[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


     UNCERTAINTY, INFLATION, REGULATIONS: CHALLENGES FOR AMERICAN 
                              AGRICULTURE

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

                                HEARING

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

                           FEBRUARY 28, 2023
                               __________

                            Serial No. 118-1
                            
                            
                [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                     
                            

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

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
52-370 PDF                 WASHINGTON : 2023   



                        COMMITTEE ON AGRICULTURE

                 GLENN THOMPSON, Pennsylvania, Chairman

FRANK D. LUCAS, Oklahoma             DAVID SCOTT, Georgia, Ranking 
AUSTIN SCOTT, Georgia, Vice          Minority Member
Chairman                             JIM COSTA, California
ERIC A. ``RICK'' CRAWFORD, Arkansas  JAMES P. McGOVERN, Massachusetts
SCOTT DesJARLAIS, Tennessee          ALMA S. ADAMS, North Carolina
DOUG LaMALFA, California             ABIGAIL DAVIS SPANBERGER, Virginia
DAVID ROUZER, North Carolina         JAHANA HAYES, Connecticut
TRENT KELLY, Mississippi             SHONTEL M. BROWN, Ohio
DON BACON, Nebraska                  SHARICE DAVIDS, Kansas
MIKE BOST, Illinois                  ELISSA SLOTKIN, Michigan
DUSTY JOHNSON, South Dakota          YADIRA CARAVEO, Colorado
JAMES R. BAIRD, Indiana              ANDREA SALINAS, Oregon
TRACEY MANN, Kansas                  MARIE GLUESENKAMP PEREZ, 
RANDY FEENSTRA, Iowa                 Washington
MARY E. MILLER, Illinois             DONALD G. DAVIS, North Carolina
BARRY MOORE, Alabama                 JILL N. TOKUDA, Hawaii
KAT CAMMACK, Florida                 NIKKI BUDZINSKI, Illinois
BRAD FINSTAD, Minnesota              ERIC SORENSEN, Illinois
JOHN W. ROSE, Tennessee              GABE VASQUEZ, New Mexico
RONNY JACKSON, Texas                 JASMINE CROCKETT, Texas
MARCUS J. MOLINARO, New York         JONATHAN L. JACKSON, Illinois
MONICA De La CRUZ, Texas             GREG CASAR, Texas
NICHOLAS A. LANGWORTHY, New York     CHELLIE PINGREE, Maine
JOHN S. DUARTE, California           SALUD O. CARBAJAL, California
ZACHARY NUNN, Iowa                   ANGIE CRAIG, Minnesota
MARK ALFORD, Missouri                DARREN SOTO, Florida
DERRICK VAN ORDEN, Wisconsin
LORI CHAVEZ-DeRemer, Oregon
MAX L. MILLER, Ohio

                                 ______

                     Parish Braden, Staff Director

                 Anne Simmons, Minority Staff Director

                                  (ii)

                             C O N T E N T S

                              ----------                              
                                                                   Page
Finstad, Hon. Brad, a Representative in Congress from Minnesota, 
  submitted letter...............................................   252
Miller, Hon. Max L., a Representative in Congress from Ohio, 
  prepared statement.............................................     5
Rose, Hon. John W., a Representative in Congress from Tennessee, 
  submitted letter...............................................   253
Scott, Hon. David, a Representative in Congress from Georgia, 
  opening statement..............................................     4
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania, opening statement................................     1
    Prepared statement...........................................     3
    Submitted statements on behalf of:
        Broydrick, Bill, Executive Director, National Rural 
          Lenders Roundtable.....................................   245
        J.R. Simplot Company.....................................   245

                               Witnesses

Duvall, Vincent ``Zippy'', President, American Farm Bureau 
  Federation, Washington, D.C....................................     7
    Prepared statement...........................................     8
Friedmann, Peter, Executive Director, Agriculture Transportation 
  Coalition, Washington, D.C.....................................    15
    Prepared statement...........................................    16
    Supplementary material.......................................   260
Rosenbusch, Corey, President and Chief Executive Officer, The 
  Fertilizer Institute, Arlington, VA............................    19
    Prepared statement...........................................    20
Twining, Michael, Vice President of Sales & Marketing, Willard 
  Agri-Service; Member, Board of Directors, Agricultural 
  Retailers Association, Worton, MD..............................    24
    Prepared statement...........................................    26
Brown, Mike, President, National Chicken Council, Washington, 
  D.C............................................................    34
    Prepared statement...........................................    36
    Supplementary material.......................................   261
Larew, Robert L., President, National Farmers Union, Washington, 
  D.C............................................................   173
    Prepared statement...........................................   174
    Supplementary material.......................................   268


 
           UNCERTAINTY, INFLATION, REGULATIONS: CHALLENGES FOR AMERICAN 
                              AGRICULTURE

                              ----------                              


                       TUESDAY, FEBRUARY 28, 2023

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1300 of the Longworth House Office Building, Hon. Glenn 
Thompson [Chairman of the Committee] presiding.
    Members present: Thompson, Lucas, Austin Scott of Georgia, 
Crawford, LaMalfa, Rouzer, Kelly, Bacon, Johnson, Baird, Mann, 
Feenstra, Miller of Illinois, Moore, Cammack, Finstad, Rose, 
Jackson of Texas, Molinaro, De La Cruz, Langworthy, Duarte, 
Nunn, Alford, Van Orden, Chavez-DeRemer, Miller of Ohio, David 
Scott of Georgia, Costa, McGovern, Adams, Spanberger, Hayes, 
Brown, Davids of Kansas, Slotkin, Caraveo, Salinas, Perez, 
Davis of North Carolina, Tokuda, Budzinski, Sorensen, Vasquez, 
Crockett, Jackson of Illinois, Casar, Pingree, Carbajal, Craig, 
and Soto.
    Staff present: Parish Braden, Caleb Crosswhite, Josh 
Maxwell, Patricia Straughn, Trevor White, Erin Wilson, Daniel 
Feingold, Prescott Martin III, Ashley Smith, Joshua Tonsager, 
Elaine Zhang, Kate Fink, and Dana Sandman.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    The Chairman. The Committee will now come to order. 
Welcome, everybody, and thank you for joining today's hearing 
entitled, Uncertainty, Inflation, Regulations: Challenges for 
American Agriculture. After brief opening remarks, Members will 
receive testimony from our witnesses today, and then the 
hearing will be open to questions.
    So once again, good morning, everybody, and welcome to the 
first House Committee on Agriculture hearing of the 118th 
Congress. Our focus this morning will be on the headwinds 
facing production agriculture. Without a comprehensive 
understanding of the industry's challenges, we cannot write an 
impactful farm bill that addresses the needs of those who grow, 
process, and consume the food, fuel, and fiber we are blessed 
to produce here in the United States.
    As we seek solutions, it is my vision that this Committee 
will provide the necessary tools to our farmers and ranchers to 
ease the barriers to production felt in recent years. As 
Chairman, I challenge each Member of the Agriculture Committee 
to view all policies through the lens of science, technology, 
and innovation and identify forward-looking solutions 
throughout our work.
    Our nation's farmers, ranchers, and foresters are 
exceptional, having increased food and fiber production nearly 
threefold since the 1940s. They have done so with no relative 
increase in inputs, serving as shining stars of sustainability 
and conservation practices. However, the uncertainty caused by 
a global pandemic, geopolitical unrest, and incessant 
government intrusion have led to a modest production decline in 
recent years. Enduring production agriculture policies are 
essential to our national security. Maintaining a safe, 
abundant, and affordable domestic food supply is equally 
essential, as is meeting the needs of the perennial global food 
crisis.
    Over the last several years, I have traveled to more than 
40 states and I have heard firsthand from our farmers on issues 
related to labor, fuel, fertilizer, inflation, and interest 
rates. The average cost of diesel fuel per gallon increased 95 
percent from 2020 to 2022. The 2022 average Henry Hub Natural 
Gas Spot Price increased 53 percent from 2021. Fertilizer 
inputs such as nitrogen, phosphorus, and potassium increased 
125 percent in 2021 and an additional 30 percent in the first 5 
months of 2022 alone. Urea, the most applied nitrogen 
fertilizer, increased 205 percent in price between 2020 and 
2022.
    Last week marked 1 year since Russia's invasion of the 
Ukraine, which perpetuates a disrupted global food supply 
system, resulting in continued increased energy prices, 
fertilizer cost spikes and shortages, and worsening food 
scarcity in developing countries. At the same time, American 
consumers are watching in dismay as their grocery and energy 
bills skyrocket. The Biden Administration continues to ignore 
these crises, neglecting America's producers and consumers. In 
fact, this Administration continues to promote nonsensical 
regulations and policies that create needless uncertainty for 
farmers, ranchers, and working families, further limiting our 
ability to meet the growing food demands of our nation and the 
world. The challenges facing production agriculture are many. 
However, I believe that one of the few silver linings, maybe 
the only silver lining, is Americans' heightened awareness of 
the importance of a reliable domestic food supply and the 
producers who provide it.
    As Members of the House Committee on Agriculture in a farm 
bill reauthorization cycle, it is our mandate to fully 
understand these challenges and work diligently without 
partisanship to ensure the passage of a strong farm bill that 
addresses the issues highlighted today.
    Thank you to the witnesses appearing here before us today. 
I look forward to your testimony. And regardless of the 
challenges, it is time to retire our dress shoes and put on our 
work boots. We have a lot of work to do, and I will need every 
one of you at the table to help us deliver a farm bill for the 
backbone of this country, the American producer.
    [The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress 
                           from Pennsylvania
    Good morning, and welcome to the first House Committee on 
Agriculture hearing of the 118th Congress. Our focus this morning will 
be on the headwinds facing production agriculture. Without a 
comprehensive understanding of industry's challenges, we cannot write 
an impactful farm bill that addresses the needs of those who grow, 
process, and consume the food, fuel, and fiber we are blessed to 
produce here in the United States.
    As we seek solutions, it is my vision that this Committee will 
provide the necessary tools to our farmers and ranchers to ease the 
barriers to production felt in recent years. As Chairman, I challenge 
each Member of the Agriculture Committee to view all policies through 
the lens of science, technology, and innovation, and identify forward-
looking solutions throughout our work.
    Our nation's farmers, ranchers, and foresters are exceptional, 
having increased food and fiber production nearly three-fold since the 
1940s. They have done so with no relative increase in inputs--serving 
as shining stars of sustainability and conservation practices. However, 
the uncertainty caused by a global pandemic, geopolitical unrest, and 
incessant government intrusion has led to a modest production decline 
in recent years.
    Enduring production agriculture policies are essential to our 
national security. Maintaining a safe, abundant, and affordable 
domestic food supply is equally essential, as is meeting the needs of 
perennial global food crises.
    Over the last several years, I have traveled to more than 40 states 
and have heard firsthand from our farmers on issues related to labor, 
fuel, fertilizer, inflation, and interest rates. The average cost of 
diesel fuel per gallon increased 95 percent between 2020 and 2022. The 
2022 average Henry Hub real natural gas spot price increased 53 percent 
from 2021. Fertilizer inputs such as nitrogen, phosphorus, and 
potassium increased 125 percent in 2021 and an additional 30 percent in 
the first 5 months of 2022 alone. Urea, the most applied nitrogen 
fertilizer, increased 205 percent in price between 2020 and 2022.
    Last week marked 1 year since Russia's invasion of Ukraine, which 
perpetuates a disrupted global food system, resulting in continued 
increased energy prices, fertilizer cost spikes and shortages, and 
worsening food scarcities in developing countries. At the same time, 
American consumers are watching in dismay as their grocery and energy 
bills skyrocket.
    The Biden Administration continues to ignore these crises, 
neglecting America's producers and consumers. In fact, this 
Administration continues to promote nonsensical regulations and 
policies that create needless uncertainty for farmers, ranchers, and 
working families, further limiting our ability to meet the growing food 
demands of our nation and the world.
    The challenges facing production agriculture are many. However, I 
believe one of the few silver linings--maybe the only silver lining--of 
the coronavirus pandemic is Americans' heightened awareness of the 
importance of a reliable, domestic food supply and the producers who 
provide it.
    As Members of the House Committee on Agriculture in a farm bill 
reauthorization cycle, it is our mandate to fully understand these 
challenges and work diligently and without partisanship to ensure the 
passage of a strong farm bill that addresses the issues highlighted 
today.
    Thank you to the witnesses appearing here before us today. I look 
forward to your testimony.
    And regardless of the challenges, it is time to retire our dress 
shoes and put on the work boots. We have a lot of work to do, and I 
will need every one of you at the table to help us deliver a farm bill 
for the backbone of this country--the American producer.

    The Chairman. And before I recognize the Ranking Member, I 
would like to note the addition of four returning Democratic 
Members who were added to the Committee roster yesterday 
evening, Representatives Pingree, Carbajal, Craig, and Soto. I 
am excited to have all four of you back. Thank you for your 
commitment to do that.
    And with that, I would now like to welcome the 
distinguished Ranking Member, the gentleman from Georgia, Mr. 
Scott, for any opening remarks that he would like to give.

  OPENING STATEMENT OF HON. DAVID SCOTT, A REPRESENTATIVE IN 
                     CONGRESS FROM GEORGIA

    Mr. David Scott of Georgia. Thank you. And I would like to 
begin my comments by congratulating Chairman Thompson as we 
start the 118th Congress, and how proud I am of the bipartisan 
work that our Agriculture Committee did last Congress. We 
brought in Agriculture Secretary Vilsack to discuss the state 
of the farm economy in January of 2022 and followed that with 
19 farm bill review hearings with stakeholders and other 
Administration officials. We also held five listening sessions 
all across the country, and we got input from farmers and 
consumers about how our farm bill programs are working for 
them.
    In addition, we have an online feedback form, which is 
still open and can be accessed on the House Agriculture 
Committee's website for both Democratic and Republican 
feedback.
    And through those hearings, we have been able to get 
regular updates on what is happening on the ground and the 
needs of our farmers, ranchers, and foresters and what we must 
do to make sure we get the farm bill right for all producers 
across the country and to ensure we are also tending to our 
Congressional oversight responsibilities.
    This hearing today broadly refers to uncertainty, 
inflation, and regulations as the challenges producers are 
experiencing. And as we discuss these important issues and get 
input from the witnesses today, I encourage each of my fellow 
Committee Members, both Democrats and Republicans, to place 
these problems in their proper context. We are still feeling 
the impacts of the pandemic on our supply chains. The COVID-19 
pandemic disrupted manufacturing across the globe and 
exacerbated labor shortages right here at home.
    And President Biden's Administration has taken important 
actions to address these issues. For example, President Biden 
signed the Ocean Shipping Reform Act (Pub. L. 117-146) last 
year, and that helped avert a nationwide rail crisis. And the 
President worked with us here in Congress to pass two historic 
pieces of legislation, the bipartisan Infrastructure Investment 
and Jobs Act (Pub. L. 117-58), which included more than $2.9 
billion for USDA's rural broadband programs, for water storage, 
and a new byproduct pilot program. And that was followed by 
passage of the Inflation Reduction Act (Pub. L. 117-169), which 
made historic investments in rural America to help our farmers 
and rural communities mitigate climate change and continue to 
lead the way on renewable energies. These investments in 
infrastructure in our farm bill and forestry programs will pay 
dividends for farmers well into the future.
    And we have also seen how these international conflicts 
continue to reverberate throughout our economy. Former 
President Trump's trade war with China was devastating to many 
American producers and domestic manufacturers. And more 
recently, this Russian invasion of Ukraine has had significant 
impacts on fertilizer, grain, and fuel costs. And, ladies and 
gentlemen, many people may not know, but Russia at that point 
was containing and providing 60 percent of all the fertilizer 
in the world.
    The cause of inflation is not singular in nature. It is the 
result of a variety of factors. And with that in mind, we 
should also strive to focus on the issues that are within the 
House Agriculture Committee's jurisdiction so that we can be 
the most impactful in our work ahead for our great nation in 
this important, vitally important to every single American, our 
agriculture system. I yield back and thank you.
    The Chairman. Well, I thank the gentleman. I am looking 
forward to our continuing work together here.
    Mr. David Scott of Georgia. Yes, indeed.
    The Chairman. The chair would request that other Members 
submit their opening statements for the record so the witnesses 
may begin their testimony and to ensure that there is ample 
time for questions.
    [The prepared statement of Mr. Miller of Ohio follows:]

Prepared Statement of Hon. Max L. Miller, a Representative in Congress 
                               from Ohio
    Agriculture is the number-one contributor to Ohio's economy. The 
state has more than 77,800 farms, about \1/2\ of which have livestock 
production. Farming also provides one out of seven jobs in Ohio, and 
the Buckeye State ranks among the top ten in the nation in number of 
farms.
    However, Ohio and U.S. farmers continue to face economic 
uncertainty due to unprecedented inflationary input costs, diminishing 
trade opportunities, and an ever-increasing regulatory framework at a 
time when our nation's agriculture producers are called on to meet 
global food insecurities.
    Washington, D.C. has made life infinitely more difficult for Ohio's 
farmers--overburdensome regulations, spiraling crop input costs, and 
lowered trade outlook has made it more difficult to own and operate 
farm operations in my Congressional district and around the country.
    The U.S. Department of Agriculture, in its February 2023 
Projections for Agriculture \1\ underscored these concerns, ``Global 
economic and market circumstances continue to challenge the U.S. 
agriculture sector. Persistent inflation, severe weather events, supply 
chain disruptions, high input costs, and Russia's war against Ukraine 
continued to pressure commodity prices.'' Concluding, ``Prices for all 
crops are forecast to decline starting in 2023/24 for several years.''
---------------------------------------------------------------------------
    \1\ U.S. Department of Agriculture (USDA) Projections for 
Agriculture 2023-2032, February 15, 2023 (https://www.usda.gov/sites/
default/files/documents/USDA-Agricultural-Projections-to-2032.pdf).
    * Editor's note: references annotated with  are retained in 
Committee file.
---------------------------------------------------------------------------
    In addition, USDA has projected U.S. total agricultural exports 
will decrease 8% over the next 10 year period--causing more uncertainty 
and strain on our nation's farm community. According to economists at 
Ohio State University (OSU), inflation and high food costs can have an 
impact on U.S. agricultural trade, as when commodity input costs rise 
and food prices increase, trading partners `pull-back' purchasing, 
therefore reducing U.S. trading opportunities for U.S. farmers .
    The noted Ohio State economist \2\ concluded, ``The main issue for 
U.S. farmers in that while commodity prices may have been high, input 
prices are putting a lot of pressure on the bottom line of farmers. 
Global events such as the war in Ukraine and resulting tightening 
fertilizer supplies have had a dramatic impact, as while commodity 
prices have doubled, fertilizer costs have quadrupled, and volatile 
fertilizer increases do not show signs of softening.''
---------------------------------------------------------------------------
    \2\ Dr. Ian Sheldon, Chair of Agricultural Marketing, Trade and 
Policy Ohio State University, Ohio Farm Bureau Podcast. January 2023 
(https://soundcloud.com/ohiofarmbureaupodcast/ep-002-inflation-and-
energy-watch-outs-for-ag).
---------------------------------------------------------------------------
    Furthermore, access to natural gas, a key feedstock and energy 
source for nitrogen fertilizer, has been reduced in Europe as well as 
in the U.S., and fertilizer freight issues continue to inhibit farmers' 
access. As a result, according to OSU Extension officers, farmers may 
not be able to apply the appropriate amount of fertilizer as advised, 
and it will lessen yield, reduce income to farms, and result in 
tightened food supplies.
    Inflation is driving up the price of groceries in Ohio, 
increasingly pinching Ohioans budgets. So it is not just farmers who 
are suffering from spiking food prices--as U.S. families and those in 
the Buckeye State have suffered as USDA reports \3\ food-at-home prices 
increased by 11.4 percent in 2022--with costs continuing to rise 7.1 
percent thus far in 2023.
---------------------------------------------------------------------------
    \3\ USDA Food Price Outlook, February 23, 2023 (https://
www.ers.usda.gov/data-products/food-price-outlook/).
---------------------------------------------------------------------------
    OSU Extension experts note that inflation can affect crop 
production in a number of ways. For the producer, it can increase the 
costs of inputs such as seeds, fertilizers, and labor, which can reduce 
farmers' profit margins and make it more difficult for them to invest 
in new technology or expand their operations. For the consumer, 
inflation can lead to higher food prices, which can reduce consumer 
demand for agricultural products and hurt farmers' production and 
sales. This can also increase the cost of living for farmers and rural 
communities.
    Faced with these mounting pressures, farmers in Ohio and across the 
country are bracing for a substantial drop in farm income, which USDA 
\4\ projects to decrease by 17.8 percent in 2023. After 2 strong years 
of growth, U.S. farm income is forecast to drop substantially in 2023 
as commodity prices fall and expenses rise, and with food prices 
projected to rise into 2023. The Ohio Capital Journal concluded, ``The 
nation's producers will not be reaping the financial benefits.'' \5\
---------------------------------------------------------------------------
    \4\ USDA Projections for Agriculture 2023-2032, February 15, 2023.
    \5\ Editor's note: the article referred to is retained in Committee 
file; in entitled, USDA projects farm income will fall in 2023 after 2 
robust years, dated Feb. 8, 2023, and is available at https://
ohiocapitaljournal.com/2023/02/08/usda-projects-farm-income-will-fall-
in-2023-after-two-robust-years/.
---------------------------------------------------------------------------
    Federal regulations also have a direct impact on farmers and 
ranchers, and over the years, the breadth and extent of that regulatory 
landscape have increased dramatically. Farmers and ranchers in my 
District also are certainly challenged on the regulatory front. While 
farm bill programs such as conservation programs crop insurance and 
provide valuable tools--producers continue to confront numerous 
regulatory challenges.
    I was glad to join a bipartisan resolution sponsored by the 
Chairman of this Committee calling for commonsense resolution of the 
Waters of the U.S. Rule, which provides an unworkable test for 
jurisdiction of when the Federal Government regulates farms and 
ranchers, and creates uncertainty for agriculture as they work to 
sustain vital conservation resources.
    I am heartened by efforts such as the Ohio Agriculture Conservation 
Initiative (OACI), a partnership in my state between agriculture, 
conservation, environmental and research communities to recognize 
farmers for their dedication to advancing methods that improve water 
quality in Ohio and increasing the number of farm best management 
practices. Farmers have a commitment to the preservation of natural 
resources and maintaining the land for future generations, and I look 
forward to working with this Committee on the farm bill to ensure 
access to sound conservation practices.
    The many challenges facing Ohio and U.S. farmers, as highlighted in 
recent USDA official forecasts, remain a concern, ``Economic growth 
continues to contract as high levels of inflation persist worldwide, 
lower growth in China, and negative ramifications from Russia's war 
against Ukraine materialize in high food and energy prices and lower 
global trade . . . painting a gloomier economic outlook for the near 
future.''
    However, I remain committed to working with farmers and ranchers in 
my Congressional district, along with Members of this Committee, to 
make a meaningful difference in the upcoming farm bill to promote and 
sustain vital agriculture production in our nation.

