,
 rotator cuff repair, shoulder replacement.)
 
                        Injury related conditions
 
Back, Neck, Hip, Knee, shoulder,     Hand therapy
 elbow, foot/ankle
 
                         Neurological Conditions
 
    Parkinson's BIG program, traumatic brain injury, spinal cord injury,
 stroke, multiple sclerosis, ALS, imbalance, ataxic gait
 
                          Geriatric Conditions
 
Fall prevention, home safety,        Vertigo/Dizziness/Vestibular Rehab/
 osteoarthritis                       BPPV Rehab
 
                Sacroiliac dysfunction: pregnancy, injury
 
         Pediatric conditions: developmental delay, torticollis
 
TMJ Dysfunction                      Myofascial Release
Ergonomic Work Station Evaluation    Kiniesotaping/Athletic Taping/
                                      bracing
 
                   Primary Care and Internal Medicine
 
Child and teen checkups              DOT collections
Well-baby exams                      Skilled nursing home visits
Chronic Care Management/Care         Assisted living visits
 Coordination Services
Immunizations                        FAA physicals
Sports physicals                     Special issuance exams
ICC/DOT physicals
 
                             Women's Health
 
Family planning.                     Prenatal care and OB exams.
Breast and cervical cancer program.  Well-women physicals.
Menopausal counseling and services.
 
                    Internal Medicine Clinic Consults
 
    Complex medical issues such as but no limited to cardiac disorders,
 diabetes with pump adjustments, thyroid disorders, pulmonary issues,
 renal, and liver disease.
                           Diagnostic Imaging
 
General                              Mammography
Dexascan                             Nuclear Medicine
CT Scan                              Ultrasound
MRI
 
                            Surgical Services
 
General Surgery                      Orthopedic Surgery
Podiatry Surgery
 
                             Speech Therapy
 
Cognitive testing                    Swallowing
LSVT Parkinson's BIG and LOUD        Language Comprehension
Pediatrics with SOS Feeding          Vital Stimulation Adults and
                                      Children
Voice Production                     Communication Skills
 
                             Sleep Services
 
Overnight oximetry studies           Sleep apnea evaluations
 
                            Swing Bed Program
 
                               Wound Care
 
Non-healing chronic wounds           Traumatic wounds
Pressure ulcers                      Surgical wounds
Diabetic ulcers                      Abdominal stomas
Venous ulcers                        Continence disorders
Arterial ulcers                      Rash and lesion identification
Skin lesion removal and biopsies     Minor burns
 

                              [Attachment]
    Earlier this year, the Minnesota Hospital Association released its 
annual report examining the financial health of Minnesota hospitals and 
health systems. Below is a summary of the findings. Here is a link \1\ 
to the full report.
---------------------------------------------------------------------------
    \1\ https://online.fliphtml5.com/pzfal/pnuz/#p=1.
    Editor's note: this report is retained in Committee file.
---------------------------------------------------------------------------
    Minnesota hospitals' operating margins declined in 2019 to 1.4%--a 
signal that Minnesota's hospitals and health systems are experiencing 
challenges including declining reimbursements from both government and 
commercial payers; health care professional shortages that bring higher 
staffing costs; and increasing costs of products and supplies such as 
pharmaceuticals, devices and technology systems for electronic health 
records

   Between 2014 and 2018, the trend of overall median hospital 
        and health system operating margin in Minnesota remained steady 
        at just over 2%. In 2018, however, the median operating margin 
        declined to 1.7% and fell yet again in 2019 to 1.4%

   This year-over-year declining trend line of median operating 
        margin signals a financially fragile health system in 
        Minnesota, even before the additional significant challenges 
        presented by the global pandemic in 2020.

   While 45 of the 76 hospitals and health systems shown on the 
        report generated positive operating margins in 2019, 31 
        hospitals, or 41% of the hospitals and health systems reflected 
        in the report, experienced negative operating margins.

     The number of hospitals reporting negative margins has 
            grown over the last 2 years.

       In 2017, 26 hospitals reported negative margins.

       In 2018, 27 hospitals reported negative margins.

     A negative operating margin does not mean a hospital 
            may close. It simply means a balancing act for hospitals 
            and health systems in providing the right mix of services 
            for the community.

     Many hospitals and health systems in Minnesota 
            continuously adjust their service lines depending on the 
            community's needs, which services are better provided at a 
            larger nearby hospital, and their health care professional 
            workforce's skills and experience.

     Compared to other states in the country, Minnesota 
            benefitted from expanding Medicaid in 2011. More people on 
            insurance helped hospitals and clinics. That is one of the 
            reasons Minnesota has not seen the rural hospital closures 
            seen in other states. In addition, Minnesota's critical 
            access hospitals (CAH) benefit from a different payment 
            model.

   Historically Minnesota's urban hospitals have had higher 
        margins than rural hospitals; however, the trend in recent 
        years has been convergence, with both urban and rural hospitals 
        and health systems showing declines since 2017. The median 
        operating margins for urban and rural hospitals and health 
        systems were the same in 2019 at 1.4%.

    A positive operating margin is necessary to ensure hospitals' and 
health systems' ongoing ability to serve patients in their community, 
maintain strong credit ratings and affordable access to capital, and 
recruit and retain the highly educated and skilled workforce necessary 
to care for patients.

   Hospitals and health systems face significantly increased 
        expenses in products, supplies and services they need to care 
        for patients provided by vendors, including pharmaceutical 
        companies, medical device companies, and technology companies.

   Approximately 52% of hospitals' expenses are in the form of 
        wages and benefits to recruit and retain all the care team 
        members necessary to deliver high-quality patient care.

   Health care, especially the complex level of care provided 
        in hospitals, is a capital-intensive undertaking and requires 
        hospitals and health systems to obtain capital bonds or loans 
        to finance major projects or expensive equipment. A hospital's 
        margin is necessary to fund these types of capital 
        improvements.

    A hospital's mix of payer sources can significantly impact its 
ability to achieve a positive operating margin.

   Serving a community with higher poverty rates tends to 
        result in the hospital or health system receiving less revenue 
        because it provides care for more uninsured, underinsured and 
        patients on public programs.

   Hospitals across the state all care for low-income, elderly 
        and disabled residents in their communities, many of whom are 
        covered by the state's Medicaid program, called Medical 
        Assistance, and the MinnesotaCare program.

     The Medical Assistance program's provider 
            reimbursement rates are below the actual cost for 
            delivering patient care. The most recent estimate from the 
            Minnesota Department of Human Services shows the Medical 
            Assistance program's fee-for-service payments support only 
            74% of the actual costs hospitals incurred to provide that 
            care.

     The Federal Medicare program, which provides coverage 
            for most Minnesotans over age 65, routinely reimburses 
            hospitals below the actual costs of care.

   Financial pressures on hospitals and health systems are 
        increasing as commercial insurers reduce their payment rates to 
        providers.

   To reduce the rate of growth of health care costs, hospitals 
        and health systems have partnered with the Medicare and 
        Medicaid programs and health plans to enter into value-based 
        payment arrangements. In these arrangements, hospitals, health 
        systems, and payers work together to reduce care costs while 
        improving quality and patient safety.

     These financial arrangements increasingly allow health 
            care providers to create ways to improve population health, 
            provide care management to the communities they serve and 
            improve the overall quality of care to ensure the best 
            outcomes.

     Partnership models between governmental and commercial 
            payers and delivery systems--in which the partners work 
            together to create value for the individuals and 
            communities they serve and equally share in the value 
            created--provide hope for the health care industry's 
            future.

   Other factors that might result in lower revenues include 
        each organization's commitment to providing services that are 
        needed in the community but with low- or even negative-margin 
        financial impacts, such as mental and behavioral health care, 
        nursing home services or home health agencies.

    Net margins at not-for-profit or government-owned hospitals are 
reinvested back into the facilities and services that advance their 
community service missions and support access to high-quality medical 
services.

   Most of Minnesota's hospitals are part of an organization 
        that provides other kinds of medical services, such as clinics, 
        nursing homes, ambulance services, mental and behavioral health 
        care, home health care and hospice services, that often 
        generate low or even negative margins.

   A positive margin earned from a hospital's patient care 
        activities is used to cross-subsidize and financially support 
        some of these non-hospital health care services to meet these 
        high-priority community needs.

    Data collected for the report precedes the COVID-19 pandemic, which 
caused substantial financial instability, though hospitals and health 
systems saw some positive mitigation from state and Federal funding 
responses.

   MHA expects next year's financial health report to encompass 
        the pandemic's impacts on hospitals' and health systems' 
        financial health during FY 2020.

   To get an idea of the impact of the COVID-19 pandemic, MHA 
        surveyed hospitals for a preview of their calendar year (CY) 
        2020 operating margins for the first, second and third 
        quarters. These survey results do not include any state or 
        Federal provider relief funds, given regulatory compliance 
        issues determined at year-end. In total, 52 individual 
        hospitals and two health systems encompassing 20 additional 
        hospitals replied to the survey.

     In the first quarter of 2020, hospitals saw a median 
            operating margin of ^2%.

       During this time, hospital and health system efforts 
            included caring for the 
              state's initial cases of COVID-19, ensuring stable supply 
            chains, deploying 
              crisis response plans and implementing additional 
            precautions to prevent 
              virus spread.

     In the second quarter of 2020, hospitals saw a median 
            operating margin of ^5%.

       From March 23 to May 10, 2020, a state executive order 
            postponed non-
              time-sensitive surgical procedures to conserve PPE for 
            front-line caregivers, 
              ensure care capacity in hospitals for a potential surge 
            of COVID-19 pa-
              tients, reduce potential exposure for patients and health 
            care workers and 
              slow the increasing spread of the virus.

       At the same time, patients also deferred routine care 
            and necessary serv-
              ices such as knee and hip replacements. Hospitals and 
            health systems saw 
              losses in patient volumes of 20% in inpatient, 26% in the 
            emergency depart-
              ment and 41% in outpatient surgeries based on MHA's 
            statewide claims 
              data system. This deferral of care caused harm for 
            patients and contributed 
              to the financial impact.

     In the third quarter of 2020, hospitals saw a median 
            operating margin of 3.5%.

       Some of this improvement can be attributed to the return 
            of pent-up de-
              mand for health care services as the surgery pause was 
            lifted and patients 
              felt more comfortable accessing care in health care 
            facilities.

     MHA did not survey for the fourth quarter of 2020. The 
            second peak of COVID-19 hit Minnesota during this quarter.

   These preliminary survey results align with national results 
        in a report \2\ from the U.S. Department of Health and Human 
        Services Office of Inspector General released on March 23, 
        which found that the COVID-19 pandemic has significantly 
        strained health care delivery.
---------------------------------------------------------------------------
    \2\ https://oig.hhs.gov/oei/reports/OEI-09-21-00140.pdf.
    Editor's note: this report is retained in Committee file.

     Many hospitals and health systems nationwide reported 
            experiencing financial instability because of increased 
            expenses associated with responding to a pandemic and lower 
            revenues from decreased use of other services. Hospitals 
            and health systems indicated that many of the challenges 
---------------------------------------------------------------------------
            were more severe in rural areas.