    The Chairman. Let me introduce our witnesses. We have a 
very experienced, talented, and diverse panel of witnesses 
today as we look at the landscape in which the American 
producers have to work in today. This is a great, great hearing 
to help guide us in our farm bill as we develop the farm bill.
    So our first witness today is Mr. Zippy Duvall, President 
of the American Farm Bureau Federation. Our next witness is Mr. 
Peter Friedmann, who is the Executive Director of the 
Agriculture Transportation Coalition. Our third witness today 
is Mr. Corey Rosenbusch, the President and Chief Executive 
Officer of The Fertilizer Institute. Our fourth witness today 
is Mr. Michael T. Twining, who is the Vice President of Sales 
and Marketing for Willard Agri-Service. And our fifth witness 
today is Mr. Mike Brown, President of the National Chicken 
Council. Our sixth and final witness today is Rob Larew, who is 
the President of the National Farmers Union.
    Thank you to all of our impressive witnesses for joining us 
today, and we are now going to proceed to your testimony. You 
each have 5 minutes. The timer in front of you will count down 
to zero, at which point your time has expired, and we would ask 
that you wrap up whatever thought that you are at that point. 
And thank you for your written testimony that you have 
submitted, which all Members have in front of them.
    So, Mr. Duvall, please begin when you are ready.

STATEMENT OF VINCENT ``ZIPPY'' DUVALL, PRESIDENT, AMERICAN FARM 
              BUREAU FEDERATION, WASHINGTON, D.C.

    Mr. Duvall. Well, thank you, Mr. Chairman. And thank you, 
Ranking Member Scott, from my home state and my good friend, 
and other Members of the Committee. And I want to begin by 
thanking all of you for the work that you do for the American 
farmer and rancher.
    The country that cannot feed its people is not secure, so 
the strong foreign policy that supports a strong food system 
truly is part of a smart national security strategy. There are 
certainly plenty of challenges for American agriculture, from 
losses experienced in a trade war with China, to the pandemic 
lockdowns, to the supply chain disruptions. Add to that a 
record high supply cost and you see how farmers and ranchers 
have faced unprecedented volatility in recent years.
    USDA's most recent Farm Sector Income Forecast sees a 
decrease in net farm income in 2023 down 15.9 percent. Adjusted 
for inflation, that is an 18 percent drop. The same report 
estimates that farm/ranch production expenses will continue to 
increase by $18 billion. That follows a record increase of $70 
billion in 2022. Short- and long-term interest rates are also 
high and rising double and triple of what it was just a year 
ago. And if we remember the high interest rates caused by the 
high inflation and the Fed stepping up to address inflation led 
to a farm debt crisis in 1980s. We need to be sure that the 
doubling and tripling of interest rates does not cause similar 
pressures on our farmers.
    I am especially concerned about our beginning farmers, 
those that are forced to borrow for succession planning, and 
other farmers who have made recent new investments.
    Affordable, reliable, abundant energy is critical to 
farmers and ranchers. Energy is necessary for all farm 
production, and we continue to ride a rollercoaster ride of 
high energy and input costs. But along with the challenges, 
there are humongous opportunities ahead for agriculture. 
Innovation and research are helping us do more with less. Our 
advances in sustainability are truly impressive. But in order 
to seize the opportunities ahead and continue achievements, we 
need a strong foreign policy. We need a supportive regulatory 
environment. The Federal regulations have a direct impact on 
farmers and ranchers. Today's farmers and ranchers face a 
flurry of requirements and challenges: the new Waters of the 
U.S. rule, the Endangered Species Act, access to important crop 
protection tools, immigration and labor regulations, and now 
agencies such as the SEC imposing on our farmers and ranchers 
new climate regulations that are meant for Wall Street. Much 
uncertainty remains related to the ability of farmers and 
ranchers to access affordable supplies and deal with the 
regulatory and weather-related challenges.
    Expected revenue decline has more than erased the gains 
that we made during 2022, so it becomes more and more important 
for farmers to have clarity on rules that impact their business 
and ability to operate. Growers need to have access to 
comprehensive risk management options. They deserve a 
resounding voice during formulation of vital legislation such 
as the farm bill, and the farm bill is a critical took that 
ensures our nation's food supply remains secure.
    Farm Bureau supports the following principles to guide 
development of programs in the next farm bill. We want to 
increase the baseline funding commitments on farm programs. We 
want to maintain a unified farm bill that includes nutrition 
programs and farm programs together. And we want to prioritize 
the funding for risk management tools, which include both 
Federal crop insurance and commodity programs. The 2023 Farm 
Bill presents an important opportunity for lawmakers to rise 
above partisanship.
    I urge you to work together again to pass legislation that 
protects the food security for all Americans and ensures the 
future success for our farmers and ranchers. Farm bill will 
stand against the threat of long-term resiliencies of our rural 
communities. For your part, Congress must protect American 
agriculture and modern production practices from undue burdens. 
Farmers and ranchers are the highest and most trusted 
profession in America. I ask Congress to trust farmers and 
ranchers, too, and respect the ability to innovate and solve 
problems. We are committed to doing the right thing and 
appreciate the support of this Committee.
    And thank you, Mr. Chairman, for holding this hearing 
today, and I look forward to the questions from you in just a 
little while. Thank you.
    [The prepared statement of Mr. Duvall follows:]

  Prepared Statement of Vincent ``Zippy'' Duvall, President, American 
                Farm Bureau Federation, Washington, D.C.
    Mr. Chairman and Members of the Committee, my name is Zippy Duvall. 
I am a third-generation farmer and President of the American Farm 
Bureau Federation, and I am pleased to offer this testimony on behalf 
of the American Farm Bureau Federation and Farm Bureau members across 
this country.
    There are certainly plenty of challenges for American agriculture. 
Beginning with losses experienced from the trade war with China, 
pandemic lockdowns, supply chain disruptions, and record-high input 
costs, farmers and ranchers have been facing unprecedented volatility 
in recent years. Recognizing that other witnesses might cover some of 
these challenges more in-depth, I want to briefly highlight market 
uncertainties, energy affordability and potential regulatory burdens 
that will have an impact on farmers, ranchers and our rural 
communities.
    While there are challenges, I remain optimistic for the future of 
American agriculture. Through science, technology and innovation and 
the get-it-done attitude of rural Americans, no challenge has been too 
great. But we also must make sure that farmers and ranchers have the 
tools necessary to succeed, including support from good public policy 
and strong markets both domestically and abroad.
Uncertainty
    USDA's most recent Farm Sector Income Forecast,\1\ released Feb. 7, 
sees a decrease in net farm income in 2023. U.S. net farm income, a 
broad measure of farm profitability, is currently forecast at $136.9 
billion, down 15.9% from 2022's $162.7 billion. This $25.9 billion 
decline erases the $21.9 billion increase that was forecast between 
2021 and 2022. Adjusted for inflation, 2023 net farm income is expected 
to decrease even more: $30.5 billion (18.2%). The report expects farm 
and ranch production expenses to continue to increase by $18.2 billion 
(4.1%) in 2023 to $459.5 billion, following a record increase of $70 
billion in production expenses in 2022.
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    \1\ https://www.ers.usda.gov/topics/farm-economy/farm-sector-
income-finances/farm-sector-income-forecast/.
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    The largest decrease in net farm income is tied to a projected fall 
in cash receipts from livestock due to lower prices for all major 
categories except cattle. The value of livestock production (in nominal 
dollars) is expected to decrease nearly 6%, or $14.7 billion, in 2023. 
Chicken eggs and milk are responsible for the largest percentage 
decreases, with cash receipts for chicken eggs projected to decrease by 
$4.9 billion or 24%. Highly pathogenic avian influenza has affected 
over 52 million birds in commercial flocks in the U.S., including over 
43 million egg layers, pressuring supplies and pushing up prices. As 
the flock recovers, egg production increases and consumer demand 
fundamentals recalibrate prices lower. Milk receipts are similarly 
expected to decline $8.4 billion (14.6%) on expectations for higher 
milk production and lower corresponding prices.
    Cash receipts for cattle and calves are estimated to increase by 
$2.1 billion or 2.4%; but this is because drought conditions in the 
West and southern Plains have damaged pastures and led to higher costs 
for feed such as hay. This has resulted in many farmers marketing 
heifers that would typically be kept for breeding and herd replacement, 
resulting in a reduction in U.S. cattle inventory that will continue 
for years. Tighter cattle supplies have pulled both cash and futures 
prices higher, leading to continued growth in cash receipts and 
marketing of cattle.
    On the crops side, receipts for many major row crops like corn and 
soybeans are expected to decline, though wheat and hay are expected to 
increase. Receipts for corn are expected to fall by 4.5% ($4.1 
billion), while soybeans are expected to be down 8.1% ($5.2 billion). 
Wheat is expected up 4% ($0.6 billion) and hay receipts are expected to 
grow by $0.6 billion (6.1%). Fruits and nuts are expected to hover 
close to $30.8 billion in receipts, while vegetables and melons are 
poised to fall from $21.8 billion to $19.9 billion (^8.6%). The vast 
majority of expected receipt declines are linked to falling prices 
rather than volume dynamics.
    Weather and climate conditions will have strong impacts on the true 
outcome of this year's price outlook. Extreme drought that has pushed 
up hay and wheat prices could subside marginally after a winter of 
strong (so far) Western precipitation and snow. Record corn and soybean 
production in exporting countries like Brazil and Argentina are 
competition for U.S. crops overseas, particularly in the China market. 
Uncertainty related to Mexico's commitment to ban GMO corn for human 
consumption and the ongoing Ukraine-Russia \2\ conflict remains.
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    \2\ https://www.fb.org/market-intel/ukraine-russia-volatile-ag-
markets.
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    On the cost side, production expenses, including operator dwelling 
expenses, are forecast to increase for a sixth consecutive year, 
growing in 2023 by $18.2 billion, or 4.1%, to reach a record $459.5 
billion. And while it's little consolation, some major input items such 
as cumulative feed costs, fertilizers and fuels and oil are expected to 
decline from record highs. Feed costs, which represent the largest 
single expense category, are expected to decline $3.92 billion to 
$72.66 billion (^5%). Fertilizers, lime and soil conditioners are 
expected to decrease $1.25 billion, or 3%, from $43.42 billion to 
$42.17 billion. Typically, fertilizers represent about 15% of a crop 
farmer's costs and any increase, regardless of magnitude, can be 
crushing for some producers, especially in times of declining revenue. 
Fuels and oils are expected to experience the largest percent decline--
17%--from 2022, moving from $20.25 billion to $17.1 billion. These 
drops, however, are easily outpaced by increases in other expense 
categories including marketing, storage and transportation, which are 
forecast to increase 11%. Labor costs are expected up across all 
subcategories, with cash labor forecast to move from $39.2 billion to 
$42.08 billion (+7%). Inflation, currently sitting at 6.5%, remains a 
source of uncertainty and is eroding asset values; and interest 
expenses have increased as the Federal Reserve Bank attempts to bring 
inflation under control through higher rates. Between 2022 and 2023, 
interest expenses, including operator dwellings, are expected to jump 
22%, going from $27.6 billion to $33.84 billion, making it more 
difficult for farmers and ranchers to acquire lines of credit to 
purchase inputs and equipment this year. Livestock, seed, electricity, 
repair and maintenance are among the other categories expected to 
increase in price.
    Other farm income, which includes things like income from custom 
work, machine hire, commodity insurance indemnities and rent received 
by operator landlords, is estimated to increase by $3.2 billion, or 8%, 
from $42 billion to $45.2 billion in 2023. But when all these factors 
are accounted for, the resulting expectations for net farm income 
decline become apparent.
    USDA's Farm Sector Income Forecast also provides expectations of 
farm financial indicators that provide insight into the overall 
financial health of the farm economy. During 2023, U.S. farm sector 
debt is projected to increase $31.19 billion, or 6.2%, to a record $535 
billion in nominal terms. Nearly 70% of farm debt is in the form of 
real estate debt, for the land to grow crops and raise livestock. Real 
estate debt is projected to increase $26.79 billion to a record-high 
$375.8 billion, largely due to an increase in land values \3\ across 
the country. Non-real estate debt, or debt for purchases of things like 
equipment, machinery, feed and livestock, is projected to increase by 
$4.4 billion to a record $159.1 billion. The value of assets regularly 
being purchased with debt is rising, which means it will continue to be 
important for farmers and ranchers to pay down debt and cover interest 
to maintain a healthy balance sheet, an endeavor that will be even more 
cumbersome within a high interest environment.
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    \3\ https://www.fb.org/market-intel/farm-inputs-u.s.-agricultural-
land-values-show-record-increase.
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    Based on 2023 debt and asset levels, USDA expects the debt-to-asset 
ratio to be 13.22% for 2023, which sits marginally below the prior 5 
year average (13.5%), meaning farmers are expected to hold steady on 
borrowing to finance the purchase of assets. Higher interest rates will 
likely act as a barrier for farmers to finance new assets, and will 
then likely drive down the value of these assets over the next couple 
of years.
    Working capital, which takes into consideration current assets and 
liabilities, is the amount of cash and cash-convertible assets minus 
amounts due to creditors within 12 months. In 2023, working capital is 
projected to fall by $14.9 billion, or 8.9%, to $118 billion, which is 
the first decline since 2016, and sits at $2.5 billion below 2014 
levels, when farmers and ranchers held $121 billion in working capital. 
Lower levels of working capital often suggest that many U.S. farmers 
have just enough capital to service their short-term expenses and debt, 
which becomes more difficult as interest rates rise.
Inflation
    Short- and long-term interest rates are also high and rising. In 
recent years, interest expense has been about 5% of farm cash 
production expenses. Farmers will be facing interest rates double and 
triple what they were just a few years ago, with corresponding 
increases in interest expense; high interest rates, caused by both high 
inflation and the Fed's steps to address inflation, led to the farm 
debt crisis in the 1980s. A doubling or tripling of interest expenses 
now could cause similar pressures, especially for any farmer already 
committed to new investments, beginning farmers or farmers forced to 
borrow for succession. If history is a guide, it could take years for 
long-term interest rates to come back down to where they were for the 
last decade.
    Higher interest rates tend to lower property values, including 
farmland values, which would make worse the debt trap of higher 
interest rates and lower farm returns. Rising interest rates will raise 
the cost of all debt, including government debt, which will ultimately 
cost the taxpayer and limit the government's flexibility to provide 
assistance in a debt crisis. Inflation is slashing the purchasing power 
of American consumers, and weakening the economy, which both undercuts 
demand for farm products and lowers prices. Inflation undermines the 
real value of USDA programs, including the value of reference prices 
and budgets for most commodity programs.
    The aggressive interest rate increases by the Fed are making the 
dollar attractive to foreign investors and strengthening the dollar, 
which undermines U.S. agricultural export competitiveness. A Fed-driven 
recession in the U.S. is bad for the global economy, which will also 
undermine U.S. agricultural exports.
Energy
    Affordable and abundant energy is critical for farmers and ranchers 
as it is a major factor for input costs. The price of crude oil is the 
main factor in the price of diesel fuel and gasoline, and fluctuations 
in the crude oil market greatly influence changes in prices.
    On March 8, President Biden announced a ban on U.S. imports of 
petroleum, coal and natural gas from Russia in response to Russia's 
further invasion into Ukraine. The ban includes crude oil and petroleum 
products. It was well reported at the time that in 2021, imports from 
Russia only accounted for 3% of the U.S.'s crude oil imports. However, 
less discussed is that Russia accounted for a 20% share of U.S. imports 
of petroleum products in 2021. Petroleum products, namely unfinished 
oils and fuel oil, are used by the U.S. as a supplement to crude oil in 
the refining process. According to the U.S. Energy Information 
Administration (EIA), a substantial share of the unfinished oils from 
Russia was used as a supplementary refinery input and has qualities 
similar to a heavier, relatively high-sulfur crude oil. These higher-
sulfur oils are heavily used in the production of diesel fuels.
    U.S. imports of distillates (a category of petroleum distillation 
fractions that includes primarily diesel fuel and fuel oil) were lower 
in 2021-2022, relative to 2020-2021. Additionally, U.S. exports of 
distillates are higher in 2021-2022, relative to 2020-2021. Russia's 
invasion of Ukraine has had significant impacts on global markets for 
crude oil and petroleum products, not just U.S. markets. These 
disruptions have created unusual marketing opportunities for producers 
of oils and fuels and resulted in some unusual product flow. The result 
for the U.S. diesel market is a net decrease in distillate trade, 
further tightening U.S. supplies.
    Beyond the impact of Russia, since 2019, diesel production capacity 
has dropped by about 180,000 barrels per day. This is equivalent to 
about 4% of current diesel production. Effectively, this means that the 
price of diesel fuel--upon which farmers rely very heavily to run 
equipment and to bring their supplies in and to ship their products out 
on rail, truck and barge--have stayed high, even as gasoline prices 
have moderated.
    Farm Bureau strongly supports the development of a national energy 
policy that provides for increased exploration and use of domestic 
energy resources. In addition, Farm Bureau advocates policies that will 
create a diverse, domestic energy supply to fuel America's economic 
growth and prosperity while strengthening our energy security. Further 
development and use of renewable energy sources such as ethanol, 
biodiesel, renewable diesel, biomass, solar and wind are critical to 
our nation's energy future and will help further strengthen the overall 
national security of the United States.
Regulations
    All Americans have an interest in a regulatory process that is 
transparent and fact-based, respects the will of Congress, and observes 
the separation of powers in the Constitution. Federal regulations have 
a direct impact on farmers and ranchers, and over the years, the 
breadth and extent of that regulatory landscape have increased. AFBF 
has taken a stand against regulatory overreach and is working to reform 
the Federal regulatory process and preserve farmers' and ranchers' 
land-use and water rights.
    Today, farmers and ranchers are faced with a flurry of requirements 
through the Clean Water Act, the Endangered Species Act, the Federal 
Insecticide, Fungicide and Rodenticide Act, the Food Safety 
Modernization Act, immigration and labor regulations, and 
interpretation of the Federal Land Policy and Management Act--to name 
just a few.
    Often, these requirements are the result of Federal regulations; 
sometimes they emanate from court decisions. But no matter how they are 
established, the result often can be controversial. Stakeholders can 
disagree on the language in the statute, and affected parties can also 
disagree on the science, the data or the models underpinning one or the 
other.
    Farm Bureau strongly believes that all Americans, including farmers 
and ranchers, need a regulatory system that is fair, transparent, 
adheres to the will of Congress, takes economic impacts into account 
and respects our freedoms.
WOTUS
    The EPA and the U.S. Army Corps of Engineers have finalized a new 
Waters of the United States (WOTUS) rulemaking that repeals the 
Navigable Waters Protection Rule, doubles down on the unworkable 
``significant nexus test'' and creates more complicated, overreaching 
regulations.
    The new rule greatly expands the Federal Government's regulatory 
reach over private land use because it allows it to regulate ditches, 
ephemeral drainages and low spots on farmland and pastures. This could 
impact everyday activities such as plowing, planting and fence-building 
in or near these areas.
    This rulemaking brings us further away from the clarity and 
predictability achieved by the Navigable Waters Protection Rule. This 
is important for farmers and ranchers because the penalties for non-
compliance are significant. A simple misjudgment by a farmer in 
determining whether a low spot is or isn't subject to the regulation 
can trigger substantial civil fines as well as criminal penalties.
    Farmers and ranchers care about clean water and preserving the 
land, both of which are essential to producing healthy food and fiber 
and ensuring future generations can do the same. That's why we 
supported the Navigable Waters Protection Rule. Farmers play a leading 
role in protecting our nation's wetlands and unfortunately, the new 
WOTUS rule could prevent farmers from incorporating beneficial 
conservation practices into their operations. Farmers and ranchers 
often take on projects that provide stormwater management, wildlife 
habitat, flood control, and nutrient processing and improve overall 
water quality in uplands and ephemeral features. But, if they cannot do 
this without applying for a Federal permit, it may be cost-prohibitive, 
resulting in environmental degradation, not protection. Additionally, 
over the last 15 years, the number of acres enrolled in wetland and 
buffer practices under the Conservation Reserve Program has more than 
doubled (from 2.5 million acres to 5.3 million acres). In addition, 
more than 140 million acres of U.S. farmland are used for voluntary 
conservation efforts and wildlife habitats--an area equal to the states 
of California and New York combined. Finally, farmers advocate for and 
support commonsense rules that don't require a team of consultants and 
lawyers to navigate.
Endangered Species Act
    Preserving natural surroundings for America's wildlife has long 
been a priority for America's farmers and ranchers. Today, Americans 
have a growing understanding of and appreciation for wildlife 
conservation. There are countless examples of effective voluntary 
conservation programs and practices that are being implemented at the 
state and local level. However, the Endangered Species Act (ESA) is 
long overdue for a meaningful update that recognizes these voluntary 
efforts to restore and enhance habitats.
    Endangered and threatened species protection can be more 
effectively achieved by providing incentives to private landowners and 
public land users rather than by imposing land use restrictions and 
penalties. We must all be good stewards of our natural resources and 
wildlife habitats.
    Farm Bureaus across the country have played a leading role in 
education, outreach and goal setting to protect at-risk species such as 
the monarch butterfly and lesser prairie chicken. Unfortunately, ESA 
listings often entangle farmers and ranchers in bureaucratic red tape 
rather than providing a path to achieve shared conservation goals.
National Environmental Policy Act
    The National Environmental Policy Act (NEPA) was enacted in 1970, 
designed to ensure that environmental impacts are considered in 
proposed agency decision-making. NEPA's requirements apply to a broad 
range of actions affecting the daily lives of Americans across the 
country. From the construction of roads, bridges, highways, 
transmission lines, conventional and renewable energy projects, 
broadband deployment, and water infrastructure to management of 
activities on Federal lands, such as grazing, forest management, and 
wildfire protection to environmental restoration and other projects. We 
support the over-riding goal for better environmental decisions in a 
cost and time-efficient manner.
    However, Farm Bureau members have experienced significant delays in 
obtaining and renewing Federal grazing permits as well as securing 
timber sale contracts with many averaging over 7 years to complete. In 
some cases, NEPA reviews have taken a decade or more to complete, and 
often get caught in a cycle of litigation. Farm Bureau policy supports 
immediate simplification, improvement, and streamlining of NEPA. NEPA, 
and its implementing regulations, should reflect current technologies, 
agency practice, eliminate obsolete provisions, and improve the format 
and readability of the regulations while reducing unnecessary paperwork 
and promoting better decision-making consistent with NEPA's statutory 
requirements. We encourage Congress to update this decades-old law.
Crop Health
    Protecting our sustainable food supply starts with protecting crops 
while they are still in the ground or on the tree or vine. To that end, 
farmers and ranchers rely on a variety of tools and techniques as they 
grow the crops that will become our food, fiber and renewable fuel. 
Specific methods of crop protection vary from farm to farm based on 
regional climate and specific threats to crops, such as weeds, pests 
and invasive species. Crop protection tools, like herbicides, also 
enable environmentally beneficial practices such as reduced- or no-
till, which sequester carbon and promote healthy soils. Additionally, 
it's critical farmers have access to a variety of pesticides to ensure 
the most effective product can be used for the targeted pest and 
prevent resistance issues. Above all, safety is the top priority for 
farmers when using any kind of pesticide, and thanks to advances in 
technology, farmers can be precise in their applications, down to the 
individual plant.
    Farmers need access to affordable and effective crop protection 
chemistry, but this is threatened by the push to regulate pesticides in 
ways that directly contradict decades-long science-based conclusions 
from the EPA. We need legislative clarity that acknowledges states have 
the right to build on the Federal Government's baseline regulations but 
limits their ability to directly contradict the scientific findings and 
rigorous review process of the experts at the EPA.
Labor
    Farmers and ranchers need a reliable, skilled workforce. Farm work 
is challenging, often seasonal and transitory, and with fewer and fewer 
Americans growing up on the farm, it's increasingly difficult to find 
American workers attracted to these kinds of jobs. Not all farm jobs 
can be replaced by machines. There are certain farm jobs, like tending 
livestock and pruning or picking fresh produce, that require a human 
touch. Where American workers are unwilling or unavailable, workers 
from other countries have provided crucial support to American 
agriculture.
    Congress needs to pass responsible immigration reform that 
addresses agriculture's current experienced workforce and creates a new 
flexible guest worker program. Instability in the agricultural 
workforce places domestic food production at risk--increasing 
immigration enforcement without also reforming our worker visa program 
could cost America $70 billion in agricultural production.
Grain Inspection, Packers, and Stockyards Administration
    The Packers and Stockyards Act was enacted in 1921 and prohibits 
unfair, deceptive, and unjust discriminatory practices by market 
agencies, dealers, stockyards, packers, swine contractors, and live 
poultry dealers in the livestock and poultry industries. Farm Bureau 
has long advocated for remedies that provide fairness and transparency 
for poultry growers, while maintaining provisions that keep hog and 
cattle markets flexible and competitive.
Dairy
    Modernizing our Federal Milk Marketing Order system is an important 
step to provide dairy farmers with confidence in how their milk is 
priced in today's market environment. In the 2018 Farm Bill, a Class I 
formula change resulted in nearly $750 million less in the Federal 
Order pool during COVID-19 market disruptions, meaning lower checks for 
many farmers across the country. In 2021, the latest data point 
available, for each $27.50 per hundredweight spent, dairy farmers 
received only $21.23, a loss of $6.27 per hundredweight. It is 
essential that adjustments are made both legislatively and through the 
Federal Order hearing process to ensure the system works fairly for all 
dairy farmers. Switching back to the higher-of Class I pricing formula 
in the most expedient manner possible is necessary to provide farmers 
with more price certainty.
    Make allowances, a fixed deduction from each milk product formula 
used to offset processing costs, are expected to be a primary topic for 
dairy industry stakeholders to consider in future Federal Order 
discussions. Currently, make allowances can be changed using 
information from voluntary cost of processing surveys taken by 
different researchers across the country. Voluntary participation means 
some processors may be left out when establishing data points 
stakeholders then use to formulate milk checks, potentially skewing 
dairy farmers' checks negatively. Mandatory processing cost surveying 
would provide farmers the assurance that any make allowance increase 
reflects true costs borne by processors. This will have to be done 
legislatively as USDA does not have the power to authorize without 
Congress. Other priorities include a switch to modified bloc voting 
during the Federal Order hearing process, which would give farmers the 
opportunity to vote independently and confidentially if they so desire. 
Milk check transparency and uniformity can help provide farmers with 
clarity and confidence in how they are being paid.
Securities and Exchange Commission Climate Disclosure Regulations
    In March 2022, the Securities and Exchange Commission (SEC) 
proposed a rule requiring public companies to include climate-related 
disclosures in their financial statements. Notably, the rule would 
necessitate the disclosure of the public companies' ``Scope 3'' 
emissions, indirect emissions from upstream and downstream activities 
in their supply chains.
    The rule applies throughout a publicly traded company's value 
chain, burdening all agricultural producers, particularly small- and 
mid-sized farm operations.
    The Scope 3 emissions reporting requirement could impact most farms 
since a majority of agricultural products are used or sold by a 
publicly traded company. Ninety-eight percent of all farms in the U.S. 
are independent, family operations that do not have the resources to 
track and report the emissions data necessary to meet the disclosure 
requirements. The increased production costs and difficulty in 
supplying emissions data to public companies will hinder our ability to 
compete in global markets and will encourage further market 
consolidation and vertically integrated supply chains.
    Farmers and ranchers already comply with expansive legislative and 
regulatory directives that exist at the local, state and Federal 
levels. The SEC's proposed rule seeks to further extend regulatory 
burdens on farmers and ranchers, all while lacking appropriate 
statutory authority. In fact, Congress has been very clear that 
agencies may not require mandatory reporting of greenhouse gas 
emissions from livestock.
    The SEC's primary purpose is to enforce the law against market 
manipulation and fraud. However, this rule moves well beyond its 
traditional regulatory authority by mandating climate change reporting 
requirements that will not only regulate publicly traded companies but 
will impact every company in the value chain. More importantly, this 
rule could require public companies to force farmers and ranchers to 
report personal information and business-related data, raising serious 
privacy concerns. In this capacity, the SEC would be granted 
unprecedented jurisdiction over America's farms and ranches, 
potentially creating onerous compliance requirements for even small 
farms and ranches with few or no employees.
    Farmers and ranchers have never been subjected to SEC oversight 
and, in fact, no company involved in agricultural production for crops 
or livestock is a registrant with the SEC. Unlike the large 
corporations the SEC presently regulates, family farms and ranches do 
not have teams of compliance officers or access to the financial 
resources compliance would require.
    Farmers and ranchers have been on the forefront of climate 
mitigation efforts from the very beginning, working on conservation 
stewardship efforts and decreasing their greenhouse gas emissions \4\ 
through voluntary efforts. This rule could undermine that progress and 
force mandates that could eliminate many farms and ranches. If the SEC 
does not take into consideration these concerns in their final rule, 
farmers and ranchers will be looking to Congress to intervene. One way 
to do that is to pass H.R. 1018, the Protect Farmers from the SEC Act.
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    \4\ https://www.fb.org/market-intel/2020-epa-emissions-inventory-
demonstrates-agricultures-advancements-in-sust.
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Conclusion
    Much uncertainty remains related to the ability of farmers and 
ranchers to cost-effectively access inputs and deal with regional 
regulatory and weather-related challenges. With an early expectation of 
revenue declines, which more than erase gains made during 2022, it 
becomes all the more important for producers to have clarity on rules 
that impact their businesses' ability to operate, for producers to have 
access to comprehensive risk management options and for producers to be 
given a resounding voice during formulation of vital legislation such 
as the farm bill, which can either complicate or streamline farmers' 
and ranchers' ability to contribute to a reliable and resilient U.S. 
food supply sustainably.
    The farm bill is a critical tool for ensuring our nation's food 
supply remains secure. No one buys insurance for the good times, and 
similarly, farm bill programs provide critical tools to help farmers 
and ranchers manage risk. Farm programs are written to provide a basic 
level of protection to help offset bad economic times and severe 
weather. The 2018 Farm Bill brought certainty to farm and ranch 
families through crop insurance, improved risk management programs and 
support for beginning farmers and ranchers, while also providing much-
needed funding for trade development and ag research.
    As you can hear from my testimony, farming is a difficult and risky 
business, yet critical to the well-being of our country. It's often 
stated that food security is national security. Few pieces of 
legislation are more significant than the farm bill when it comes to 
ensuring our food system is secure. We urge lawmakers to recognize this 
significance as they consider updating and improving the farm bill.
    Farm Bureau supports the following principles to guide development 
of programs in the next farm bill:

   Increase baseline funding commitments to farm programs;

   Maintain a unified farm bill that includes nutrition 
        programs and farm programs together; and

   Prioritize funding for risk management tools, which include 
        both Federal crop insurance and commodity programs.

    The farm bill has been a bipartisan effort in the past. The 2023 
Farm Bill presents an important opportunity for lawmakers to rise above 
partisanship and work together again to pass legislation that protects 
food security for all Americans and the future success of our farmers 
and ranchers.
    Farm Bureau will continue to work to ensure that farm families 
maintain their ability to feed, fuel and clothe the world and defeat 
public policy that threatens the long-term resiliency of our rural 
communities. Congress must protect American agriculture and production 
practices from undue burden, and respect farmers' and ranchers' ability 
to innovate and solve problems.
    American farm families want to leave the land better than when it 
was first entrusted to our care. That is the story of my family's farm 
in Georgia and the story of millions of farms across this country. We 
want to protect the planet, feed and clothe people, and promote vibrant 
communities. Working with our partners, land-grant universities, 
policymakers, and the farmers and ranchers we represent, Farm Bureau 
intends to continue finding solutions for the challenges of the future.
    Mr. Chairman, I commend you for convening this hearing and for all 
your hard work on behalf of agriculture across the country. I will be 
pleased to respond to questions.

    The Chairman. Thank you, Mr. Duvall, I appreciate it.
    Mr. Friedmann, please begin when you are ready.

 STATEMENT OF PETER FRIEDMANN, EXECUTIVE DIRECTOR, AGRICULTURE 
                   TRANSPORTATION COALITION, 
                        WASHINGTON, D.C.

    Mr. Friedmann. Thank you very much, Mr. Chairman, for 
holding this hearing. The timing is very important.
    A number of years ago, some newspaper called the 
Agriculture Transportation Coalition the principal voice of 
U.S. agriculture and agriculture exporters in transportation 
policy, and we have taken that very seriously. But before I 
begin, I would like to recognize a couple of Members of your 
Committee who achieved more for agriculture exports when it 
comes to transportation than has been achieved in decades and 
did it last year. Congressman Dusty Johnson and Congressman Jim 
Costa, together with Congressman John Garamendi, authored the 
Ocean Shipping Reform Act of 2022, absolutely critical. It is 
essential. It has already changed the practices, and ocean 
transportation has changed what the foreign ocean carriers are 
doing. And I want to thank you, this Committee, and thank you, 
Congressman Johnson and Congressman Costa, for leading the 
charge on that, incredible. And as Congressman Scott mentioned 
something about bipartisan, incredible. It passed the Senate 
unanimously and it passed here three times overwhelmingly, so 
thank you very much, really critical.
    Why is the transportation so important? It is because there 
is virtually nothing produced in agriculture or forest products 
in this country that cannot be sourced somewhere else in the 
world. If we aren't able to deliver it affordably and 
dependably to our foreign customers, those foreign customers 
have other places to go. They will find substitutes, and in the 
past they have done so. And when they do so, it is very 
difficult for us, the U.S. agriculture, to get those markets 
back again. And there are plenty of stories in cotton and 
soybean and almonds and walnuts and so forth about lost foreign 
markets because our transportation did not facilitate the flow 
of affordable, dependable supply.
    So let me just say that Federal and state policies can 
facilitate the flow of commerce, agriculture exports, or they 
can hinder it. And so I would like to highlight a couple of 
those. Now, first, I want to go back to the Ocean Shipping 
Reform Act because it is still very much in play. You all 
passed the legislation last year, but now, the Federal Maritime 
Commission has to implement it. And those entities that were 
opposed to this legislation, fortunately, unsuccessfully, 
overwhelmingly defeated, are now trying to undo some of those 
reforms at the Federal Maritime Commission as it goes through 
the rulemaking process. Fortunately, the Federal Maritime 
Commission has five Commissioners, Republicans and Democrats, 
that are 100 percent aligned and on board with the interests of 
agriculture exports, as well as importers, exporters, all the 
American interests, but still, the rulemaking process sometimes 
provide some access for those who would oppose the legislation 
to achieve their goals down there. So we really do need this 
Committee and this Congress to continue to monitor what goes on 
down there, and we will be back with specifics from time to 
time as needed.
    So that continued engagement is critical. Let me just tell 
you one of the things it did. The ocean carriers, foreign ocean 
carriers--and there are only ten of them in the world, we are 
dependent on ten ocean carriers, all foreign companies, to get 
all our agricultural products out and the inputs that much of 
agriculture needs into the country. They have now invested 
millions of dollars, which they made over the last 2 years, in 
upgrading all their systems. And it has already provided some 
evidence. We have seen evidence of that improvement.
    We do have more work to do. Truck weights need to be 
increased. Members of this Committee introduced the SHIP IT Act 
(H.R. 471, Safer Highways and Increased Performance for 
Interstate Trucking Act), which increased truck weights to a 
level that is even closer to what Canada and Europe and all our 
trading partners do. We have the lowest truck weight limits in 
the world in some of our states, and in California it creates a 
barrier to agriculture exports. The lowest truck weight limits 
in the world, increasing congestion, increasing delay, and 
increasing emissions. It is almost an embarrassment when you 
talk to Canadians or any other country.
    We need more truck drivers, and there is legislation and 
pilot projects underway to get more people, young people when 
they graduate from high school, maybe they want to go into 
truck driving, they can't now. This will facilitate that. We 
need more of that.
    We do need a resolution of the port longshore labor dispute 
and the contract negotiations on the West Coast that has been 
going too long, and we are hopeful, and maybe oversight from 
this Committee will help because it is causing a shift in 
transportation services from the West Coast to the East and 
Gulf Coast.
    We do need inland rail depots and really can use your help 
there because agriculture needs more of those. Thank you very 
much.
    [The prepared statement of Mr. Friedmann follows:]

Prepared Statement of Peter Friedmann, Executive Director, Agriculture 
               Transportation Coalition, Washington, D.C.
    The Agriculture Transportation was established in 1988 to provide a 
voice for a broad cross-section of U.S. agriculture exporters, 
importers requiring dependable, affordable ocean, rail and truck 
transportation services to maintain and grow foreign market share.
    Maritime press declared the AgTC as ``the principal voice of U.S. 
agriculture exporters in transportation policy.'' Members are primarily 
ag exporters and importers, also their forwarders, truckers, trade 
associations, state commodity commissions, Departments of Agriculture.
    The AgTC annually conducts Ag Shipper Workshops around the country, 
culminating in the AgTC Annual Meeting--the nation's largest annual 
gathering of ag international transport stakeholders.
Outline of Comments
    1. We Cannot Take Global Demand for U.S. Agriculture For Granted
    2. Role of the Federal Government--Congress, Executive Branch and 
Agencies

          a. U.S. agriculture exporters brought Congress and the 
        Administration together in a bipartisan way in 2022
          b. There's More to Do to Improve the Ag Transport Supply 
        Chain
          c. Intl. Shipments to Inland Rail Ramps Requires Federal 
        Regulatory Clarity
          d. Infrastructure

    3. Agriculture Export Supply Chain is Complex and Fragile--Case 
Study
    4. Conclusion
1. We Cannot Take Global Demand for U.S. Agriculture For Granted
    There is virtually nothing in U.S. agriculture and forest products 
grown or produced in this country that cannot be sourced or substituted 
with products from elsewhere in the world; if we cannot deliver 
affordably and dependably, both our foreign and U.S. customers can, and 
have proven they will, shift their purchases to those other countries, 
sometimes permanently. This has in fact occurred periodically, for 
pork, beef, cotton, almonds, soybeans, fresh fruit, etc.
2. Role of the Federal Government--Congress, Executive Branch and 
        Agencies
    There is a role for govt. to assure adequate supply of 
transportation services. Federal and state policies and laws can and do 
either facilitate the flow of ag commerce, or in a number of states, 
hinder it.
a. U.S. agriculture exporters brought Congress and the Administration 
        together in a bipartisan way in 2022
    Recently, Congress has been very active on ag transportation, last 
year passing one of the very few, if only major pieces of legislation 
to move through the U.S. Senate unanimously and passing the House 
overwhelmingly three times--the Ocean Shipping Reform Act of 2022 
(OSRA). While all importers and exporters benefit by OSRA, the primary 
sponsors were Congressmen and women, bipartisan, on behalf of their ag 
constituents--beef, pork, almonds, hay, lumber, cotton, etc.
    There are significant requirements in OSRA designed to prevent or 
alleviate significant unreasonable practices by the ocean carriers 
which at times rendered U.S. agriculture an undependable and 
unaffordable supplier to the world during the past few years of the 
COVID supply chain crisis.
    The Federal Maritime Commission is responsible to assure compliance 
with the Ocean Shipping laws, and is now engaged in Rulemakings to 
implement OSRA.
b. There's More to Do to Improve the Ag Transport Supply Chain
    More is needed to improve the transportation supply chain, for 
example, legislation has been introduced:

   to make truck weights reasonable,

   assure availability of truck drivers,

   provide reasonable hours of service (driver hours);

Congress and the White House must continuously monitor and engage as 
necessary to assure the labor-management disputes do not disrupt the 
supply chain.

          Rail: This past fall both the White House intervened to 
        prevent threatened national rail strikes; Congress was ready 
        with legislation if needed.
          Port Labor: Currently the West Coast port gateways are 
        operating without a longshore labor contract in place, creating 
        uncertainty, and causing shift of carriers and cargo from the 
        West Coast ports to East and Gulf coast. Hopefully to be 
        resolved in coming months.
c. Intl. Shipments to Inland Rail Ramps Requires Federal Regulatory 
        Clarity
    Currently, for international ocean shipping movements that 
originate or end at inland locations, regulatory jurisdiction is 
unclear. Thus, when a shipper is treated unreasonably by the railroad 
of the ocean carrier for such an international shipment, does OSRA 
apply subject to the Federal Maritime Commission regulation, or does 
the Surface Transportation Board apply its own regulations? This 
uncertainty is currently preventing exporters and importers from 
gaining intervention and resolution of significant impediments to 
efficient freight movement in those inland locations.
d. Infrastructure
    The supply chain crisis of the past few years exposed deficiencies 
in our infrastructure capacity. Ports nationwide were overwhelmed, as 
were communities in surrounding areas. Inland rail ramps and 
surrounding areas were also unable to handle the volume of trade that 
was entering and leaving the U.S. West Coast ports need enlargement of 
existing marine terminals, and building of new terminals, even 
construction of entire new deep-water ports. Some are now being 
proposed, seeking Federal infrastructure funding.
    There must be continued expansion of inland rail depots, some 
relatively near the seaports, to relieve the pressure on the marine 
terminals at the seaports. There are many along the East Coast, but 
more will be effective. More are needed along the Gulf Coast. In 
comparison, the West Coast remains painfully and inexcusably lacking in 
inland rail load points to serve the overwhelmed West Coast seaports. 
They are desperately needed. It will require Class I railroads, short 
line railroads, state and local governments, port authorities and 
shippers to get these planned and built.
    Road access is always needed, we hope the funding in the 
infrastructure bills will provide necessary expansion.
3. Agriculture Export Supply Chain is Complex and Fragile--Case Study
    The transportation of agriculture for international delivery is 
complex and delicate. Let's take, for example, cotton, or grain, or 
soybeans, or beef or pork, originating in the heartland. One can see 
how many independent components, various transport modes--truck, rail, 
rail ramps, marine terminals, cold storage facilities, chassis, ships--
are required, and how delay or shortage of any one, at any point, will 
disrupt or prevent the flow of agriculture, from U.S. origins to the 
foreign customer.

   Truck to pick up empty ocean containers from a local or 
        regional rail-ramp (Presuming the ocean carrier has directed 
        the railroad to position those empty containers there--
        sometimes requiring repositioning of empty containers hundreds 
        or more miles from a seaport or inland location to that 
        particular rail-ramp),

   Truck to the inland production or packing facility,

   Loaded, then trucked back to the rail ramps where they will 
        wait which can be days or weeks, for a train,

   Loaded on railroad, then railed to the coastal seaport.

   Then access to the marine terminals at the seaports, either:

     by on-dock rail, onto the marine terminal. Then, when 
            ship arrives and is ready for loading, loaded on ship, 
            which departs for foreign destination.

     or container is offloaded from the train at a rail 
            yard near the port, where it can sit for days or longer. 
            When the ship arrives, a trucker finds a chassis (the 
            trailer upon which the ocean contain sits when pulled by a 
            truck), of the same brand as designated by the ocean 
            carrier, which is brought to the rail yard; the container 
            is loaded on that chassis, the trucker then seeks an 
            appointment at the marine terminal to enter the gate (these 
            appointments are often not available). Trucker brings to 
            the terminal, can wait many hours or longer to enter. Then 
            the container goes to the ground in the terminal, to await 
            ship arrival and availability for loading.

     Note: much agriculture travels from the heartland in 
            bulk rail `hopper cars', which arrive at near-port 
            `[transshipment]' facilities where the bulk commodity is 
            transferred into an ocean container, then, as described 
            above, loaded on a chassis, taken to the marine terminal, 
            etc.

   Once loaded on ship it departs for foreign destination, 
        where most of the process above must be repeated, in reverse.

   At any point in the supply chain described above, a delay 
        can occur, which then creates a crisis that extends throughout 
        the transportation plan, not only for the particular shipment, 
        but for all shipments of all shippers.

   Refrigerated agriculture. If you think this is complex, 
        think about all our agriculture that requires refrigeration. 
        Special ocean containers with precisely controlled 
        temperature--frozen or chilled. Cold storage facilities near 
        the inland rail ramps or truck depots, cold storage at or near 
        the seaports. Reefer plugs on the marine terminals, and on the 
        ships, and at the terminals at the foreign seaport destination 
        . . . .
4. Conclusion
    The Agriculture Transportation Coalition on behalf of all 
agriculture and forest products members thanks the Committee for your 
attention to and pursuit of transportation efficiency, which is 
fundamental to U.S. agriculture viability.

    The Chairman. Thank you, Mr. Friedmann, much appreciated.
    Mr. Rosenbusch, please begin when you are ready.