    The Chairman. Thank you, Mr. Mattson, and let me just say 
thank you to all of the witnesses for your very informative and 
insightful testimony.
    At this time, Members will be recognized for questions in 
order of seniority, alternating between Majority and Minority 
Members. You will be recognized for 5 minutes each in order to 
allow us to get to as many questions as possible. Please keep 
the microphones muted until you are recognized in order to 
minimize background noise.
    I now will recognize myself for 5 minutes, and I do want to 
begin with Mr. Erling.
    Your testimony mentions issues facing rural communities, 
lack of capital access, underfunded schools, failing 
infrastructure, and access to high-speed broadband. You also 
mentioned the Rebuild Rural America Act as a way to provide 
sustained strategic investment in our rural communities. I 
introduced the Rebuild Rural America Act with several of my 
colleagues on this Subcommittee after hearing from 
constituents, local elected officials, and community leaders 
that our rural communities need, as you put it, direct and 
flexible resources to best fit their needs. The bill would 
provide 5 year block grants to strengthen rural communities. 
Often, we hear rural communities lack the time or resources to 
work through the different Federal application processes. The 
Rebuild Rural America Act would also help rural regions 
navigate the application process by providing training and 
technical assistance.
    Mr. Erling, can you expand on how this sort of model could 
help get rural communities above water and moving forward?
    Mr. Erling. Absolutely. Thank you for the opportunity. I 
mentioned my background of working across affordable housing, 
holistic community development, and then really specializing in 
agricultural economic development. And several of the 
challenges that have been universal, whether I was working on 
affordable housing, whether I was working on traditional 
economic development, has been year over year funding and 
consistency, and flexible access to critical funds or critical 
mass funds that could then be also leveraged with additional 
state, additional municipal or local, and even philanthropic 
dollars. And the Rebuild Rural America Act at its base really 
provides some of that foundation and addresses the competitive 
disadvantage that many of our rural regions and many of our 
rural communities have compared to urban areas that have the 
year over year block grant funding available, and consistently 
can plan to implement and have the flexibility for both the 
human soft infrastructure side as well as the hard traditional 
infrastructure side.
    I think some of the things that are critical that we want 
to make sure that we can actually address is not just having 
access to the funding to implement, but also having access to 
the funding to plan and create the tools on the human side. So, 
I just want to address a little bit with the business technical 
assistance. Business technical assistance relies on experts: 
accountants, attorneys, strategists, PR specialists, and in the 
food and rural development world, food safety specialists, 
engineers, et cetera. Having a solid Rolodex and having 
opportunities for those experts to make a living, providing 
services to rural entrepreneurs in rural communities is 
critical, and the planning that you get with year over year 
funding and the stability opportunity that you have with 
something like a community development block grant lays that 
foundation so you can build the Rolodex, if I go back to a 
previous era, or build the bench of service providers. And it 
is not unlike what we need to do to address successional 
planning for farming. The average age of the farmer in New York 
State is in the high 60s, and is creeping up. And successional 
planning and successional members, whether they are farm 
members or whether they are actually never ever farmers that 
want to move into the arena require the human resources to 
support them.
    So, that is one of the things I really just want to drive 
home about the Rebuild Rural America Act. It is not just the 
year over year funding; it is the fact that it is regional. It 
is the fact that it can be planned for and implemented by a 
strategy that is brought up by the regional communities, and 
then you can actually start to benchmark and build momentum and 
critical mass and human resources because you have that 
stability and because you have that block grant year over year 
access.
    Thanks for the opportunity. I am happy to build off of this 
at any time.
    The Chairman. Thank you. I see I am bumping up against 5 
minutes. You basically addressed my second question, the 
importance of business technical assistance for agricultural 
businesses? I actually sent a letter to Secretary Vilsack 
urging use of existing pandemic funding to support one-on-one 
business technical assistance for small and mid-size farm and 
food businesses, and you have done a good job of explaining why 
that is so important, so thank you for your answers there.
    I now would like to recognize Ranking Member Fischbach for 
5 minutes.
    Mrs. Fischbach. Thank you, Mr. Chairman.
    Mr. Mattson, and thank you again for testifying. I enjoyed 
my visit to the facility in Fergus Falls, and so thank you for 
that.
    But I am just wondering, did you seek other sources of 
funding for the Prairie Ridge facility, and why did you decide 
to move forward in particular with the Community Facilities 
Program?
    Mr. Mattson. Yes, thank you for that question. The 
Community Facilities Loan Program put together a total package 
of about $20 million, $16 million was a direct loan, and $4 
million was a guaranteed loan. We did look at other funding 
sources, but quite frankly, with all the USDA programs, it 
wouldn't have been possible. The longer repayment term, fixed 
interest rate at a lower rate created affordable access to 
capital that wasn't otherwise available in the market through 
traditional programs, whether it is bond or a commercial bank. 
The long-term amortization period allowed us a more favorable 
cash flow, and the other component of it, our borrowing profile 
at the facility and our creditworthiness might not have been up 
to spec with some of the commercial lenders at that time. So 
the USDA program and the eligibility requirements which we met 
and surpassed created affordability, and not only 
affordability, but also access. We were a qualified borrower 
for USDA, but maybe on the cusp of a commercial bank.
    We were also able to fund a higher level of project costs 
than traditional markets required, so we get more of a facility 
than we could have if we had to come up with a higher up-front 
payment. Financial convenance requirements were less 
restrictive with the USDA. They are appropriate. They monitor 
our progress and our status, but some of the commercial lending 
requirements are a little bit onerous for a smaller facility 
like ours.
    While there is more paperwork with USDA programs, the 
requirements of the loan are actually less onerous and less 
restrictive. The up-front costs are less. The loan closing 
process is more efficient, and the monitoring and compliance 
requirements during the loan term are less onerous. So, we did 
look at other bond financing opportunities, commercial bank 
financing opportunities, but the USDA program by far checked 
all the boxes of this community facility that was ultimately 
developed.
    Mrs. Fischbach. Thank you very much, I appreciate that.
    Commissioner Fox, I will just ask you. I appreciate you 
again for being with the Committee today. You mentioned 
broadband, and in your experience with broadband, are there any 
lessons you learned between the state grant experience and 
applying for ReConnect?
    Mr. Fox. I guess the lessons I have learned is I wish I 
could do a retake about 25 years ago and let the REA take us 
all over and do it, rather than hodgepodge pieces together. I 
think that is the hardest piece, especially in our county, we 
have five different telephone companies and systems, so it was 
kind of cumbersome at times.
    But people are really into the piece where we got wireless 
to them, especially last year when their kids were at home, and 
we got probably 80, 85 percent covered. But no, it is just a 
process, a process you have to go through to get to the end 
result.
    Mrs. Fischbach. And just a quick follow-up, are there any 
suggestions you would make, based on your experience with the 
program? Any suggestions you might make in improvement? I have 
about a minute left, so there might not be time to explain them 
all, but if there is something that you have that would be 
helpful for us to know?
    Mr. Fox. I think the biggest thing for us as counties was 
talking to our neighbors. If we didn't talk to our neighbors, 
we could have never got a provider to come in and help us do 
what we wanted to do, and that was the biggest key. Talking to 
our neighbors and know that you can get connected and get the 
service that you need. You are never going to do this alone in 
a rural county. You need partners and you need the neighbors.
    Mrs. Fischbach. Thank you very much, and thank you, Mr. 
Chairman. I will yield back my 20 seconds.
    The Chairman. Thank you, Ranking Member.
    I now recognize the gentlewoman from Iowa, Mrs. Axne, for 5 
minutes.
    Mrs. Axne. Thank you, Chairman Delgado, for holding this 
hearing, and to our witnesses for being here today and sharing 
your experiences. This has been a great conversation so far, so 
much to talk about.
    But of course, the success of rural America is so vital to 
this country, and Mr. Erling, I so appreciate you bringing that 
up. Every ball bearing for every Ford Explorer is made in my 
district, so folks in Detroit benefit.
    But the topic of this hearing, of course, is around rural 
America, and I first want to talk about something that is so 
important to rural America and the middle parts of our country, 
biofuels for our rural communities.
    Unfortunately, the last Administration repeatedly 
undermined the Renewable Fuel Standard through small refinery 
exemptions, removing over 4 billion gallons of ethanol demand 
from the market, and conservative estimates put that cost of 
over 2 years of those exemptions at over $5.3 billion in 
economic loss. So, what happened here is a greatly reduced 
opportunity in rural Iowa, and of course, rural communities 
across the country. And while I have been pleased with what 
this current Administration has previously said that they 
believe and value the importance of RFS, it is important to 
reiterate that any action that reduces big oil's obligation to 
decarbonize their fuel through biofuels would be a continuation 
of Trump's failed policies.
    So, that can't happen, and as we look to invest in our 
rural communities and decarbonize our transportation sector, we 
must uphold the RFS.
    Now, Mr. Fox, you note in your testimony that rural 
communities were still struggling to recover from the 2008 
economic crisis when COVID-19 hit. I know you don't have direct 
experience with biofuels facilities, but can you talk about how 
critical agricultural facilities or similar plants are for 
rural communities and the devastating impact closures of such 
plants would have on our communities?
    Mr. Fox. Chairman Delgado, Congresswoman, I do have a lot 
of experience. I have been involved in the State Corn Growers 
of the past and present of the state and the National Corn 
Board. And so, I saw the ethanol industry grow in Minnesota 
through the cooperative model. It has done tremendous growth 
throughout our state because of those dollars getting back to 
the farm. When I was farming full-time and trying to make a 
living and raise children with $1.75 corn and no ethanol 
plants, it didn't work. When we got the ethanol plants and we 
got another 50 or 75 a bushel to that crop, and that money 
goes down main street and we spend it seven times down that 
main street. It has created wealth in the State of Minnesota 
and across the Midwest. It has been a great thing that the 
biofuel industry has done.
    Mrs. Axne. Well, I appreciate you reinforcing how important 
this is to our rural communities, and thank you so much for 
that.
    Now I want to turn to the USDA's Rural Development 
programs, which, of course, is so important to our community. 
And I have introduced bipartisan legislation, the Rural Equal 
Aid Act (H.R. 498), which provides for 9 months of loan relief 
for USDA RD loan programs like RMAP and IRP.
    So, reviewing the testimony today that I am hearing, many 
of you have experience with these loan programs. So, with the 
time remaining, I would love to open this up to hear about what 
your thoughts are for rural communities if USDA provided such 
relief for the borrowers of these programs.
    Ms. Polonius, I would like to start with you, and thank you 
for mentioning my Rural Equal Aid Act. Given your experience 
with IRP, what are your thoughts on implementing something like 
this and the benefits of that?
    Ms. Polonius. Congresswoman Axne, thank you for being--the 
legislation and thank you for your question.
    We have direct experience with this through the SBA Debt 
Relief Program that was part of the CARES Act. It provided for 
6 months and then it came back and provided an additional 3 
months. This was a lifesaver, relatively easy to implement 
because SBA literally sent us those payments, and then we 
credited those borrowers for those months of payments. It was a 
lifeline, and what we attribute to the fact that our portfolio 
is relatively intact. I think we need exactly the same on the 
IRP side, on the RMAP side, because there are a lot of micro 
entrepreneurs that had a very difficult time accessing programs 
like the PPP, and they now stand in line, waiting for some kind 
of debt relief in the process. And the same thing goes for our 
portfolio on the IRP side, which is water and wastewater loans. 
I am very happy to hear about the 9 months versus the 6 months, 
which I was made aware of, which would be even greater help.
    What these water systems need right now is to be able to 
save money to put back into a reserve, because they don't know 
when the next crisis is going to hit. And while USDA 
infrastructure lending is so critical, it has a longer lead 
time. And so, we strongly encourage every system to have a 
strong reserve for those small emergencies that turn out to 
have huge impacts.
    So, I will end there, seeing that I am out of time. Thank 
you.
    Mrs. Axne. Thank you so much. My time has expired, and I 
yield back.
    The Chairman. Thank you.
    I now recognize the gentleman from California, Mr. LaMalfa.
    Mr. LaMalfa. Thank you, Mr. Chairman, and to our panelists 
for being here today.
    Let me follow up on some of the previous thoughts that were 
being made here. Mr. Mattson, I have a very rural district, 
too, like a lot of us on this Committee, and I want to talk 
about the importance of telehealth, the ability to do a lot 
more things at a distance electronically. Would you touch base 
on how--there in Minnesota for you how key that is for you or 
others that you have worked with, your experience on that?
    Mr. Mattson. Yes, thank you for the question.
    Telehealth was one of the first tools that we pulled out 
when the pandemic hit, recognizing that we started to shut our 
facilities down from the outside to make sure that our 
workforce and our patients were protected. We rapidly spun up 
increased telehealth. We saw probably an 80 percent uptake in 
what we had been previously experiencing, so it was definitely 
an accelerator.
    And since then, we have continued to step that up. So, we 
refined our processes. We created better patient flows. We 
created better care flows. And one of the things that we are 
also able to do now is we are able to use that technology to 
bring consultations from larger metropolitan areas to our 
patients. So, it is not just primary care, but it is also 
specialty care, and a lot of the techniques to deal with care 
that comes in through our emergency departments like trauma 
evaluations, stroke care, those things can be done on a 
consultative basis from a distance. So, we are able to take 
care of people closer to home and more at home than previously.
    So, definitely the crisis was an accelerator event, and I 
believe that telehealth will continue to stay. We do need some 
time to put system process in structure and some funding for 
that, so we have asked for some parity in reimbursements so we 
are treated and paid the same way as an inpatient visit, or an 
in-person visit. But once we get those systems and structures 
in place, we should be able to deliver them at a lower cost 
profile. But that will take some time to do.
    Mr. LaMalfa. Yes. So, that makes perfect sense with what we 
are experiencing in my home area, too. And so, it always comes 
back--we talk a lot on this Committee, and we have made some 
good ground on broadband, and so, when we are looking at 
different funding sources and different--well, more emphasis on 
broadband, would you please expand upon that thought for me?
    Mr. Mattson. Yes, definitely. We can make services 
available on our end, but if we don't have connectivity to all 
of our patients, it is either no experience because we can't 
get to them, or it is a very poor experience. When you are 
conveying healthcare information, details and specifics are 
very important, so an interrupted, a slow, or downtime events 
really impair our ability to take care of our patients.
    So, strong broadband, a strong network, a strong build of 
that infrastructure is really important, no different than the 
bricks and mortars that we built out through the Community 
Facilities Program.
    And again, we are going to need this more and more, and 
building that out is something a little bit different than we 
have done before. So, we are facing a little bit of new 
challenges, but that is new opportunities. But we do partner 
with our teleservices around our community. We have quite a few 
of them, but it is a long distance to string the lines, so to 
speak. But it is very important to deliver our essential 
service.
    Mr. LaMalfa. Yes. You made a really good point about the 
ability to have more specialized services that maybe a small 
rural hospital can't possibly employ the type of personnel, or 
maybe even equipment that they can't cost effectively do. So, 
with the telehealth via good broadband, it makes a lot more 
things possible at that local level.
    So, why don't you--when we are talking about specialists 
and the challenges of getting them and getting them into, 
again, a more rural scene, why don't you finish out my 40 
seconds with that, please?
    Mr. Mattson. Yes. As I pointed out in my testimony, as a 
direct result of the facility build out which created better 
places to take care, plus facilities that were built-out that 
weren't available in the 1960s building, like a brand new, 
state of the art surgical center, we are able to recruit 37 
specialists to our small communities, and that would have been 
very difficult to do with our aging facility. In this day and 
age, there is a provider shortage on primary care, definitely 
on specialty care, and some of the economic opportunity that 
the metropolitan areas offer, we just can't offer it in rural 
communities. So, we need facilities that attract and retain 
talent.
    Mr. LaMalfa. Thank you.
    I yield back, Mr. Chairman. I appreciate it.
    The Chairman. Thank you.
    I now recognize the gentleman from Illinois, Mr. Rush.
    Mr. Rush. Well, thank you, Mr. Chairman. An excellent 
hearing, and I want to again welcome all the witnesses.
    Mr. Erling, in your testimony you discuss how farmers too 
often lack training in business planning and financial 
literacy, which can make it even harder for them to access 
government assistance during difficult times.
    I recently toured the Chicago High School for Agricultural 
Sciences, which is in my district, and which rigorously 
prepares its students to succeed in a variety of agricultural 
fields. Do you believe that more agricultural high schools like 
the Chicago High School for Agricultural Sciences, as well as 
community or junior colleges, that have a focus on agriculture 
could be beneficial in equipping future farmers with these 
skills and other types of skills?
    Mr. Erling. Thank you for that insightful question, 
Congressman, and I applaud you and your district for having the 
opportunity to implement an innovative opportunity with the 
public school system, and it sounds like with also the 
community and the private entrepreneurial market and producers.
    A broad-spectrum approach that does include our public 
schools is absolutely critical. In our rural regions as well as 
our urban centers, we are seeing some insight and we are seeing 
some significant synapses closing so that we have these new 
opportunities, or are restarting these opportunities. Future 
Farmers of America in my area is one of the programs being 
embraced by public schools.
    But I also want to reinforce that our public school system 
often relies on a solid tax base, and so, the public school 
system is really a component to make sure that we are feeding 
the entrepreneur system, the producers, and the markets so that 
we continue to produce revenue and capital. And it is really 
that opportunity to be at the forefront to make sure that our 
youth, as well as our existing entrepreneurs and our senior and 
aging business members are all working together, one-on-one.
    Thank you for asking that great question. I look forward to 
working with you on that in our own district.
    Mr. Rush. Last April, I published an op-ed in the Chicago 
Sun-Times entitled, When white America catches a cold, black 
America catches pneumonia.* In the op-ed, I wrote, `` . . . it 
is always the most vulnerable who fair the worst by far, 
particularly when it comes to the black community. Hurricane 
Katrina devastated a region, but effectively obliterated the 
black middle class there; the Great Recession damaged the 
entire economy, but, by all accounts, was particularly 
disastrous for black Americans and further widened the already 
vast racial wealth gap; and although America is rightfully 
fixated by the mass shootings that happen at our schools, 
churches, and concert venues around the country, there have 
been 36 mass shootings in my district--which is a majority 
minority district--since 2013 alone.'' It is clear, in my 
opinion, that rural America is in the same boat as too often 
left behind by our recovery efforts.
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    * Editor's note: the article referred to is located on p. 53.
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    Mr. Fox and Ms. Polonius, do you have any suggestions for 
ways rural America can partner with urban America to address 
these same shared concerns?
    Ms. Polonius. So, in my 10 seconds I will address the fact 
that part of our technical assistance program, moving forward, 
focuses not just on the health of the business, but also the 
opportunities for wealth creation of those business owners, in 
particular Black business owners, which make up about 85 
percent of our technical assistance portfolio, and about 80 
percent of our lending portfolio.
    So, you speak to a really important issue, Congressman 
Rush, that is really dear to our hearts at Communities 
Unlimited, and something that we focus on very much in the 
South.
    Mr. Rush. Thank you.
    Mr. Chairman, thank you so much, and I yield back the 
balance of my time.
    The Chairman. Thank you, and now, I recognize the gentleman 
from New York, Mr. Jacobs.
    Mr. Jacobs. Thank you, Mr. Chairman, and thank you to all 
the witnesses. Great testimony from all of you.
    I represent western New York State, which is heavily rural, 
and so, a lot of what you have talked about today encapsulates 
many of the challenges in the 27th Congressional District.
    I wanted to just ask a question for Dr. Koneru, as we talk 
about certainly the need for more business creation, more 
entrepreneurs, Doctor, you are the sole person who is one of 
those. And I was just curious as a pharmaceutical company, a 
biotech company, why did you decide to locate your business and 
launch your business in a rural community, and just as a 
follow-up on that, what advantages do you see you have by 
making that choice, because maybe we could kind of replicate 
what you are doing elsewhere? Thank you.
    Dr. Koneru. Mr. Jacobs, thank you very much for asking that 
question.
    I have been asked this question several times. The reason 
why I went to Lenoir is because it was the best choice at the 
time. I had--considering we had limited funds and our needs 
were small at the time, so we could just get by with a small 
building and limited funds. That is what we did. But there were 
other factors as well. For example, the location has a very 
strong infrastructure in the--because of the furniture industry 
that was there. So, it had a very strong electrical grid that 
was there already. And then, the local community was based on 
manufacturing, so they already had manufacturing experience, 
even though they were not really a GNP, FDA manufacturing base. 
But we thought that we could train them and it will take some 
time, 6 months or longer, but that was an investment we were 
willing to make. And there were other factors for Lenoir. For 
example, the facility, the place is a very nice area. I lived 
in a lot of heavy traffic cities, Los Angeles, San Diego, New 
York, San Francisco, D.C., et cetera, so I know what traffic 
is. And this was very refreshing for me to see zero traffic 
with 2 minutes to work, all of that stuff, very clean air, very 
attractive to me.
    And then, the other aspect of this is the low cost of 
living compared to East Coast and West Coast. So, these are all 
really the many advantages that it can be replicated. They can 
be replicated in many rural communities. So, I would strongly 
encourage you to kind of encourage your entrepreneurs to start 
businesses like me, like mine there.
    Mr. Jacobs. All right. Thank you very much, Doctor.
    I will just conclude by I think that as a post-COVID--and I 
am glad we can talk about it, calling it post-COVID now--there 
is a great opportunity for rural America. I have seen in my 
area of western New York that we have seen a lot of people come 
back home, ex-pats from, let's say, New York City, during this 
COVID time, and actually had a new-found appreciation for the 
quality of life, the ease of moving around. And, the big issue 
here is the opportunity to try to keep these people here. They 
realize that they can work remotely. They can keep their job in 
the big city and travel there periodically, but they don't have 
to sacrifice quality of life for them and their family. I think 
that is a great opportunity for us to seize, and rural 
broadband is key to that. And I am so glad that we are talking 
about that at every level, every discussion right now in this 
Committee and elsewhere, and I hope that is matched by our 
budgets and our funding that is critical for the future of our 
regions here collectively.
    Thank you very much, Mr. Chairman. I yield back.
    The Chairman. Thank you.
    I now recognize the gentlewoman from New Hampshire, Ms. 
Kuster.
    Ms. Kuster. Thank you very much, Mr. Chairman, and thank 
you to my colleague. I commend your remarks, and we have 
bipartisan common ground when it comes to rural broadband, and 
to people moving from the city into our communities. So, I 
agree we need to capitalize on that opportunity.
    I am glad we are having this important discussion on 
sustaining and strengthening our rural communities and 
economies. In order for our nation to thrive, especially as we 
recover from the devastation of this pandemic, we need to make 
sure that no part of the country is left behind. In times of 
economic turmoil, rural America is often hardest hit. Congress 
hasn't always done a good job of addressing this, but I am 
pleased with the progress we have made over the last decade, 
especially here on the Agriculture Committee.
    In the last three farm bills, I have been proud to allocate 
funding and expand the reach of the Northern Borders Regional 
Commission, an economic and community development Federal-state 
partnership that serves rural counties in the upper Northeast. 
NBRC awards millions of dollars to worthy projects in New 
Hampshire each year that help to generate jobs and career 
opportunities, as well as to bolster the infrastructure and the 
economy in our rural communities. More broadly, USDA Rural 
Development loans and grants have been a critical lifeline for 
towns and nonprofits across my district. From affordable 
housing to community colleges to clean energy projects, USDA 
Rural Development is a key part of making innovative ideas a 
reality in rural America.
    Moving forward, there is much that Washington can do to 
further support our rural communities, and that includes 
expanding broadband access. The most recent USDA Agricultural 
Census found that 13 percent of New Hampshire farms did not 
even have internet access, and even looking beyond how this 
impacts farmers and food producers, we know that broadband 
connectivity is critical for everyone.
    So, I would like to ask the witnesses, if I could, what 
would you recommend that we do with broadband access, and how 
do you think we can make a difference in providing internet 
access to every household?
    Mr. Fox. Chairman Delgado, Congresswoman Kuster, I will 
take a stab at this, Mr. Fox will.
    I think that is different in different parts of the 
country, but we are a flat agricultural land, so we were able 
to connect our middle mile with WiFi towers and get that out 
and have services up to 50 mbps up and 50 mbps down, and that 
was enough to get the education piece going when kids were at 
home. So, it is technology, and it is always changing 
technology, because the word I hear now from providers is that 
if we move the towers closer, we can even increase those 
speeds, and as time goes on, that is going to be the most 
important piece.
    The dream would be to have a fiber to every home and every 
farm, but right now, some places it is just not economically 
feasible.
    Ms. Kuster. Mr. Erling, I am impressed by your efforts to 
build out agricultural entrepreneurship in the Hudson Valley. 
Could you speak to the most predominant challenges farmers face 
with business development and financial planning, and do you 
see ways for the USDA to enhance their capacity for providing 
business and technical assistance to synchronize the efforts?
    Mr. Erling. Thank you, Congresswoman. I really want to also 
commend you on the efforts that you have done with the 
Agricultural Viability Alliance that we are a part of. You and 
your team have added to the support opportunities with the 
letter Congressman Delgado led on, and also with diversifying 
the different alphabet soups. I really appreciate Northern 
Border Regional Commission recognition, but also, recognizing 
that it is only islands in the stream at this point, and we 
need some more flexibility for those Federal funds to really 
make the difference.
    So, the biggest opportunity that I see is making sure that 
the technical assistance service providers, the BTA, have 
consistency, training, and professional qualifications similar 
to what we see with other disciplines and other opportunities. 
And I think that in rural regions like yours, as well as with 
some of our partners like Lanford Good, which your office is an 
amazing partner with, we can really develop some of those tools 
in concert with your support and your staff.
    Ms. Kuster. Great.
    Well, my time is up. I did want to ask about the aging 
population, particularly in our Northeast region. I am a big 
fan of the Beginning Farmer and Rancher Program and the Arm to 
Farm Program for military veterans. So, I will work with you 
and with our Committee to encourage new energy and new vitality 
on our farms as well.
    Thank you very much, and with that, I yield back.
    The Chairman. Thank you.
    I now recognize the gentleman from Iowa, Mr. Feenstra.
    Mr. Feenstra. Thank you, Mr. Chairman Delgado and Ranking 
Member Fischbach.
    My question for Mr. Erling, in your testimony, you 
mentioned that 40 percent of American farmland is likely to 
change hands in the next 20 years. You note in your work in 
providing succession planning to aid in the transfer of 
agricultural land. As you've helped farmers with their 
transition planning, would you describe each family farm's 
transition as being unique to each one, and depending on the 
particular farm structure or the number of children and family 
members involved in the operation? Mr. Erling, would you say 
that this would be unique for each transition planning issue?
    Mr. Erling. Yes, I appreciate the question, Congressman, 
and I do have to say, I agree with you that there are unique 
circumstances to each transition and to each family, and 
individual farms. Opportunities as well as challenges, but 
there are also some common denominators. We actually have a 
program that is partially funded by philanthropic as well as 
state called Hudson Valley Farm Link Program here, and the 
American Farmland Trust was really critical in helping us 
launch that.
    So, we do have some common denominator components to that, 
but then we also do have some opportunities where it is a 
challenge and unique by funding, by inter-family relationships, 
and sometimes even by pivoting to new commodities and new 
market opportunities.
    But the bottom line is, we need to facilitate those unique 
circumstances to fill the gap with our aging populations and 
our market demands that we have in our suburban and urban areas 
to support our rural communities.
    Mr. Feenstra. Yes, I firmly agree with you. Thanks for 
noting that. Each family farm transition is probably unique, as 
to their situation there is some commonality, but it is very 
unique.
    This is why I have grave concern about the Biden 
Administration's proposed tax policies. I have heard from many 
Iowa farm families concerned about proposed policies regarding 
the treatment of capital gains and stepped-up income basis. The 
Administration claims they will provide agricultural exemptions 
for inherited agricultural land, but I don't know if it is 
possible to provide a workable exemption for all farmers, given 
the complexity and diversity of how farm operations are 
structured.
    In fact, a study from the Agricultural and Food Policy 
Center released this morning confirms that eliminating stepped-
up income basis probably will impact 98 percent of the farm 
transactions.
    Mr. Chairman, I would ask that this study be submitted for 
the record.
    The Chairman. Submitted.
    [The report referred to is located on p. 55.]
    Mr. Feenstra. Thank you so much.
    The Chairman. Without objection.
    Mr. Feenstra. As discussions around tax policy continue, I 
think it is extremely important that we consider how these 
proposals would work in real life and real situations. We need 
to be looking towards solutions that help family farmers to 
transition operations and create additional investments in our 
rural communities, not creating huge tax liabilities for our 
farmers and small businesses.
    Thank you, and I yield back.
    The Chairman. Thank you, Mr. Feenstra.
    I now recognize the gentlewoman from Illinois, Mrs. Bustos.
    Mrs. Bustos. Thank you, Chairman Delgado, and thank you, 
Ranking Member Fischbach, for holding this very important 
hearing today. I want to thank also those who are testifying.
    I would like to look back to the 2018 Farm Bill for a 
moment, if I may, and talk about some language that I was able 
to secure in the farm bill through our office to create a rural 
health liaison position at the USDA. Then last year, we filled 
the position through the appropriations process.
    The goal of the rural health liaison is three things. 
Number one, improve coordination in rural healthcare delivery; 
number two, promote awareness of the USDA resources available 
to help finance the construction of hospitals and telehealth 
infrastructure; number three, coordinate with other government 
agencies on rural health issues.
    My questions are for Mr. Fox and Mr. Mattson, and Mr. Fox, 
if you could answer first and then, Mr. Mattson, if you have 
anything to add onto this, if you could chime in.
    Given what I just shared with you about the office's 
duties, how do you feel the rural health liaison can be most 
valuable, most valuable in the COVID recovery? Second part of 
that same question, are there specific areas in the rural 
healthcare space that could be helped by better Federal 
Government coordination?
    Mr. Fox, if you could go first, please.
    Mr. Fox. Chairman Delgado and Congresswoman, I think 
anything that can be done to help rural hospitals with the 
technical piece and being able to move forward with 
telemedicine is very important. The more we can partner and the 
more we can learn from each other, the better off we are is 
just so important. We appreciate the work you've done.
    Mrs. Bustos. Mr. Mattson?
    Mr. Mattson. Yes, thank you for the question.
    One thing that was illustrated through COVID crisis, John 
Maxwell recently quoted, ``A crisis doesn't make you; it 
reveals you.'' And one of the things that was revealed was the 
need for coordination of all of the resources that we had. 
Funding, patient care, we are so geographically disconnected in 
some respects that the level of coordination in rural spaces 
was much higher demand and more dragging on our system than in 
urban metro concentrated areas.
    Definitely we are thinking now about how we are going to 
recover from the pandemic. The OIG report released on March 23, 
that hospitals supporting the COVID-19 public health crisis has 
significantly strained the healthcare delivery system. I would 
recommend the Subcommittee to review that report,* because it 
really does accurately capture the pulse of healthcare 
organizations. And definitely one of the things that we are 
concerned about is our ability to recover post-COVID. Our 
financial instability, higher costs and lower revenues, we are 
not sure where our volumes are going to recover. So, 
coordination of funding resources, coordination of the 
infrastructure build-out, and definitely coordination of 
building-out telehealth, not just the infrastructure to deliver 
the product, but also the electronic medical record. Over the 
next 5 years, our organization is going to spend about $28.5 
million on EPIC, which is our electronic medical record, which 
helps us take better care of patients as a better data 
resource. We are required under all the regulations that they 
have, the connectivity, but it is expensive. Getting that 
product and having money available for that is equally as 
important as having funds available to build buildings and 
other facilities.
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    * Editor's note: the report referred to is retained in Committee 
file and is available at https://oig.hhs.gov/oei/reports/OEI-09-21-
00140.pdf.
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    So, like $28 million over 5 years, that is a significant 
spread, and it is an ambulatory surgery center, bricks and 
mortar locally. But interoperability requirements bring 
together a great policy to have. That has to be coordinated 
again, so it's not just the access, but it's the product that 
we use to deliver the care that's important to consider equally 
as much as the broadband side.
    I think that coordinator position would tie a lot of loops 
that might remain open right now. It would be nice to close 
those.
    Mrs. Bustos. I will yield back. Thank you.
    The Chairman. Thank you.
    I now recognize the gentlewoman from the U.S. Virgin 
Islands, Ms. Plaskett.
    Ms. Plaskett. Thank you so much, Mr. Chairman, and thank 
you to our guests who are here. Thank you for your testimony.
    This is really--has been said by so many of my colleagues, 
a really important hearing to examine opportunities for growth 
and investment in rural America. Our rural communities face a 
number of serious challenges today, as we continue to recover 
from the coronavirus pandemic. I can't think of a more 
important topic for this Subcommittee's first hearing of the 
117th Congress, and I look forward to working with the Members 
of this Subcommittee to address these issues today and over the 
course of this next Congress.
    Ms. Polonius, you raised some important points in your 
testimony about the role that USDA Rural Development plays in 
providing critical services in communities across the country, 
including in response to natural disasters like drought or 
hurricanes.
    My home of the Virgin Islands is a prime example of what 
you mentioned in your testimony. Our home was ravaged by two 
devastating hurricanes in 2017, while drought currently 
persists across the Virgin Islands. USDA Rural Development has 
played a key role in helping us respond to these challenges, 
and the agency conducts extensive lending activities in the 
Virgin Islands.
    But I still believe that there are ways that we can improve 
and expand the reach of the USDA Rural Development programs.
    So, my question is of the infrastructure investment 
priorities that you have outlined in your testimony, do you 
believe that these investments can help rural communities 
improve resiliency and better respond to natural disasters, 
going forward?
    Ms. Polonius. Thank you, Congresswoman Plaskett, for the 
question.
    Through the Technical Assistance Program, which is funded 
by USDA by the name of Technitrain, we actually assist 
communities in building resiliency plans, and this addresses 
both cybersecurity vulnerability all the way to natural 
disasters.
    What we have been inquiring about, Congresswoman Plaskett, 
is a dedicated pool of funds that would allow us to respond 
immediately at the time of a disaster and be able to lend into 
some of these projects. So, during that same year that your 
home was destroyed, we were working on the other end of the 
country in Texas after Hurricane Harvey. Within 5 days, we had 
mapped out every single water and wastewater system that is a 
USDA borrower to understand the level of need of those systems. 
With our relatively small CDFI and loan fund, currently we are 
about $20 million in assets. Back then, we were at about $12 
million. We made a $900,000 loan. We made a $650,000 loan, 
which was really an exception to our policy, because we wanted 
to move quickly to help those communities rebuild those key 
infrastructure systems before people left the community.
    And, what we learned from Hurricane Harvey is once people 
leave a community because they don't even have basic services 
like water and wastewater, they can't clean their home, they 
can't rebuild their home. They don't come back, and that 
community is then further devastated because all the businesses 
that were relying on the population now are half the demand for 
their businesses and the process sort of keeps going.
    So, that is where, as a country, but also as a USDA RD and 
the technical assistance providers that are supported through 
RD need to be prepared to react and move quickly, and have the 
flexibility in funding to be able to do that.
    Ms. Plaskett. Thank you. Thank you.
    Mr. Fox, you mentioned in your testimony how various 
matching requirements for certain Federal programs often create 
hurdles for local governments. Can you speak to how these 
requirements may disproportionately impact rural areas, 
especially in areas that are working to recover from natural 
disaster, or areas that have economic recession?
    Mr. Fox. Thank you, Chairman Delgado and Congresswoman.
    The matches are very difficult for rural counties, 
especially now with this money that is supposed to help replace 
all of our funds, and now we are told we are not going to be 
able to use that as a match. So, how do we do that? For some 
counties that can't raise any more funds because of state laws, 
that will cause problems in rural counties. So, anything that 
we can do to reduce that or maybe U.S. Treasury look at 
changing their guidance, that--whatever tool we can put in that 
toolbox to use to help these rural counties.
    Ms. Plaskett. Thank you. My time has expired, and I yield 
back. Thank you very much, Mr. Chairman.
    The Chairman. Thank you.
    And now, I would like to recognize the gentlewoman from 
Florida, Mrs. Cammack.
    Mrs. Cammack. There we go. I wanted to make sure I was off 
mute.
    Well, good afternoon now, and thank you, Chairman and 
Ranking Member Fischbach, and to all of the witnesses for being 
here today virtually.
    For too long, our rural communities have been left behind, 
playing catch up in the 21st century economy, as we all know. 
Many of us represent rural districts.
    Now, beyond this Subcommittee hearing, there is a larger 
discussion afoot on the future of infrastructure rebuilding 
America, and doing it better. However, that conversation has 
become hopelessly distorted as words like rural development and 
infrastructure have now a catchall, per the Administration and 
the Majority's policy agenda.
    Many of the witnesses here today have already echoed my 
view that rural development is about building back critical 
infrastructure, blanketing rural America in reliable, fast, 
affordable broadband, and supporting our domestic producers. I 
am encouraged to hear about what many of you have done to 
harness the resources through USDA for accomplishing these 
goals.
    So, I am going to jump into some questions. Ms. Polonius, 
in your testimony you mention the importance of community-based 
strategies and building regional partnerships, and this is the 
model of economic development that I also support. In the last 
farm bill, the Committee provided the authority for the 
Secretary to set aside funds for communities that worked 
collaboratively across multiple stakeholders and government 
entities.
    Now, can you just very quickly elaborate on how these 
stakeholder groups can work a bit more efficiently as we move 
forward in talking about rural development?
    Ms. Polonius. Congresswoman Cammack, thank you for the 
question.
    For us--and again, my vantage point is specifically in 
persistent poverty rural places, because we have so many of 
them here in the South. It is a three-step process. First, we 
build leadership teams in communities, because we can't just 
rely on a part-time mayor with little or no staff. It needs to 
be carried by the diverse leadership team that reflects the 
community. And then as we build the capacity of that leadership 
team, we look together with them at strategic opportunities on 
how to link up to micropolitan areas, how to share resources 
with other local rural communities, and really begin to develop 
strategy, whether that is a regionalization of a water or 
wastewater system where that makes sense, or whether that is an 
economic opportunity to really figure out how do we create 
suppliers for corporations that may be located in that micro or 
metropolitan entity, and then figure out how do we create that 
regional connection between the two. I hope that begins to 
answer your question.
    Mrs. Cammack. It does, and as a follow-up, having worked 
pretty extensively throughout the years on the issues of rural 
development, a lot of times with our stakeholders, there tends 
to be a lot of finger pointing with accountability or lack 
thereof. When we have multiple stakeholders from different 
government entities and community organizations who come 
together, how can we better hold the group accountable and get 
into a more productive conversation, rather than a lot of the 
finger pointing? Maybe you could point to some best practices.
    Ms. Polonius. I think one of the challenges, Congresswoman, 
is that funding goes to one lead entity, and then there are 
sub-grants and subcontracts that go out to the other 
stakeholders, and that instantly creates sort of a hierarchy 
and puts that lead entity in a position to be accountable to 
the Federal agency, when, in fact, it is the subcontractors 
that may or may not be able to perform at that point in time.
    So, if there could be a funding mechanism that actually 
looks at the collaboration as a whole, that would be a very 
powerful model for us to work on, where everyone is equally 
accountable and not just the lead agency. Because quite 
frankly, it is difficult to find that lead agency for this very 
reason, whether that is in a community or whether that is in a 
nonprofit or a county agency.
    Mrs. Cammack. Excellent. Thank you so much for your 
commentary.
    In the time I have left, I want to shift gears a little 
bit.
    Mr. Erling, in your testimony you had discussed the 
challenges of transferring agricultural land, both through 
succession and new farmers. Now, what are the challenges, in 
your opinion--I have my own opinion, but I would love to know 
your opinion on what some of those challenges are, and how you 
specifically can help farmers successfully plan for what is 
outside of control for the clients?
    Mr. Erling. Sure, thanks. In the short time I have, I 
appreciate you recognizing that.
    Often, it is flexible funding and making sure that you get 
fair value for the exiting farmer or for the previous 
generation's investment and equity.
    Mrs. Cammack. Okay. Really short answer, and I appreciate 
that. Thank you so much.
    And with that, I yield back. I think my time has expired.
    The Chairman. Thank you. I think that concludes all 
questions from the Members.
    Before we adjourn today, I invite the Ranking Member to 
share any closing comments she may have.
    Mrs. Fischbach. First of all, thank you, Mr. Chairman, for 
putting together the hearing, and I appreciate the opportunity 
just to say a couple of words. Thank you to everybody for 
participating today in the hearing. I appreciate the 
perspectives of all of the witnesses that joined us and all of 
the valuable information you have been able to provide.
    I will just say, Mr. Chairman, I look forward to continuing 
the dialogue and working with you to really come up with some 
great solutions for rural America.
    So, thank you very much, and I appreciate it. Thank you, 
Mr. Chairman.
    The Chairman. Thank you, Ranking Member Fischbach.
    As we close out this hearing, I would again like to thank 
our panel of witnesses for their time and expertise. I have no 
doubt that you are all assets to the rural communities you work 
in and with to support long-term sustainable growth and 
development. The lessons and successes you shared with this 
Subcommittee are invaluable as you work to build back better 
after the COVID-19 pandemic.
    One thing was made abundantly clear today. Meaningful 
investment in rural America and rural infrastructure is 
critical to our nation's recovery from the COVID-19 pandemic, 
and necessary for rural communities to reach their full 
potential. We have an opportunity right now to make significant 
direct investments in rural America that will improve the lives 
of generations of people, support our goals as a nation to 
build back better, and help ensure that our rural communities 
aren't left behind.
    For the sake of every farmer, rancher, forester, student, 
teacher, or business owner living in a rural area, I hope this 
Congress recognizes the importance of a strong rural economy 
and are willing to make the critical investments that we heard 
the need for today.
    With that, under the Rules of the Committee, the record of 
today's hearing will remain open for 10 calendar days to 
receive additional material and supplementary written responses 
from the witnesses to any question posed by a Member.
    This hearing of the Subcommittee on Commodity Exchanges, 
Energy, and Credit is adjourned.
    [Whereupon, at 12:47 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
 Submitted Article by Hon. Bobby L. Rush, a Representative in Congress 
                             from Illinois