 STATEMENT OF COREY ROSENBUSCH, PRESIDENT AND CHIEF EXECUTIVE 
              OFFICER, THE FERTILIZER INSTITUTE, 
                         ARLINGTON, VA

    Mr. Rosenbusch. Good morning, Chairman Thompson, Ranking 
Member Scott, and Members of the Committee. My name is Corey 
Rosenbusch. I am the President and CEO of The Fertilizer 
Institute. TFI represents companies in the entire fertilizer 
supply chain from manufacturers to distributors to retailers. 
And we as an industry have recently taken center stage as the 
spotlight has been shined on the important role that fertilizer 
plays in food security. Half of all crop yields on this planet 
are because of fertilizer use.
    So I grew up in agriculture. My dad was an ag teacher and 
an FFA advisor, so it was actually a pleasure to spend a great 
part of the last year with farmers. And as the fertilizer 
prices began to rise during harvest in 2021, I had a chance to 
climb into a cotton picker with a farmer from my home State of 
Texas. And yes, as you can imagine, he was quite concerned over 
input costs. But at the same time, he understood that we are 
experiencing high farm income and high crop prices. But not all 
commodities had that same bump. I am sure you have heard that 
from farmers in your district.
    Fertilizer prices went from a period of historic lows just 
a few years ago to record highs, and it was really that 
volatility that was so impactful to the farmer. Fertilizer 
materials are each very different products that are all 
resource-dependent and are all very different markets. The 
United States is fortunate to have significant production of 
nitrogen and phosphates, but we import over 80 percent of our 
potash from Canada. Globally, the United States only accounts 
for about seven percent of total fertilizer production, and 
over 90 percent of all fertilizer is actually used outside of 
the United States.
    So if you hear nothing else I say today, hear this. 
Fertilizer is a globally traded commodity subject to global 
supply-and-demand factors. So as we look at those global 
supply-and-demand factors, you have to start with geopolitics. 
We had Belarus that was sanctioned, removing about 20 percent 
of global potash supply that they produce. You had China, the 
world's largest producer of fertilizer, who restricted their 
exports. You have Russia, who is the world's largest global 
supplier of fertilizer, who also had sanctions from many 
countries as the war broke out in the Ukraine, and Russia also 
supplies much of Europe's natural gas. As a result, we saw 
nearly 70 percent of all European nitrogen plants shuttered 
during that period.
    Natural gas is that key feedstock for all ammonia 
production, but also the energy for ammonia, and that is the 
building block for every nitrogen fertilizer product. It 
accounts for about 70 to 90 percent of the production cost of 
ammonia. And we saw natural gas prices reach over $100 per 
MMBtu in Europe last August.
    Fertilizer demand is also driven by crop prices, which we 
have seen reached record highs. Global grain stock-to-use 
ratios are the tightest they have been in 8 years, and it will 
likely take years to rebalance those. Logistics has been a huge 
issue for our industry. Over 60 percent of all fertilizer moves 
by rail, and we have seen poor rail service that was compounded 
by low water levels in the Mississippi River, reducing barge 
traffic and, of course, trucking capacity issues as well.
    Now, good news in recent months for the farmer is that 
fertilizer prices have come down. Farmers have definitely taken 
a wait-and-see approach as we approach the spring planting 
season. European nitrogen plants have restarted. China has 
slowly begun exporting product. Russia trade flows have shifted 
and actually had a record year of exports last year. And 
finally, we expect market fundamentals to remain in place for 
the foreseeable future with high planted acres. Low grain 
stock-to-use ratio and high grain prices means that fertilizer 
demand will remain strong.
    So if it is a global supply-and-demand issue, what can 
Congress do? In the interest of time, I will refer to my 
written testimony where we have outlined a number of policy 
solutions for the Administration and for Congress. But I can 
summarize those all by saying that fertilizer plants are 
capital-intensive facilities, sometimes costing as much as $4 
billion to build. So if one wanted to bolster fertilizer supply 
for the American farmer, the most significant impact that you 
can have to mitigate our biggest risk is to provide regulatory 
certainty. Thank you.
    [The prepared statement of Mr. Rosenbusch follows:]

 Prepared Statement of Corey Rosenbusch, President and Chief Executive 
            Officer, The Fertilizer Institute, Arlington, VA
    Good morning, Chairman Thompson, Ranking Member Scott, and Members 
of the Committee.
    My name is Corey Rosenbusch, President and CEO of The Fertilizer 
Institute (TFI). TFI represents companies that are engaged in all 
aspects of the fertilizer supply chain from manufacturers to 
distributors to retailers. The fertilizer industry ensures that farmers 
receive the nutrients they need to grow the crops that feed our nation 
and the world. Half of all global crop yields can be attributed to 
fertilizer use.
    I want to thank the Committee and its members for the opportunity 
over the last year to informally brief you on the complexity of 
fertilizer markets. The roundtables, virtual presentations, and 
meetings in your offices were tremendously helpful in educating you and 
your staff on the volatility that we have experienced. While this may 
be a review for some, I want to spend a few minutes reviewing the 
factors that got us to this point; and I will then share an update for 
the current market situation and outlook for the spring.
    I grew up in agriculture as the son of an ag teacher and FFA 
Advisor, and I spent much of the last year visiting with farmers to 
hear about the stress that high input costs have caused. As prices 
climbed during 2021's harvest, I climbed into a cotton stripper with a 
farmer in my home State of Texas. While he was concerned about the 
price of fertilizer, he also recognized he was experiencing record high 
farm income and prices for cotton. But not all commodities experienced 
that same bump, and I have no doubt that you have also heard from 
farmers in your district about the high price of fertilizer. Adding to 
the ``normal'' stress of farming, fertilizer prices were at historical 
lows just a few years ago, followed by recent record highs. It has been 
this extreme volatility that has especially impacted farmers' psyche.
Monthly Fertilizer Prices: Jan. 2007-Feb. 17, 2023.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: Weekly Prices Reported in Green Markets (A Bloomberg 
        Company).

    While people often speak of fertilizer as a single product, there 
are many fertilizer products. We often talk about fertilizer products 
in terms of the three macro nutrients which are all essential for plant 
(or crop) growth: Nitrogen, Phosphate, and Potash. They are each 
different products with different markets. In the case of Nitrogen, you 
have many forms or types of products that each have their own prices 
and markets: Ammonia, UAN, Urea, and Ammonium Sulfate to name a few.
Global Producers--2021

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: International Fertilizer Association (IFA).

    The United States has significant production of Nitrogen and 
Phosphate fertilizers. We have some Potash production as well; however, 
we import over 80% of our Potash from Canada. We also import Phosphate 
and Nitrogen fertilizer from abroad. The U.S. only accounts for about 
7% of global fertilizer production. Over 90% of all fertilizers are 
used outside the United States.
Global Producers--2020

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: International Fertilizer Association (IFA).

    If there is one thing you take away from my comments, it is this. 
Fertilizer is a globally traded commodity, subject to international 
pressures and geopolitical events. And it has been global supply and 
demand that has led to the current market environment.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: International Fertilizer Association (IFA).
Market Background
    Geopolitical events have been the biggest disrupter in recent 
years.

   Belarus is sanctioned out of the global market and that is 
        \1/5\ (20%) of the world's potash supply.

   China is the world's biggest producer of fertilizers (nearly 
        30%) and a top global supplier (about 11% of all exports). Last 
        year, China imposed export restrictions on its fertilizer 
        products. Because China is a significant supplier to the 
        world's single largest buyer of fertilizer, India; this was 
        highly disruptive, distorted global markets, and raised costs 
        for farmers worldwide. India procures their fertilizer through 
        a centralized government buying tender that is then subsidized 
        before being sold to farmers.

   The Russian war in Ukraine was also highly disruptive. 
        Russia is the biggest global supplier of fertilizers (about 20% 
        of global supply), and that supply chain was highly disrupted 
        at the onset of the war mainly because of sanctions imposed by 
        several nations. Russia also restricted Europe's natural gas 
        supply, which Europeans relied on for their fertilizer 
        production. This resulted in approximately 70% of European 
        nitrogen fertilizer production shutting down last year due to 
        high natural gas costs.

    Natural gas is the key feedstock and energy source for ammonia 
which is the building block of all nitrogen fertilizers. Natural gas 
accounts for between 70% to 90% of the total ammonia production costs. 
Natural gas prices doubled in the United States in 2022 and remain very 
volatile. As mentioned, high natural gas costs shut down 70% of 
European nitrogen fertilizer production.
Dutch TTB Natural Gas Futures Prices
(February 17, 2021, February 17, 2022-February 17, 2023)

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: Investing.com.

    Crop prices reached historic highs, and commodity demand and 
plantings drive demand and prices for fertilizers. Crop prices were 
strong last year, especially for corn, which accounts for 50% of 
fertilizer demand in the United States. The biggest factor for 
fertilizer demand is global grain stock-to-use ratios which TFI 
understands are the tightest they have ever been, and it will likely 
take years to rebalance.
    Logistical supply chains were highly congested and challenged. More 
than 60% of all fertilizer moves by rail. Fertilizer leans on rail more 
than any other ag commodity, and rail service was terrible last year. 
Beyond rail, there was some disruption from the low-water situation on 
the Mississippi and trucking capacity remains constrained and was made 
worse along the U.S.-Canadian border due to the cross-border vaccine 
mandate.
Recent Market Updates
    In recent months, fertilizer input costs have come down and supply 
and demand have improved.
    High prices last year led to demand deferral and resulted in 
inventory carryover. This was especially the case for Phosphate and 
Potash as farmers ``mined'' their soil. Excess inventory means 
fertilizer demand has been soft in recent months as farmers ``wait-and-
see'' prior to spring.
    European Nitrogen plants have restarted as natural gas prices have 
moderated following a mild winter. China has been slowly exporting more 
fertilizer. Russian supply disruptions have also mitigated as supply 
patterns shifted, leading to a record fertilizer export year for 
Russia. This shift in trade flows, however, also impacts prices.
    Nitrogen fertilizer prices in the United States are significantly 
lower than they were at this time a year ago, reflecting changes in the 
global supply and demand balance rather than changes in the makeup of 
the fertilizer industry, which has remained constant. For example, urea 
prices in the United States have dropped by about 65% since March 2022.
    Finally, TFI expects the market fundamentals to remain in place for 
the foreseeable future. High planted acres, low grain stocks-to-use 
ratios, and high grain prices means demand will likely remain strong 
going into the spring.
What Can Congress Do?
    While Congress can't control China or Russia, TFI has also 
developed a roadmap of solutions that Congress can consider.
    Fertilizer production facilities are capital intensive, typically 
costing $1 billion to $4 billion to build. This means that domestic 
producers and many others around the world must consider long-term 
factors that can make or break the viability of these substantial 
investments. Providing regulatory certainty is perhaps the most 
significant impact that you can have on fertilizer markets.
    A few of those include:

  1.  Potash and Phosphate should be placed on the government's list of 
            Critical Minerals.

  2.  We also need energy policies that support an abundant, safe, and 
            affordable supply of natural gas.

  3.  Permit reform is essential for mining, construction of new 
            production facilities, and for our infrastructure.

  4.  We need more reliable rail service, we need to promote driver 
            recruitment and retention for trucking, and we need 
            investments in our water and roadway infrastructure. 
            Congressmen Dusty Johnson and Jim Costa have some excellent 
            legislation, the SHIP-IT Act (H.R. 471), which helps a lot 
            on trucking.

  5.  Revamp current USDA conservation programs that empower retail 
            agronomists and CCAs to help farmers access these 
            resources.
Conclusion
    Thank you again for the opportunity to be with you all this 
morning. I am happy to answer any questions.

    The Chairman. Mr. Rosenbusch, thank you so much for your 
testimony.
    And now, Mr. Twining, please begin when you are ready.

    STATEMENT OF MICHAEL TWINING, VICE PRESIDENT OF SALES & 
 MARKETING, WILLARD AGRI-SERVICE; MEMBER, BOARD OF DIRECTORS, 
                    AGRICULTURAL RETAILERS 
                    ASSOCIATION, WORTON, MD

    Mr. Twining. Good morning, Chairman Thompson, Ranking 
Member Scott, and distinguished Members of the Committee. I 
appreciate the opportunity to be here to testify before you 
about the challenges facing American agriculture. My name is 
Mike Twining. I serve as Vice President of Sales and Marketing 
for Willard Agri-Service. Willard Agri-Service is a family-
owned and -operated independent retailer based just up the road 
in Frederick, Maryland. We service growers in approximately six 
states with crop protection, plant nutrition, and custom 
application of those products, as well as robust decision 
support tools to help them make decisions in this volatile 
environment that enable them to farm more sustainably. I appear 
also before you today as a member of the Ag Retailers 
Association Board of Directors, which I am humbled to serve as 
the Vice Chair of their Public Policy Committee.
    The economic prosperity of ag retailers and the general 
public is directly tied to the economic prosperity of farmers. 
Only if they succeed, do we succeed. It is therefore in our 
interest, as well as the interest of the nation and its 
consumers, to have a solid safety net for producers.
    First, I would like to address several regulatory burdens 
affecting our industry. In the past couple of years, Federal 
regulators proposed and finalized dozens of major rules that 
impacted many sectors, including agriculture. Due to the time 
limitations, I have only mentioned three of them today in my 
oral testimony. However, many other examples are included in my 
written testimony.
    I would like to start with EPA pesticide registrations. It 
is essential that the EPA have a scientifically justifiable, 
predictable, and functioning process for pesticide 
registrations. This is why we supported the PRIA legislation 
(Pub. L. 117-328, Consolidated Appropriations Act, 2023) that 
Congress passed last year. Uncertainty around what the rules 
will be and what the products will be available, including 
label changes too close to the start of season, complicates our 
efforts as ag retailers to stock the products that farmers will 
want and need, as well as our ability to use them safely and 
effectively.
    We commend EPA for proactively addressing the Endangered 
Species Act, or ESA, compliance in its pesticide reviews. 
However, EPA's recently released ESA Work Plan needs additional 
modifications to ensure it does not cause severe disruptions to 
American agricultural industries. Ag retailers and their 
certified crop advisors, of which I am one, should be consulted 
in developing pesticide mitigation measures, and working with 
those experts should be accounted for in the EPA's picklist 
scoring methodology. Care should be taken to provide local 
options that work in each growing area and cropping system 
because they are all unique. EPA must ensure stakeholder 
engagement of end-users such as farmers, ag retailers, and 
pesticide applicators for the products they regulate.
    WOTUS, the new Waters of the United States, or WOTUS rule, 
greatly expands the Federal Government's regulatory reach over 
private land use and allows EPA to regulate ditches, ephemeral 
drainages, and low spots on farmlands and pastures. None of 
these features meet the definition of the word navigable waters 
in the Clean Water Act, and the new rule impacts everyday 
activities that farmers must do on their working lands.
    Finally, energy. The Biden Administration's focus on 
climate policy provides some ways that agriculture can 
contribute significantly to solutions but has also created some 
practical problems in implementation. Natural gas, which has 
already been mentioned, which is an essential feedstock to 
manufacture nitrogen fertilizer and is a co-product of shale 
oil production, has seen pricing increases, leading not only to 
fertilizer cost increases but volatility. Diesel fuel is used 
every day and is a daily necessity for every ag retailer, grain 
shipper, and farmer and has increased significantly in cost.
    All inputs involved in the production of food have become 
more expensive because of these policies. The price to feed and 
fuel our country has risen as a result, something that every 
American feels on a daily basis.
    While my testimony this morning highlights some of the 
negative effects the rural economy has had on the agriculture 
community recently, I am encouraged by this Committee's goals 
and priorities for this year. To that end, my written testimony 
has several recommendations for Congress and the Administration 
to consider. As a farm supply retailer, I am confident that 
improvements in safety nets in the upcoming farm bill, free and 
fair trade amongst agricultural producers and customers, an 
all-of-the-above energy strategy, and changes to the regulatory 
landscape currently hindering farm production will all 
contribute to a once again burgeoning farm economy.
    Thank you for your continued commitment to American 
agricultural industry, and I look forward to your questions.
    [The prepared statement of Mr. Twining follows:]

   Prepared Statement of Michael Twining, Vice President of Sales & 
     Marketing, Willard Agri-Service; Member, Board of Directors, 
             Agricultural Retailers Association, Worton, MD
Introduction
    Chairman Thompson, Ranking Member Scott, and distinguished Members 
of the House Agriculture Committee. Thank you for the opportunity to 
testify regarding the current challenges facing American agriculture.
    My name is Mike Twining and I serve as Vice President of Sales & 
Marketing for Willard Agri-Service, a family-owned ag retailer based in 
Frederick, Maryland. We provide goods and services to farmers and 
ranchers which include fertilizer (i.e., plant nutrition), crop 
protection products (i.e., pesticides), custom application of 
pesticides and fertilizers, development of nutrient management plans, 
field scouting, soil testing, precision agricultural services, and much 
more to help solve production problems and manage risks through the 
life of their crops.
    I also appear before you today on behalf of the Agricultural 
Retailers Association (ARA). I currently serve on the ARA Board of 
Directors and as Vice Chair of their Public Policy Committee. ARA is 
the recognized unified national voice and trusted resource for 
agricultural retailers and distributors. ARA unites its members and 
their interests to advocate and educate on their behalf, provide 
services to improve their businesses, and preserve their freedom to 
operate and innovate, ensuring a safe and plentiful food supply for 
all. ARA members are scattered throughout all 50 states and range in 
size from small family-held businesses, farmer cooperatives, and large 
companies with multiple outlets.
    America's agricultural retailers, also known as farm supply 
dealers, like other industries, have been hit hard by the volatile 
economy we have witnessed over the past couple of years. There are a 
growing number of factors that have led to this economic uncertainty 
including substantially higher energy costs, higher crop input prices, 
an unreliable transportation supply chain, increased regulatory 
burdens, and disruptions in the global markets. Modern agricultural 
technologies are essential for America's agricultural production for us 
to continue providing safe, healthy, and affordable food, feed, fuel, 
and fiber for the nation and the global economy. Our industry is being 
asked to produce more for a growing domestic and global population with 
less land, water, and critical inputs.
    However, it's not too late for this Committee and Congress to act 
in the best interest of American farmers and ranchers, the retailers 
and distributors that supply them, and the rest of the agricultural 
value chain which ultimately includes every American Citizen.
    We believe Congress and this Administration needs to enact several 
changes to strengthen the farm bill and provide economic opportunities 
for America's agribusinesses to continue to thrive and grow.
    The economic prosperity of agricultural retailers is directly tied 
to the prosperity of the farmers we serve. Only if they succeed does 
our industry succeed. It is therefore in our interest, as well as the 
interest of the nation and its consumers, to have a solid safety net 
for producers in the farm bill.
Farm Income Outlook
    A recent forecast from USDA's Economic Research Service reported a 
dim outlook for farm profits. The report, entitled USDA Agricultural 
Projections to 2032, states that ``economic growth continues to 
contract as high levels of inflation persist worldwide'' contradicting 
statements from the White House in recent weeks touting decreasing 
inflation. The USDA-ERS report goes on to say that ``persistent 
inflation, severe weather events, supply chain disruptions, and high 
input costs'' will continue to pressure commodity prices and net farm 
income and net cash income are projected to decrease in 2023. I see 
this reality every day as I work with growers who are struggling to 
adjust to the unprecedented increases in costs, supply chain volatility 
and obtaining operating capital to fund the inputs required to plant a 
crop. In 2023, projected U.S. total agricultural exports decrease by 
3.2 percent, while Agricultural imports are expected to be a record 
$199.1 billion in 2023.'' \1\
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    \1\ https://www.ers.usda.gov/webdocs/outlooks/105853/oce-2023-
01.pdf?v=6291.9.
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    In addition to declining revenues, USDA-ERS predicts a decline in 
crop cash receipts. In this kind of economic uncertainty for farmers 
and the retailers supplying them, it is now more important than ever to 
pass a multi-year farm bill reauthorization that provides for a 
strengthened safety net. I fully expect your Committee will work 
diligently to ensure these important issues are addressed when crafting 
the upcoming farm bill authorization. I strongly urge the Committee to 
fully review this forecast as it includes a broader outlook than the 
items referenced in my testimony this morning.
Regulatory Burdens
    First, I would like to address several regulatory burdens affecting 
our industry. In the past couple of years, Federal regulators proposed 
and finalized dozens of major rules that impacted many sectors, 
including agriculture. I would like to highlight several today, 
including some that fall outside the direct jurisdiction of this 
Committee.
EPA Pesticide Registrations
    Americans continue to have access to the safest, most diverse, and 
most affordable food supplies in history. This is thanks in large part 
to the efficiency, productivity, and innovation of U.S. agriculture 
enabled by pesticides, fertilizers, seed protections, biostimulants, 
and biotechnology products. These products are approved for use within 
the United States' robust science- and risk-based regulatory system.
    Agricultural retailers employ commercial pesticide applicators that 
receive extensive education and training to apply pesticide products in 
accordance with laws and regulations under the Federal Insecticide, 
Fungicide and Rodenticide Act (FIFRA). EPA has financially supported 
training of certified commercial applicators through state grants. The 
programs generally cover Best Management Practices (BMPs) for safe 
pesticide use as well as environmental issues like endangered species 
and water quality protection. Thousands of agricultural retailers and 
their commercial applicators have raised their professional status by 
also participating in voluntary programs such as the Certified Crop 
Advisor (CCA) program administered by the American Society of Agronomy 
(ASA). I am a CCA and can speak directly to the rigorous and relevant 
requirements to both obtain and maintain this certification. Our 
industry is licensed and extensively trained to store, handle, and 
apply Restricted Use Pesticide (RUP) products.
    For healthy and productive growth of nutritious food, plants also 
require essential nutrients. Fertilizers and bio stimulants serve as a 
supplement to the natural supply of soil nutrients, build up soil 
fertility to help satisfy the demands of crop production, and 
compensate for the nutrients removed by harvested crops. Higher crop 
yields are well documented with better crop and soil management. 
Adopting nutrient stewardship contributes to the preservation of 
natural ecosystems by growing more on less land with fewer inputs.
    U.S. agriculture remains the leader in plant breeding innovation 
due to clear, predictable, and science- and risk-based regulations. 
Plant breeders continue to strive to provide solutions to new and 
emerging challenges facing farmers, consumers, and the environment. Ag 
biotechnology such as genetically modified organisms (GMOs) and gene 
editing can help increase global food security. New innovations in 
plant breeding provide benefits such as reducing CO2 
emissions, dramatically increasing crop productivity, providing more 
food to remote communities, reducing input load, and decreasing food 
waste.
    ARA is concerned by recent actions taken by the U.S. Environmental 
Protection Agency (EPA) to revoke all tolerances for the insecticide 
chlorpyrifos. We believe the actions by EPA are inconsistent with 
Federal statutes, the agency's own extensive record on chlorpyrifos, 
and sound, science-based and risk-based regulatory practices. This 
action by EPA will cause significant harm to the food and agricultural 
industries and directly impact supply chains. Other examples of 
disruptions to the marketplace include the U.S. Court of Appeals for 
the 9th Circuit ruling issued in June 2020 that canceled the 
registration of three Dicamba herbicides for over-the-top usage in 
registered crops. The Federal court decision was delivered in the 
middle of application season, well after seed and pesticide product 
selection decisions were made by American cotton and soybean farmers. 
If EPA had not allowed for these products continued use during the 2020 
growing season under their long-standing ``Existing Stocks'' policies, 
there may not have been enough alternative products available for 
agricultural retailers or their farmer customers. Congress and EPA need 
to protect the agency's policy on ``Existing Stocks'' of pesticide 
products if there are future cancellations to prevent severe 
disruptions in the marketplace. These concerns are not unique to 
chlorpyrifos. We have seen targeted campaigns to products such as 
glyphosate, atrazine, and whole classes of rodenticides removed from 
the market or severely restrict their uses.
    It is essential that EPA have a scientifically justifiable, 
predictable, and functioning process for pesticide registrations. 
Consumers and the environment depend on it, and so do registrants, 
farmers, and ag retailers. ARA along with other agricultural 
stakeholders supported the Pesticide Registration Improvement Act 
(PRIA) reauthorization legislation that Congress passed last December 
that updates registration fees used to fund the Office of Pesticide 
Programs (OPP) and increase the transparency between the agency and 
industry. We support the bipartisan effort that enabled passage of this 
bill and encourage the same collaboration to support the passage of a 
well-designed farm bill.
    EPA decisions must be based on quality scientific information to 
which they have full access to the raw data and based on scientific 
analyses that truly evaluate causal relationships beyond mere 
correlation. Uncertainty around what the rules will be and what 
products will be available, including label changes too close to the 
start of the season, complicates our efforts to stock the products that 
producers will want and need as well as our ability to use them. 
Problems in this area have cost the industry a valuable insecticide in 
chlorpyrifos for which there is no suitable replacement. In other 
cases, label changes have been made to products that have been used 
safely for decades with minimal justification or done after product 
ordering and stocking decisions have been made by farmers and 
retailers.
    We commend EPA for proactively addressing Endangered Species Act 
(ESA) compliance in its pesticide reviews. However, EPA's recently 
released ESA Work Plan needs additional modifications to ensure it does 
not cause severe disruptions to America's agricultural industry. Ag 
retailers and their Certified Crop Advisors (CCA) should be consulted 
in developing pesticide mitigation measures, and work with these 
experts should be accounted for in the EPA's picklist scoring 
methodology. It is important that mitigation options being provided 
work in each growing area and cropping system. For example, practices 
like strip tilling and diversion terraces do not make any sense in a 
state like Florida. EPA must ensure stakeholder engagement of end-users 
of the products they regulate. Agricultural retailers and their farmer 
customers need to have a seat at the table and be allowed to have 
meaningful opportunities to participate in the registration and re-
registration review process at the beginning, middle, and end of any 
final decisions, including FIFRA label requirements that the pesticide 
applicator will need to follow. ARA believes the following proposed 
additional modifications need to be made to the EPA ESA Work Plan to 
ensure it does not cause severe disruptions to America's agricultural 
industry--

   Evaluate New Pesticides and Account for Advancements in 
        Technologies--It is important for EPA to fully evaluate newer 
        chemistries, even if in the same class as some older 
        chemistries, as they may behave very differently--and may be 
        more likely to have a narrower spectrum of activity--than older 
        chemistries. EPA must NOT group pesticides in broad 
        classifications without evaluating and accounting for any 
        potential distinctions.

   County-Level Bans are Ineffective, Inefficient, Overly Broad 
        Measures--EPA and the Services have put significant time and 
        effort into preparing science-supported biological evaluations 
        and have developed a new approach. For example, they have 
        concluded that county-level bans are ineffective, inefficient, 
        and overly broad measures that discourage growers from 
        proactively engaging on avoiding exposure to non-target 
        species. EPA should follow-suit and ensure that this is not an 
        option going forward. It is important that all stakeholders 
        focus on appropriate and effective solutions.

   Local Certified Crop Advisor (CCA)/Agronomist Included as 
        Part of ESA FIFRA Label Mitigation Pick List--EPA is 
        implementing mitigation measures as a pick list that gives 
        pesticide applicators a choice to implement certain practices. 
        If this is part of EPA's process EPA moving forward, ARA 
        recommends that one of the main options included on the pick 
        list relates to farmers working with their local agricultural 
        retailer' agronomist/Certified Crop Advisor (CCA) to develop 
        pesticide mitigation measures. Agricultural retailers and their 
        CCA's are partners with farmers on the front lines of critical 
        decisions in agriculture to address pest concerns, sustainable 
        agricultural practices, and tight financial margins to produce 
        a crop.

   Incorporate Agricultural retailers and other end-user input 
        to determine feasibility of mitigation measures along with 
        providing flexibility for the industry--Agricultural retailers, 
        commercial applicators, and their farmer customers must be 
        involved when EPA is considering mitigations measures. EPA must 
        ensure stakeholder engagement of end-users of the product. 
        Agricultural retailers and their farmer customers should have 
        meaningful opportunities to participate in the registration and 
        re-registration review process at the beginning, middle, and 
        end of any final decisions, including FIFRA label requirements 
        that the pesticide applicator will need to follow.

   EPA and the Services must establish efficient processes to 
        complete the entire registration/consultation process--ARA 
        agrees with recommendations made by the Pesticide Policy 
        Coalition (PPC) that ``EPA must adopt more efficient approaches 
        to meeting its ESA obligation.'' EPA should adopt policies that 
        allow pesticide registrants to provide input on how best to 
        refine up-front mitigation measures based on additional data. 
        It is important for EPA and the Services to ensure registrants, 
        agricultural retailers, commercial applicators, and farmers are 
        involved in agency decision making at every major step of the 
        registration review process and label decision making process. 
        It is critical that the Services and the registrants, 
        agricultural retailers, commercial applicators, and farmers be 
        included in discussions with EPA at every major step of the ESA 
        consultation process to finalize mitigations before finalizing 
        FIFRA labels.

   Prioritize development of programmatic consultations. All 
        parties to the pesticide registration process, from registrants 
        to regulators to end-users, could be well-served by developing 
        programmatic consultations on a pesticide-class basis 
        (herbicides, insecticides, etc.) that include practices which 
        might avoid jeopardy for all species. As we state above, 
        however, individual products, and especially newer chemistries 
        may behave differently, and be more likely to have a narrower 
        spectrum of activity than some older chemistries or otherwise 
        present a different potential risk profile. So, while 
        considering programmatic consultations, EPA assessments that 
        group pesticides together individual registration assessments 
        may need to evaluate and account for these distinctions.

    Finally, ARA urges the Committee to include language in the 2023 
Farm Bill reauthorization that codifies state oversight of pesticides 
at the state level. 46 states have adopted some form of pesticide 
preemption and are working cooperatively with local officials to 
enforce robust oversight of state pesticide laws.
    Ensuring that pesticides are properly regulated under the Federal 
Insecticide, Fungicide, and Rodenticide Act (FIFRA) is imperative for 
all our health and safety. Since the 1970s, state lead agencies have 
worked with the U.S. Environmental Protection Agency (EPA) through 
cooperative agreements to administer and enforce FIFRA laws and support 
the development of scientifically based pesticide labels. State level 
pesticide control officials are career employees with extensive 
scientific training and are therefore best situated to prevent 
pesticides from having adverse effects to the environment.
    This targeted fix will ensure that those with expertise at state 
lead agencies and EPA are the ones to determine pesticide usage and 
protect the status quo of 46 states where robust oversight of 
pesticides is already occurring. There is precedent for including 
similar language in the farm bill, as demonstrated in H.R. 2 the 
Agriculture Improvement Act of 2018 where the House included such 
language in its initial 2018 Farm Bill. However, it was ultimately not 
included in the final conferenced version signed into law on December 
20, 2018. It is therefore important the language be included, and 
remain in, the final 2023 Farm Bill. This bipartisan proposal is 
supported by over 200+ national, regional, and state organizations with 
membership throughout the United States.
WOTUS
    The new Waters of the United States (WOTUS) rule greatly expands 
the Federal Government's regulatory reach over private land use allows 
EPA to regulate ditches, ephemeral drainages and low spots on farmlands 
and pastures. None of these features meet the definition of the word 
``navigable water'' in the Clean Water Act (CWA) as intended by 
Congress. The new rule is likely to impact everyday activities such as 
tilling, fertilizing, spraying, planting, and fence-building on ag 
lands.
    This new WOTUS rulemaking takes us away from the increased clarity 
and predictability achieved in the Navigable Waters Protection Rule 
(NWPR) and it also ensured states could enforce their own environmental 
laws as intended using a cooperative federalism approach. EPA was 
premature in moving forward with the new WOTUS regulations as the U.S. 
Supreme Court is currently considering Sackett v. EPA, a Federal court 
case that will answer the important legal question of whether the 
``significant nexus'' test is appropriate to use when determining 
jurisdiction of the EPA and Federal Government under the CWA. ARA 
believes EPA and the Army Corps of Engineers should wait to implement 
any new WOTUS regulations until the Supreme Court issues a decision in 
the Sackett v. EPA case.
    ARA strongly supports H.J. Res. 27, the WOTUS resolution of 
disapproval under the Congressional Review Act (CRA) introduced by 
House Transportation & Infrastructure Committee Chairman Sam Graves (R-
MO), Chair of the T&I Water Resources Subcommittee David Rouzer (R-NC), 
along with senior Members of the House Committee on Agriculture. ARA 
urges swift passage of this important proposal and send an important 
message from Congress to the Biden Administration. A clean, safe, and 
abundant water supply is a top priority for ARA, our members, and their 
rural communities. This can be achieved with clear, concise, common-
sense regulations provided in NWPR.
Energy
    The Biden Administration's focus on climate policy provides some 
ways that agriculture can contribute significantly to solutions, but 
also has created some practical problems in implementation. Natural 
gas, which is an essential feedstock to manufacture nitrogen fertilizer 
and a co-product of shale oil production, is now more expensive. Diesel 
fuel, used to transport products across the nation and operate 
agricultural equipment is significantly higher. Diesel is necessary for 
every ag retailer, grain shipper, and farmer.
    Diesel powered irrigation systems used to water our crops, plastics 
used to contain crop protection products, and even the packaging used 
by food producers, all have become more expensive because of these 
policies. The price to feed and fuel our country has risen as a result.
    ARA also support Federal policies that increase domestic energy 
production, resulting in reduced costs for crop input materials 
manufactured in the U.S. Our nation must remain energy independent by 
including oil, natural gas, and other domestic energy supplies, such as 
renewable fuels like ethanol and biodiesel, in our efforts to promote 
economic growth in the nation's ag sector and reduce U.S. dependence on 
foreign sources of energy. Overall, we support an ``all of the above'' 
energy strategy and believe this approach is necessary to support a 
resilient food supply chain. Demand for oil and gas is increasing. 
Congress and the Biden Administration must avoid policies that halt or 
hold back increased domestic energy production such as development 
onerous and duplicative regulations, restricting access to abundant 
supplies of oil and gas located on Federal lands, permitting delays and 
denials, and inconsistent environmental review standards, that cause 
bottlenecks in the supply chain.
    According to a recent study conducted by Environmental Health & 
Engineering, Inc., ethanol reduces gasoline's greenhouse gas emissions 
by 46 percent. Additionally, by 2022, USDA anticipates that corn 
ethanol's relative carbon benefits could reach up to 70 percent thanks 
to continued innovation in the ethanol process.
    ARA issued a commissioned study in October 2020 entitled, 
``Economic Impacts to U.S. Biofuels, Agriculture, and the Economy from 
Subsidized Electric Vehicle Penetration.'' The study examined three 
scenarios for electric vehicle (EV) market penetration through 2050 and 
their potential impacts on biofuels consumption, the agricultural 
sector, and the greater economy. The three scenarios include:

  1.  Base Case: EV market penetration increases to 13 percent of 
            light-duty vehicle sales by 2050, following Annual Energy 
            Outlook Reference Case projections.

  2.  ICE Ban by 2050: EV market share reaches 100 percent of light-
            duty and freight vehicle sales by 2050 due to a ban on 
            internal combustion engines (ICE).

  3.  ICE Ban by 2035: EV market share reaches 100 percent of light-
            duty vehicle sales by 2035 and 100 percent freight vehicle 
            sales by 2040 due to a ban on internal combustion engines.

    These scenarios were selected to present a full range of possible 
impacts across the biofuels value chain and supporting supply chains. 
The biofuels value chain includes farm seed, fertilizer, and other 
inputs required for crop production, maintenance, harvesting, 
intermediate transportation, and biofuels manufacturing. The ICE Ban by 
2050 and ICE Ban by 2035 scenarios were designed to represent scenarios 
where non-market policy factors, including a potential ban on the sale 
of vehicles with an internal combustion engine, could require EV 
adoption. Relative to the Base Case, this study found that in 2050:

   U.S. light-duty and freight vehicle consumption of ethanol 
        and biodiesel could decline up to 90 percent to 1.1 billion 
        gallons and up to 61 percent to 0.8 billion gallons, 
        respectively.

   Corn and soybean consumption decrease by up to 2.0 billion 
        bushels and up to 470 million bushels, respectively.

   Corn prices fall up to 50 percent to $1.74 per bushel.

   Soybean prices fall up to 44 percent to $4.92 per bushel.

   U.S. Net Farm Income decreases by up to $27 billion.

   U.S. GDP declines by up to $26.4 billion, resulting in 
        cumulative GDP losses of up to $321 billion.

   U.S. job losses could reach up to 255,300 in the year 2050.

    These studies demonstrate that biofuels, like ethanol and 
biodiesel, must continue to be critical pieces of a low-carbon economy. 
According to the U.S. Energy Information Administration (EIA) biodiesel 
is carbon-neutral because the plants (soybeans) that are the source of 
the feedstock for making the renewable fuel absorb carbon dioxide 
(CO2) as they grow. All forms of domestically produced 
energy should be fully utilized to develop and promote low-carbon 
emission vehicles as it will help keep energy, manufacturing, food, and 
fuel costs low for American consumers and ensure economic prosperity 
for America's domestic industries. For these reasons, we oppose efforts 
to ban the internal combustion engine as it would have an adverse 
impact on the U.S. agricultural industry and rural communities. ARA 
also supports the Renewable [Fuel] Standards (RFS) and the year-round 
sale of E15. Congress needs to restore the U.S. energy independence and 
global leadership to ensure long-term economic growth and energy 
security.
Labor
    The agricultural community is dependent on a sustainable workforce 
now more than ever. Every farm worker engaged in high-value labor 
intensive crop and livestock production sustains an average of two to 
three off-farm jobs. With the added burden of a global pandemic, 
employers and employees are strained even further.
    The current H-2A ag guestworker visa program is broken and only 
available for part of the agricultural industry. Additionally, 
agriculture needs the H-2A program to be more flexible as it currently 
requires the cooperation of multiple Federal agencies which can 
complicate the program.
    Our economy is expanding quickly in response to the post COVID-19 
business openings. Supply chains for consumer, industrial, and 
agriculture businesses need to move more products in a short amount of 
time and in higher volumes to keep pace with demand. Trucking demand is 
outpacing the supply of available drivers. As noted above, road 
infrastructure is important and truck deliveries are critical to keep 
supplies on our retail shelves, raw materials to manufacturers, and 
agriculture productive. A practical proposal with immediate results 
would be to increase weight limits for trucks on roads to from June 30-
November 1 across the nation. Resupplying America would boost the 
economy by ensuring raw materials and finished goods are in the right 
place for purchase during this period of high demand.
    Allowing higher payloads to resupply America's supply chains is the 
right policy to consider because it would increase efficiency, reduce 
costs, and lower emissions with fewer trucks in a short amount of time. 
The increased weight on the roads would occur before most areas have 
significant freezing and thawing. Increased inventory would be 
available to consumers, easing price increases and providing inputs for 
manufacturing and agriculture.
    Seventy percent of the nation's freight is carried by commercial 
trucks, yet as our economy strengthens, motor carriers have difficulty 
sourcing the drivers they need to handle growing capacity. According to 
a recent estimate by the American Trucking Association in 2021, the 
driver shortage reached a record high of roughly 81,000, and that 
number is only expected to grow to 160,000 drivers by 2031 absent any 
changes to the status quo. In many supply chains, companies are being 
forced to increase prices to account for higher transportation costs. 
This will ultimately result in higher prices for consumers on 
everything from electronics to food.
    While 48 states currently allow drivers to obtain a commercial 
driver's license at 18, they are prohibited from driving in interstate 
commerce until they are 21. ARA supported the inclusion of the Safe 
Driver Apprenticeship Pilot Program included in the ``Infrastructure 
Investment and Jobs Act'' (IIJA) passed in the last Congress. This 
program will allow 18 to 20 year old drivers to be trained as 
commercial truck drivers and drive in interstate commerce. Commercial 
trucks are now being outfitted with the latest safety technology 
including active braking collision mitigation systems, forward-facing 
event recording cameras, and automatic or automatic manual 
transmissions. We currently use these technologies in our trucks at 
Willard Agri-Service and I can attest to its effectiveness and 
increased safe driving that occurs. We would like to hire qualified and 
interested young people right out off high school and begin them on a 
rewarding career. ARA is concerned with the restrictions being placed 
on this new pilot program regarding the total available apprenticeship 
slots (3,000). In addition, participating motor carriers are required 
to be part of the U.S. Department of Labor-approved Registered 
Apprenticeship Program (RAP) to be eligible. This late requirement, 
which was not part of any provisions included by Congress when it 
developed a carefully crafted this young driver apprenticeship program, 
has prompted many motor carriers to decline participation in the 
program. ARA believes the program should be expanded to include more 
eligible drivers and the DOL requirement eliminated in order to 
increase motor carrier participation.
    The Farm-Related Restricted Commercial Driver's License (CDL), or 
more commonly referred to as the ``Seasonal Ag CDL'' program, has been 
an essential seasonal program for farm-related service industries since 
1992. These industries have historically had a very strong 
transportation safety record and it has not been diminished since these 
Federal regulations have been in place. The Seasonal Ag CDL program has 
helped promote economic growth for America's agricultural industries 
serving the essential needs of farmers during the busy planting and 
harvesting seasons. Due to challenging weather events, the increase in 
crop production diversification, technological advances, and weight 
increases in light duty pickup trucks and agricultural equipment over 
the past several decades, it is necessary to modernize the Federal 
regulations providing the framework for these state-administered 
programs. The temporary shutdown of the state department of motor 
vehicles offices throughout the nation during the height of the 
[COVID]-19 pandemic also caused major disruptions for farm-related 
service industries and their rural communities.
    Please support additional reforms to the Farm-Related Restricted 
CDL program with the following reforms:

   Ensure Farm-Related Restricted CDL drivers can also operate 
        certain Class A commercial vehicles (excluding tractor-
        trailers) in recognition of the advances and changes made to 
        light duty pickup trucks, agricultural equipment, and trailers 
        over the past 30 years.

   Eliminate the requirement for in-person seasonal renewal of 
        the Farm-Related Restricted CDL.

    There is a strong need for long-term modifications to this program 
to ensure economic growth for our industries and their rural 
communities while continuing to maintain a strong transportation safety 
record. This essential seasonal CDL program is currently authorized in 
24 states. The 2023 Farm Bill reauthorization offers an opportunity to 
enact reforms that can help provide necessary transportation 
flexibility for farm-related service industries and ensure there are no 
disruptions to America's agricultural production and the supply chain.
    The Hours of Service (HOS) agricultural operation exemption has 
been vital for our industry to ensure ``just in time'' delivery of farm 
supplies and other essential products and services to farm and ranch 
customers. The electronic logging device (ELD) requirements highlighted 
issues with the existing HOS regulations and the need to modernize the 
agricultural exemption. While it has had the largest impact on the 
livestock industry, there has also been an impact on farm supply 
transporters and smaller trucking operations. To addresses these 
issues, ARA requests support of legislation eliminating the HOS ag 
exemption's planting and harvesting season provision. Over 30 states 
already have a year-round ``planting and harvesting season'' 
designation. Eliminating this provision ensures the HOS ag exemption is 
year-round for all states, promoting regulatory consistency and 
alleviating unnecessary regulatory burdens highlighted by the ELD 
mandate. We also request support for expanding the current air mile 
radius of 150 air miles up to 200 air miles for farm supply 
transporters following an FMCSA pilot program to collect safety data to 
address continued industry consolidation and driver shortages.
    In 2012, Congress included a new mandate that created a requirement 
for Entry-Level Driver Training (ELDT). The new ELDT rule went into 
effect in February 2022. This new requirement costs between $6,000 to 
$8,000 per driver and possibly higher, depending on the trainer and can 
take several days and up to 20 days to complete. ARA requests relief be 
provided agricultural retailers and other agribusinesses relief from 
these new Federal requirements as our industry continues to face a 
growing driver shortage and higher operating costs. In the last 
Congress, the Trucking Regulations Unduly Constricting Known Service-
providers (TRUCKS) Act was introduced. This common-sense legislation 
would allow states to exempt employees of agriculture-related 
industries and small businesses from the ELDT requirements to obtain 
their CDL. Individuals may be faced with paying for these new training 
requirements whether employed by a company or seeking employment, 
creating an unnecessary barrier to entry into become a commercial truck 
driver.
    USDA agencies collaborate on their climate change and supply chain 
polices due to their inherent linkage to the production of raw 
agricultural commodities--the first step in the food and agricultural 
supply chain and the most likely step to be impacted by climate change 
policies. As an alternative to cropland idling climate change polices, 
I urge USDA to prioritize Federal resources toward working land 
programs to achieve large environmental and economic benefits by 
incentivizing broader adoption of best management farming and ranching 
practices.
    I also support strengthening U.S. freight transportation policy and 
infrastructure to help ensure there are many efficient ways for 
agricultural commodities and products to flow throughout the 
agricultural supply chain. The U.S. freight transportation system can 
be strengthened through the following ways:

   Adopt solutions to better balance the needs of ocean 
        carriers with the needs of our agricultural exports.

   Support reauthorization of the Surface Transportation Board 
        (STB) and include provisions that foster increased competition 
        among freight railroads and other transportation modes, 
        increase shippers rights, provide better methods for 
        challenging unreasonable rail rates and require railroad 
        carriers to provide increased access to railroad service data 
        to enhance agricultural supply chain operations.

   Increase motor carrier capacity through regulatory reform 
        and legislative change.

    These regulatory changes will help our nation's freight continue to 
move while preserving the safety of our highway and rail system.
Pro-Growth Economic Policies
    The Agricultural Retailers Association sees a need to support and 
advocate for pro-growth economic policies that will aid our members by 
developing a more business-friendly marketplace in which to operate. 
There are several barriers to entry within the American Tax Code we 
would like to see changed to protect our freedom and license to 
operate. These pro-growth policies will also positively impact our 
nation's food supply chain and its resiliency.
    Protecting current tax provisions is also paramount in promoting 
growth. The estate tax has long been a detriment to our member's 
business and, as such, we support its full repeal.
    ARA also supports a workable sale and use tax collection system to 
shield retailers and farmers from burdensome tax compliance 
requirements and we continue to advocate for efforts to streamline 
these requirements.
    ARA recently signed onto a letter to Congressional leadership 
regarding the need to preserve several tax provisions that would 
support new and multi-generational farm operations, thus ensuring a 
robust and dependable food supply chain. The letter noted that with 
more than 370 million acres expected to change hands in the next 2 
decades, tax policies will determine agricultural producers' ability to 
secure affordable land to start or expand their operations. Highlighted 
were three critically important tax provisions:

   Stepped-Up Basis: Assets in agriculture are typically held 
        by one owner for several decades, so resetting the basis on the 
        value of the land, buildings, and livestock on the date of the 
        owner's death under a step-up in basis is important for 
        surviving family members and business partners to ensure the 
        future financial stability of the operation.