[https://chicago.suntimes.com/2020/4/8/21213747/african-americans-
coronavirus-racial-inequities-racism-bobby-rush]
When white America catches a cold, black America catches pneumonia
          Black people will continue to die at disproportionally higher 
        rates than white Americans as a result of COVID-19. It is 
        imperative that black Americans remain hypervigilant.

By U.S. Rep. Bobby Rush \1\ Apr. 8, 2020, 12:13 p.m. CDT
---------------------------------------------------------------------------
    \1\ https://chicago.suntimes.com/authors/bobby-rush.
    
    
          African Americans are more likely to have jobs that have been 
        deemed ``essential'' during the pandemic, writes U.S. Rep. 
        Bobby Rush, making it impossible for them to stay home. Ashlee 
---------------------------------------------------------------------------
        Rezin Garcia/Sun-Times.

    Every few years, America catches a nasty ``cold'' that afflicts 
untold damage on its communities and citizenry. These colds aren't 
always pathological, and they manifest in different forms, but the 
carnage they wreak on our nation's most vulnerable is always 
staggering.
    In 2005, this cold took the form of one of the costliest hurricanes 
on record, slamming into Louisiana and Texas and leaving $125 billion 
in damage in its wake. A few years later, we suffered as a nation from 
the Great Recession, which was brought on by the collapse of the 
housing market and further decimated the already waning middle class. 
And in the latter part of the 2010s, we have lived through a scourge of 
mass shootings that have left virtually no part of the country 
untouched.
Opinion
    These colds have impacted all Americans, but it is always the most 
vulnerable who fair the worst by far, particularly when it comes to the 
black community. Hurricane Katrina devastated a region, but effectively 
obliterated the black middle class there; the Great Recession damaged 
the entire economy, but, by all accounts, was particularly disastrous 
for black Americans and further widened the already vast racial wealth 
gap; and although America is rightfully fixated by the mass shootings 
that happen at our schools, churches, and concert venues around the 
country, there have been 36 mass shootings in my district--which is a 
majority minority district--since 2013 alone.
    Over the history of our country, we have weathered a number of 
these sorts of colds, but in every case, it is clear that when America 
catches a cold, the black community has caught pneumonia. This time, 
however, there is an actual virus that is ravaging our nation. 
Specifically, a severe acute respiratory syndrome brought on by a novel 
coronavirus, and it has proven to be particularly deadly for the 
African American community.
    As of April 4, out of the 86 recorded deaths from COVID-19 in 
Chicago, 61 were black residents. Less than 30 percent of Chicago's 
population is black, and yet this population makes up a full 70 percent 
of those who have succumbed to this disease. Looking at Cook County as 
a whole, we are seeing strikingly similar trends. African Americans, 
who make up only 23 percent of Cook County's population, represent 58 
percent of the county's COVID-19 deaths.
    Tragically, these terrible trends are not unique to Chicago. In 
Milwaukee County, Wisconsin, African Americans make up about half of 
the county's 945 confirmed cases but account for 81 percent of the 
deaths. In Michigan, which is only 14 percent black, African Americans 
accounted for 35 percent of the cases and 40 percent of the COVID-19 
related deaths.
    While these statistics are shocking, they are not a coincidence, 
and as I have outlined, this situation is, unfortunately, all too 
predictable. According to an article published in ProPublica last week, 
``Environmental, economic and political factors have compounded for 
generations, putting black people at higher risk of chronic conditions 
that leave lungs weak and immune systems vulnerable: asthma, heart 
disease, hypertension and diabetes.'' Furthermore, African Americans 
are more likely to have jobs that have been deemed ``essential''--
including those in industries such as health care, transportation, 
government, and food supply--making it impossible for them to stay 
home.
    What's equally alarming is the gross amount of misinformation that 
very well might have led an already vulnerable population to not take 
this pandemic as seriously as they should have. In the weeks leading up 
to these staggering deaths, various social media platforms found 
themselves overrun with an alarming amount of misinformation related to 
the coronavirus. These falsehoods ranged from fraudulent vaccines and 
cures for the virus to more outrageous mistruths that claim African 
Americans are altogether immune to this pathogen.
    Although this might make for tempting wishful thinking, the numbers 
coming out of Chicago, Milwaukee and Detroit tell us that this could 
not be further from the truth.
    In the face of the grim reality that black people will continue to 
die at disproportionally higher rates than white Americans as a result 
of COVID-19, combined with the startling amount of misinformation being 
thrown at us online, it is imperative that black Americans remain 
hypervigilant as we weather America's latest cold. We must follow the 
Centers for Disease Control and Prevention's guidance as well as the 
stay-at-home order issued by Gov. J.B. Pritzker. If you must leave your 
home, take the necessary precautions and practice social distancing.
    On the Federal level, I am also calling for the Secretary of Health 
and Human Services to ensure that the data, clinical trials and access 
to vaccines and treatments include the communities that are the most 
likely to catch ``pneumonia'' when this is all said and done. When 
vaccines and treatments do become available, the federal government 
must prioritize hot spots and medically underserved areas when 
determining distribution, as these areas will need access to tests and 
treatments as quickly as possible.
    America has weathered some terrible colds in the past, but sadly, 
it has been, and it will continue to be, the black community that 
catches the resulting pneumonia. If we are going to break that cycle, 
we must take this current cold deadly serious, and we must ensure that 
the needs of the black community as it relates to COVID-19 are taken 
just as seriously as well.

          U.S. Rep. Bobby L. Rush, a Democrat, represents Illinois' 1st 
        Congressional District. He is a senior member of the House 
        Energy and Commerce Committee, chairman of the Committee's 
        Subcommittee on Energy and sits on the committee's Subcommittee 
        on Health.
          Send letters to [email protected].
                                 ______
                                 
 Submitted Report by Hon. Randy Feenstra a Representative in Congress 
                               from Iowa
Economic Impacts of the Sensible Taxation and Equity Promotion Act and 
        the For the 99.5 Percent Act on AFPC's Representative Farms and 
        Ranches
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
          Cover photo by Phil Hogan, USDA.

Joe L. Outlaw, Bart L. Fischer, Henry L. Bryant, J. Marc Raulston, 
George M. Knapek, Brian K. Herbst

Agricultural and Food Policy Center, Texas A&M University

June 15, 2021
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


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

            2021 by the Agricultural and Food Policy Center

Research Report 21-01

    Agricultural and Food Policy Center, Department of Agricultural 
    Economics, 2124 TAMU, College Station, TX 77843-2124
    Web site: www.afpc.tamu.edu
    Twitter: @AFPCTAMU
Executive Summary
    Under current law, when the owner of a farm or ranch dies, the 
estate is subjected to Federal estate taxes. As of 2021, $11.7 million 
per individual and $23.4 million per couple in assets are exempted from 
the estate tax, effectively protecting most farms from the estate tax. 
In addition, when a decedent passes farm assets to an heir, the heir is 
allowed to take fair market values as their basis in the property 
(i.e., stepped-up basis), effectively avoiding capital gains taxes. 
Given that cropland values have roughly tripled over the past 25 years, 
most producers are extremely sensitive to any changes to the estate tax 
exemptions or stepped-up basis.
    In Spring 2021, a number of proposals surfaced that would 
significantly change how inheritance is treated. For example, the 
Sensible Taxation and Equity Promotion Act (STEP Act)--announced by 
Sen. Chris Van Hollen (D-MD)--proposes to eliminate stepped-up basis 
upon death of the owner. The For the 99.5 Percent Act (99.5% Act)--
introduced by Sen. Bernie Sanders (I-VT)--would decrease the estate tax 
exemption to $3.5 million ($7 million per couple), among other things. 
Senator John Boozman, Ranking Member, Senate Committee on Agriculture, 
Nutrition, and Forestry, and Representative G.T. Thompson, Ranking 
Member, House Committee on Agriculture, asked the Agricultural and Food 
Policy Center (AFPC) to examine the impact of the proposals on 
agricultural producers.
    AFPC maintains a database of 94 representative farms in 30 
different states. That data, in conjunction with a farm-level policy 
simulation model, allows AFPC to analyze policy changes on farms and 
ranches across the country. As part of this analysis, AFPC analyzed a 
total of five scenarios:

   Scenario 1: Current Tax Law with No Generational Transfer.

   Scenario 2: Generational Transfer under Current Tax Law.

   Scenario 3: Generational Transfer under STEP Act.

   Scenario 4: Generational Transfer under 99.5% Act.

   Scenario 5: Generational Transfer under STEP Act and 99.5% 
        Act.

    Under current tax law, only three of the 94 representative farms 
would be impacted by an event triggering a generational transfer. By 
contrast, under the STEP Act, 92 of the 94 representative farms would 
be impacted, with additional tax liabilities incurred averaging 
$726,104 per farm. Under the 99.5% Act, 41 of the 92 representative 
farms would be impacted, with additional tax liabilities incurred 
averaging $2.17 million per farm.
    If both the STEP Act and the 99.5% Act were simultaneously 
implemented, 92 of the 94 representative farms would be impacted, with 
additional tax liabilities incurred averaging $1.43 million per farm 
across the 92 representative farms.
Introduction
    This report analyzes the economic impacts of the tax provisions of 
the Sensible Taxation and Equity Promotion Act (STEP Act) and the For 
the 99.5 Percent Act (99.5% Act) on the Agricultural and Food Policy 
Center's (AFPC's) 94 representative farms and ranches. The analysis was 
requested by Senator John Boozman, Ranking Member, Senate Committee on 
Agriculture, Nutrition, and Forestry, and Representative G.T. Thompson, 
Ranking Member, House Committee on Agriculture. The results are 
presented relative to a status quo baseline that maintains the current 
estate tax exemption and stepped-up basis provisions through 2026.
Background
Overview of Capital Gains Tax Provisions in Current Law
    When an asset appreciates in value, the difference between the 
current fair market value and the amount paid for the asset (less 
accumulated depreciation) is known as a capital gain. Under current tax 
law, assets held longer than 1 year are taxed at long-term capital 
gains rates of up to 20% depending on one's underlying taxable income. 
As noted in an April 2021 report by Ernst and Young for the Family 
Business Estate Tax Coalition (FBETC), ``a longstanding provision of 
U.S. tax law, in place since the Revenue Act of 1921, is that a capital 
gains tax is not imposed when assets are transferred at death to an 
heir. Furthermore, tax law allows the heir to increase their basis in 
the bequeathed assets to fair market value without paying capital gains 
tax. This is referred to as a step-up of basis.''
Overview of Estate Tax Provisions in Current Law
    While stepped-up basis provisions have largely rendered capital 
gains tax irrelevant when assets are transferred to an heir at death, 
that is not the case with the Federal estate tax. Prior to passage of 
the Tax Cuts and Jobs Act of 2017 (P.L. 115-97), the estate tax 
exemption level was $5.49 million (indexed to inflation) (Figure 1). 
Because property left to a surviving spouse transfers free of the 
estate tax, the exemptions for a married couple are effectively 
doubled--$10.98 million for 2017.
    The Tax Cuts and Jobs Act of 2017 raised the exemption level to 
$11.18 million for 2018 (still indexed to inflation). As of 2021, the 
estate tax exemption is $11.7 million per person which is set to expire 
in 2025, at which point the estate tax exemption reverts to $5.49 
million per person. When accounting for a spouse, the current exemption 
level is effectively $23.4 million per couple.
Application to Agriculture
    Agricultural producers are extraordinarily sensitive to changes in 
stepped-up basis and estate taxes because much of their net worth is 
traditionally comprised of land and equipment. Given recent trends in 
land values, that concern now is even more heightened. As noted in 
Figure 2, cropland values have more than tripled since 1997. So, even 
if a producer has not purchased any additional land, the land they were 
already holding is now considerably more valuable.
Figure 1: Historic Individual Estate Tax Exemption Levels
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: IRS and Jacobson, et al.
Figure 2: Farm Real Estate Values (Including Buildings), Cropland 
        Values, and Pastureland Values (in $/Acre), 1988-2020
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
          Source: USDA/NASS.
Proposed Changes
    The Sensible Taxation and Equity Promotion Act (STEP Act)--
announced by Sen. Chris Van Hollen (D-MD)--proposes to eliminate 
stepped-up basis upon death of the owner.\1\ Under the STEP Act, $1 
million in capital gains would be excluded from taxation. The STEP Act 
also anticipates situations where generational transfers do not occur--
for example, imposing capital gains taxes on trusts every 21 years. 
With that said, it is not clear how similar situations would be 
treated. For example, assume an institutional investor (e.g., hedge 
fund) holds farmland in an LLC. It is not clear if those institutional 
landowners would be impacted. As a result, that analysis is beyond the 
scope of this report.
---------------------------------------------------------------------------
    \1\ For more information on the STEP Act, see: https://
www.vanhollen.senate.gov/news/press-releases/van-hollen-leads-
colleagues-in-announcing-new-legislation-to-close-the-stepped-up-basis-
loophole.
---------------------------------------------------------------------------
    The For the 99.5 Percent Act (99.5% Act)--introduced by Sen. Bernie 
Sanders (I-VT)--includes modifications to estate, gift, and generation-
skipping transfer taxes.\2\ The 99.5% Act would, among other things, 
decrease the estate tax exemption to $3.5 million per individual and $7 
million per couple. If signed into law this year, the changes would be 
effective for decedents dying and gifts made during calendar year 2021.
---------------------------------------------------------------------------
    \2\ For more information on the 99.5% Act, see: https://
www.sanders.senate.gov/press-releases/sanders-and-colleagues-introduce-
legislation-to-end-rigged-tax-code-as-inequality-increases/.
---------------------------------------------------------------------------
    This analysis evaluates the elimination of stepped-up basis alone 
and in conjunction with estate tax changes, depending upon the scenario 
being analyzed. Each of the scenarios are described in more detail 
below and do not assume any special rules or exceptions other than 
those explicitly stated.
Data and Methods
Model
    For over 30 years, AFPC has maintained a farm-level policy 
simulation model (FLIPSIM) developed by Richardson and Nixon (1986) for 
analyzing the impact of proposed policy changes on U.S. farms and 
ranches. AFPC currently uses a next generation simulation model--Farm 
Economics and Solvency Projector (FarmESP)--developed by Dr. Henry 
Bryant, that moves to the Python platform and includes all of the 
previous generation's policy and tax capabilities with a significant 
upgrade in terms of crop insurance capabilities.
Data
    The data to simulate farming operations in FarmESP comes primarily 
from AFPC's database of representative farms. Information to describe 
and simulate these farms comes from panels of farmers (typically 4-6 
producers per location) located in major production regions in 30 
states across the United States (Figure 3). The farm panels are 
reconvened frequently to update their representative farm's data. The 
representative farms are categorized by their primary source of 
receipts--for example, feedgrain, wheat, cotton, rice, dairy, and 
cattle ranches. The representative farm database has been used for 
policy analysis for over 30 years.
Figure 3: Map of AFPC Representative Farm and Ranches
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    In the tables that follow, the first two letters of a farm's name 
is the state abbreviation followed by the letter describing the type of 
farm (e.g., G for feedgrain, W for wheat, etc.) followed by an M or L 
indicating if the farm is moderate or large (an X indicates there is 
only one farm size of that type in the region). The number in a farm's 
name indicates the acres or number of head of cattle for ranches or 
milk cows for dairies. Appendix A provides an overview of the 
characteristics of AFPC's representative farms. Appendix B provides the 
names of producers, land-grant faculty, and industry leaders who 
cooperated in the panel interview process to develop the representative 
farms. Additional information about the representative farms can be 
found in AFPC Working Paper 21-1 by Outlaw, et al., March 2021. The 
breakdown of farms by type is as follows:

   Feedgrain: 25

   Wheat: 11

   Cotton: 13

   Rice: 15

   Cattle: 10

   Dairy: 20

    Projected prices, policy variables, and input inflation rates are 
from the Food and Agricultural Policy Research Institute (FAPRI) 2021 
Baseline (Tables 1 and 2). Notably, there are occasions when we would 
expect a policy change to greatly change relative commodity prices 
necessitating a FAPRI analysis of the sector level that would feed into 
the representative farm models. This is not the case for the current 
tax analyses. We expect any impacts to be experienced over time and 
localized to operations with significant owned land. AFPC's 
representative farms and ranches are all assumed to be full-time, 
commercial-scale family operations. The results of this analysis will 
vary greatly by farm depending upon each farm's asset base and the 
share of their farmland they own versus rent. Tables 3 and 4 provide 
the percent of the farm's cropland or ranch's pastureland that is owned 
for the representative farms. The percentage varies greatly across 
farms and farm types. For example, two of the four Texas rice farms are 
comprised only of rented land. As a result, any capital gains or estate 
taxes accrue from sources other than land (if at all--as noted later in 
the results, two Texas rice farms were the only farms not impacted by 
this analysis). Importantly, the analysis does not include indirect 
impacts. For example, while two of the Texas rice farms were not 
impacted, if they were renting land from a landowner who was impacted 
by either proposal, one could reasonably assume that rental rates would 
increase as a result.