   Like-Kind Exchanges: This provision allows businesses to buy 
        and sell like assets without tax consequences, thus helping 
        farmers and ranchers, who are typically ``land rich and cash 
        poor,'' maintain cash flow and reinvest in their businesses.

   Sec. 199A Business Income Deduction: To maintain a 
        reasonable level of taxation for pass-through businesses, like 
        farms and ranches, it is critical to preserve Section 199A 
        business income deduction.

    We also support a consistent corporate tax structure and oppose 
changes to the current corporate tax structure. These provisions are 
fundamental to the financial health of production agriculture and the 
businesses that supply its inputs, transport its products, and market 
its commodities.
    ARA strongly advocates for the free and fair trade of agricultural 
products, equipment, and crop inputs that are essential to food supply 
chain resiliency. We believe this will create opportunities for 
economic benefit for farmers, ranchers, retailers, and other members of 
the supply chain. ARA members and their farmer customers purchase crop 
inputs from both domestic and international manufacturers. ARA strongly 
supports the domestic crop input manufacturing industry, and policies 
that will make them more efficient and competitive globally. However, 
our primary interest lies in achieving competitive sources of products 
with which our retailer and distributor members can best serve their 
grower customers.
    We have consistently supported reducing both domestic and 
international trade barriers. The agriculture industry is heavily 
weather dependent; thus, to ensure a strong U.S. food supply, farmers 
require large volumes of agriculture inputs during tight time spans 
during the planting and harvest seasons. Hence, it is necessary for the 
U.S. agriculture industry to have a strong and steady supply of crop 
protection products and fertilizers available to ensure adequate supply 
and to avoid wild price swings in the market. Our policy position 
supporting fair and free trade of agricultural products is a top 
priority that includes foreign and domestic manufacturers alike and 
treats imports and exports equally.
Conclusion
    While my testimony this morning highlights some of the negative 
effects the rural economy has had on the agriculture community 
recently, I am encouraged by this Committee's goals and priorities for 
this year as well as actions taken in the last Congress to help improve 
our supply chain and allow the nation to remain globally competitive.
    To that end, we recommend the following supply chain solutions for 
Congress and the Administration to act upon:

   Reauthorization a Multi-Year Farm Bill that strengthens the 
        crop insurance program, promotes voluntary conservation 
        programs that allow for the continuation of working lands, CCAs 
        being automatically recognized as Technical Service Providers 
        (TSP) by NRCS, pesticide preemption, and increased ag research 
        funding.

   All of the Above Energy Strategy that includes oil, gas, and 
        renewable fuels.

   Add Phosphate and Potash to U.S. Critical Minerals List.

   Support reauthorization of the Surface Transportation Board 
        and include reforms that promote increased competition and 
        provides increased shippers rights.

   Increase the number of available commercial truck drivers 
        through an expanded Young Driver Apprenticeship (ages 18-20).

   Implement additional Seasonal Ag CDL program reforms by 
        allowing on-line renewals and use of certain Class A Commercial 
        Vehicles for agribusinesses.

   Hours of Service (HOS) pilot program for transporters of 
        farm supplies that are allowed to operate up to a 200 air-mile 
        radius.

   Waive Jones Act requirements for agricultural shipping.

   Remove [COVID]-19 vaccination border restrictions.

   Implement National Environmental Policy Act (NEPA) Reforms

   Protect use of essential pesticide products and other modern 
        ag technologies.

    As a farm supply retailer, I am confident that improvements to 
safety nets in the upcoming farm bill, free and fair trade amongst 
agriculture producers and customers, and changes to the regulatory 
landscape hindering farm production will all contribute to a once again 
burgeoning farm economy.

    The Chairman. Mr. Twining, thank you so much for your 
testimony.
    Mr. Brown, please begin when you are ready.

 STATEMENT OF MIKE BROWN, PRESIDENT, NATIONAL CHICKEN COUNCIL, 
                        WASHINGTON, D.C.

    Mr. Brown. Chairman Thompson, Ranking Member Scott, and 
Members of the Agriculture Committee, I want to thank you for 
the opportunity to present testimony today. My name is Mike 
Brown. I am the President of the National Chicken Council. 
Today's hearing addresses a topic that is critically important 
for the chicken industry: over-regulation that suffocates 
rather than fosters a vital national industry.
    The chicken industry is a model of American innovation and 
efficiency. In fact, there is no more important food source in 
America, I would argue, the world. Chicken is healthy, 
sustainable, and affordable. Chicken supports millions of jobs 
in thousands of rural communities. But overzealous and 
misguided regulations threaten to take chicken off the table 
for millions, and those most vulnerable would be first in line: 
lower-income earners, children who receive free and reduced 
school lunch meals, and needy individuals who rely on food 
banks.
    USDA is threatening to layer on another series of 
unnecessary and financially ruinous regulations, and it is 
critical we don't repeat past mistakes. First, USDA has 
resurrected a 13 year old Packers and Stockyards Act rulemaking 
that would stifle chicken production. Through a series of at 
least three rules, USDA is proposing to greatly increase the 
costs and legal risks involved in chicken grower contracting, 
make it all but impossible to incentivize high-performing 
farmers without bonus pay and eliminate the need to show injury 
to competition. The 2010 version of these rules would have cost 
the industry more than $1 billion.
    Today, USDA has taken a unique approach. They have taken 
those rules and they have broken them up into three rules. So 
take the billion, divide by three, that is how they are costing 
their rules. But 10 years ago versus today, you can imagine the 
cost of what it is to raise birds, so we are probably well over 
$1.5 billion with that particular rule.
    Second, USDA is suggesting it might abandon a well-
established program allowing chicken processors to run at 
certain speeds at their plants. This program dates back to the 
Clinton Administration. It is bipartisan. Democratic 
Administrations, Republican Administrations, Democratic 
Administrations, and here we are. And to threaten to reduce 
line speeds could have an incredible impact not only on the 
prices that consumers pay, but also the number of birds that 
growers can grow. And they are our most important asset, our 
growers, though many of you hear differently.
    Third, USDA has released a proposed framework that would 
make Salmonella an adulterant in all raw poultry, an abrupt 
change from longstanding USDA policy and court precedent. The 
chicken industry has devoted tremendous efforts to controlling 
Salmonella, and, on a per-consumption basis, rates have 
decreased for raw chicken over the years. And as we all know, 
proper cooking destroys Salmonella. USDA has presented no data 
to justify its proposal. The technology does not exist to 
implement a policy like this. And this policy would be 
inconsistent with the Poultry Products Inspection Act (Pub. L. 
85-172). But one thing is certain: Treating Salmonella as an 
adulterant in raw poultry would lead to disastrous levels of 
food waste, something I know that this Committee and Congress 
and the Administration take seriously. All these regulatory 
programs share two things in common: One, there is no 
compelling justification for them; and two, they would drive 
unprecedented levels of food inflation and food scarcity.
    Mr. Chairman and Members of the Committee, the chicken 
industry, the American consumers, and farmers have faced a lot 
over the past several years. Chicken is the most important 
protein in the world. Now is not the time to be layering on 
additional regulations that further drain consumers, farmers, 
and the chicken industry. Thank you for the opportunity to 
present today. I know I have presented you with lengthy written 
comments.
    [The prepared statement of Mr. Brown follows:]

Prepared Statement of Mike Brown, President, National Chicken Council, 
                            Washington, D.C.
    Chairman Thompson, Ranking Member Scott, and distinguished Members 
of the Committee on Agriculture, thank you for the opportunity to come 
before you today to present testimony on the challenges facing American 
agriculture. The National Chicken Council (``NCC'') is the national 
trade association representing vertically integrated companies that 
produce, process, and market over 95 percent of the chicken in the 
United States. NCC members include allied industry firms that supply 
necessary inputs and services for the chicken industry. Today's 
hearing, entitled ``Uncertainty, Inflation, Regulations: Challenges for 
American Agriculture,'' addresses a timely and critical topic, and NCC 
appreciates the opportunity to participate.
    Chicken processors' positive economic impact stretches from coast 
to coast, hits every sector of the U.S. economy and is felt in every 
Congressional district. We know that chicken is nutritious, affordable, 
and versatile, but chicken also means jobs--whether it's on the farm, 
in the processing plant, the transportation sector, manufacturing, 
retail or restaurants. Companies that produce and process chicken in 
the United States employ as many as 381,164 people across the country 
and generate an additional 1,136,633 jobs in supplier industries, 
including jobs in companies supplying goods and services to the broiler 
industry.\1\ Broiler production is the primary economic driver of many 
rural communities and the livelihood of thousands of small business 
family farmers--in 2021, small family farms accounted for 47 percent of 
U.S. poultry and egg output.\2\
---------------------------------------------------------------------------
    \1\ 2022 Impact Report of the Chicken Industry, U.S. Poultry & Egg 
Ass'n (Oct. 18, 2022), https://chicken.guerrillaeconomics.net/reports/
2e2ef9af-f1eb-40ca-a0ad-6b21c3e92c13; 2022 Poultry and Egg Economic 
Impact Study Methodology, U.S. Poultry & Egg Ass'n (Oct. 18, 2022), 
https://poultry.guerrillaeconomics.net/res/Methodology.pdf. To view the 
economic impact of chicken in your state and district, visit 
chickenfeedsamerica.org.
    \2\ C. Whitt, et al., America's Farms and Ranches at a Glance, USDA 
Economic Research Service (ERS) (Dec. 2022), https://www.ers.usda.gov/
webdocs/publications/105388/eib-247.pdf?v=9539.4.
---------------------------------------------------------------------------
    Not only does the chicken industry create good jobs in the United 
States, but the industry also contributes to the economy as a whole. 
The broader economic impact flows throughout the economy, generating 
business for firms seemingly unrelated to the chicken industry. Real 
people, with real jobs, working in industries as varied as banking, 
real estate, accounting, even printing all depend on the chicken 
industry for their livelihood. In fact, in 2022, the industry was 
responsible for as much as $417.04 billion in total economic activity 
throughout the country, creating or supporting as many as 1,517,797 
total jobs.\3\ The industry also generates sizeable tax revenues. 
Nationally, the industry and its employees pay about $19.73 billion in 
Federal taxes, and $5.78 billion in state and local taxes.
---------------------------------------------------------------------------
    \3\ 2022 Impact Report of the Chicken Industry, supra note 1.
---------------------------------------------------------------------------
    The U.S. broiler industry is the world's largest producer of 
chicken. In 2021, U.S. farmers produced nearly 60 billion pounds of 
broiler chickens valued over $30 billion.\4\ A portion of this product 
is exported, and the United States is the world's second largest 
broiler meat exporter, after Brazil.\5\
---------------------------------------------------------------------------
    \4\ US Broilers: Production by Year, USDA ERS (April 28, 2022), 
https://www.nass.usda.gov/Charts_and_Maps/Poultry/brlprd.php; U.S. 
Poultry: Production and Value of Production by Year, USDA ERS (April 
28, 2022), https://www.nass.usda.gov/Charts_and_Maps/Poultry/
valprdbetc.php.
    \5\ 2021 Agricultural Export Yearbook, Poultry 2021 Export 
Highlights, USDA Foreign Agricultural Service (April 14, 2022), https:/
/www.fas.usda.gov/poultry-2021-export-highlights.
---------------------------------------------------------------------------
    Chicken is America's preferred protein, and Americans are on track 
to consume over 102.4 pounds of chicken per person in 2023, more than 
any other meat protein source.\6\ Moreover, at a time when food deserts 
are commonplace and availability of nutritious food is a top concern 
among consumers, chicken is the most available meat source in the 
United States \7\ and is recommended by the U.S. Department of 
Agriculture (USDA) Dietary Guidelines for Americans as a top 
unprocessed, nutrient-dense protein source.\8\ The broiler industry and 
its partners work hard to make sure consumers have a healthy protein 
option available to them, doing our part to work towards addressing the 
first pillar of the White House National Strategy on Hunger, Nutrition, 
and Health--food availability and affordability.\9\
---------------------------------------------------------------------------
    \6\ See USDA Economic Research Service, 2022 estimates and 2023 
forecasts, Data Products, USDA ERS, https://www.ers.usda.gov/data-
products/.
    \7\ In 2021, 68.1 pounds of chicken per person were available for 
human consumption. Food Availability and Consumption, USDA ERS (Jan. 
26, 2023), https://www.ers.usda.gov/data-products/ag-and-food-
statistics-charting-the-essentials/food-availability-and-consumption/
?topic
Id=080e8d1d-e61e-4bd8-beac-51f0f1d1f0fe.
    \8\ Dietary Guidelines for Americans, 2022-2025, Ninth Edition, 
USDA at 33 (Dec. 2020), https://www.dietaryguidelines.gov/sites/
default/files/2020-12/Dietary_Guidelines_for_Amer
icans_2020-2025.pdf.
    \9\ Biden-Harris Administration National Strategy on Hunger, 
Nutrition, and Health, White House (Sept. 2022), https://
www.whitehouse.gov/wp-content/uploads/2022/09/White-House-National-
Strategy-on-Hunger-Nutrition-and-Health-FINAL.pdf.
---------------------------------------------------------------------------
    Our members may feed the nation and the world, but they are acutely 
aware of their reliance on local talent and passion in the communities 
they call home. Throughout the pandemic and 2020, chicken companies all 
around the country gave back--and continue to give back--to their local 
communities by making donations to food banks, soup kitchens, local 
health care facilities, police, and fire stations. Every weekend, you 
could find a company selling chicken at reduced prices right out of 
trucks in the local community. In coordination with Meatingplace News, 
NCC compiled a snapshot of NCC member community donations in 2020: \10\
---------------------------------------------------------------------------
    \10\ Exhibit 1, NCC 2020 U.S. Broiler Chicken Industry 
Sustainability Report (Sept. 2021) at p. 49.

---------------------------------------------------------------------------
   2,540,000+ pounds of protein

   $132,800,000+ million dollars

   $981,000+ in grants

   22,000,000+ meals

    These data do not represent every commitment by every member, but 
they provide a rough estimate of meals--and hope--delivered in what was 
a challenging year.
    Community support is but one of many factors driving sustainability 
in the broiler chicken industry. For the chicken industry, 
sustainability means being responsible stewards of land and water, 
animal and feed management, our people, and communities into the 
future. Flowing from this commitment, a lifecycle assessment of the 
broiler industry found that, from 2010-2020: \11\
---------------------------------------------------------------------------
    \11\ Id. at 13; Broiler Production System Life Cycle Assessment: 
2020 Update, NCC, https://nccsite.wpengine.com/wp-content/uploads/2021/
09/Broiler-Production-System-LCA_2020-Update.pdf.

---------------------------------------------------------------------------
   Land use decreased 13 percent

   Greenhouse gas emissions decreased 18 percent

   Water consumption decreased 13 percent

   Fossil-based resource use decreased 22 percent

   Particulate-forming emissions decreased 22 percent

    At the same time these important reductions were being achieved, 
the broiler chicken industry increased overall chicken production by 
more than 20 percent.\12\ In other words, the chicken industry now 
produces much more chicken using many fewer resources than in 2010. The 
industry is committed to continuing to advance critical sustainability 
goals in the years to come. I refer the Committee to the attached NCC 
U.S. Broiler Chicken Industry Sustainability Report for more 
information about the many steps being taken to advance sustainability 
in our industry.
---------------------------------------------------------------------------
    \12\ According to USDA's Economic Research Service, domestic 
chicken production increased from 36.9 billion pounds in 2010 to 44.5 
billion pounds in 2020, the same period covered by the lifecycle 
analysis. See ``All Meat Statistics'' in Livestock, Dairy, and Poultry 
Outlook: Livestock and Meat Domestic Data, USDA ERS (last updated Jan. 
27, 2023), https://www.ers.usda.gov/data-products/livestock-and-meat-
domestic-data/livestock-and-meat-domestic-data/#All%20Meat
%20Statistics.
---------------------------------------------------------------------------
    The chicken industry is a model of American innovation and 
efficiency. The industry has only been able to be America's most 
affordable, available, and nutritious source of protein by improving 
its efficiency over many years. The efficiency of the broiler industry, 
however, is increasingly threatened by overreaching and costly Federal 
regulation that threatens to squeeze the chicken production process 
from every direction. The results would be devastating: loss of jobs, 
decimation of family farmers, fewer and more costly exports, and more 
expensive chicken for American consumers.
    NCC urges the Committee to take a critical look at the regulatory 
barriers being erected around and within the chicken industry and to 
determine whether they truly are in the interest of American farmers, 
workers, and consumers. To illustrate the barriers being erected, the 
harm they would cause across America, and the lack of any legitimate 
societal benefit, my testimony focuses on three critically important 
topics: chicken farmer contracting, processing plant line speeds, and 
USDA's policy toward Salmonella in raw chicken.
USDA Is Proposing to Dismantle Chicken Contract Farming
Background on Chicken Contracting
    The American chicken industry is the most competitive in the world. 
This is no accident, but nor was it foreordained. Rather, the industry 
is built on a grower compensation system--refined through decades of 
innovation--that encourages farmers to raise healthy birds in an 
efficient manner, relieves family farmers of many of the economic risks 
otherwise inherent in farming, and ensures that hard-working farmers 
are appropriately rewarded for their efforts.
    To briefly describe the chicken contracting structure, broiler 
integrators contract with independent farmers, often referred to as 
``growers,'' to raise broiler chicks on behalf of integrators. 
Integrators deliver broiler chicks to growers on the day the chicks 
hatch. Growers raise the chicks into broilers using feed, veterinary 
care, and other consultants like animal welfare experts that are 
provided by the integrator. Growers are responsible for providing 
quality housing, farm maintenance, on-farm inputs, and day-to-day care 
of the broilers.
    The system's fair, honest contracts provide a target pay that high-
performing growers can supplement by raising birds efficiently. In a 
typical grow-out contract, growers and integrators agree on a pre-
determined target price per pound of weight gain based on an average. 
The specifics vary, but growers are usually either paid the target plus 
a bonus for high performance, or grower payments are adjusted slightly 
upward or downward from the target based on relative performance. 
Overall, regardless of the approach taken, growers earn a predictable 
payment plus the opportunity to earn a bonus for strong performance. 
This approach rewards skilled growers who have honed their management 
practices to raise healthy birds most efficiently, and it ensures all 
growers have a strong incentive to raise healthy flocks.
    Properly cared-for birds experience optimal growth rates and have 
lower mortality, both of which increase a grower's pay. This contract 
structure makes the well-being of birds the integrator's and grower's 
top priority because incentives are given to farmers who raise the 
healthiest, highest-quality birds. Similarly, integrators have every 
incentive to make sure their growers succeed and produce healthy, 
quality birds, because the integrator is counting on those birds to 
produce chicken meat. If an integrator sees a flock struggling or 
identifies opportunities to increase efficiency, the integrator will 
provide the grower with assistance through technical experts that are 
familiar with the breed, business, and growing conditions to help the 
grower maximize his or her potential.
    As importantly, the poultry grower contracting system has evolved 
to efficiently allocate economic risk to the parties best prepared to 
burden it. In fact, data show that chicken companies remove 
approximately 97 percent of the economic risk from growers as compared 
to independent growers.\13\ Expensive and highly variable inputs such 
as the broiler chicks, feed, and veterinary care are the responsibility 
of the integrators, who can use their size to negotiate better terms 
and can better absorb price shocks. Contract chicken farmers, for 
example, do not need to worry about spikes in feed costs or deploy 
complex grain-hedging strategies. And because they raise birds under 
contract, they do not have to find a market for their flocks as they 
mature, and they never face the risk of investing months in raising a 
flock only to not be able to find a buyer. Meanwhile, contract growers 
provide high-quality, day-to-day care, land, and housing for their 
birds while being shielded from volatile input prices like feed. This 
mutually beneficial partnership supports the economic viability and 
independence of family farms by averting risk and promoting stable and 
predictable income.
---------------------------------------------------------------------------
    \13\ C.R. Knoeber & W.N. Thurman, ``Don't Count Your Chickens . . 
.'': Risk and Risk Shifting in the Broiler Industry, 77 Am. J. 
Agricultural Econ. 486, 496 (1995).
---------------------------------------------------------------------------
    The data shows this contracting model is profitable and works well 
for all parties. NCC commissioned an independent study using recent 
chicken production statistics, which indicated that chicken contracting 
relationships are mutually beneficial, successful, and profitable for 
both growers and integrators.\14\ This study revealed several key 
points:
---------------------------------------------------------------------------
    \14\ T. Elam, Live Chicken Production Trends, FarmEcon, LLC (Mar. 
2022), https://www.nationalchickencouncil.org/wp-content/uploads/2022/
03/Live-Chicken-Production-FARMECON-LLC-2022-revision-FINAL.pdf, 
available as Appendix A to Exhibit 2, NCC Comments to Docket No. AMS-
FTPP-21-0044 Transparency in Poultry Grower Contracting and Tournaments 
(Aug. 23, 2022).

   Growers have voluntarily chosen to maintain long-term 
        relationships with their integrators. Most growers are in a 
        position to choose between partnering with two or more 
        processors and can readily cut ties with a bad business 
        partner. Over 50 percent of growers have been with their 
        current integrator for 10 years or more, a statistic unchanged 
        from 2015, with an additional 20 percent (for a total of 70 
        percent) having been with their current integrator for over 5 
        years.\15\
---------------------------------------------------------------------------
    \15\ Id. at 3.

   Growers rarely have their contracts terminated. In 2021, 
        only 0.7 percent of contract growers had their contracts 
        terminated.\16\
---------------------------------------------------------------------------
    \16\ Id. at 5.

   Chicken farming pays well. The median income for chicken 
        farmers exceeds the median income for farm households 
---------------------------------------------------------------------------
        generally, as well as for U.S. households broadly.

   There is a long waitlist of people wanting to enter chicken 
        farming. In 2021, there were 1,672 applications from potential 
        growers and 335 expansion requests from existing farmers.\17\
---------------------------------------------------------------------------
    \17\ Id. at 4.

   Chicken farmers have very low loan default rates. The 
        deficiency percent and charge-off percent for poultry grower 
        loans amount to merely \1/3\ of the average agricultural loan, 
---------------------------------------------------------------------------
        based on Small Business Administration loan quality data.