                    Table 1: FAPRI January 2021 Baseline Crop and Livestock Prices, 2019-2026
----------------------------------------------------------------------------------------------------------------
                     2019        2020        2021        2022        2023        2024        2025        2026
----------------------------------------------------------------------------------------------------------------
                                                   Crop Prices
----------------------------------------------------------------------------------------------------------------
Corn ($/bu.)            3.56        4.22        4.04        3.96        3.91        3.85        3.80        3.78
Wheat ($/bu.)           4.58        4.84        5.00        5.09        5.09        5.05        5.03        5.01
Upland Cotton         0.5960      0.6816      0.6785      0.6675      0.6689      0.6807      0.6821      0.6919
 Lint ($/lb.)
Sorghum ($/bu.)         3.34        4.59        4.06        3.98        3.90        3.86        3.82        3.82
Soybeans ($/bu.)        8.57       11.15       10.49       10.34       10.09        9.80        9.60        9.45
Barley ($/bu.)          4.69        4.64        4.76        4.78        4.73        4.68        4.63        4.61
Oats ($/bu.)            2.82        2.77        2.63        2.69        2.70        2.69        2.67        2.67
All Rice ($/           13.50       13.10       12.61       12.85       12.98       13.12       13.33       13.60
 cwt.)
Soybean Meal ($/      285.67      366.40      334.10      334.07      329.04      323.51      317.02      314.86
 ton)
All Hay ($/ton)       163.00      159.10      162.69      161.62      160.53      159.08      157.73      157.14
Peanuts ($/ton)       410.00      426.61      412.71      404.76      400.25      401.29      402.55      404.02
----------------------------------------------------------------------------------------------------------------
                                                  Cattle Prices
----------------------------------------------------------------------------------------------------------------
Feeder Cattle ($/     153.65      145.83      148.81      163.34      171.77      177.61      182.36      184.49
 cwt)
Fed Cattle ($/        116.78      108.46      116.47      122.63      127.73      131.68      134.85      136.33
 cwt)
Culled Cows ($/        58.97       58.50       60.45       64.85       66.71       68.25       70.68       71.82
 cwt)
----------------------------------------------------------------------------------------------------------------
                                                   Milk Price
----------------------------------------------------------------------------------------------------------------
U.S. All Milk          18.63       18.30       17.50       17.59       17.78       18.01       18.05       18.04
 Price ($/cwt)
----------------------------------------------------------------------------------------------------------------
Source: Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri-Columbia.


 Table 2: FAPRI January 2021 Baseline Assumed Rates of Change in Input Prices and Annual Changes in Land Values,
                                                    2020-2026
----------------------------------------------------------------------------------------------------------------
                                 2020        2021        2022        2023        2024        2025        2026
----------------------------------------------------------------------------------------------------------------
                                   Annual Rate of Change for Input Prices Paid
----------------------------------------------------------------------------------------------------------------
Seed Prices (%)                    ^2.00        2.45        3.17        2.51        1.94        1.47        1.22
All Fertilizer Prices (%)           3.29        3.63        4.11       ^1.03        0.37        0.54        0.50
Herbicide Prices (%)               ^1.85        3.80        1.96        1.51        1.62        1.58        1.67
Insecticide Prices (%)             ^6.59        2.80        1.87        1.71        1.81        1.77        1.82
Fuel and Lube Prices (%)           ^3.26        2.17        6.45        6.72        2.42        3.17        4.20
Machinery Prices (%)               ^0.12        1.98        1.84        0.94        1.13        1.17        1.30
Wages (%)                           1.48        2.62        3.31        3.42        3.22        3.20        3.30
Supplies (%)                        1.49        1.63        1.42        1.43        1.39        1.57        1.62
Repairs (%)                         1.29        2.57        2.35        2.39        2.29        2.42        2.50
Services (%)                       ^0.24        1.81        2.44        2.15        2.16        2.13        2.24
Taxes (%)                           1.36        3.17        2.46        4.94        5.13        1.33        1.40
PPI Items (%)                      ^0.89        3.52        2.51        1.33        1.04        1.12        1.27
PPI Total (%)                      ^0.39        3.32        2.57        1.71        1.47        1.38        1.53
----------------------------------------------------------------------------------------------------------------
                                   Annual Change in Consumer Price Index (%)
----------------------------------------------------------------------------------------------------------------
                                    1.25        2.12        2.46        2.10        2.12        2.15        2.23
----------------------------------------------------------------------------------------------------------------
                                 Annual Rate of Change for U.S. Land Prices (%)
----------------------------------------------------------------------------------------------------------------
                                    0.00        5.15        5.10       ^2.20       ^1.92       ^1.33       ^1.20
----------------------------------------------------------------------------------------------------------------
Source: Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri-Columbia.


                       Table 3: Percent of Cropland on the Farm that is Owned by Farm Type
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
      Feedgrain Farms  Wheat Farms
                       Cotton Farms
                        Rice Farms
----------------------------------------------------------------------------------------------------------------
  IAG-M-1350         19%       WAW-M-2800         29%      TXSP-X-4500         11%      CAR-M-1200         23%
        IAG-L-3400   25%             WAW-L-10000  25%      TXEC-X-5000         25%            CAR-L-3000   30%
  NEG-M-2400         25%      WAAW-X-5500         45%      TXRP-X-3000         29%      CABR-X-800         40%
        NEG-L-4500   48%       ORW-X-4500         44%      TXMC-X-2500          7%      CACR-X-800         30%
  NDG-M-3000         24%       MTW-X-9500         53%      TXCB-M-4000         15%      TXR-M-1500         27%
        NDG-L-9000   44%      KSCW-M-2000         35%            TXCB-L-10000  15%            TXR-L-3000    0%
  ING-M-1000         30%            KSCW-L-5300   25%      TXVC-X-5500         32%     TXBR-X-1800          0%
        ING-L-3500   35%      KSNW-M-4000         29%      ARNC-X-5000         20%     TXER-X-2500          0%
   OHG-M-700         50%            KSNW-L-7000   30%       TNC-M-3000         10%                LASR-X-2010%
        OHG-L-1500   25%       COW-M-3000         70%             TNC-L-4050   25%     ARMR-X-6500         18%
 MOCG-M-2300         60%             COW-L-6000   50%                ALC-X-350010%     ARSR-X-3240         20%
       MOCG-L-4200   43%                                    GAC-X-2500        100%     ARWR-X-2500         50%
 MONG-X-2300         70%                                   NCNP-X-1600         38%     ARHR-X-4000         25%
            LANG-X-2520%                                                               MSDR-X-5000         60%
  TNG-M-2500         25%                                                               MOBR-X-4000         25%
        TNG-L-5000   28%
 NCSP-X-2000         35%
  NCC-X-2030         11%
  SCC-X-2000         28%
  SCG-X-3500         40%
 TXNP-M-3450         75%
       TXNP-L-10880  38%
 TXPG-X-2500         75%
 TXHG-X-3000         15%
 TXWG-X-1600          9%
----------------------------------------------------------------------------------------------------------------


                                  Table 4: Percent of Crop and Pastureland on the Farm/Ranch that is Owned by Farm Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Ranches       Dairy Farms
--------------------------------------------------------------------------------------------------------------------------------------------------------
                            Cropland
                          Pastureland                                     Cropland
                          Pastureland
                -------------------------------------------------------------                -----------------------------------------------------------
                       Acres        Percent          Acres        Percent                          Acres        Percent          Acres        Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
    NVB-X-650          1,300           100%         10,725            81%       CAD-X-2000           700            86%              0            N/A
   NVSB-X-550            125           100%            375           100%        WAD-M-300           250            50%              0            N/A
    MTB-X-600            900           100%         20,700            63%             WAD-L-1200     850            50%              0            N/A
    WYB-X-475            330           100%          2,200            68%       IDD-X-1500           850            50%              0            N/A
    COB-X-275            650            69%          3,050            75%       NVD-X-1000           500            60%              0            N/A
    NMB-X-210              0            N/A         12,333            82%      TXND-X-3800         1,920           100%              0            N/A
    SDB-X-600          1,000           100%         14,200            46%      TXCD-X-1500           616            59%            500           100%
    MOB-X-250            360            60%            850            67%       TXED-X-400           950            50%              0            N/A
   TXRB-X-400              0            N/A         20,000            50%        WID-M-180           800            50%             40           100%
   TXSB-X-300            100           100%          1,575            51%             WID-L-1700   3,200            50%              0            N/A
                                                                                 OHD-X-400           700            50%             25           100%
                                                                                NYWD-M-400           800            60%              0            N/A
                                                                                     NYWD-L-1200   2,100            67%             50           100%
                                                                                NYCD-M-180           400            80%             30           100%
                                                                                     NYCD-L-800    1,800            75%             50           100%
                                                                                 VTD-M-160           220            45%             60            N/A
                                                                                      VTD-L-400    1,000            53%            100            50%
                                                                                MOGD-X-550           460           100%              0            N/A
                                                                                         FLND-X-550  600            75%             60           100%
                                                                                         FLSD-X-1750 400           100%            470           100%
--------------------------------------------------------------------------------------------------------------------------------------------------------

Producer Input
    Each time a policy proposal is evaluated that depends on individual 
producer responses, AFPC sends an email asking for information from 
representative farm panel participants that would make the analysis 
more realistic. For this analysis, representative farm participants 
provided information that assisted with allocating the percentage of 
owned land on each type of farm (crop, dairy, ranch) into time periods 
of acquisition to calculate potential capital gains tax obligations. 
Naturally, AFPC anticipates land that was recently acquired will have a 
higher basis compared to land that panel members acquired comparatively 
earlier.
    A total of 247 responses were received from the representative 
farm/ranch panel members. This represents approximately 40% of the 
panel members in the AFPC database. This is by far the highest response 
rate AFPC has ever received when asking questions about potential 
policy changes. There were 23 responses from the ten ranches, 186 
responses from the 64 crop farms, and 38 responses from the 20 dairy 
farms. As noted earlier, we typically have 4-6 producers on each 
representative farm panel, so the number of producer responses we 
received easily exceeded the number of representative farms in our 
analysis. Major agricultural states often have more than one 
representative farm/ranch panel in our network of representative farms; 
producers in every state with a representative farm or ranch registered 
responses.
    The percentage of owned land by years of ownership has similar 
patterns across farm types. A relatively large percentage was purchased 
within the past 5 years, and 49 percent or more of the land for each 
farm type was acquired over 15 years ago. As discussed in more detail 
below, these percentages were utilized in the FarmESP simulation model 
to incorporate realistic land ownership patterns (Figure 4).
Figure 4: Simple Average of Panel Member Responses to Length of Time 
        They Have Owned Land
        
        
Model Modifications
    To simulate the effects of the STEP Act and 99.5% Act provisions, 
the following changes were incorporated into FarmESP:

   To calculate the potential capital gain tax liability under 
        the STEP Act, capital gain amounts were calculated for each 
        farm based on owned land and equipment. The capital gain on 
        land was dependent on the farm type (crop, dairy, or ranch) and 
        panel member feedback on the length of time the land was owned. 
        For example, if a crop farm owned 100 acres, it was assumed 
        that 18.3% of the 100 acres was owned for more than 30 years, 
        6.6% was owned for 26 to 30 years, and so on based on the 
        producer responses summarized in Figure 4.

   The taxable amount of capital gains on owned land was 
        defined as the difference between the current market value of 
        the land in 2021 and the value of the land when it was 
        acquired. The current value of the land reflects discussions by 
        panel members in the most recent update meeting with AFPC 
        personnel. The value of the land when it was acquired was 
        determined by taking the current market value in 2021 and 
        applying a percentage price change for each land vintage that 
        is equal to their state-level pastureland (ranches) or cropland 
        (all other farms) percentage price change based on NASS data.

   The taxable amount of capital gains on machinery was 
        calculated on the current market value of machinery in 2021 
        less the book value in 2021. The current market value of 
        machinery reflects discussions by panel members in the most 
        recent update meeting with AFPC personnel. The book value is 
        based on the purchase price and depreciation schedule in 
        FarmESP. Both the machinery and land capital gains were assumed 
        to be taxed at the current 20% long-term capital gains rate. 
        The exclusion of tax on the first $1 million of capital gain 
        was also assumed (consistent with the STEP Act).

   The estate tax liability under the 99.5% Act was calculated 
        using the nominal net worth of each farm in 2021. The nominal 
        net worth was taxed at the applicable updated marginal tax 
        rates outlined in the 99.5% Act. Each farm was assumed to be 
        eligible for double the $3.5 million exclusion amount 
        (consistent with AFPC's assumption of two payment limits for 
        purposes of Title [I] benefits). Thus, the assumed estate tax 
        exclusion on each farm went from $23.4 million in current law 
        to $7 million under the 99.5% Act. In scenario 3 (Generational 
        Transfer under STEP Act) and the final scenario (Generational 
        Transfer under STEP Act and 99.5% Act), it was assumed that the 
        applicable capital gains tax amount was deducted from the 
        decedent's gross estate for purposes of calculating the estate 
        tax obligation.

   This analysis for all of the farms starts in 2018 using 
        actual prices and output variables (e.g., crop yields, milk 
        production per cow, and calf crop) for 2018-2020 and uses FAPRI 
        commodity and input price forecasts for 2021-2026. Using 3 
        years of history provides the opportunity to check to ensure 
        the model results are aligned with the panel's experiences.

   AFPC's representative farms are constructed to analyze 
        policy changes going forward. Under the status quo, the farms 
        are assumed to continue operating in perpetuity. For purposes 
        of this analysis and for the sake of consistency, the operator/
        landowner is assumed to die in 2021 with the farm transferring 
        ownership in 2021 and taxes due in 2022. Naturally, farms that 
        recently went through a generational transfer would not be 
        impacted by the proposed changes (at least not in the near 
        term), but this assumption is obviously key to analyzing the 
        impact of the tax proposals on the farms in the event of an 
        operator death.

   Finally, farms are expected to pay the calculated tax 
        obligations in the year they are due. All farms are assumed to 
        pay calculated taxes out of existing cash (if available). If 
        the farm does not have enough cash to pay all cash obligations, 
        then a carryover is experienced, and a short-term loan is 
        established for the debt. While the results would suggest that 
        some farms would have difficulty securing financing, this 
        assumption of available financing is consistent with the fact 
        that the STEP Act, for example, provides a 15 year financing 
        option. While there are a number of ways a producer could 
        choose to address a large additional tax liability, the 
        assumptions made in this analysis provide a snapshot of the 
        magnitude of the financial impacts of the proposed tax policy 
        changes.
Scenarios Analyzed
    The following five scenarios were analyzed for each of the 94 
representative farms and ranches:

   Scenario 1: Current Tax Law with No Generational Transfer. 
        This baseline scenario assumes current tax law remains in place 
        and that no event triggers a generational transfer.

   Scenario 2: Generational Transfer under Current Tax Law. 
        This scenario assumes current tax law remains in place and an 
        event triggers a generational transfer in 2021 (e.g., death of 
        the principal operator).

   Scenario 3: Generational Transfer under STEP Act. This 
        scenario assumes the STEP Act is in effect and an event 
        triggers a generational transfer in 2021 (e.g., death of the 
        principal operator). Under the STEP Act, the current estate tax 
        exemption levels are maintained and stepped-up basis is 
        eliminated.

   Scenario 4: Generational Transfer under 99.5% Act. This 
        scenario assumes the 99.5% Act is in effect and an event 
        triggers a generational transfer in 2021 (e.g., death of the 
        principal operator). Under the 99.5% Act, the estate tax 
        exemption levels are lower but stepped-up basis is maintained.

   Scenario 5: Generational Transfer under STEP Act and 99.5% 
        Act. This scenario assumes both the STEP Act and the 99.5% Act 
        are in effect and an event triggers a generational transfer in 
        2021 (e.g., death of the principal operator). In this scenario, 
        the estate tax exemption levels are lower and stepped-up basis 
        is eliminated.
Results
    As noted above, Scenario 1 is a baseline scenario where no event 
triggers a generational transfer. Under this status quo scenario, 38 of 
the 94 representative farms and ranches are projected to have a 
negative ending cash balance at the end of 2026--and that is without 
any policy changes. In other words, even in the status quo scenario, 
there are farms struggling to cash flow across all types of farms and 
ranches (seven feedgrain, four wheat, five cotton, ten rice, eight 
dairy and four cattle ranches).

               Table 5: Summary of Results for the Representative Farms for the Five Tax Scenarios
----------------------------------------------------------------------------------------------------------------
                                             Scenario 1
                                                 No        Scenario 2    Scenario 3    Scenario 4    Scenario 5
                                            Generational  Generational  Generational  Generational  Generational
                                              Transfer      Transfer      Transfer      Transfer      Transfer
                                             Current Tax   Current Tax    STEP Act      99.5% Act   STEP + 99.5%
                                               Policy        Policy                                     Acts
----------------------------------------------------------------------------------------------------------------
Number of Farms Impacted                             N/A     2/94 (2%)   92/94 (98%)   41/94 (44%)   92/94 (98%)
Average Additional Tax Liability Incurred            N/A      $370,431      $726,104    $2,166,415    $1,431,408
 for Farms Impacted
Average Change in Ending Cash Balances               N/A     ^$382,200     ^$796,627   ^$2,375,717   ^$1,588,365
 (2026)
----------------------------------------------------------------------------------------------------------------

    As noted in Table 5, under Scenario 2 (Generational Transfer under 
Current Law), only two of the larger dairies (CAD-X-2000 and TXND-X-
3800) face estate tax liabilities as a result of a generational 
transfer--owing to stepped-up basis (i.e., no long-term capital gains 
tax) and the $23.5 million estate tax exclusion in current law. 
Naturally, larger farms would be impacted by current law during a farm 
transition, but none of the other 92 farms in AFPC's database would 
incur capital gains or estate taxes resulting in a change in ending 
cash balances under current law.
    In sharp contrast, under Scenario 3 (Generational Transfer under 
the STEP Act), 92 of the 94 representative farms are impacted. Despite 
the $1 million exclusion included in the STEP Act, the elimination of 
stepped-up basis impacts almost all of AFPC's representative farms. 
Across the 92 impacted farms, the additional tax liability incurred 
averages $726,104 per farm.
    Under Scenario 4 (Generational Transfer under the 99.5% Act), 
lowering the estate tax exemption levels to $3.5 million (or a combined 
total of $7 million per couple) impacts 41 farms, with the additional 
tax liability incurred averaging $2.17 million per farm.
    If the STEP Act and 99.5% Act were both implemented (Scenario 5), 
92 of the 94 representative farms would be impacted. The additional tax 
liability incurred would average $1.43 million per farm across all 92 
farms. While the average impact in Scenario 5 is lower than that in 
Scenario 4, that is entirely because Scenario 5 impacts 92 farms 
(whereas Scenario 4 impacted only 41 farms). Importantly, when looking 
at individual farm results (Table 6), in no case was the tax liability 
in Scenario 5 lower than that incurred in Scenarios 3 or 4; in other 
words, combining the two policies always resulted in an equal or higher 
tax liability.
    Table 5 also includes the average change in ending cash balances in 
2026 for each scenario. The fact that the reduction in ending cash 
balances exceeds the tax liability incurred largely reflects the 
interest costs incurred in financing the debt resulting from the tax 
liability.
    Tables 6-8 contain the results for the 25 feedgrain, 11 wheat, 13 
cotton, 15 rice, and 20 dairy farms along with ten cattle ranches. For 
this analysis, the key output variables used to demonstrate the impact 
of the two tax policy changes are (1) additional tax liability incurred 
and (2) ending cash balances in 2026. With everything on the operation 
staying the same except for the policy change associated with each 
scenario, these variables highlight any liabilities and potential cash 
flow shortfalls that would be created by the tax changes.
    Tables 6 and 7 also utilize average annual net cash farm income 
(NCFI) for 2021-2026 under the baseline scenario (i.e., current tax law 
with no generational transfer) as a point of reference. NCFI equals 
total cash receipts minus all cash expenses. It is used to pay family 
living expenses, principal payments, income taxes, self-employment 
taxes, and machinery replacement costs.
    Table 7 reflects the ratio of additional tax liability incurred to 
NCFI for Scenarios 3-5. For context, Table 7 illustrates how many years 
it would take to pay off the new tax liability if NCFI were used 
exclusively for that purpose. For example, on the 4,500-acre Nebraska 
feedgrain farm, it would take 14.5 years using all of the NCFI 
generated by the farm (while ignoring all other obligations normally 
covered by NCFI) to pay off the tax liability from the STEP Act and 
99.5% Act.
    Table 8 includes the average change in ending cash balances in 2026 
for each scenario. As noted earlier, any reduction in ending cash 
balances that exceeds the tax liability incurred largely reflects the 
interest costs incurred in financing the debt resulting from the tax 
liability. As shown in Table 8, a number of farms were already facing 
negative ending cash balances in 2026 under status quo.
    While there is no perfect point of reference (or context), another 
approach would be to compare the additional tax liability incurred to 
the cost basis of the assets on the farm. For 11 of the 94 
representative farms, the tax liability incurred in Scenario 5 was more 
than 50% of the cost basis of the assets on the farm. In the extreme 
case, for the large Texas dairy (TXND-X-3800), the tax liability 
exceeded the cost basis of the farm (106%).

  Table 6: Average Annual Net Cash Farm Income (NCFI) and Tax Liability for the Representative Farms for Select
                                           Tax Scenarios (in Dollars)
----------------------------------------------------------------------------------------------------------------
                                                       Scenario 2
                                         Average      Generational     Scenario 3     Scenario 4     Scenario 5
       Type               Farm         Annual Base      Transfer      Generational   Generational   Generational
                                       NCFI (2021-     Current Tax   Transfer STEP     Transfer    Transfer STEP
                                           26)           Policy           Act         99.5% Act     + 99.5% Acts
----------------------------------------------------------------------------------------------------------------
      Feedgrain         IAG-M-1350          89,090               0        283,842              0        283,842
                              IAG-L-3400   531,862               0      1,244,826      1,027,064      1,711,563
                        NEG-M-2400         435,960               0        713,177              0        713,177
                              NEG-L-4500   419,070               0      2,956,842      4,591,837      6,070,258
                        NDG-M-3000         278,514               0        450,627              0        450,627
                              NDG-L-9000 1,351,884               0      2,763,619      5,996,955      7,378,764
                        ING-M-1000         239,848               0        332,811              0        332,811
                              ING-L-3500   652,927               0      1,467,786      1,738,634      2,507,257
                         OHG-M-700         125,353               0        201,014              0        201,014
                              OHG-L-1500   407,906               0        346,212              0        346,212
                       MOCG-M-2300         575,856               0      1,513,229      1,873,664      2,655,537
                             MOCG-L-4200 1,122,730               0      2,321,461      4,605,774      5,766,504
                       MONG-X-2300         587,196               0      1,716,843      2,201,626      3,065,311
                                  LANG-X-25205,219               0        193,054              0        193,054
                        TNG-M-2500         322,796               0        288,653              0        288,653
                              TNG-L-5000   874,612               0        850,887      1,835,971      2,268,907
                       NCSP-X-2000         183,313               0        306,738              0        306,738
                        NCC-X-2030         422,000               0          4,424              0          4,424
                        SCC-X-2000         195,420               0        191,371              0        191,371
                        SCG-X-3500         493,834               0        784,226         42,908        784,841
                       TXNP-M-3450         666,326               0        760,188        491,731        933,396
                             TXNP-L-108801,515,870               0      2,026,900      6,140,075      7,153,525
                       TXPG-X-2500         324,813               0        503,516              0        503,516
                       TXHG-X-3000         154,201               0        119,460              0        119,460
                       TXWG-X-1600          63,661               0         31,866              0         31,866
          Wheat         WAW-M-2800         307,995               0        113,573              0        113,573
                              WAW-L-10000  751,923               0        839,410      1,580,241      2,019,522
                       WAAW-X-5500          16,889               0         90,880              0         90,880
                        ORW-X-4500         145,686               0         30,282              0         30,282
                        MTW-X-9500         759,114               0        844,122        497,394        970,260
                       KSCW-M-2000         315,536               0        215,694              0        215,694
                             KSCW-L-5300   751,846               0        618,500          8,088        618,533
                       KSNW-M-4000         289,968               0        479,058              0        479,058
                             KSNW-L-7000   525,991               0      1,048,546        378,545      1,084,027
                        COW-M-3000         179,199               0        368,527              0        368,527
                              COW-L-6000    65,283               0        666,247              0        666,247
         Cotton        TXSP-X-4500         230,148               0        140,492              0        140,492
                       TXEC-X-5000         410,855               0        338,474              0        338,474
                       TXRP-X-3000           5,356               0         12,680              0         12,680
                       TXMC-X-2500         161,687               0         52,494              0         52,494
                       TXCB-M-4000         175,477               0        219,094              0        219,094
                             TXCB-L-10000  845,126               0        727,223        981,309      1,381,657
                       TXVC-X-5500         594,979               0        663,329        212,613        706,259
                       ARNC-X-5000       1,278,995               0      1,029,805      2,157,625      2,676,174
                        TNC-M-3000         612,663               0         62,219              0         62,219
                              TNC-L-4050   644,658               0        505,551         95,867        515,022
                                 ALC-X-3500967,496               0        291,897              0        291,897
                        GAC-X-2500         614,064               0        770,004      1,245,734      1,667,186
                       NCNP-X-1600          77,648               0        174,455              0        174,455
           Rice         CAR-M-1200         349,839               0        387,583              0        387,583
                              CAR-L-3000   112,705               0      1,471,776      2,696,234      3,440,680
                        CABR-X-800         262,352               0        400,802              0        400,802
                        CACR-X-800         ^76,059               0        352,582              0        352,582
                        TXR-M-1500          37,579               0        147,822              0        147,822
                              TXR-L-3000   157,929               0          4,464              0          4,464
                       TXBR-X-1800         148,843               0              0              0              0
                       TXER-X-2500         213,467               0              0              0              0
                                  LASR-X-20099,116               0        116,394              0        116,394
                       ARMR-X-6500         831,787               0        797,103        958,548      1,418,087
                       ARSR-X-3240         316,344               0        464,406              0        464,406
                       ARWR-X-2500         291,745               0        885,012         82,666        885,133
                       ARHR-X-4000         209,290               0        880,740        271,001        899,695
                       MSDR-X-5000       1,009,655               0      2,132,270      4,659,867      5,726,002
                       MOBR-X-4000         229,378               0      1,119,486        741,637      1,368,706
          Ranch          NVB-X-650          97,922               0      1,851,122      2,064,410      3,011,086
                        NVSB-X-550          83,046               0        386,106              0        386,106
                         MTB-X-600         144,217               0        874,000        620,397      1,101,097
                         WYB-X-475          34,455               0        236,199              0        236,199
                         COB-X-275         151,476               0      1,460,362      4,038,415      4,768,596
                         NMB-X-210          47,185               0        544,318              0        544,318
                         SDB-X-600          10,942               0      1,032,121        297,084      1,032,193
                         MOB-X-250         216,147               0        192,957              0        192,957
                        TXRB-X-400         119,777               0        972,300        731,541      1,266,307
                        TXSB-X-300         134,256               0        570,520              0        570,520
          Dairy         CAD-X-2000       1,483,972           1,815      2,124,243      7,016,637      8,078,759
                         WAD-M-300         ^67,127               0        223,542              0        223,542
                              WAD-L-1200   376,854               0      1,158,760      3,055,598      3,634,978
                        IDD-X-1500       1,276,968               0      1,217,659      1,888,263      2,514,284
                        NVD-X-1000         814,030               0        318,521        218,965        434,172
                       TXND-X-3800       2,318,634         739,047      2,091,233      8,910,791      9,821,758
                       TXCD-X-1500         526,077               0        779,773      1,033,075      1,462,828
                        TXED-X-400         ^53,969               0         81,163              0         81,163
                         WID-M-180         345,162               0        455,045              0        455,045
                              WID-L-1700 1,205,662               0      2,459,744      4,761,203      5,991,074
                         OHD-X-400         298,843               0        651,910              0        651,910
                        NYWD-M-400         267,324               0        422,625              0        422,625
                             NYWD-L-1200   797,816               0      1,733,207      3,802,948      4,669,552
                        NYCD-M-180         237,356               0        105,510              0        105,510
                             NYCD-L-800    598,976               0      1,384,251      1,860,716      2,572,514
                         VTD-M-160         ^57,479               0         48,520              0         48,520
                              VTD-L-400   ^158,767               0        544,104              0        544,104
                        MOGD-X-550         279,483               0        174,427              0        174,427
                                 FLND-X-550123,601               0        109,499              0        109,499
                                 FLSD-X-175190,761               0        761,215      1,409,379      1,814,163
----------------------------------------------------------------------------------------------------------------


 Table 7: Years of Net Cash Farm Income (NCFI) Required to Eliminate Tax Liability for the Representative Farms
                                            for Select Tax Scenarios
----------------------------------------------------------------------------------------------------------------
                                                                                                  Scenario 5
                                                       Scenario 3            Scenario 4          Generational
          Type                     Farm               Generational          Generational       Transfer STEP +
                                                    Transfer STEP Act    Transfer 99.5% Act       99.5% Acts
----------------------------------------------------------------------------------------------------------------
         Feedgrain               IAG-M-1350                    3.2                                       3.2
                                       IAG-L-3400              2.3                  1.9                  3.2
                                 NEG-M-2400                    1.6                                       1.6
                                       NEG-L-4500              7.1                 11.0                 14.5
                                 NDG-M-3000                    1.6                                       1.6
                                       NDG-L-9000              2.0                  4.4                  5.5
                                 ING-M-1000                    1.4                                       1.4
                                       ING-L-3500              2.2                  2.7                  3.8
                                  OHG-M-700                    1.6                                       1.6
                                       OHG-L-1500              0.8                                       0.8
                                MOCG-M-2300                    2.6                  3.3                  4.6
                                      MOCG-L-4200              2.1                  4.1                  5.1
                                MONG-X-2300                    2.9                  3.7                  5.2
                                           LANG-X-2500         0.9                                       0.9
                                 TNG-M-2500                    0.9                                       0.9
                                       TNG-L-5000              1.0                  2.1                  2.6
                                NCSP-X-2000                    1.7                                       1.7
                                 NCC-X-2030                    0.0                                       0.0
                                 SCC-X-2000                    1.0                                       1.0
                                 SCG-X-3500                    1.6                  0.1                  1.6
                                TXNP-M-3450                    1.1                  0.7                  1.4
                                      TXNP-L-10880             1.3                  4.1                  4.7
                                TXPG-X-2500                    1.6                                       1.6
                                TXHG-X-3000                    0.8                                       0.8
                                TXWG-X-1600                    0.5                                       0.5
             Wheat               WAW-M-2800                    0.4                                       0.4
                                       WAW-L-10000             1.1                  2.1                  2.7
                                WAAW-X-5500                    5.4                                       5.4
                                 ORW-X-4500                    0.2                                       0.2
                                 MTW-X-9500                    1.1                  0.7                  1.3
                                KSCW-M-2000                    0.7                                       0.7
                                      KSCW-L-5300              0.8                  0.0                  0.8
                                KSNW-M-4000                    1.7                                       1.7
                                      KSNW-L-7000              2.0                  0.7                  2.1
                                 COW-M-3000                    2.1                                       2.1
                                       COW-L-6000             10.2                                      10.2
            Cotton              TXSP-X-4500                    0.6                                       0.6
                                TXEC-X-5000                    0.8                                       0.8
                                TXRP-X-3000                    2.4                                       2.4
                                TXMC-X-2500                    0.3                                       0.3
                                TXCB-M-4000                    1.2                                       1.2
                                      TXCB-L-10000             0.9                  1.2                  1.6
                                TXVC-X-5500                    1.1                  0.4                  1.2
                                ARNC-X-5000                    0.8                  1.7                  2.1
                                 TNC-M-3000                    0.1                                       0.1
                                       TNC-L-4050              0.8                  0.1                  0.8
                                          ALC-X-3500           0.3                                       0.3
                                 GAC-X-2500                    1.3                  2.0                  2.7
                                NCNP-X-1600                    2.2                                       2.2
              Rice               CAR-M-1200                    1.1                                       1.1
                                       CAR-L-3000             13.1                 23.9                 30.5
                                 CABR-X-800                    1.5                                       1.5
                                 CACR-X-800                      a                                         a
                                 TXR-M-1500                    3.9                                       3.9
                                       TXR-L-3000              0.0                                       0.0
                                TXBR-X-1800
                                TXER-X-2500
                                           LASR-X-2000         1.2                                       1.2
                                ARMR-X-6500                    1.0                  1.2                  1.7
                                ARSR-X-3240                    1.5                                       1.5
                                ARWR-X-2500                    3.0                  0.3                  3.0
                                ARHR-X-4000                    4.2                  1.3                  4.3
                                MSDR-X-5000                    2.1                  4.6                  5.7
                                MOBR-X-4000                    4.9                  3.2                  6.0
             Ranch                NVB-X-650                   18.9                 21.1                 30.7
                                 NVSB-X-550                    4.6                                       4.6
                                  MTB-X-600                    6.1                  4.3                  7.6
                                  WYB-X-475                    6.9                                       6.9
                                  COB-X-275                    9.6                 26.7                 31.5
                                  NMB-X-210                   11.5                                      11.5
                                  SDB-X-600                   94.3                 27.2                 94.3
                                  MOB-X-250                    0.9                                       0.9
                                 TXRB-X-400                    8.1                  6.1                 10.6
                                 TXSB-X-300                    4.2                                       4.2
             Dairy               CAD-X-2000                    1.4                  4.7                  5.4
                                  WAD-M-300                      a                                         a
                                       WAD-L-1200              3.1                  8.1                  9.6
                                 IDD-X-1500                    1.0                  1.5                  2.0
                                 NVD-X-1000                    0.4                  0.3                  0.5
                                TXND-X-3800                    0.9                  3.8                  4.2
                                TXCD-X-1500                    1.5                  2.0                  2.8
                                 TXED-X-400                      a                                         a
                                  WID-M-180                    1.3                                       1.3
                                       WID-L-1700              2.0                  3.9                  5.0
                                  OHD-X-400                    2.2                                       2.2
                                 NYWD-M-400                    1.6                                       1.6
                                      NYWD-L-1200              2.2                  4.8                  5.9
                                 NYCD-M-180                    0.4                                       0.4
                                      NYCD-L-800               2.3                  3.1                  4.3
                                  VTD-M-160                      a                                         a
                                       VTD-L-400                 a                                         a
                                 MOGD-X-550                    0.6                                       0.6
                                          FLND-X-550           0.9                                       0.9
                                          FLSD-X-1750          4.0                  7.4                  9.5
----------------------------------------------------------------------------------------------------------------
a Under the current baseline outlook, the average annual NCFI is negative. In other words, the farm is already
  in poor shape under status quo conditions and there is no expected NCFI available to help pay down the tax
  liability incurred.


   Table 8: Changes in Ending Cash Balances in 2026 for the Representative Farms for Select Tax Scenarios (in
                                                     $1,000)
----------------------------------------------------------------------------------------------------------------
                                                       Scenario 2
                                       Ending Cash    Generational     Scenario 3     Scenario 4     Scenario 5
       Type               Farm         Balance Base     Transfer      Generational   Generational   Generational
                                          (2026)       Current Tax   Transfer STEP     Transfer    Transfer STEP
                                                         Policy           Act         99.5% Act     + 99.5% Acts
----------------------------------------------------------------------------------------------------------------
      Feedgrain         IAG-M-1350          ^887.9             0.0         ^330.8            0.0         ^330.8
                              IAG-L-3400      89.3             0.0       ^1,367.2       ^1,120.6       ^1,896.6
                        NEG-M-2400           771.3             0.0         ^755.2            0.0         ^755.2
                              NEG-L-4500  ^2,087.6             0.0       ^3,597.6       ^5,612.3       ^7,438.9
                        NDG-M-3000           318.4             0.0         ^483.2            0.0         ^483.2
                              NDG-L-9000   4,813.6             0.0       ^2,842.0       ^6,378.4       ^7,944.2
                        ING-M-1000           212.1             0.0         ^348.9            0.0         ^348.9
                              ING-L-3500   1,154.5             0.0       ^1,525.4       ^1,816.6       ^2,653.6
                         OHG-M-700            14.3             0.0         ^226.6            0.0         ^226.6
                              OHG-L-1500   1,252.1             0.0         ^348.7            0.0         ^348.7
                       MOCG-M-2300           921.9             0.0       ^1,640.7       ^2,048.8       ^2,944.9
                             MOCG-L-4200   3,188.1             0.0       ^2,408.3       ^4,882.3       ^6,160.5
                       MONG-X-2300           289.1             0.0       ^1,934.7       ^2,490.4       ^3,483.2
                                  LANG-X-250^232.5             0.0         ^223.7            0.0         ^223.7
                        TNG-M-2500           183.0             0.0         ^315.9            0.0         ^315.9
                              TNG-L-5000   2,349.2             0.0         ^877.4       ^1,926.3       ^2,412.5
                       NCSP-X-2000        ^1,021.9             0.0         ^361.8            0.0         ^361.8
                        NCC-X-2030         1,356.2             0.0           ^4.5            0.0           ^4.5
                        SCC-X-2000          ^115.6             0.0         ^217.1            0.0         ^217.1
                        SCG-X-3500           910.6             0.0         ^822.7          ^43.2         ^823.3
                       TXNP-M-3450         2,038.7             0.0         ^772.9         ^494.3         ^948.4
                             TXNP-L-10880  6,946.2             0.0       ^2,042.4       ^6,383.8       ^7,560.5
                       TXPG-X-2500           366.6             0.0         ^550.5            0.0         ^550.5
                       TXHG-X-3000          ^212.7             0.0         ^136.1            0.0         ^136.1
                       TXWG-X-1600          ^479.4             0.0          ^40.4            0.0          ^40.4
          Wheat         WAW-M-2800           702.6             0.0         ^116.1            0.0         ^116.1
                              WAW-L-10000  1,654.5             0.0         ^903.2       ^1,723.3       ^2,248.8
                       WAAW-X-5500        ^1,153.0             0.0         ^112.6            0.0         ^112.6
                        ORW-X-4500          ^274.5             0.0          ^35.6            0.0          ^35.6
                        MTW-X-9500         1,508.6             0.0         ^869.4         ^510.0       ^1,000.6
                       KSCW-M-2000           766.8             0.0         ^218.3            0.0         ^218.3
                             KSCW-L-5300   2,810.2             0.0         ^626.6           ^8.2         ^626.6
                       KSNW-M-4000           354.7             0.0         ^526.6            0.0         ^526.6
                             KSNW-L-7000   1,206.3             0.0       ^1,106.4         ^387.3       ^1,143.3
                        COW-M-3000          ^120.8             0.0         ^434.9            0.0         ^434.9
                              COW-L-6000  ^2,420.8             0.0         ^828.5            0.0         ^828.5
         Cotton        TXSP-X-4500          ^182.4             0.0         ^156.4            0.0         ^156.4
                       TXEC-X-5000         1,142.1             0.0         ^358.1            0.0         ^358.1
                       TXRP-X-3000        ^1,036.4             0.0          ^15.6            0.0          ^15.6
                       TXMC-X-2500          ^149.4             0.0          ^57.8            0.0          ^57.8
                       TXCB-M-4000            ^8.9             0.0         ^238.2            0.0         ^238.2
                             TXCB-L-10000  3,439.2             0.0         ^743.2       ^1,000.8       ^1,412.7
                       TXVC-X-5500         2,406.7             0.0         ^667.5         ^212.9         ^710.6
                       ARNC-X-5000         4,101.8             0.0       ^1,045.6       ^2,191.9       ^2,726.8
                        TNC-M-3000         2,610.7             0.0          ^63.0            0.0          ^63.0
                              TNC-L-4050   2,126.1             0.0         ^508.6          ^96.2         ^518.1
                                 ALC-X-35004,072.0             0.0         ^309.4            0.0         ^309.4
                        GAC-X-2500         1,610.9             0.0         ^783.9       ^1,277.2       ^1,735.1
                       NCNP-X-1600        ^1,017.1             0.0         ^206.1            0.0         ^206.1
           Rice         CAR-M-1200           702.4             0.0         ^401.2            0.0         ^401.2
                              CAR-L-3000  ^2,314.8             0.0       ^1,663.4       ^3,066.5       ^3,920.9
                        CABR-X-800           153.2             0.0         ^424.2            0.0         ^424.2
                        CACR-X-800        ^1,665.0             0.0         ^425.4            0.0         ^425.4
                        TXR-M-1500        ^1,125.1             0.0         ^185.9            0.0         ^185.9
                              TXR-L-3000    ^452.0             0.0           ^5.2            0.0           ^5.2
                       TXBR-X-1800          ^161.0             0.0            0.0            0.0            0.0
                       TXER-X-2500           ^28.9             0.0            0.0            0.0            0.0
                                  LASR-X-200^504.7             0.0         ^142.2            0.0         ^142.2
                       ARMR-X-6500         1,918.8             0.0         ^830.7         ^985.2       ^1,478.5
                       ARSR-X-3240           275.6             0.0         ^500.4            0.0         ^500.4
                       ARWR-X-2500          ^620.3             0.0       ^1,058.6          ^96.1       ^1,058.8
                       ARHR-X-4000        ^2,029.5             0.0       ^1,036.9         ^317.0       ^1,059.2
                       MSDR-X-5000         1,487.6             0.0       ^2,299.2       ^5,206.8       ^6,445.0
                       MOBR-X-4000          ^864.7             0.0       ^1,343.1         ^877.9       ^1,649.8
          Ranch          NVB-X-650          ^109.1             0.0       ^2,317.5       ^2,590.1       ^3,802.2
                        NVSB-X-550           ^54.0             0.0         ^490.4            0.0         ^490.4
                         MTB-X-600           234.2             0.0       ^1,039.9         ^726.4       ^1,324.7
                         WYB-X-475          ^460.8             0.0         ^291.5            0.0         ^291.5
                         COB-X-275           461.7             0.0       ^1,660.9       ^4,806.4       ^5,713.1
                         NMB-X-210           ^78.0             0.0         ^684.7            0.0         ^684.7
                         SDB-X-600        ^1,088.2             0.0       ^1,296.4         ^373.1       ^1,296.5
                         MOB-X-250           616.5             0.0         ^196.4            0.0         ^196.4
                        TXRB-X-400           319.4             0.0       ^1,122.0         ^832.4       ^1,479.5
                        TXSB-X-300           262.8             0.0         ^654.3            0.0         ^654.3
          Dairy         CAD-X-2000         3,280.4            ^1.9       ^2,222.6       ^7,612.8       ^8,804.7
                         WAD-M-300        ^2,092.3             0.0         ^274.2            0.0         ^274.2
                              WAD-L-1200    ^284.4             0.0       ^1,279.6       ^3,468.4       ^4,144.0
                        IDD-X-1500         3,888.0             0.0       ^1,288.6       ^2,006.0       ^2,694.4
                        NVD-X-1000         3,146.2             0.0         ^327.9         ^225.4         ^446.9
                       TXND-X-3800         9,200.1          ^762.5       ^2,167.1       ^9,497.1      ^10,511.6
                       TXCD-X-1500         1,084.7             0.0         ^826.6       ^1,095.8       ^1,563.5
                        TXED-X-400        ^1,334.1             0.0         ^107.8            0.0         ^107.8
                         WID-M-180           734.5             0.0         ^470.4            0.0         ^470.4
                              WID-L-1700   3,938.9             0.0       ^2,579.6       ^5,100.3       ^6,495.3
                         OHD-X-400          ^788.5             0.0         ^754.8            0.0         ^754.8
                        NYWD-M-400           448.5             0.0         ^446.6            0.0         ^446.6
                             NYWD-L-1200   1,199.9             0.0       ^1,860.5       ^4,244.1       ^5,259.7
                        NYCD-M-180           555.0             0.0         ^108.3            0.0         ^108.3
                             NYCD-L-800      405.3             0.0       ^1,535.4       ^2,097.0       ^2,945.8
                         VTD-M-160        ^1,200.7             0.0          ^58.5            0.0          ^58.5
                              VTD-L-400   ^3,034.8             0.0         ^653.6            0.0         ^653.6
                        MOGD-X-550           544.3             0.0         ^183.3            0.0         ^183.3
                                 FLND-X-550 ^246.4             0.0         ^123.9            0.0         ^123.9
                                 FLSD-X-1750^715.9             0.0         ^843.7       ^1,574.8       ^2,042.5
----------------------------------------------------------------------------------------------------------------

Summary and Conclusions
    This analysis utilized AFPC's 94 representative farms to determine 
the likely impacts of two tax policy proposals--the Sensible Taxation 
and Equity Promotion Act and the For the 99.5 Percent Act--on the 
farm's ability to cash flow. Under current tax law, an assumed death of 
the principal operator would impact 2 of 94 representative farms.
    Eliminating stepped-up basis in the Sensible Taxation and Equity 
Promotion Act--even with the $1 million exclusion--would impact 92 of 
94 representative farms, including all of the ranches and dairies, with 
an additional tax liability incurred of $726,104 per farm.
    Imposing lower estate tax exemption levels from the For the 99.5 
Percent Act would impact 41 farms (26 of 64 crop farms, 5 of 10 ranches 
and 10 of 20 dairies) with an average additional tax liability incurred 
of $2.17 million per farm.
    The combination of the two tax policy changes would impact 92 
representative farms at an average additional tax liability incurred of 
$1.43 million and an average loss in ending cash balances of all 
affected farms of $1.59 million in 2026. While the average tax 
liability declines (relative to imposing the For the 99.5 Percent Act 
alone), the number of farms impacted climbed from 41 to 92.