    These and other data reinforce what the chicken industry has long 
known: chicken contract farming is a profitable, beneficial arrangement 
that provides steady and reliable income to family farmers across the 
country. A series of USDA proposed rules, however, threatens to 
completely upend this model--a model that has made chicken the most 
affordable protein in the market.
USDA's Proposed Rules on Chicken Contracting
    In 2022, USDA revived a decade-old, abandoned rulemaking effort 
that directly threatens this efficient, successful contracting system. 
Although positioned as intended to promote competition and protect 
growers, the proposals would, in reality, dismantle the very contract 
farmer system that has proven so successful for all involved.
    First, USDA issued a proposed rule titled ``Transparency in Poultry 
Grower Contracting and Tournaments'' (``Tournament System Proposed 
Rule'').\18\ Ostensibly positioned as a transparency initiative, this 
proposed rule would impose substantial recordkeeping costs on chicken 
companies, would require establishing complex and costly internal 
auditing frameworks, and seems designed to greatly rachet up litigation 
risk for integrators using the current grower contracting model.
---------------------------------------------------------------------------
    \18\ 87 Fed. Reg. 34980 (June 8, 2022); see also Exhibit 2, NCC 
Comments to Docket No. AMS-FTPP-21-0044 Transparency in Poultry Grower 
Contracting and Tournaments (Aug. 23, 2022).
---------------------------------------------------------------------------
    This proposed regulation would require integrators to make a 
substantial number of disclosures at various points during the chicken 
contracting process and to certify their accuracy, even for forward-
looking financial projections. For example, when entering a new 
contract, integrators would have to provide detailed information about 
past litigation; bankruptcy filings for all related entities; average 
payments to all growers company-wide in the past year; average payments 
to all growers at the complex for the past 5 years or, if that does not 
reflect anticipated income, projected future grower income under the 
contract; and information about grower-controlled costs outside an 
integrator's control, such as utilities, fuel, water, labor, and 
repairs and maintenance. A senior executive would have to certify the 
accuracy of this information, including the forward-looking financial 
projections. At chick placement, integrators would be required to 
provide information such as stocking density, breed details, chicken 
gender ratios, information about the breeder flock facility, breeder 
flock age, information about health impairments, and how the integrator 
would adjust payment based on these factors. At settlement, the 
integrator would have to provide much of the same information, but for 
all growers in the settlement pool. In addition to these disclosures, 
the proposal would require integrators establish a costly ``governance 
framework,'' complete with audits, testing, and document reviews.
    Adding further uncertainty and raising the specter of yet more 
rulemaking, USDA released a companion to the Tournament System Proposed 
rule, an advanced notice of proposed rulemaking entitled ``Poultry 
Growing Tournament Systems: Fairness and Related Concerns,'' \19\ which 
requested information on dozens of leading questions about the current 
chicken grower contracting process. Although USDA cited no example of 
actual Packers and Stockyards Act (PSA) violations, the nature of the 
questions strongly suggest USDA is considering engaging in yet more 
rulemaking.
---------------------------------------------------------------------------
    \19\ 87 Fed. Reg. 34814 (June 8, 2022); see also Exhibit 3, NCC 
Comments to Docket No. AMS-FTPP-21-0046 Poultry Growing Tournament 
System Fairness and Related Concerns (Sept. 6, 2022).
---------------------------------------------------------------------------
    Following USDA's proposed rule regarding poultry grower contract 
disclosures, USDA issued a second proposed rule under the PSA targeting 
the broader meat and poultry industry and threatening more fundamental 
changes to the broiler industry. The proposal, titled ``Inclusive 
Competition and Market Integrity Under the Packers and Stockyards Act'' 
(``Inclusive Competition Proposed Rule'') \20\ would create a potential 
cause of action for virtually any unequal treatment between two 
growers, even if there were no actual harm to competition. For example, 
the proposal would create a vaguely defined concept of a ``market-
vulnerable individual'' and prohibit nearly any unequal treatment of a 
person on account of their being a market-vulnerable individual. The 
proposal would define a broad swath of everyday business conduct as 
retaliation, making it more difficult to terminate a contract or even 
choose not to enter a contract in the first place. The proposal would 
likewise expand the concept of deceptive practices and ban without 
defining the use of ``pretexts'' in many contracting situations. As 
with the Tournament System Proposed Rule, this proposal would impose 
substantial recordkeeping burdens, requiring broadly that a company 
maintain for 5 years ``all records relevant to its compliance'' with 
the proposal, without actually defining what those records would be.
---------------------------------------------------------------------------
    \20\ 87 Fed. Reg. 60010 (Oct. 3, 2022); see also Exhibit 4, NCC 
Comments to Docket No. AMS-FTPP-21-0045 Inclusive Competition and 
Market Integrity Under the PSA Proposed Rule (Jan. 17, 2023).
---------------------------------------------------------------------------
    Third, USDA has signaled it intends to release a third proposed 
rule, tentatively called ``Unfair Practices, Undue Preferences, and 
Harm to Competition Under the Packers and Stockyards Act,'' \21\ which 
we understand may attempt to reinterpret Section 202 so that it is not 
necessary to prove injury to competition to establish a violation, 
despite universal rejection of this position by every Federal court of 
appeal to have heard the issue.
---------------------------------------------------------------------------
    \21\ Unfair Practices, Undue Preferences, and Harm to Competition 
Under the Packers and Stockyards Act (AMS-FTPP-21-0046), OMB Unified 
Regulatory Agenda Fall 2022 (Jan. 4, 2023), https://www.reginfo.gov/
public/do/eAgendaViewRule?pubId=202210&RIN=0581-AE04.
---------------------------------------------------------------------------
    Together, these three proposed rules, plus the further rulemaking 
foreshadowed in the advanced notice of proposed rulemaking, threaten to 
completely dismantle the existing chicken contracting system, impose 
billions of dollars of regulatory cost on the industry, and expose 
chicken processors to a flood of litigation. Ultimately, everyone will 
suffer: consumers will face higher prices, the best farmers will see 
their income go down, and chicken companies will have to absorb extreme 
costs.
Fundamental Problems and Costs with USDA's PSA Proposals
    At bottom, USDA's PSA proposals are an attempt to resurrect a 
misguided rulemaking started in 2010 that was blocked by Congress and 
later abandoned by USDA. The policies were unnecessary and costly then, 
and they are even more so now. They would achieve nothing but driving 
up the cost of putting wholesome, nutritious chicken on the dinner 
table and making it more difficult to earn a living in agriculture. 
Trial lawyers seem to be the only ones who would benefit.
    USDA has positioned the set of proposals as intended to reduce 
costs and foster competition, but nothing could be further from the 
truth. Rather, the proposals would inject costs and heighten litigation 
risk at every step in the chicken production process, discourage 
innovation, and drive the best farmers out of chicken production. While 
I am focused today on the impact these rules would have on the chicken 
industry, they would also prove catastrophic for the beef, pork, and 
turkey industries.
    USDA stated the reason for the Tournament System Proposed Rule is 
to help growers anticipate their income from broiler contracts and 
reduce information asymmetries between integrators and growers. The 
scope of the disclosures would not achieve that goal and would require 
integrators to collect and disclose items like bankruptcy history, 
litigation history, payment information for different regions, and 
breeder flock information, that are entirely irrelevant for determining 
how much income a grower might earn. Some of the information to be 
disclosed would already be available in the public domain (e.g., 
bankruptcy history), while other information like that pertaining to 
breeder information and grower payments, is competitively sensitive.
    The proposal entirely overlooks factors inherent in the system that 
protect against the hypothetical problems USDA is targeting with the 
proposal. Integrators own the birds and need a consistent supply of 
healthy birds to keep their processing plants operating at capacity. 
Integrators already have every incentive to ensure they are placing 
healthy birds, providing appropriate feed, and maintaining reputations 
as good business partners. Further, many growers obtain financing from 
agricultural lenders, who are experienced in reviewing chicken growing 
contracts and evaluating their economic viability.
    Most importantly, USDA's proposal would make it more difficult to 
maintain the performance-based pay structure of grower contracts, 
threatening the entire broiler industry. The sheer breadth of the 
disclosures amplifies the litigation risk around every single grower 
interaction, sharply raising the costs of using a performance-based 
contract. Eliminating performance-based pay would eliminate any 
incentive for a grower to put in the hard work and make the necessary 
investments to raise high-quality flocks. This would compromise the 
overall global competitiveness and the resources of the U.S. chicken 
industry, shrinking the pool of revenue available to growers and 
driving up costs while also further squandering our already limited 
resources during a period of already historic inflation. The current 
compensation system structure is an efficient and an effective means of 
rewarding the best growers for performing above average and 
incentivizing less-efficient growers to improve their performance.
    USDA asserts the goal of the Inclusive Competition Proposed Rule is 
to promote competition and market integrity in meat production and 
enhance protections for vulnerable livestock and poultry producers. Not 
only would the proposal fail to achieve these goals, it would 
fundamentally alter and constrain the chicken production market to the 
detriment of growers, consumers, and processors alike. The proposal 
would have devastating effects on the grower contracting process, 
resulting in increased costs to integrators making it more difficult to 
fairly reward their contract farmers.
    The proposed rule is rife with vague and undefined terms that fail 
to clearly express what conduct is prohibited. Even the key term used 
throughout the rule, ``market-vulnerable individual,'' is so broadly 
defined that nearly anyone involved in the market could be a vulnerable 
individual in one way or another. The proposal would make every 
interaction between an integrator and a grower fraught with financial 
peril, as any perceived differences in treatment could form the basis 
for a lawsuit. In addition, the rule fails to provide virtually any 
guidance on when conduct would be unlawful or how an integrator would 
demonstrate its conduct reflected reasonable business decisions. A 
chicken integrator acting in utmost good faith and ordering its affairs 
in the most rational fashion in an effort to comply with the proposed 
rule could not reasonably anticipate, much less determine with any 
reasonable degree of certainty, what business practices would 
ultimately be held illegal under these and other provisions.
    Both proposed rules drastically underestimate their economic impact 
at every possible opportunity. The rules fail to properly account for 
the costs of contract renegotiations, the time required to implement 
the extensive recordkeeping and record-retention systems, develop new 
compliance policies, and implement an administratively complicated 
oversight and compliance system, all of which require highly paid 
professionals and substantial attorney time. Moreover, the proposals 
would make contracting more difficult and could deter companies from 
entering into new grower relationships, reducing overall economic 
efficiency in the chicken production market, driving up consumer costs, 
harming processors, and harming growers. The proposals would also drive 
costly, frivolous litigation.
    Both proposed rules pose substantial costs to growers with no 
concrete added benefit. USDA estimated the 10 year aggregate combined 
costs of the proposed Tournament System Proposed Rule to be $20.4 
million, over half of which will fall on chicken growers, and NCC 
believes this figure grossly underestimates the economic harm this rule 
would inflict by deterring innovation and undermining efficiencies in 
the contracting system. It would make it more difficult for integrators 
to properly reward their best-performing growers, and top performers 
could see their income drop and decide chicken growing is no longer the 
right choice for them. Tellingly, USDA even recognizes that the 
proposal would not actually help growers increase their incomes. In 
other words, even with an understated economic impact analysis, USDA 
could not show the proposal helps anyone. It simply makes chicken 
production more difficult and more expensive for all.
    The proposed Inclusive Competition Rule could be even more costly, 
although USDA's economic impact analysis so understates costs as to be 
meaningless. This proposal would turn every integrator-grower 
interaction into a potential litigation flashpoint, forcing integrators 
to carefully guard every word and evaluate every single grower-related 
decision as one that could cost the company hundreds of millions of 
dollars. It would have a tremendous chilling effect on new contracting, 
as any deviation from the norm could be perceived as disparate 
treatment in violation of the proposal. Integrators would be reluctant 
to take on new growers, existing growers would see fewer opportunities 
to expand their income, and it would become much riskier to sever ties 
with poor performing growers who fail to properly care for their birds. 
Integrators would have to develop massive recordkeeping and compliance-
monitoring systems. A dynamic economic system would stagnate, and these 
lost efficiencies would be shouldered by consumers, growers, and 
integrators. USDA's economic impact assessment in the proposed 
Inclusive Competition Rule fails to consider these or virtually any 
costs. Despite these economic realities, USDA concluded that this 
proposed rule would cost companies a few hundred dollars a year, in 
total. This estimate simply defies belief.
    The third proposal, although yet to be released, could prove even 
more economically devastating. Based on experience with the 2010 
rulemaking, any attempt to make a regulatory end-run around the need to 
show injury to competition when establishing a violation of Section 202 
of the PSA would create tremendous confusion and uncertainty, injecting 
billions of dollars of costs into the industry. The costs of this 
proposal would likely be measured in the billions of dollars, with only 
the trial lawyers coming out ahead.
    Moreover, even assessing the potential costs of the proposals is 
impossible because USDA has chosen to release these proposals in 
piecemeal fashion instead of as a single rulemaking on livestock and 
poultry contracting. This approach has made it nearly impossible for 
industry to assess the true cost of these regulations and has almost 
certainly resulted in low-balled cost estimates. By comparison, 
independent economic analyses of previous USDA rulemakings on similar 
topics have indicated economic impact costs in excess of $1 
billion,\22\ and these were prepared 13 years ago, before unprecedented 
inflation. USDA's PSA proposals could well have the same or greater 
economic impact, but USDA's piecemeal approach has made it impossible 
to evaluate.
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    \22\ Scope of Sections 202(a) and (b) of the Packers and Stockyards 
Act, 81 Fed. Reg. 92566, 92576 (discussing cost estimates prepared by 
Thomas Elam and Informa Economics).
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    The proposed rules also suffer from grave legal infirmities and 
would inject tens of millions of dollars of litigation costs into the 
industry, adding to the basic compliance costs and costs from 
efficiency losses. The rulemaking records are devoid of any actual 
instances of allegedly violative behavior to support such sweeping 
burdens. The proposals are rife with vague, broad, and poorly defined 
terms, subjecting companies to substantial uncertainty and staggering 
litigation costs as the courts would be forced to define the terms USDA 
declined to. Most troubling, both proposals completely overlook that, 
as an antitrust law, Section 202 of the PSA is violated only if there 
is a showing of injury to competition.
    Every Federal circuit court of appeals to have construed Section 
202 of the PSA has held that no violation of subsections (a) or (b) 
occurs without a showing of competitive injury. Eight different 
circuits have addressed the issue, and they have uniformly and 
resoundingly affirmed this understanding.\23\ In surveying court 
precedent, the Sixth Circuit noted the ``prevailing tide'' of circuit 
court decisions holding ``that subsections (a) and (b) of  192 [PSA  
202] require an anticompetitive effect,'' after which it concluded:
---------------------------------------------------------------------------
    \23\ Terry v. Tyson Farms, Inc., 604 F.3d 272, 276-79 (6th Cir. 
2010); Wheeler v. Pilgrim's Pride Corp., 591 F.3d 355 (5th Cir. 2009) 
(en banc); Been v. O.K. Indus., Inc., 495 F.3d 1217, 1230 (10th Cir. 
2007); Pickett v. Tyson Fresh Meats, Inc., 420 F.3d 1272, 1280 (11th 
Cir. 2005), cert. denied, 547 U.S. 1040 (2006); London v. Fieldale 
Farms Corp., 410 F.3d 1295, 1303 (11th Cir.), cert. denied, 546 U.S. 
1034 (2005); IBP, Inc. v. Glickman, 187 F.3d 974, 977 (8th Cir. 1999); 
Philson v. Goldsboro Milling Co., 1998 WL 709324 at *4-5 (4th Cir., 
Oct. 5, 1998); Jackson v. Swift Eckrich, Inc., 53 F.3d 1452, 1458 (8th 
Cir. 1995); Farrow v. USDA, 760 F.2d 211, 215 (8th Cir. 1985); De Jong 
Packing Co. v. USDA, 618 F.2d 1329, 1336-37 (9th Cir. 1980); Pac. 
Trading Co. v. Wilson & Co., 547 F.2d 367, 369-70 (7th Cir. 1976); see 
also Armour & Co., 402 F.2d 712 (7th Cir. 1968).

          The tide has now become a tidal wave, with the recent 
        issuance of the Fifth Circuit Court of Appeals' en banc 
        decision in Wheeler v. Pilgrim's Pride Corp., 591 F.3d 355 (5th 
        Cir. 2009) (en banc), in which that court joined the ranks of 
        all other Federal appellate courts that have addressed this 
        precise issue when it held that ``the purpose of the Packers 
        and Stockyards Act of 1921 is to protect competition and, 
        therefore, only those practices that will likely affect 
        competition adversely violate the Act.'' Wheeler, 591 F.3d at 
        357. All told, seven circuits--the Fourth, Fifth, Seventh, 
        Eighth, Ninth, Tenth, and Eleventh Circuits--have now weighed 
        in on this issue, with unanimous results.\24\
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    \24\ Terry, 604 F.3d at 277 (lengthy string citation of supporting 
cases omitted).