                               References
 
    Ernst and Young. Repealing step-up of basis on inherited assets:
 Macroeconomic impacts and effects on illustrative family businesses.
 Prepared for the Family Business Estate Tax Coalition (FBETC), April
 2021. Available at: https://www.fb.org/files/FBETC_Stepped-
 Up_Basis_Report_2021.
    Food & Agricultural Policy Research Institute. U.S. Agricultural
 Market Outlook. University of Missouri, Division of Applied Social
 Sciences, FAPRI-MU Report #01-21, March 2021. Available at: https://
 www.fapri.missouri.edu/wp-content/uploads/2021/03/2021-U.S.-
 Agricultural-Market-Outlook-FINAL.pdf.
    Internal Revenue Service (IRS). Estate Tax. Available at: https://
 www.irs.gov/businesses/small-businesses-self-employed/estate-tax
 [accessed on May 28, 2021].
    Jacobson, D.B., B.G. Raub, and B.W. Johnson. The Estate Tax: Ninety
 Years and Counting. Available at: https://www.irs.gov/pub/irs-soi/
 ninetyestate.pdf.
    Outlaw, J.L., B.L. Fischer, G.M. Knapek, B.K. Herbst, J.M. Raulston,
 H.L. Bryant, D.P. Anderson, S.L. Klose and P. Zimmel. Representative
 Farms Economic Outlook For The January 2021 FAPRI/AFPC Baseline.
 Agricultural and Food Policy Center, Texas A&M University, College
 Station, Texas, AFPC Working Paper 21-1, March 2021. Available at:
 https://www.afpc.tamu.edu/research/publications/files/707/WP-21-01.pdf.
    Richardson, James W. and Clair J. Nixon. (1986). Description of
 FLIPSIM V: a General Firm Level Policy Simulation Model. Texas
 Agricultural Experiment Station. Available at: https://hdl.handle.net/
 1969.1/129137.
 


        Appendix A--Representative Farm and Ranch Characteristics
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 2020 Characteristics of Panel Farms Producing Feed Grains and Oilseeds
------------------------------------------------------------------------
       IAG1350       IAG1350 is a 1,350 acre northwestern Iowa (Webster
                  County) grain farm. The farm is moderate-sized for the
                  region and plants 810 acres of corn and 540 acres of
                  soybeans annually. Sixty-one percent of this farm's
                  2020 receipts come from corn production.
       IAG3400       This 3,400 acre large-sized grain farm is located
                  in northwestern Iowa (Webster County). It plants 2,040
                  acres of corn and 1,360 acres of soybeans each year,
                  realizing 60 percent of receipts from corn production.
       NEG2400       South-central Nebraska (Dawson County) is home to
                  this 2,400 acre grain farm. This farm plants 1,600
                  acres to corn and 800 acres to soybeans. The farm
                  splits its corn acres evenly between yellow and white
                  food-grade corn. Sixty-four percent of gross receipts
                  are derived from corn sales.
       NEG4500       This is a 4,500 acre grain farm located in south-
                  central Nebraska (Dawson County). This operation
                  plants 3,000 acres of corn and 1,000 acres of soybeans
                  each year. Remaining acres are planted to alfalfa. A
                  portion (25 percent) of the corn acreage is food-grade
                  corn. In 2020, 67 percent of total receipts were
                  generated from corn production.
       NDG3000       NDG3000 is a 3,000 acre, moderate-sized, south
                  central North Dakota (Barnes County) grain farm that
                  plants 500 acres of wheat, 1,000 acres of corn, and
                  1,500 acres of soybeans. One hundred acres are
                  enrolled in the Conservation Reserve Program. The farm
                  generated 39 percent of 2020 receipts from soybean
                  sales and 40 percent from corn sales.
       NDG9000       This is an 9,000 acre, large-sized grain farm in
                  south central North Dakota (Barnes County) that grows
                  4,500 acres of soybeans, 2,500 acres of corn, 1,250
                  acres of wheat, and 500 acres of barley annually. The
                  remaining acreage is enrolled in the Conservation
                  Reserve Program. Soybean and corn sales accounted for
                  75 percent of 2020 receipts.
       ING1000       Shelby County, Indiana, is home to this 1,000 acre
                  moderate-sized feedgrain farm. This farm annually
                  plants 475 acres of corn, 525 acres of soybeans, and
                  50 acres of wheat that is double cropped with
                  soybeans. Due to this farm's proximity to
                  Indianapolis, land development pressures will likely
                  constrain further expansion of this operation. Forty-
                  seven percent of 2020 receipts came from corn sales.
       ING3500       ING3500 is a large-sized grain farm located in east
                  central Indiana (Shelby County). This farm plants
                  1,750 acres to corn and 1,750 acres to soybeans each
                  year. In 2020, 53 percent of gross receipts were
                  generated by corn sales.
        OHG700       This is a 700 acre, moderate sized grain farm in
                  north western Ohio (Henry County). This farm planted
                  105 acres of corn and 280 acres of soybeans in 2020.
                  Because of the wet spring there were 315 acres that
                  were not planted and was taken as preventive planting
                  insurance. Normally would be 350 acres each of corn
                  and soybeans. Twenty-seven percent of 2020 receipts
                  were generated by corn sales.
       OHG1500       This is a 1,500 acre, large-sized grain farm in
                  north western Ohio (Henry County). This farm planted
                  202 acres of corn, 304 acres of soybeans, and 150
                  acres of wheat in 2020. Because of the wet spring
                  there were 844 acres that were not planted and was
                  taken as preventive planting insurance. Normally would
                  be 675 acres each of corn and soybeans plus the 150
                  acres of wheat. Thirty-five percent of 2020 receipts
                  were generated by corn sales.
------------------------------------------------------------------------
           2020 Panel Farms Producing Feed Grains and Oilseeds
------------------------------------------------------------------------
      MOCG2300       MOCG2300 is a 2,300 acre grain farm located in
                  central Missouri (Carroll County) and plants 1,150
                  acres of corn and 1,150 acres of soybeans annually.
                  This farm is located in the Missouri River bottom, an
                  area with a large concentration of livestock
                  production. This farm generated 52 percent of its
                  total revenue from corn and 38 percent from soybeans
                  during 2020.
      MOCG4200       This is a 4,200 acre central Missouri (Carroll
                  County) grain farm with 2,310 acres of corn and 1,890
                  acres of soybeans. This farm is located in the
                  Missouri River bottom, an area with a large
                  concentration of livestock production. Corn sales
                  accounted for 59 percent of farm receipts and soybeans
                  accounted for 32 percent in 2020.
      MONG2300       MONG2300 is a 2,300 acre diversified northwest
                  Missouri grain farm centered in Nodaway County.
                  MONG2300 plants 1,125 acres of corn, 1,125 acres of
                  soybeans, and 50 acres of hay annually. The farm also
                  has a 300 head cowcalf herd. Proximity to the Missouri
                  River increases marketing options for area grain
                  farmers due to easily accessible river grain
                  terminals. In 2020, 46 percent of the farm's total
                  receipts were from corn, 42 percent from soybeans, and
                  8 percent from cattle sales.
              LAN    This is a 2,500 acre northeast Louisiana (Madison
                  Parish) diversified grain farm. This farm harvests 500
                  acres of rice, 875 acres of soybeans, 375 acres of
                  cotton, and 750 acres of corn. For 2020, 49 percent of
                  farm receipts came from corn and soybean sales.
       TNG2500       This is a 2,500 acre, moderate-sized grain farm in
                  West Tennessee (Gibson County). Annually, this farm
                  plants 1,025 acres of corn, 1,475 acres of soybeans,
                  and 375 acres of wheat (planted before soybeans) in a
                  region of Tennessee recognized for the high level of
                  implementation of conservation practices by farmers.
                  For 2020, 39 percent of farm receipts were from sales
                  of corn and 43 percent from soybeans.
       TNG5000       West Tennessee (Gibson County) is home to this
                  5,000 acre, large-sized grain farm. Farmers in this
                  part of Tennessee are known for their early and
                  continued adoption of conservation practices,
                  including no-till farming. TNG5000 plants 2,500 acres
                  of corn, 500 acres of wheat, 2,500 acres of soybeans
                  (500 of which are double-cropped after wheat). The
                  farm generated 50 percent of its 2020 gross receipts
                  from sales of corn and 35 percent from soybeans.
      NCSP2000       A 2,000 acre diversified farm located in southern
                  North Carolina (Bladen County). NCSP2000 plants 400
                  acres of peanuts, 1,100 acres of corn, and 500 acres
                  of soybeans. Sixty-two percent of receipts for this
                  farm came from corn and soybean sales in 2020; thirty-
                  one percent of receipts came from peanut sales.
       NCC2030       This is a 2,000 acre grain farm located on the
                  upper coastal plain of North Carolina (Wayne County).
                  NCC2030 plants 400 acres of corn, 200 acres of wheat,
                  and 1,000 acres of soybeans annually. Corn accounted
                  for 23 percent of this farm's 2020 receipts, while
                  soybeans accounted for 35 percent.
       SCC2000       SCC2000 is a moderate-sized, 2,000 acre grain farm
                  in South Carolina (Orangeburg County) consisting of
                  800 acres of corn, 550 acres of cotton, 250 acres of
                  peanuts, and 400 acres of soybeans. Thirty-nine
                  percent of the farm's receipts were from corn sales
                  during 2020.
       SCG3500       A 3,500 acre, large-sized South Carolina (Clarendon
                  County) grain farm with 1,800 acres of corn, 750 acres
                  of cotton, 600 acres of peanuts, and 350 acres of
                  soybeans. The farm generated 45 percent of 2020
                  receipts from corn sales and 5 percent from soybean
                  sales.
      TXNP3450       This is a 3,450 acre diversified grain farm located
                  on the northern High Plains of Texas (Moore County).
                  This farm plants 1,206 acres of cotton, 1,294 acres of
                  irrigated corn, 260 acres of irrigated sorghum for
                  seed production, and 432 acres of irrigated wheat
                  annually. Forty-five percent of total receipts are
                  generated from corn sales.
     TXNP10880       TXNP10880 is a large-sized diversified grain farm
                  located in the Texas Panhandle (Moore County). This
                  farm annually plants 4,454 acres of cotton (3,962
                  irrigated/492 dryland); 3,962 acres of irrigated corn;
                  1,272 acres of grain sorghum (530 irrigated for seed
                  production/492 dryland/250 irrigated for commercial
                  use); and 492 acres of dryland winter wheat. Thirty-
                  eight percent of 2020 cash receipts were derived from
                  corn sales.
      TXPG2500       The Texas Panhandle is home to this 2,500 acre farm
                  (Deaf Smith County). Annually, wheat is planted on 534
                  acres (350 irrigated and 184 dryland), 1,000 acres
                  planted to irrigated corn, 783 acres are planted to
                  cotton (600 irrigated and 183 dryland), and grain
                  sorghum is planted on 183 dryland acres. Fifty-three
                  percent of 2020 cash receipts were generated by corn
                  sales.
      TXHG3000       This 3,000 acre grain farm is located on the
                  Blackland Prairie of Texas (Hill County). On this
                  farm, 2,000 acres of corn, 500 acres of cotton, and
                  500 acres of wheat are planted annually. Grain sales
                  accounted for 65 percent of 2020 receipts with cotton
                  accounting for nineteen percent of sales. Forty beef
                  cows live on 300 acres of improved pasture and
                  contribute approximately two percent of total
                  receipts.
      TXWG1600       This 1,600 acre farm is located on the Blackland
                  Prairie of Texas (Williamson County). TXWG1600 plants
                  800 acres of corn, 300 acres of sorghum, 400 acres of
                  cotton, and 100 acres of winter wheat annually.
                  Additionally, this farm has a 40 head beef cow herd
                  that is pastured on rented ground that cannot be
                  farmed. Grain sales accounted for 54 percent of 2020
                  receipts with cotton accounting for 29 percent of
                  sales.
------------------------------------------------------------------------
           2020 Characteristics of Panel Farms Producing Wheat
------------------------------------------------------------------------
       WAW2800       This is a 2,800 acre moderate-sized grain farm in
                  the Palouse of southeastern Washington (Whitman
                  County). It plants 1,840 acres of wheat and 800 acres
                  of dry peas. Disease concerns dictate rotating a
                  minimum acreage of peas to maintain wheat yields. This
                  farm generated 63 percent of 2020 receipts from wheat.
      WAW10000       A 10,000 acre, large-sized grain farm in the
                  Palouse of southeastern Washington (Whitman County).
                  Annually, this farm allocates 5,800 acres to wheat and
                  2,700 acres to dry peas. Diseases that inhibit wheat
                  yield dictate the rotation of a minimum acreage of
                  peas. Wheat sales accounted for 61 percent of 2020
                  receipts.
      WAAW5500       South-central Washington (Adams County) is home to
                  this 5,500 acre, large-sized wheat farm. Annually,
                  this farm plants 2,600 acres of wheat in a wheat-
                  fallow rotation. Additionally, 300 acres are enrolled
                  in CRP. In 2020, 91 percent of the farm's income came
                  from wheat.
       ORW4500       ORW4500 is a 4,500 acre large-sized grain farm
                  located in northeastern Oregon (Morrow County). This
                  farm plants 2,250 acres annually in a wheat-fallow
                  rotation. Eighty-six percent of this farm's 2020 total
                  receipts came from wheat sales.
       MTW8000       North-central Montana (Chouteau County) is home to
                  this 9,500 acre farm on which 3,500 acres of wheat
                  (1,920 acres of winter wheat, 1,344 acres of spring
                  wheat, and 544 acres of Durham), 590 acres of barley,
                  and 1200 acres of dry peas are planted each year.
                  MTW8000 uses no-till production practices. In 2020, 50
                  percent of receipts came from wheat.
      KSCW2000       South central Kansas (Sumner County) is home to
                  this 2,000 acre, moderate-sized grain farm. KSCW2000
                  plants 800 acres of winter wheat, 1,100 acres of
                  soybeans, 200 acres of cotton, and 500 acres of corn
                  each year. For 2020, 18 percent of gross receipts came
                  from wheat.
      KSCW5300       A 5,300 acre, large-sized grain farm in south
                  central Kansas (Sumner County) that plants 2,385 acres
                  of winter wheat, 1,590 acres of corn, and 3,352 acres
                  of soybeans. Twenty-two percent of this farm's 2020
                  total receipts were generated from sales of winter
                  wheat.
      KSNW4000       This is a 4,000 acre, moderate-sized northwest
                  Kansas (Thomas County) grain farm. This farm plants
                  1,200 acres of winter wheat (wheat-fallow rotation),
                  1,200 acres of corn, and 600 acres of sorghum. This
                  farm generated 33 percent of 2020 receipts from wheat
                  and 57 percent of its receipts from feed grains.
      KSNW7000       KSNW7000 is a 7,000 acre, large-sized northwest
                  Kansas (Thomas County) grain farm that annually plants
                  1,700 acres of winter wheat, 3,770 acres of corn, 700
                  acres of sorghum, and 130 acres of soybeans. The farm
                  generated 16 percent of receipts from wheat and 74
                  percent from feed grains during 2020.
       COW3000       A 3,000 acre northeast Colorado (Washington
                  County), moderate-sized farm that plants 1,012 acres
                  of winter wheat and 675 acres of corn each year.
                  COW3000 has adopted minimum tillage practices on most
                  of its acres. This farm generated 54 percent of its
                  receipts from wheat and 34 percent from corn.
       COW6000       A 6,000 acre, large-sized northeast Colorado
                  (Washington County) wheat farm. It plants 2,000 acres
                  of wheat, 1,000 acres of millet, and 1,000 acres of
                  corn. During 2020, 50 percent of gross receipts came
                  from wheat sales and 23 percent came from corn sales.
------------------------------------------------------------------------
          2020 Characteristics of Panel Farms Producing Cotton
------------------------------------------------------------------------
      TXSP4500       The Texas South Plains (Dawson County) is home to
                  this 4,500 acre, large-sized cotton farm that grows
                  4,380 acres of cotton (2,880 dryland, 1,500
                  irrigated), and 120 irrigated acres of peanuts. Cotton
                  sales comprised 76 percent of 2020 receipts.
      TXEC5000       This 5,000 acre farm is located on the Eastern
                  Caprock of the Texas South Plains (Crosby County).
                  Annually, 4,700 acres are planted to cotton (2,230
                  irrigated and 2,470 dryland) and 300 acres to dryland
                  wheat. In 2020, cotton sales accounted for 75 percent
                  of gross receipts.
      TXRP3000       TXRP3000 is a 3,000 acre cotton farm located in the
                  Rolling Plains of Texas (Jones County). This farm
                  plants 1,800 acres of cotton and 1,200 acres of winter
                  wheat each year. The area is limited by rainfall, and
                  the farm uses a conservative level of inputs. Sixty-
                  five percent of 2020 farm receipts came from cotton
                  sales. Fifty head of beef cows generated three percent
                  of farm receipts.
      TXMC2500       This 2,500 acre cotton farm is located on the
                  Coastal Plain of southeast Texas (Wharton County).
                  TXMC2500 farms 300 acres of sorghum, 1,455 acres of
                  cotton, and 655 acres of corn. In 2020, cotton sales
                  comprised 57 percent of total cash receipts on this
                  operation.
      TXCB4000       A 4,000 acre cotton farm located on the Texas
                  Coastal Bend (San Patricio County) that farms 2,000
                  acres of cotton, 1,600 acres of sorghum, and 400 acres
                  of corn annually. Sixty percent of 2020 cash receipts
                  were generated by cotton.
     TXCB10000       Nueces County, Texas is home to this 10,000 acre
                  farm. Annually, 5,000 acres are planted to cotton,
                  4,500 acres to sorghum, and 500 acres of corn. Cotton
                  sales accounted for 63 percent of 2020 receipts.
      TXVC5500       This 5,500 acre farm is located in the lower Rio
                  Grande Valley of Texas (Willacy County) and plants
                  2,550 acres to cotton (425 irrigated and 2,125 acres
                  dryland), 2,295 acres to sorghum (170 irrigated and
                  2,125 dryland), and 255 acres of corn. In 2020, 42
                  percent of TXVC5500's cash receipts were generated by
                  cotton sales.
      ARNC5000       This 5,000 acre farm is located in northern
                  Arkansas (Mississippi County) and plants 2,500 acres
                  to cotton, 500 acres to corn, 1,000 acres of soybeans,
                  and 1,000 acres to peanuts. In 2020, 44 percent of
                  ARNC5000's cash receipts were generated by cotton
                  sales.
       TNC3000       A 3,000 acre, moderate-sized West Tennessee
                  (Fayette County) cotton farm. TNC3000 consists of 825
                  acres of cotton, 1,375 acres of soybeans, and 800
                  acres of corn. Cotton accounted for 29 percent of 2020
                  gross receipts, with corn and soybeans contributing 24
                  percent and 28 percent, respectively.
       TNC4050       TNC4050 is a 4,050 acre, large-sized West Tennessee
                  (Haywood County) cotton farm. This farm plants 1,500
                  acres of cotton, 1,950 acres of soybeans, 550 acres of
                  corn, and 750 acres of wheat each year. During 2020,
                  cotton sales generated 34 percent of gross receipts.
             ALC3    A 3,500 acre cotton farm located in northern
                  Alabama (Lawrence County) that plants 1,050 acres to
                  cotton, 1,050 acres to corn, 1,400 acres of soybeans
                  and 875 acres to wheat (double cropped with soybeans)
                  annually. This farm was early to adopt no-till
                  cropping practices. Cotton sales accounted for 27
                  percent of total farm receipts during 2020.
       GAC2500       Southwest Georgia (Decatur County) is home to a
                  2,500 acre cotton farm that plants 1,250 acres to
                  cotton, 800 acres to peanuts, and 450 acres to corn.
                  In 2020, farm receipts were comprised of cotton sales
                  (36 percent), corn (15 percent), and peanut sales (33
                  percent). The farm also runs a 125 head beef cow herd,
                  generating 3 percent of 2020 receipts.
      NCNP1600       A 1,600 acre diversified farm located in northern
                  North Carolina (Edgecombe County). NCNP1600 plants 320
                  acres of peanuts, 240 acres of corn, 640 acres of
                  cotton, and 400 acres of soybeans. Twenty-three
                  percent of receipts for this farm came from peanut
                  sales in 2020, 38 percent from cotton sales and 23
                  percent came from corn and soybean sales.
------------------------------------------------------------------------
           2020 Characteristics of Panel Farms Producing Rice
------------------------------------------------------------------------
       CAR1200       CAR1200 is a 1,200 acre moderate-sized rice farm in
                  the Sacramento Valley of California (Sutter and Yuba
                  Counties) that plants 1,200 acres of rice annually.
                  This farm generated 99 percent of 2020 gross receipts
                  from rice sales.
       CAR3000       This is a 3,000 acre rice farm located in the
                  Sacramento Valley of California (Sutter and Yuba
                  Counties) that is large-sized for the region. CAR3000
                  plants 3,000 acres of rice annually. In 2020, 99
                  percent of gross receipts were generated from rice
                  sales.
       CABR800       The Sacramento Valley (Butte County) is home to
                  CABR800, a 800 acre rice farm. CABR800 harvests 800
                  acres of rice annually, generating 99 percent of 2020
                  farm receipts from rice sales.
       CACR800       CACR800 is an 800 acre rice farm located in the
                  Sacramento Valley of California (Colusa County). This
                  farm harvests 800 acres of rice each year. During
                  2020, 99 percent of farm receipts were realized from
                  rice sales.
       TXR1500       This 1,500 acre rice farm located west of Houston,
                  Texas (Colorado County) is moderate-sized for the
                  region. TXR1500 harvests 600 acres of rice. The farm
                  generated 97 percent of its receipts from rice during
                  2020.
       TXR3000       TXR3000 is a 3,000 acre, large-sized rice farm
                  located west of Houston, Texas (Colorado County). This
                  farm harvests 1,500 acres of rice annually. TXR3000
                  realized 98 percent of 2020 gross receipts from rice
                  sales.
      TXBR1800       The Texas Gulf Coast (Matagorda County) is home to
                  this 1,800 acre rice farm. TXBR1800 generally plants
                  \1/3\ of its acres to rice annually and fallows the
                  remainder. The farm generated 98 percent of its
                  receipts from rice during 2020.
      TXER2500       This 2,500 acre rice farm is located in the Texas
                  Gulf Coast (Wharton County). TXER2500 harvests 1,250
                  acres of rice each year. The farm also grows 1,250
                  acres of corn. Seventy-three percent of 2020 receipts
                  came from rice sales.
              LAS    A 2,000 acre southwest Louisiana (Acadia, Jeff
                  Davis, and Vermilion parishes) rice farm, LASR2000 is
                  moderate-sized for the area. This farm harvests 1,000
                  acres of rice and 200 acres of soybeans. During 2020,
                  58 percent of gross receipts were generated from rice
                  sales.
      ARMR6500       ARMR6500 is a 6,500 acre diversified rice farm in
                  southeast Arkansas (Desha County) that plants 650
                  acres of rice, 3,900 acres of soybeans, and 1,950
                  acres of corn. For 2020, 10 percent of gross receipts
                  came from rice sales, 27 percent from corn sales, and
                  50 percent from soybean sales.
      ARSR3240       ARSR3240 is a 3,240 acre, large-sized Arkansas
                  (Arkansas County) rice farm that harvests 1,458 acres
                  of rice, 1,458 acres of soybeans, and 324 acres of
                  corn each year. Fifty-five percent of this farm's 2020
                  receipts came from rice sales.
      ARWR2500       East central Arkansas (Cross County) is home to
                  this 2,500 acre rice farm. Moderate-sized for the
                  region, ARWR2500 annually plants 1,250 acres each to
                  rice and soybeans. During 2020, rice sales generated
                  60 percent of gross receipts.
      ARHR4000       ARHR4000 is a 4,000 acre large-sized northeast
                  Arkansas (Lawrence County) rice farm that annually
                  harvests 2,400 acres of rice, 1,400 acres of soybeans,
                  and 200 acres of corn. Rice sales accounted for 73
                  percent of 2020 farm receipts.
      MSDR5000       MSDR5000 is a 5,000 acre Mississippi Delta (Bolivar
                  County) rice farm that annually harvests 1,667 acres
                  of rice and 3,333 acres of soybeans. Rice sales
                  accounted for 39 percent of 2020 farm receipts.
                  Soybeans account for 54 percent of receipts.
      MOBR4000       MOBR4000 is a 4,000 acre Missouri Bootheal
                  (Pemiscot County) rice farm. The farm annually
                  harvests 1,320 acres of rice, 1,800 acres of soybeans
                  and 880 acres of corn. Rice sales accounted for 44
                  percent of farm receipts in 2020.
------------------------------------------------------------------------
           2020 Characteristics of Panel Farms Producing Milk
------------------------------------------------------------------------
       CAD2000       A 2,000 cow, large-sized central California (Tulare
                  County) dairy, the farm plants 975 acres of hay/silage
                  for which it employs custom harvesting. Milk sales
                  generated 81 percent of 2020 total receipts.
        WAD300       A 300 cow, moderate-sized northern Washington
                  (Whatcom County) dairy. This farm plants 250 acres of
                  silage and generated 79 percent of its 2020 gross
                  receipts from milk sales.
       WAD1200       A 1,200 cow, large-sized northern Washington
                  (Whatcom County) dairy. This farm plants 850 acres for
                  silage annually. During 2020, 80 percent of this
                  farm's gross receipts came from milk.
       IDD1500       A 1,500 cow, large-sized dairy located in the Magic
                  Valley of Idaho (Twin Falls County). This farm plants
                  550 acres of corn silage and 300 acres of hay
                  annually. Milk sales account for 79 percent of 2020
                  gross receipts.
       NVD1000       A 1,000 cow, moderate-sized Nevada (Churchill
                  County) dairy. This farm plants 475 acres of hay and
                  200 acres of corn silage annually. Milk sales
                  accounted for 85 percent of NVD1000's gross receipts
                  for 2020.
      TXND3800       A 3,800 cow, large-sized dairy located in the South
                  Plains of Texas (Bailey County). This farm plants
                  1,920 acres of corn silage annually. Milk sales
                  account for 83 percent of 2020 gross receipts.
      TXCD1500       A 1,500 cow, large-sized central Texas (Erath
                  County) dairy, TXCD1500 plants 366 acres of silage and
                  500 acres of hay annually. During 2020, milk sales
                  accounted for 85 percent of receipts.
       TXED400       A 400 cow, moderate-sized northeast Texas (Hopkins
                  County) dairy. This farm has 200 acres of hay. During
                  2020, milk sales represented 77 percent of annual
                  receipts.
        WID180       A 180 cow, moderate-sized eastern Wisconsin
                  (Winnebago County) dairy, the farm plants 120 acres of
                  silage, 50 acres for hay, 320 acres of corn, 100 acres
                  of wheat, and 180 acres of soybeans. Milk constituted
                  64 percent of this farm's 2020 receipts.
       WID1700       A 1,700 cow, large-sized eastern Wisconsin
                  (Winnebago County) dairy, the farm plants 850 acres of
                  haylage, 1,000 acres of silage, 75 acres of soybeans,
                  150 acres of wheat, and 1,200 acres of corn. Milk
                  sales comprised 80 percent of the farm's 2020
                  receipts.
        OHD350       A 350 cow, moderate-sized central Ohio (Gonzalez
                  County) dairy, the farm plants 575 acres of silage,
                  200 acres of corn, 50 acres of soybeans, and 50 acres
                  of wheat. Milk sales comprised 73 percent of the
                  farm's 2020 receipts.
       NYWD400       A 400 cow, moderate-sized western New York (Wyoming
                  County) dairy. This farm plants 50 acres of corn, 750
                  acres of silage, and double crops 425 acres of haylage
                  annually. Milk sales accounted for 84 percent of the
                  gross receipts for this farm in 2020.
      NYWD1200       A 1,200 cow, large-sized western New York (Wyoming
                  County) dairy. This farm plants 1,900 acres of silage
                  and 900 acres of corn annually. Milk sales accounted
                  for 85 percent of the gross receipts for this farm in
                  2020.
       NYCD180       A 180 cow, moderate-sized central New York (Cayuga
                  County) dairy. This farm plants 200 acres of corn, and
                  350 acres of silage annually. Milk sales accounted for
                  70 percent of the gross receipts for this farm in
                  2020.
       NYCD800       A 800 cow, large-sized central New York (Cayuga
                  County) dairy. This farm plants 950 acres of silage
                  and 850 acres of hay annually. Milk sales accounted
                  for 78 percent of the gross receipts for this farm in
                  2020.
        VTD160       A 160 cow, moderate-sized Vermont (Washington
                  County) dairy. VTD160 plants 160 acres of hay and 260
                  acres of silage annually. Milk accounted for 79
                  percent of the 2020 receipts for this farm.
        VTD400       A 400 cow, large-sized Vermont (Washington County)
                  dairy. This farm plants 75 acres of hay and 600 acres
                  of silage annually. Milk sales represent 71 percent of
                  VTD400's gross receipts in 2020.
       MOGD550       A 550 cow, grazing dairy in southwest Missouri
                  (Dade County), the farm grazes cows on 300 acres of
                  improved pasture cut for hay. The dairy uses minimal
                  inputs with 9,000 lbs of milk per cow. Milk accounted
                  for 58 percent of gross farm receipts for 2020.
             FLND    A 550 cow, moderate-sized north Florida (Lafayette
                  County) dairy. The dairy grows 130 acres of hay and
                  200 acres of silage each year. All other feed
                  requirements are purchased in a pre-mixed ration. Milk
                  sales accounted for 76 percent of the 2020 farm
                  receipts.
             FLSD    A 1,750 cow, large-sized south-central Florida
                  (Okeechobee County) dairy, FLSD1750 plants 300 acres
                  of hay. Milk sales represent 84 percent of 2020 total
                  receipts.
------------------------------------------------------------------------
        2020 Characteristics of Panel Farms Producing Beef Cattle
------------------------------------------------------------------------
        NVB650       NVB650 is a 650 cow ranch located in northeastern
                  Nevada (Elko County). The operation consists of 1,300
                  acres of owned hay meadow and 8,725 acres of owned
                  range, supplemented by 3,560 AUMs of public land. Each
                  year, the ranch harvests 975 acres of hay. Annually,
                  cattle sales represent 78 percent of the ranch's
                  receipts.
       NVSB550       NVSB550 is a 550 cow ranch located in southeastern
                  Nevada (Lincoln County). The operation consists of 125
                  acres of owned hay meadow and 375 acres of owned
                  range, supplemented by 7,600 AUMs of public land.
                  Annually, cattle sales represent 77 percent of the
                  ranch's receipts.
        MTB600       A 600 cow ranch located on the eastern plains of
                  Montana (Custer County), MTB600 runs cows on a
                  combination of owned land and land leased from
                  Federal, state, and private sources. The ranch owns
                  14,000 acres of pasture. 800 acres of hay are produced
                  annually. Also, all deeded acres are leased for
                  hunting. Cattle sales represented 71 percent of this
                  ranch's 2020 receipts.
        WYB475       This 475 cow ranch is located in north central
                  Wyoming (Washakie County). The ranch leases 2750 AUMs
                  from the U.S. Forest Service and owns 1,500 acres of
                  range. Annually, the ranch harvests 315 acres of
                  alfalfa and grass hay on owned ground. In 2020, cattle
                  sales accounted for 78 percent of gross receipts.
        COB275       This 275 cow ranch is located in northwestern
                  Colorado (Routt County). Federal land provides seven
                  percent of the ranch's grazing needs. The ranch owns
                  2,300 acres of rangeland, and the cattle graze Federal
                  land during the summer. Cattle sales accounted for 51
                  percent of the ranch's 2020 total receipts.
        NMB210       NMB210 is a 210 cow ranch located in northeastern
                  New Mexico (Union County). During 2020, 82 percent of
                  gross receipts were derived from cattle sales with the
                  balance of receipts generated from fee hunting.
        SDB600       SDB600 is a 600 cow West River (Meade County, South
                  Dakota) beef cattle ranch. This operation produces hay
                  on 1,000 acres of owned cropland, and runs its cows on
                  6,500 acres of owned native range. In 2020, cattle
                  sales accounted for 83 percent of gross receipts.
        MOB250       A 250 cow beef cattle operation is the focal point
                  of this diversified livestock and crop farm located in
                  southwest Missouri (Dade County). MOB250 plants 160
                  acres of corn, 160 acres of wheat, and 200 acres of
                  soybeans. Improved pasture makes up another 570 acres
                  of this ranch. During 2020, cattle sales comprised 38
                  percent of gross receipts.
       TXRB400       The western Rolling Plains of Texas (King County)
                  is home to this 400 head cow-calf operation. This
                  ranch operates on 20,000 acres (half owned, half
                  leased) of native range. Seventy-one percent of 2020
                  receipts came from cattle sales, while 29 percent came
                  from fee hunting.
       TXSB300       A 300 head cow-calf operation is the central focus
                  of this full-time agricultural operation in south
                  central Texas (Gonzales County). Contract broiler
                  production and hunting income are vital to the ranch's
                  viability. Cattle sales accounted for 74 percent of
                  2020 gross receipts.
        OTHERS       Five other representative farms have beef cattle
                  operations along with their crop production (MONG2300,
                  TXHG2700, TXWG1600, TXRP2500, and GAC2300). These
                  farming operations have from 40 to 300 cows. Cattle
                  contributed approximately 10 percent of gross receipts
                  for these farms in 2020.
------------------------------------------------------------------------


     Appendix B--Representative Farm Panel Members and Facilitators
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                            Feed Grain Farms
 
                                 Indiana
 
                              Facilitators
 
  Mr. Scott Gabbard--Extension Educator, Shelby County, Purdue
   Cooperative Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. David Brown                     Mr. Kevin Carson
    Mr. Gary Everhart                   Mr. Andy Fix
    Mr. Jason & Dan Foltz               Ms. Carmen Hawk
    Mr. Darrell Linville                Mr. Gary Robards
    Mr. Ken Simpson                     Ms. Angie Steinbarger
    Mr. Doug Theobald                   Mr. Jeremy Weaver
------------------------------------------------------------------------
                                  Iowa
 
                              Facilitators
 
  Mr. Jerry Chizek--County Extension Director, Webster County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Doug Adams                      Mr. Brad Black
    Mr. Dean Black                      Mr. Perry Black
    Mr. A.J. Blair                      Mr. Gregg Hora
    Mr. Tyler Lane                      Mr. Jay Lynch
    Mr. Steve Peterson                  Mr. Doug Stanek
    Mr. Jason Stanek                    Mr. Brent Wells
    Mr. Kent Wuebker                    Mr. Loren Wuebker
------------------------------------------------------------------------
                            Missouri--Central
 
                              Facilitators
 
  Mr. Parman Green
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Joe Brockmeier                  Mr. Michael Brockmeier
    Mr. Kevin Casner                    Mr. Mark Casner
    Mr. Kyle Durham                     Mr. Dennis Germann
    Mr. Todd Gibson                     Mr. Dale Griffith
    Mr. Jack Harriman                   Mr. Todd Hensiek
    Mr. Mike Hisle                      Mr. Preston Hisle
    Mr. Glenn Kaiser                    Mr. Marc Kaiser
    Mr. David Kipping                   Mr. Robert Kipping
    Mr. Craig Linneman                  Mr. Mike Ritchhart
    Mr. James Wheeler
------------------------------------------------------------------------
                           Missouri--Northwest
 
                              Facilitators
 
  Mr. Peter Zimmel--FAPRI, University of Missouri
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Terry Ecker                     Mr. Curtis Lewis
    Mr. Russell Miller                  Mr. Matt Rosenbohm
    Mr. Nick Rosenbohm                  Mr. Andrew Stoll
------------------------------------------------------------------------
                            Nebraska--Central
 
                              Facilitators
 
  Ms. Sarah Sivits
  Mr. Bruce Treffer--Extension Educator, Dawson County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Jim Aden                        Mr. Rob Anderson
    Mr. Bart Beattie                    Mr. Greg Hueftle
    Mr. Pat Luther                      Mr. Tim Maline
    Mr. Clark McPheeters                Mr. Scott McPheeters
    Mr. Cody Peden                      Mr. Rod Reynolds
    Mr. Dave Rowe                       Mr. Paul Stieb
    Mr. Dan Strauss
------------------------------------------------------------------------
                              North Dakota
 
                              Facilitators
 
  Mr. Randy Grueneich--County Extension Agent, North Dakota State
   University
  Dr. Bryon Parman--Extension Associate-Farm Management, North Dakota
   State University
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. John Robert Anderson            Mr. Eric Broten
    Mr. Jim Broten                      Mr. Wade Bruns
    Mr. Mike Clemens                    Mr. Mark Formo
    Mr. Leland Guscette                 Mr. Rob Hanson
    Mr. Jason Haugen                    Mr. Charlie Kreidelcamp
    Mr. Greg Shanenko                   Mr. Anthony Thilmony
------------------------------------------------------------------------
                                  Ohio
 
                              Facilitators
 
  Mr. Ben Brown--Assistant Professor
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Dean Bixel                      Mr. Scott Conrad
    Mr. Mark Drewes                     Mr. Matt Eggers
    Mr. Todd Hesterman                  Mr. Tim Holbrook
    Mr. Eric Johnson                    Mr. Jeremy Tedrow
    Mr. Kevin Thierry
------------------------------------------------------------------------
                             Ohio--Napoleon
 
                              Facilitators
 
  Mr. Ben Brown--Assistant Professor
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Dean Bixel                      Mr. Scott Conrad
    Mr. Mark Drewes                     Mr. Matt Eggers
    Mr. Todd Hesterman                  Mr. Tim Holbrook
    Mr. Eric Johnson                    Mr. Jeremy Tedrow
    Mr. Kevin Thierry
------------------------------------------------------------------------
                             South Carolina
 
                              Facilitators
 
  Mr. Scott Mickey
  Dr. Nathan Smith
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Neal Baxley                     Ms. Vikki Brogdon
    Mr. Chris Cogdill                   Mr. Harry DuRant
    Mr. Sam DuRant                      Mr. Jason Gamble
    Mr. Steven Gamble                   Mr. Barry Hutto
    Mr. Tommy Lee                       Mr. Joe McKeower
    Mr. John Michael Parimuha
------------------------------------------------------------------------
                           Tennessee--Trenton
 
                              Facilitators
 
  Mr. Jeff Lannom--Extension Agent & County Director, Weakley County
  Mr. Chris Narayanan
  Mr. Philip Shelby--Extension Agent, Gibson County
  Mr. Tim Smith--County Extension Agent, Obion County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Steven Agee                     Mr. Brent Baier
    Mr. Kenneth Barnes                  Mr. Randy Boals
    Mr. Mike Brundige                   Mr. John Chester
    Mr. Kaleb Dinwiddie                 Mr. Mike Freeman
    Mr. Bobby Garner                    Mr. Derek Griffin
    Mr. Brent Griggs                    Mr. Gary Hall
    Mr. Rob Holman                      Mr. Josh Little
    Mr. Todd Littleton                  Mr. Jason Luckey
    Mr. Ben Moore                       Mr. Scotty Ogg
    Mr. David Oliver                    Mr. Eric Owen
    Mr. John Parrish                    Mr. Eric Partee
    Mr. Hedrick Shoaf                   Mr. Kevin Smethwick
    Mr. Keith Steele                    Mr. Seth Taylor
    Mr. James Wall                      Mr. Jody Wright
    Mr. Jay Yeargin
------------------------------------------------------------------------
                    Texas--Northern Blackland Prairie
 
                              Facilitators
 
  Mr. Zach Davis--County Extension Agent, Hill County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Chad Kaska                      Mr. Todd Kimbrell, Jr.
    Mr. Chad Radke                      Mr. John Sawyer
------------------------------------------------------------------------
                       Texas--Northern High Plains
 
                              Facilitators
 
  Mr. Marcel Fischbacher--County Extension Agent, Moore County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Tommy Cartrite                  Mr. Brent Clark
    Mr. Justin Garrett                  Mr. Kelly Hays
    Mr. Casey Kimbrell                  Mr. Tom Moore
    Mr. Chandler Preston                Mr. Jon Reznik
    Mr. Stan Spain                      Mr. Darren Stallwitz
    Mr. Dee Vaughan                     Ms. Linda Williams
------------------------------------------------------------------------
                            Texas--Panhandle
 
                              Facilitators
 
  Mr. Rick Auckerman--County Extension Agent, Texas Cooperative
   Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Michael Carlson                 Mr. Roy Carlson
    Mr. Greg Chavez                     Mr. Steve Hoffman
    Mr. Bob Meyer                       Mr. Tom Schlabs
------------------------------------------------------------------------
                    Texas--Southern Blackland Prairie
 
                              Facilitators
 
  Mr. Cooper Terrill--County Extension Agent, Williamson County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Terry Pekar                     Mr. Herbert Raesz
    Mr. Ken Seggern
------------------------------------------------------------------------
                            Texas--Southwest
 
                              Facilitators
 
  M[s]. Samantha Korzekwa--County Extension Agent, Uvalde County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Jimmy Carnes                    Mr. Ralph Hesse
    Mr. Mark Landry                     Mr. Danny Parker
------------------------------------------------------------------------
                               Wheat Farms
 
                                Colorado
 
                              Facilitators
 
  Mr. John Deering--Ag Business Agent, North Star Bank
  Mr. Dennis Kaan--Director, Golden Plains Area Extension, Colorado
   State University
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Rollie Deering                  Mr. Ward Deering
    Mr. David Foy                       Mr. Dale Hansen
    Mr. William Harman                  Mr. Barry Hinkhouse
    Mr. Terry Kuntz                     Mr. Shane Leoffler
    Mr. Dave Lillich                    Mr. Max Olsen
    Ms. Sara Olsen                      Mr. Ken Remington
    Mr. Craig Saxton                    Mr. Calvin Schaffert
    Mr. Harlan Schaffert                Mr. Dave Wagers
    Mr. John Wright
------------------------------------------------------------------------
                            Kansas--Northwest
 
                              Facilitators
 
  Dr. Dan O'Brien--Area Extension Director, Kansas State University
  Mr. Mark Wood--Extension Agricultural Economist, Kansas Farm Mgmt.
   Association
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Tanner Brown                    Mr. Steve Busse
    Rich Calliham                       Mr. Richard Calliham
    Mr. Sam Crouse                      Mr. Aaron Horinek
    Mr. Lee Juenemann                   Mr. Brian Laufer
    Mr. Lance Leebrick                  Mr. Steve Schertz
------------------------------------------------------------------------
                          Kansas--South Central
 
                              Facilitators
 
  Mr. Randy Hein--County Extension Agent, Sumner County
  Mr. Zach Simon--County Extension Agent, Sedgwick County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Colton Day                      Mr. Dennis Gruenbacher
    Mr. Doug Hisken                     Mr. Aaron Lange
    Mr. Kent Ott                        Mr. Steve Schmidt
    Mr. Mike Slack                      Mr. Nick Steffen
    Troy & Julia Strnad                 Mr. Tim Turek
    Mr. Robert White
------------------------------------------------------------------------
                         Montana--North Central
 
                              Facilitators
 
  Mr. Lochiel Edwards
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Darin Arganbright               Mr. Steve Bahnmiller
    Mr. Duane Beirwagen                 Mr. Will Roehm
    Mr. Dan Works
------------------------------------------------------------------------
                          Oregon--North Central
 
                              Facilitators
 
  Jon Farquharson
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Dana Heideman                   Mr. Bill Jepsen
    Mr. Joe McElligott                  Mr. Craig Miles
    Mr. Eric Orem                       Mrs. Shannon Rust
    Mr. Tim and Shannon Rust
------------------------------------------------------------------------
                               Washington
 
                              Facilitators
 
  Mr. Aaron Esser--County Director, WSU Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Trevor Jantz                    Mr. Ron Jirava
    Mr. Mike Miller                     Mr. Justin Simonson
    Mr. Travis Simonson                 Mr. Tim Smith
    Mr. Traven Smith                    Mr. Steve Taylor
------------------------------------------------------------------------
                           Washington--Palouse
 
                              Facilitators
 
  Dr. Janet Schmidt--Extension Faculty, Washington State University
  Mr. Steve Van Vleet--Extension Agronomist, Washington State University
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Ben Barstow                     Mr. Asa Clark
    Mr. Gavin Clark                     Mr. Scot Cocking
    Mr. Aaron Gfeller                   Mr. David Harlow
    Ms. Kenda Hergert                   Mr. Dean Kinzer
    Ms. Heidi Kopf                      Mr. Brian Largent
    Mr. Gary Largent                    Mr. Michael Largent
    Mr. Steve Mader                     Ms. Amy McKay
    Mr. Clark Miller                    Mr. Bruce Nelson
    Mr. Chris Schultheis                Mr. David Swannack
    Mr. Steve Teade                     Mr. Jon Whitman
------------------------------------------------------------------------
                              Cotton Farms
 
                                 Alabama
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. James Blythe                    Mr. Paul Clark
    Mr. Jarred Darnell                  Dr. Steve Ford
    Mr. William Lee                     Ms. Larkin Martin
------------------------------------------------------------------------
                                Arkansas
 
                              Facilitators
 
  Mr. Ray Benson
  Mr. Ronnie Kennett
  Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
   Cooperative Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Chad Costner                    Mr. Heath Donner
    Mr. Todd Edwards                    Mr. Cole Hawkins
    Mr. Justin Hawkins                  Mr. Kenny Jackson
    Mr. David Wildy
------------------------------------------------------------------------
                           Georgia--Southwest
 
                              Facilitators
 
  Ms. Nan Bostick--County Extension Coordinator, Decatur County
  Mr. Cody Powell
  Dr. Adam Rabinowitz
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Andy Bell                       Mr. Jerry Jones
    Mr. Greg Mims                       Mr. Willard Mims
    Mr. Brad Thompson                   Mr. Raymond Thompson
------------------------------------------------------------------------
                             North Carolina
 
                              Facilitators
 
  Mr. Daryl Anderson--County Extension Agent
  Dr. Blake Brown
  Mr. Gary Bullen
  Mr. Kevin Johnson--County Extension Director, Wayne County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Landis Brantham, Jr.            Mr. Michael Gray
    Mr. Willie Howell                   Mr. David B. Mitchell, Sr.
    Mr. Danny C. Pierce                 Mr. Craig West
    Mr. Bryant Worley
------------------------------------------------------------------------
                             South Carolina
 
                              Facilitators
 
  Mr. Jonathan Croft
  Mr. Scott Mickey
  Dr. Nathan Smith
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Jimmie Griner                   Mr. Dean Hutto
    Mr. John McLaurin                   Mr. David Tindal
    Mr. Landrum Weathers
------------------------------------------------------------------------
                                Tennessee
 
                              Facilitators
 
  Mr. Walter Battle--Co-Director, Haywood County Extension
  Mr. Chuck Danehower--Extension Area Specialist, Farm Management
  Mr. Chris Narayanan
  Mr. Tyson Raper
  Ms. Lindsay Stephenson-Griffin
  Mr. Jeff Via--County Extension Director, Fayette County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Alex Armour                     Mr. Chuck Dacus
    Mr. R. Morris English, Jr.          Mr. Willie German
    Mr. Lee Graves                      Mr. Dewayne Hendrix
    Mr. Ed Karcher                      Mr. Rob Karcher
    Mr. Allen King                      Mr. John King
    Mr. Travis Lonon                    Mr. Kinney McRae
    Mr. Hassell Smith                   Mr. Ronald Woods
------------------------------------------------------------------------
                           Texas--Coastal Bend
 
                              Facilitators
 
  Mr. Bobby McCool--County Extension Agent, San Patricio County and
   Aransas County
  Mr. Mark Miller--Chief Operations Officer, Texas AgFinance
  Mr. Jeff Nunley--Executive Director, South Texas Cotton & Grain
   Association
  Mr. Jason Ott--County Extension Agent, Nueces County
  Mr. John Parker--Vice President, Texas AgFinance
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Travis Adams                    Mr. Marvin Beyer, Jr.
    Mr. Colin Chopelas                  Mr. Jimmy Dodson
    Mr. Jon Gwynn                       Mr. Darrell Lawhon
    Mr. Larry McNair                    Mr. Andrew Miller
    Mr. Toby Robertson                  Mr. Darby Salge
    Mr. David Weaver                    Mr. Jon Whatley
------------------------------------------------------------------------
                         Texas--Eastern Caprock
 
                              Facilitators
 
  Ms. Caitlin Jackson
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Lloyd Arthur                    Mr. Brooks Ellison
    Mr. Mark Schoepf                    Mr. Conner Wilmeth
------------------------------------------------------------------------
                            Texas--Mid Coast
 
                              Facilitators
 
  Mr. Jeff Nunley--Executive Director, South Texas Cotton & Grain
   Association
  Mr. Jimmy Roppolo--General Manager, United Ag
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Daniel Gavranovic               Mr. Duane Lutringer
    Mr. Cedric Popp                     Mr. Michael Popp
    Mr. Darrell Schoeneberg             Mr. Mike Watz
------------------------------------------------------------------------
                        Texas--Rio Grande Valley
 
                              Facilitators
 
  Mr. Matthew Rodriguez--County Extension Agent
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Jerry Chappell                  Mr. Joe Pennington
    Mr. Spence Pennington               Mr. Ivan Salazar
    Mr. Zachary Swanberg                Mr. Mark Willis
------------------------------------------------------------------------
                          Texas--Rolling Plains
 
                              Facilitators
 
  Mr. Steven Estes--County Extension Agent, Texas AgriLife Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Larry Lytle                     Mr. Michael McLellan
    Mr. Cody Roberts                    Mr. Brian Sandbothe
    Mr. Mike Sloan                      Mr. Dale Spurgin
    Mr. Rick Vickers                    Mr. Ferdie Walker
    Mr. Terry White
------------------------------------------------------------------------
                       Texas--Southern High Plains
 
                              Facilitators
 
  Mr. Gary Roschetzky--County Extension Agent, Dawson County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Terry Coleman                   Mr. Will Cozart
    Mr. Kirk Tidwell                    Mr. Johnny Ray Todd
    Mr. Donald Vogler                   Mr. David Warren
------------------------------------------------------------------------
                               Rice Farms
 
                                Arkansas
 
                              Facilitators
 
  Mr. Chuck Capps
  Mr. Steve Kelley
  Mr. Steven Stone
  Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
   Cooperative Extension
  Mr. Gus Wilson
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. John Gates                      Mr. Andrew Gill
    Mr. Andy Gill                       Mr. Tad Keller
    Mr. Joe Mencer                      Mr. Matt Miles
    Mr. Jim Whitaker                    Mr. Sam Whitaker
------------------------------------------------------------------------
                 Arkansas--East Central-Arkansas County
 
                              Facilitators
 
  Mr. Bill Free--Riceland Foods, Inc.
  Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
   Cooperative Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Brandon Bauman                  Mr. Derek Bohanan
    Mr. Monty Bohanan                   Mr. Dusty Hoskyn
    Mr. Stephen Hoskyn                  Mr. David Jessup
    Mr. Garth Jessup
------------------------------------------------------------------------
                   Arkansas--East Central-Cross County
 
                              Facilitators
 
  Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
   Cooperative Extension
  Mr. Rick Wimberley--County Extension Agent--Staff Chair, U. of
   Arkansas Cooperative
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Corbin Brown                    Mr. John Cooper
    Mr. Byron Holmes, Jr.               Mr. Bryan Moery
    Mr. Roger Pohlner
------------------------------------------------------------------------
                   Arkansas--Northeast-Lawrence County
 
                              Facilitators
 
  Mr. Michael Andrews
  Mr. Bryce Baldridge
  Ms. Courtney Sisk
  Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
   Cooperative Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Greg Baltz                      Mr. Jeremy Baltz
    Mr. Ricky Burris                    Mr. Ronald Cavenaugh
    Mr. Doug Cox                        Mr. Bruce Manning
    Mr. Joe Richardson                  Mr. Vic Stone
------------------------------------------------------------------------
                        California--Butte County
 
                              Facilitators
 
  Dr. Luis Espino
  Mr. Tim Johnson--President and CEO, California Rice Commission
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Seth Fiack                      Mr. Imran Khan
    Mr. Peter Rystrom                   Mr. Josh Sheppard
    Mr. Derek Sohnrey
------------------------------------------------------------------------
                        California--Colusa County
 
                              Facilitators
 
  Dr. Luis Espino
  Mr. Tim Johnson--President and CEO, California Rice Commission
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Don Bransford                   Ms. Kim Gallagher
    Mr. Leo LaGrande                    Mr. Charles Marsh
    Mr. Alex Struckmeyer
------------------------------------------------------------------------
                        California--Sutter County
 
                              Facilitators
 
  Ms. Whitney Brim-DeForest--UCCE Farm Advisor
  Mr. Tim Johnson
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Bard Anderson                   Mr. Paul Baggett
    Mr. Tom Butler                      Mr. Mike DeWit
    Mr. Ned Lemenager                   Mr. Charley Mathews
    Mr. Jon Munger                      Mr. Rick Nelson
    Mr. Michael Rue                     Mr. Don Traynham
    Mr. Rob Van Dyke                    Ms. Nicole Van Vleck
------------------------------------------------------------------------
                          Louisiana--Northeast
 
                              Facilitators
 
  Mr. Scott Franklin
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Ed Greer                        Mr. Heath Herring
    Mr. Jim Lingo                       Mr. Jon Michael
------------------------------------------------------------------------
                               Livingston
------------------------------------------------------------------------
    Mr. John Owen                       Mr. Russ Ratcliff
------------------------------------------------------------------------
                      Louisiana--Southwest-Acadiana
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Al Cramer                       Mr. Tommy Faulk
    Mr. David Lacour                    Mr. Alan Lawson
    Mr. Jackie Loewer                   Mr. Micah Loewer
    Mr. Christian Richard               Mr. Fred Zaunbrecher
------------------------------------------------------------------------
                         Mississippi--Cleveland
 
                              Facilitators
 
  Dr. Larry Falconer--Extension Professor
  Mr. Craig hankins--Extension Agent
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Michael Aguzzi                  Mr. Austin Davis
    Mr. Gary Fioranelli                 Mr. Randy Howarth
    Mr. Kirk Satterfield
------------------------------------------------------------------------
                                Missouri
 
                              Facilitators
 
  Mr. Trent Haggard--Director, Fisher Delta Research Center
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. John Anderson                   Mr. Alex Clark
    Mr. Rance Daniels                   Mr. Russ Hoggard
    Mr. Jim Priggel                     Mr. Will Spargo
------------------------------------------------------------------------
                    Texas--Bay City-Matagorda County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Donnie Bulanek                  Mr. Barrett Franz
    Mr. Billy Mann                      Mr. Curt Mowery
    Mr. Bob Reed                        Mr. Joey Sliva
    Mr. Paul Sliva
------------------------------------------------------------------------
                    Texas--Eagle Lake-Colorado County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Andy Anderson                   Mr. Kenneth Danklefs
    Mr. W.A. ``Billy'' Hefner III       Mr. Jason Hlavinka
    Mr. Ira Lapham                      Mr. Patrick Pavlu
    Mr. Bryan Wiese
------------------------------------------------------------------------
                     Texas--El Campo-Wharton County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Daniel Berglund                 Mr. Timothy Gertson
    Mr. Mark Rasmussen                  Mr. L.G. Raun
    Mr. Glen Rod                        Mr. Tommy Turner
------------------------------------------------------------------------
                               Dairy Farms
 
                               California
 
                              Facilitators
 
  Dr. J.P. Martins
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Steve Gaspar                    Mr. Dino Giacomazzi
    Mr. Claudio Ribeiro                 Mr. Jeff Wilbur
------------------------------------------------------------------------
                             Florida--North
 
                              Facilitators
 
  Ms. Mary Sowerby--Regional Dairy Extension Specialist, UofF Extension
  Mr. Chris Vann--County Extension Agent, Lafayette County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Johan Heijkoop                  Mr. Everett Kerby
    Mr. Rod Land                        Mr. Terry Reagan
    Mr. Klaas Reynevelds                Mr. George Wedsted
------------------------------------------------------------------------
                             Florida--South
 
                              Facilitators
 
  Mr. Ray Hodge--Director of Govt. Relations, Southeast Milk
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Ben Butler                      Mr. Bob Butler
    Mr. Jacob Larson                    Mr. Woody Larson
    Mr. Tony Moens                      Mr. Keith Rucks
    Mr. Sutton Rucks, Jr.               Mr. Glynn Rutledge
    Mr. Tommy Watkins
------------------------------------------------------------------------
                                  Idaho
 
                              Facilitators
 
  Mr. Rick Naerebout--Executive Director, Idaho Dairymen's Association
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Willie Bokma                    Mr. Christopher Stevenson
    Mr. Ted Vander Scheaf               Mr. Pete Wiersma
------------------------------------------------------------------------
                                Missouri
 
                              Facilitators
 
  Mr. Stacey Hamilton--Dairy Specialist and Dade Co. Program Director
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Niall Murphy                    Mr. Gary Nolan
    Mr. Bernie Van Dalfsen              Mr. Zach Ward
    Mr. Craig Zydenbos
------------------------------------------------------------------------
                             Nevada--Fallon
 
                              Facilitators
 
  Mr. Bob Fletcher
  Dr. Tom Harris--Dept. of Resource Econ, University of Nevada
  Ms. Pam Powell--Extension Agent
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Pete Homma                      Mr. Cameron Mills
    Mr. Alan Perazzo                    Mr. David Perazzo
    Mr. Charles Turner                  Mr. Jeff Whitaker
------------------------------------------------------------------------
                            New York--Central
 
                              Facilitators
 
  Ms. Betsy Hicks
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Eric Carey                      Ms. Amanda Fitzsimmons
    Mr. and Mrs. Mike McMahon           Mr. Kenton Patchen
    Mr. & Mrs. Todd & Josie Spencer     Mr. Zach Young
------------------------------------------------------------------------
                            New York--Western
 
                              Facilitators
 
  Ms. Joan Petzen--Farm Business Mngt. Specialist, Cornell Cooperative
   Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Ms. Tammy Andrews                   Mr. Benjamin Chamberlain
    Mr. Gerry Coyne                     Mr. Malachy Coyne
    Mr. Peter Dueppengiesser            Ms. Kitty Dziedzic
    Mr. John Emerling                   Mr. Walter Faryna
    Mr. Tom and Bill Fitch              Mr. Craig Harkins
    Ms. Sarah Keem                      Mr. John Knopf
    Mr. Jeff Mulligan                   Ed & Jody Neal
    Mr. John Noble                      Mr. Lyman Rodgers
    Mr. Steve Sondericker               Ms. Cyndy Van Lieshout
    Mr. Ken Van Slyke
------------------------------------------------------------------------
                              Ohio--Wooster
 
                              Facilitators
 
  Ms. Dianne Shoemaker
 
                           Panel Participants
------------------------------------------------------------------------
    Ms. Jenny Bernhard                  Mr. Gary Dotterer
    Mr. Henry Hughes                    Mr. Joe Miley
    Ms. Joan Winkler                    Ms. Rebecca Winkler
------------------------------------------------------------------------
                             Texas--Central
 
                              Facilitators
 
  Mr. Lonnie Jenschke--County Agent, TexasAgriLife Extension
  Dr. Jason Johnson--Area Economist, TexasAgriLIfe Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Frans Beukeboom                 Ms. Linda Beukeboom
    Mr. Johann DeBoer                   Mr. Johan Koke
    Mr. Clemens Kuiper                  Mr. Joseph Osinga
    Mr. Henk Postmus
------------------------------------------------------------------------
                            Texas--Northeast
 
                              Facilitators
 
  Dr. Mario Villarino--County Agent, Texas Cooperative Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Alan Bullock                    Mr. Blake Fisher
    Mr. Don Smith                       Mr. Jerry Spencer
    Mr. Mark Sustaire
------------------------------------------------------------------------
                           Texas--South Plains
 
                              Facilitators
 
  Ms. Janet Claborn--Director of Economic Development
  Mr. Curtis Preston--County Extension Agent Bailey County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Tom Alger                       Mr. Matt Beckerink
    Mr. Larry Hancock                   Mr. David Lawerence
    Mr. Reed Mulliken                   Mr. Joe Osterkamp
    Mr. Bob Wade
------------------------------------------------------------------------
                                 Vermont
 
                              Facilitators
 
  Dr. Bob Parsons--Asst. Professor--Farm Management, University of
   Vermont
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Paul Bourbeau                   Mr. David & Deb Conant
    Mr. Ashley Farr                     Mr. Ted Foster
    Mr. Steven Jones                    Mrs. Polly McEwing
    Mr. Les Pike                        Mrs. Kathrine Scribner
    Mr. Onan Whitcomb
------------------------------------------------------------------------
                               Washington
 
                              Facilitators
 
  Dr. Amber Itle
  Dr. Susan Kerr--Dairy Extension Specialist, WSU
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. John/Rich Appel                 Mr. Ed Blok
    Mr. Rod & Jon De Jong               Mr. Larry DeHaan
    Mr. Troy Lenssen                    Mr. Sherman Polinder
    Mr. Ed Pomeroy                      Mr. Jeff Rainey
    Mr. Galen Smith                     Mr. John Steensma
    Mr. Harold Van Berkum               Mr. Jerry Van Dellen
    Mr. Peter Vlas
------------------------------------------------------------------------
                                Wisconsin
 
                              Facilitators
 
  Ms. Tina Kohlman
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. David Beck                      Mr. Mark Breunig
    Mr. John Diedrichs                  Ms. Gooitske Dijkstra
    Mr. Roger Grade                     Mr. Ben Hesselink
    Mr. Clint Hodorff                   Mr. Corey Hodorff
    Ms. Linda Hodorff                   Mr. Matt Hunter
    Mr. Randy Julka                     Mr. Jim Kasten
    Mr. and Mrs. Charlie Knigge         Mr. Pete Knigge
    Mr. Jeff Liner                      Mr. Chris Pollack
    Mr. Jeff Reiden                     Mr. Jim Rickert
    Mr. John Ruedinger                  Mr. Steve Smits
    Mr. Rob Stone                       Mr. Jason Vorpahl
    Mr. Bill & Tammy Wiese
------------------------------------------------------------------------
                             Beef Producers
 
                               California
 
                              Facilitators
 
  Mr. Josh Davy--Livestock and Natural Resources Rep., UC-Davis
   Extension
  Mr. Larry Forero--Farm Advisor, Livestock and Natl. Res., California
   Cooperative Extension
  Mr. Glenn Nader--Farm Advisor, Livestock and Natl. Res., California
   Cooperative Extension
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Jerry Hemsted                   Mr. Ron Masingale
    Mr. Dick O'Sullivan                 Mr. Wally Roney
    Mr. Britt Schumacher
------------------------------------------------------------------------
                                Colorado
 
                              Facilitators
 
  Mr. Todd Hagenbuch--County Extension Agent, Routt County
  Mr. CJ Mucklow--Western Region Director
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Doug Carlson                    Mr. Jay Fetcher
    Mr. Larry Monger                    Mr. Dustin Neelis
    Mr. Jim Rossi                       Mr. Phillip Rossi
    Ms. Kathy Smith                     Mr. Justin Warren
------------------------------------------------------------------------
                                 Florida
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Mike Adams                      Mr. Wes Carlton
    Mr. Alan Kelley                     Mr. Cary Lightsey
    Mr. Ralph Pelaez                    Mr. Bert Tucker
    Dr. Fred Tucker                     Mr. Wes Williamson
------------------------------------------------------------------------
                           Missouri--Southwest
 
                              Facilitators
 
  Mr. Brian Gillen--Agricultural Science Instructor, Lockwood High
   School
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Marc Allison                    Mr. Steve Allison
    Mr. Scott Daniel                    Mr. Randall Erisman
    Mr. James A. Nivens                 Mr. Mike Theurer
    Mr. Gary D. Wolf
------------------------------------------------------------------------
                                 Montana
 
                              Facilitators
 
  Mr. Michael Schuldt--County Extension Agent, Custer County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Clarence Brown                  Mr. Art Drange
    Mr. Levi Foreman                    Mr. Kendall Groer
    Mr. Alyn Haughian                   Mr. Scot Robinson
    Mr. Andy Zook
------------------------------------------------------------------------
                                 Nevada
 
                              Facilitators
 
  Dr. Tom Harris--Dept. of Resource Econ, University of Nevada
  Dr. Ron Torell--Custom A.I. & Ranch Consulting
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Tom Barnes                      Mr. and Mrs. Brad & Dani Dalton
    Mr. and Mrs. Jay Dalton             Mr. Jon Griggs
    Mr. and Mrs. Mitch & Rhonda         Mr. Pete Mori
    Mr. and Mrs. Sam Mori               Mr. and Mrs. Ed Sarman
    Mr. Paul Sarman                     Mr. and Mrs. Craig Spratling
------------------------------------------------------------------------
                            Nevada--Caliente
 
                              Facilitators
 
  Ms. Holly Gatzke
  Dr. Tom Harris--Dept. of Resource Econ, University of Nevada
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Pete Delmue                     Mr. Sam Higbee
    Ms. Kena Lytle-Gloeckner            Mr. Robert Mathews
------------------------------------------------------------------------
                               New Mexico
 
                              Facilitators
 
  Ms. Talisha Valdez--County Extension Agent, Union County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Justin Bennett                  Mr. Damon Brown
    Mr. Blair Clavel                    Mr. John Gilbert
    Mr. Russell Kear                    Mr. J.C. Miller
    Mr. Red Miller                      Mr. John Vincent
    Mr. Derek Walker
------------------------------------------------------------------------
                              South Dakota
 
                              Facilitators
 
  Ms. Adele Harty
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Kory Bierle                     Mr. Reed Cammack
    Mr. Jim Cantrell                    Mr. Gary Clanton
    Mr. Casey Doud                      Mr. Josh Geigle
    Ray & Linda Gilbert                 Mr. Riley Kammerer
    Mr. Willis Kopren                   Mr. Sam Smith
    Mr. Andrew Snyder                   Mr. Monty Williams
------------------------------------------------------------------------
                          Texas--Rolling Plains
 
                              Facilitators
 
  Mr. Thomas Boyle--County Extension Agent, Dickens County
  Mr. Toby Oliver--County Extension Agent, King County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Greg Arnold                     Hon. Duane Daniel
    Mr. Steve Drennan                   Mr. Leland Foster
    Mr. Glenn Springer
------------------------------------------------------------------------
                              Texas--South
 
                              Facilitators
 
  Mr. Dwight Sexton--County Extension Agent, Gonzales County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Jason Breitschopf               Mr. Michael Ehrig
    Mr. Brian Fink                      Mr. Mitchell Hardcastle
    Mr. Michael Kuck                    Mr. Billy Parker
------------------------------------------------------------------------
                            Wyoming--Worland
 
                              Facilitators
 
  Mr. Jim Gill--Senior University Extension Educator, Washakie County
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Matt Brown                      Ms. Teresa Brown
    Mr. Maurice Bush                    Mr. Tim Flitner
    Mr. Dan Rice                        Mr. Gary Rice
------------------------------------------------------------------------
                              Peanut Farms
 
                         North Carolina--Conway
 
                              Facilitators
 
  Dr. Blake Brown
  Mr. Gary Bullen
  Mr. Bob Sutter
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Clarke Fox                      Mr. Ray Garner
    Mr. Wayne Harrell                   Mr. Donny Lassiter
    Mr. Brad West                       Mr. Donnie White
------------------------------------------------------------------------
                      North Carolina--Elizabethtown
 
                              Facilitators
 
  Dr. Blake Brown
  Mr. Gary Bullen
  Mr. Matthew Strickland
  Mr. Bob Sutter
 
                           Panel Participants
------------------------------------------------------------------------
    Mr. Robert Byrd                     Mr. Wade Byrd
    Mr. Jart Hudson                     Mr. Alex Jordan
    Mr. Dan McDuffie                    Mr. Sean Morris
    Mr. Dan Ward                        Mr. Wilbur Ward
------------------------------------------------------------------------

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

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