    The Sixth Circuit became the eighth court to reach this conclusion, 
and it did so in a case where USDA participated as an amicus and 
directly argued that a showing of injury is not required for a Section 
202(a) or (b) violation. The court expressly recognized USDA's 
involvement, noted USDA's argument that the court should read Section 
202(a) and (b) to not require a showing of injury to competition, and 
pointedly concluded, ``We decline to do so.'' \25\
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    \25\ Id. at 278.
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    Despite being well familiar with this precedent, USDA through these 
proposals would force the industry to once more bear the substantial 
litigation costs to get the courts to again affirm that the PSA 
requires a showing of injury to competition. These litigation costs are 
not accounted for in the rulemakings at all.
    These proposed regulations are even more troubling because no one 
has asked for them, and in fact, Congress rejected similar rules 
stemming from a 2010 rulemaking. USDA previously tried to read into the 
2008 Farm Bill a mandate to circumvent the injury to competition 
requirement and engage in far-reaching rulemaking on the PSA, Congress 
reacted swiftly and clearly by preventing the agency from finalizing an 
overly broad rulemaking for several years.\26\ Moreover, the 2014 and 
2018 Farm Bills did not call for any new PSA rulemaking, and they 
certainly did not indicate Congress supported attempts to read the 
injury to competition requirement out of the PSA.
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    \26\ See Consolidated and Further Continuing Appropriations Act, 
2015, H.R. 83, 113th Cong.  731 (2014); Consolidated Appropriations 
Act, 2014, H.R. 3547, 113th Cong.  744 (2014); Consolidated and 
Further Continuing Appropriations Act, 2013, H.R. 933, 113th Cong.  
742-43 (2013); Consolidated and Further Continuing Appropriations Act, 
2012, H.R. 2112, 112th Cong.  721 (2011).
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    Given this clear direction from Congress, USDA's attempt to read 
the injury to competition requirement out of the PSA and to effectively 
expand the PSA into a general anti-discrimination law raises a major 
question requiring Congressional direction. As recently stated by the 
Supreme Court in West Virginia v. EPA, in certain cases of ``economic 
and political significance,'' an agency must demonstrate ``clear 
Congressional authorization'' to exercise its powers.\27\ The PSA is a 
hundred-year-old law, and at no point in its history has it been 
applied to broadly address the type of conduct encompassed in the 
Proposed Rule or to prohibit conduct that does not result in an injury 
or the likelihood of injury to competition. Through the present series 
of rulemakings, USDA seeks to completely upend animal production 
contracting in the livestock and poultry industry. These sectors 
account for more than $1 trillion of annual economic impact and touch 
all fifty states, and they would be drastically affected by a change in 
the injury to competition requirement, as well as by the other aspects 
of the proposals. Any attempt to rewrite by regulation the PSA's injury 
to competition requirement is the very definition of an issue of 
``economic and political significance.'' USDA cannot take it upon 
itself to dramatically expand the scope of such a longstanding statute.
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    \27\ 142 S. Ct. 2587, 2613-14 (2022) (explaining that in certain 
cases of ``economic and political significance,'' an agency must 
demonstrate ``clear Congressional authorization'' to exercise its 
powers); see also Nat'l Fed'n of Ind. Business v. OSHA, 142 S. Ct. 661 
(2022) (per curiam) (rejecting the Occupational Safety and Health 
Administration's claims of regulatory authority regarding emergency 
temporary standards imposing COVID-19 vaccination and testing 
requirements on a large portion of the national workforce); Ala. Ass'n 
of Realtors v. HHS, 141 S. Ct. 2485 (2021) (per curiam) (rejecting the 
Centers for Disease Control and Prevention's claims of regulatory 
authority regarding a nationwide eviction moratorium).
---------------------------------------------------------------------------
    At bottom, these proposals reflect tremendous overreach by USDA 
that promises to encumber a dynamic and innovative aspect of American 
agriculture with massive amounts of red tape, administrative burden, 
compliance costs, and legal risks, all for no tangible benefit.
USDA Is Threatening Chicken Processing Plant Line Speeds
    USDA has recently initiated a process that threatens to reduce the 
speed at which chicken processing plants may operate, despite decades 
of experience showing higher processing line speeds are safe for food 
and for workers.
Line Speeds in Chicken Processing
    USDA regulations cap the speed at which chicken processing plants 
may operate portions of their processing lines. In particular, USDA 
regulations cap the speed at which plants can operate the part of the 
line known in the industry as the evisceration line. The evisceration 
line is where organs and other parts are removed and where chicken 
carcasses are presented to a USDA inspector for visual inspection 
before moving into the rest of the process. This is a highly automated 
part of the production process, relying on carefully calibrated 
automated equipment to move the carcasses through the process and to 
perform the various tasks. These evisceration line speeds are 
established not for worker safety, or even for a particular food safety 
reason, but rather to make sure that USDA inspectors are able to 
perform their carcass-by-carcass inspection, as required under the 
Poultry Products Inspection Act. USDA has never regulated the speed at 
which any other part of the chicken processing line may operate.
    Currently, USDA regulations set the maximum line speed for chicken 
evisceration lines at 140 birds per minute (bpm) for plants operating 
under the modernized New Poultry Inspection System (NPIS).\28\ However, 
USDA also has long operated a waiver program allowing plants to operate 
at up to 175 bpm. This waiver system began with a trail program 
announced in 1997 called the HACCP Inspection Models Project (HIMP), 
which became a long-running trial to evaluate modernized inspection 
systems. Under HIMP, 20 chicken processing establishments were allowed 
to operate at higher evisceration line speeds of up to 175 bpm. The 
HIMP trial formed the basis for USDA's NPIS regulations, and the HIMP 
trial continued all the way until NPIS was finalized in 2014.\29\ But 
because NPIS capped evisceration line speeds at 140 bpm whereas HIMP 
plants had long operated at higher speeds, USDA created a new waiver 
program that permitted former HIMP plants and, later, other NPIS plants 
that met certain food safety metrics to operate evisceration lines at 
up to 175 bpm. This waiver program was to form the basis for further 
rulemaking to increase evisceration line speeds across the board, but 
USDA has yet to issue such a regulation, and the waiver program 
continues to this day.
---------------------------------------------------------------------------
    \28\ 9 CFR  381.69(a). These line speeds are for the USDA 
inspectional system known as the New Poultry Inspection System, which 
has become the most common system used in the chicken industry, 
although USDA also provides inspection under other legacy inspection 
systems with lower line speed limits.
    \29\ Modernization of Poultry Slaughter Inspection, USDA Food 
Safety and Inspection Service (FSIS), 79 Fed. Reg. 49566 (Aug. 21, 
2014).
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    Importantly, the HIMP trial and the line speed waiver program have 
shown that running evisceration lines at 175 bpm does not compromise 
food safety or worker safety.\30\ It does, however, let plants increase 
processing capacity by 25 percent over the current 140 bpm limit. This 
lets plants get much greater output from the same equipment, 
substantially decreasing costs, increasing efficiency, and driving down 
food prices for consumers. This efficiency is critical. Higher 
production capacity means lower production costs for integrators, more 
chickens for growers to raise, and lower prices for consumers. It is 
also essential for ensuring U.S. chicken processors remain competitive 
globally. Broiler chicken plants elsewhere in the world--including 
South America, Asia, Canada, and Europe--are able to safely operate at 
line speeds of over 200 bpm using the same equipment used in the U.S.
---------------------------------------------------------------------------
    \30\ A landmark 2001 study by the Research Triangle Institute (RTI) 
reinforced what the industry and USDA had experienced with HIMP with 
respect to food safety, finding that ``inspection under the new models 
[HIMP] is equivalent and in some ways superior to that of traditional 
inspection . . . and can maintain or even improve food safety and other 
consumer protection conditions relative to traditional hands-on 
inspection methods.'' Cates, et al., Traditional Versus Hazard Analysis 
and Critical Control Point-Based Inspection: Results from a Poultry 
Slaughter Project, J. Food Protection, 64(6), 826-832 (2001).
---------------------------------------------------------------------------
    Just as critically, evisceration line speeds do not affect worker 
safety. Chicken processing plants can be divided conceptually into two 
segments, commonly referred to as first processing and second 
processing. The evisceration portion of the operation occurs in first 
processing, which is the most highly automated portion of the 
operation. Only about two percent of a typical chicken processing 
plant's workforce is stationed in the evisceration area, and other than 
the bird-by-bird inspection and sorting performed by the plant's 
workforce, they are largely monitoring the operation of the equipment 
and not directly interacting with the carcasses or machines. To 
reiterate, the evisceration line speed limit applies only to the 
evisceration portion of the line. After evisceration, chicken carcasses 
pass the USDA inspection station, where USDA inspectors visually 
inspect each carcass, and from there they move to the chilling system 
to bring the product temperature down to refrigerated temperatures.
    The majority of the labor involved in processing chicken occurs in 
second processing, where birds are trimmed, deboned, and cut into 
pieces. Plants use varying combinations of automated and manual 
processes in second processing. Importantly, evisceration line speeds 
have nothing to do with the rate of work in second processing. One 
evisceration line feeds into multiple second processing lines, which 
work at rates independent of the evisceration line. Chicken processors 
adjust their second processing capacity by adding or removing second 
processing lines or workers based on the planned production volume. If 
the evisceration line is running faster, the processor will add more 
workers on the line and/or increase the number of operating second 
processing lines. If the evisceration line runs slower, fewer workers 
or second processing lines may be needed. Therefore, line speeds and 
work rates do not increase in second processing when evisceration line 
speeds increase, but the number of workers needed does. Faster 
evisceration line speeds thus translate directly into more jobs on the 
second processing line.
    Common sense says that faster evisceration line speeds do not 
compromise worker safety. The data reinforces this. The chicken 
industry has a long and successful track record of continual 
improvement of worker safety. Department of Labor (DOL) Bureau of Labor 
Statistics (BLS) data shows a continued decrease in injury and illness 
rates in chicken plants. From 1994 (the oldest data available on the 
BLS website) through 2019 (the most recent data without noise injected 
by the COVID-19 pandemic),\31\ the total recordable poultry processing 
illness and injury rate decreased from 22.7 cases per 100 full-time 
workers per year in 1994 \32\ to 3.2 in 2019,\33\ a 91 percent 
decrease. And the more than five-fold decrease in injury rates in the 
poultry industry from 1994-2019 coincided with a period of substantial 
increases in line speeds, bird size, and automation. Technological 
improvements in processing tend to correspond to safer workplaces.
---------------------------------------------------------------------------
    \31\ During the COVID-19 pandemic, COVID-19 illnesses among plant 
employees were typically treated as recordable illnesses, regardless of 
where or how the worker got sick. As with many public health measures, 
the COVID-19 pandemic has injected considerable noise into the data, 
and so a truer comparison can be obtained by looking at the most recent 
pre-pandemic data.
    \32\ Industry Injury and Illness Data--1994, U.S. Bureau of Labor 
Statistics (Feb. 1, 2023), https://www.bls.gov/iif/nonfatal-injuries-
and-illnesses-tables/soii-summary-historical.htm#94
Summary_Report.
    \33\ Industry Injury and Illness Data--2019, U.S. Bureau of Labor 
Statistics (Feb. 1, 2023), https://www.bls.gov/iif/nonfatal-injuries-
and-illnesses-tables/soii-summary-historical.htm#94
Summary_Report.
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    The effects, or lack thereof, of line speed waivers can be better 
isolated by comparing worker safety data from 2014, the year NPIS was 
finalized and before line additional line speed waivers were issued, 
and 2019, by the end of which 34 chicken processing plants were 
operating under line speed waivers. In 2014, the total recordable case 
rate among chicken processing plants was 4.3 cases per 100 full-time 
workers.\34\ In 2019, it was 3.2. Despite nearly three dozen plants 
operating under line speed waivers, overall worker illness rates 
continued to decrease during this period.
---------------------------------------------------------------------------
    \34\ Industry Injury and Illness Data--2014, U.S. Bureau of Labor 
Statistics (Feb. 1, 2023), https://www.bls.gov/iif/nonfatal-injuries-
and-illnesses-tables/soii-summary-historical.htm#94
Summary_Report.
---------------------------------------------------------------------------
USDA's Line Speed Study
    Despite more than a quarter century of experience with higher line 
speeds, USDA has embarked on a vaguely defined, open-ended study of the 
effects of chicken processing evisceration line speeds on worker safety 
as a condition for deciding whether to continue the program.\35\ In 
response to a lawsuit by labor activists,\36\ USDA decided to condition 
plants' ongoing eligibility for line speed waivers on those plants 
agreeing to participate sight unseen in an undefined worker safety 
study by third-party contractors engaged by USDA. As part of this 
study, plants were asked to submit voluminous quantities of worker 
safety data to USDA, required to allow third-party researchers 
unfettered access to processing plants, and made to agree in advance to 
participate in a more rigorous onsite visit yet to be defined.
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    \35\ Constituent Update, USDA FSIS (July 29, 2022), https://
www.fsis.usda.gov/news-events/news-press-releases/constituent-update-
july-29-2022.
    \36\ United Food and Commercial Workers Union, Local N. 227, et al. 
v. USDA, Case No. 1:20-cv-02045 (D.D.C.). NCC joined this case as an 
intervenor to ensure the interests of NCC member companies were 
appropriately represented.
---------------------------------------------------------------------------
    This reflects a dramatic regulatory overreach, using plants' 
reliance on discretionary evisceration line speed waivers from a food 
safety agency as leverage to force participation in a worker safety 
study outside USDA's mission area. Chicken processors were required to 
commit to participate in the study without seeing nearly enough details 
to understand what it entailed. Even now, the study protocol has yet to 
be released. But declining would mean cutting processing capacity by 20 
percent, which could be financially ruinous for a company and all those 
who depend on it for their livelihoods. The data requests are broad, 
ill defined, and burdensome. Some of the requested data includes 
sensitive medical information that even the DOL's Occupational Safety 
and Health Administration (OSHA) is prohibited from accessing without 
special safeguards. The onsite visits by the third-party contractors 
have focused almost entirely on second processing, which as explained 
is entirely unrelated to evisceration line speeds. And questions have 
arisen whether some of the third-party contractors, who have 
participated in court cases adverse to chicken processors, are 
appropriate participants in this study. Even though USDA announced this 
study in July 2022, the agency has yet to provide any information about 
the actual study protocol, timing, endpoints, or how the agency plans 
to use the study to inform policy development and rulemaking. The 
result has been widespread confusion, significant cost and time spent, 
and tremendous uncertainty about the future of evisceration line speeds 
in the chicken industry. This uncertainty has prevented companies from 
making informed long-term investment decisions for their own processing 
plants as well as what grow-out capacity they will need from their 
contract growers.
    None of this was necessary. USDA itself decided to conduct this 
study; no party in the litigation compelled this action. As explained, 
there has been a tremendously long history of experience with elevated 
line speeds, in both the United States and other countries. The 20 
plants that participated in the HIMP trial were closely scrutinized for 
decades, yet no worker safety issues emerged. Nor have worker safety 
issues emerged in the years since USDA began issuing line speed waivers 
under NPIS. Instead, recordable illness and injury rates in the chicken 
industry have steadily decreased, regardless of how fast evisceration 
lines are operating. Other countries, including Canada and many in 
Europe, have long permitted chicken processors using the same equipment 
to run much fast than even 175 bpm, with no negative effects on worker 
safety.
    Through sister agencies in DOL, USDA could have easily accessed 
detailed information about plants' worker safety history, including 
plant-level illness and injury rates, and compared that information 
across time as plants transition to line speed waivers and between 
plants with and without line speed waivers. USDA has never explained 
why it decided it was necessary to use its economic leverage to compel 
plants to participate in an ill-defined study conducted by third 
parties on a topic well outside USDA's mission area instead of simply 
asking its sister Federal agency directly responsible for worker 
safety, DOL, to share or analyze the relevant information already in 
DOL's possession.
    As a result, USDA has injected tremendous economic uncertainty into 
the chicken industry. Chicken companies that have invested heavily in 
installing new equipment and reconfiguring lines to run at 175 bpm have 
no idea whether the program will continue or their investments will 
evaporate overnight. This uncertainty makes it very difficult for 
companies to plan, and it deters investment in modernized equipment and 
plant expansions. If line speed waivers were revoked and plants forced 
to operate evisceration lines at 140 bpm, the economic effects would be 
catastrophic. Industry capacity would drop dramatically, jobs in second 
processing would be lost, rural communities would lose their economic 
engines, chicken farmers would have fewer birds to raise and see their 
earnings plummet, export competitiveness would drop off, and consumers 
would have to pay more for chicken. NCC urges Congress to ensure 
chicken processing line speeds are protected and that line speeds are 
expanded so that all chicken processors can run at the line speeds we 
already know are safe.
Potential Policy Changes Regarding Salmonella in Raw Chicken Risk Food 
        Security
    The final item I wish to raise for your attention is USDA's 
proposal to dramatically shift its policy toward Salmonella in raw 
chicken, which risks drastically affecting food security, food 
availability, and consumer prices. In October 2022, USDA announced a 
proposed Salmonella Framework that signaled a fundamental change in how 
the agency might regulate Salmonella in raw poultry.\37\ Similarly, in 
a speech last summer, Deputy Under Secretary for Food Safety Sandra 
Eskin announced that USDA intended to declare Salmonella as an 
adulterant in a very specific category of breaded and stuffed chicken 
products that are sold frozen and not fully cooked, such as chicken 
cordon bleu. Although the Salmonella Framework raises a number of 
issues of concern, I will focus primarily on USDA's suggestion that it 
might declare Salmonella an adulterant in raw poultry.
---------------------------------------------------------------------------
    \37\ See Proposed Regulatory Framework to Reduce Salmonella 
Illnesses Attributable to Poultry, USDA (Oct. 14, 2022), https://
www.fsis.usda.gov/inspection/inspection-programs/inspection-poultry-
products/reducing-salmonella-poultry/proposed (noting in ``Component 3, 
Enforceable Final Product Standard,'' that USDA is considering 
implementing a final product standard regarding Salmonella in raw 
poultry products); see also Exhibit 5, NCC Comments to Docket No. FSIS-
2022-0029 Proposed Salmonella Framework (Dec. 16, 2022).
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Background on Salmonella in Chicken
    The U.S. food supply is the safest in the world, and food safety is 
a top priority for the broiler chicken industry. NCC members are 
committed to continuing to enhance their food safety systems, and NCC 
works continuously with USDA to improve the control of pathogens in 
chicken products and to address other food safety issues. This is a 
shared challenge and a shared commitment. NCC supports food safety 
regulations that are based on sound science, robust data, and are 
demonstrated to positively impact public health. Americans eat 150 
million servings of chicken every day, and nearly all of them are eaten 
safely. But NCC members want every meal to be safe, and our members 
continue to work to drive down foodborne illness.
    For years the industry has implemented a multi-hurdle approach 
focused on the continual reduction of Salmonella from farm to fork--
implementing robust vaccination, biosecurity, sanitation, and other 
effective measures. In just the past few years, USDA has significantly 
tightened existing Salmonella standards; introduced new performance 
standards for chicken parts; rolled out a new, scientifically driven, 
modernized poultry inspection system that allows for greater testing 
and analysis; released detailed guidance on controlling Salmonella 
through processing controls; and approved numerous new interventions; 
among many other endeavors. This approach has been enormously 
successful. Based off the most recent USDA testing results,\38\ 
Salmonella prevalence on young chicken carcasses is 3.1 percent and 
Salmonella prevalence on chicken parts is 7.1 percent across all 
broiler processing establishments. These testing results are well below 
the Salmonella performance standard for both young chicken carcasses 
and chicken parts. Currently over 90 percent of the industry is meeting 
or exceeding the USDA performance standard for both young chicken 
carcasses and chicken parts.\39\
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    \38\ Sampling Results for FSIS Regulated Products, USDA FSIS 
(2022), https://www.fsis.usda.gov/science-data/sampling-program/
sampling-results-fsis-regulated-products.
    \39\ Salmonella Verification Testing: October 31, 2021 through 
October 29, 2022, USDA FSIS (2022), https://www.fsis.usda.gov/news-
events/publications/salmonella-verification-testing-october-31-2021-
through-october-29-2022.
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    On a per-consumption basis, chicken is safer than ever. While the 
overall incidence of salmonellosis in people has remained relatively 
unchanged since the Centers for Disease Control and Prevention (CDC) 
starting tracking it using the FoodNet Fast system in 1996, Americans 
eat significantly more chicken and chicken products today than in 1996. 
In 1996, chicken consumption in the U.S. was 69.7 pounds per person. 
USDA estimated that Americans would consume 102.4 pounds of chicken per 
person in 2023.\40\ This reflects a 42 percent increase in chicken 
consumption over the past 26 years, with no increase in salmonellosis. 
This means that on a per-consumption basis, salmonellosis illness rates 
attributable to chicken have dropped significantly over the past 26 
years. This is an important point that sadly has been overlooked in how 
USDA has talked about Salmonella in recent years.
---------------------------------------------------------------------------
    \40\ Data Products, USDA ERS, https://www.ers.usda.gov/data-
products/; see also World Agricultural Supply and Demand Estimates, 
USDA (Dec. 9, 2022), https://www.usda.gov/oce/commodity/wasde/
wasde1222.pdf.
---------------------------------------------------------------------------
    This data shows that USDA's existing framework for approaching 
Salmonella control has been working, and NCC has encouraged USDA to 
continue using the latest science and industry-Agency collaborations to 
drive improvements in this framework. For example, science-based 
changes such as transitioning to an enumeration-based performance 
standard would apply new technological and scientific developments to 
USDA's proven approach and would drive continued food safety 
improvements.
Issues with USDA's Proposed Salmonella Framework
    The proposed Salmonella Framework would abandon tried-and-true 
approaches for legally infirm and technologically infeasible strategies 
with no clear supporting data. Under the proposed Salmonella Framework, 
USDA has telegraphed its intent to declare Salmonella an adulterant in 
raw poultry when Salmonella is present above certain yet-to-be-
specified levels. Such an approach would be a dramatic and unwarranted 
departure from USDA's longstanding approach toward Salmonella in raw 
poultry, an approach that has been recognized by the courts and 
supported by science. Critically, despite releasing the proposed 
Salmonella Framework last October, USDA has still yet to provide any 
scientific data supporting its proposed approach. The lack of data 
supporting a considered approach is especially troubling given the 
grave consequences the approach contemplated in the Salmonella 
Framework would have on food availability, food prices, and food 
security.
    The Salmonella Framework appears premised on legally infirm 
conclusions that Salmonella may be considered an adulterant in raw 
poultry. Under the Poultry Products Inspection Act (PPIA), a product is 
adulterated if it ``bears or contains any poisonous or deleterious 
substance which may render it injurious to health.'' \41\ The statute 
notes, however, that for substances that are not added, ``such article 
shall not be considered adulterated . . . if the quantity of such 
substance in or on such article does not ordinarily render it injurious 
to health.'' \42\ Thus, for naturally occurring substances, the 
pathogen is an adulterant only if the substance is present in 
quantities that ``ordinarily'' render the product injurious to health.
---------------------------------------------------------------------------
    \41\ 21 U.S.C.  453(g)(1).
    \42\ Id. (emphasis added).
---------------------------------------------------------------------------
    As USDA has consistently recognized, Salmonella is not an 
adulterant in raw poultry because it is not an added substance and 
occurs naturally within the chicken biome. Salmonella can exist in a 
chicken's skin, muscle tissue, and gut, and healthy, asymptomatic birds 
are known to carry Salmonella.\43\ As USDA has also consistently 
recognized, Salmonella is not present in levels that ordinarily render 
chicken injurious to health because customary cooking practices call 
for thoroughly cooking raw chicken, which destroys any Salmonella that 
may be present. Cooking raw chicken to an internal temperature of 165 
F achieves a 7-log reduction in Salmonella.\44\
---------------------------------------------------------------------------
    \43\ See, e.g., Erol, et al., Serotype distribution of Salmonella 
isolates from turkey ground meat and meat parts, Biomed Res. Int. 2013, 
281591 (2013); Nde, et al., Cross contamination of turkey carcasses by 
Salmonella species during defeathering, Poult. Sci. 86, 162-167 (2007); 
Rigney, et al., Salmonella serotypes in selected classes of food animal 
carcasses and raw ground products, January 1998 through December 2000, 
J. Am. Vet. Med. Assoc. 224, 524-530 (2004).
    \44\ FSIS Cooking Guidelines for Meat and Poultry Products (Revised 
Appendix A), USDA FSIS, Table 3, https://www.fsis.usda.gov/sites/
default/files/media_file/2021-12/Appendix-A.pdf.
---------------------------------------------------------------------------
    USDA has suggested it plans to approach Salmonella in raw chicken 
similarly to how it approaches certain strains of E. coli in raw ground 
beef. But there are critical differences between the two. Unlike with 
ground beef, consumers have long customarily cooked chicken in a manner 
that achieves thorough cooking and destroys Salmonella. Chicken is 
customarily cooked through. Consumers are regularly reminded to use a 
meat thermometer to cook chicken to an internal temperature of 165 F--
including on the package itself--which achieves lethality. While NCC's 
strong recommendation is that consumers use a meat thermometer, other 
less analytical ways to gauge ``doneness,'' such as cutting into the 
meat to see if it is visibly white and firm, are also highly likely to 
achieve lethality and certainly cannot be said to ``ordinarily'' result 
in the product being injurious to health. Chicken is not customarily 
cooked ``rare'' or ``medium,'' and waitstaff at restaurants do not ask 
patrons how they would like their chicken cooked because the default 
approach is to cook chicken all the way through. Certainly, it is not 
the case that due to handling and cooking practices, Salmonella 
``ordinarily'' causes the chicken to be injurious to health.
    USDA has offered no information supporting a change in its 
longstanding position that Salmonella is not an adulterant in raw 
chicken. The proposed Salmonella Framework is nearly devoid of data, 
and USDA has not provided any scientific information to support this 
change in classification, including risk assessments, product testing, 
or scientific analysis. Nor has USDA provided any data to indicate why 
it has floated the idea of setting its adulteration threshold at one 
colony forming unit (cfu) per gram, or why this would be appropriate 
for all forms of raw chicken. This is regrettable, as without 
supporting data, the proposed Salmonella Framework appears almost 
entirely speculative. What data is available suggests that 
salmonellosis cases attributable to chicken consumption are actually 
going down when considering the overall number of servings of chicken 
consumed. NCC firmly believes that it is imperative that public health 
decisions and policy follow the data, not the other way around.
    Additionally, there appears to be a significant misunderstanding 
about how the broiler industry operates, the industry's supply chain 
structure, and current industry practices regarding the control of 
Salmonella. As a result, the policy contemplated in the proposed 
Salmonella Framework would result in untold amounts of food waste. Raw 
chicken is a highly perishable product with a short shelf life, and 
supply chains are not set up to hold substantial quantities of raw 
chicken. An enforceable finished product standard would require testing 
and holding of enormous quantities of raw chicken until results are 
received. There simply is not enough cold storage in the country to 
accomplish this, and a widescale test and hold program, in addition to 
being extremely expensive, would significantly degrade product shelf 
life and quality. Companies may be forced to destroy product or divert 
the product to be fully cooked, which accounts for only a modest amount 
of chicken production and would quickly find both demand and processing 
capacity outstripped.
    Likewise, if Salmonella were declared an adulterant in raw poultry, 
USDA would expect a recall if a product were found to exceed the 
standard, and it is entirely unclear how the agency would determine 
what products to recall. Chicken processing plants produce enormous 
volumes of chicken each day, processing birds from multiple chicken 
houses each day. The birds from a day's production commingle at various 
points, such as in the chilling systems, and it is impossible to break 
up a day's worth of production into microbiologically distinct 
production lots. The problem compounds because different parts of birds 
go to different uses in the supply chain. NCC is extremely concerned 
that under the proposed Salmonella Framework, a single test result 
could cause the recall or destruction of an extremely large amount of 
product. There are much better ways to focus efforts on driving down 
levels of Salmonella without raising these extremely complicated issues 
and so carelessly wasting food.
    As written, the proposed Salmonella Framework threatens the 
economic viability of the entire poultry sector and would result in 
increased costs and reduced availability of chicken. This would be an 
extremely unfortunate outcome, especially in light of recent record-
setting, across-the-board inflation and the continuing food insecurity 
afflicting millions of American families. Chicken is America's most 
affordable and most consumed animal protein. It is nutritious and 
versatile, and it is a staple protein for many, and critically for 
those families trying to make the most out of every food dollar. 
Moreover, chicken makes up a significant portion of food bank donations 
and purchases for Federal and state nutrition assistance programs. 
Aspects of the proposed Salmonella Framework threaten to undermine 
chicken availability.
    A finished product standard would likely cause substantial amounts 
of product to be diverted to cooking operations. However, there is 
limited use and demand for precooked chicken, and that demand is 
largely saturated. Moreover, there is limited capacity to actually 
produce cooked chicken. Combined, these factors mean that hundreds of 
millions of pounds of chicken would simply be destroyed each year, 
reducing chicken supply, and driving up costs.
    NCC member companies share USDA's goal of reducing Salmonella 
levels on raw chicken and, ultimately, driving down salmonellosis 
cases. The chicken industry has made tremendous advances in reducing 
Salmonella presence, and the industry continues to drive down 
Salmonella. However, NCC has serious concerns about many aspects of 
USDA's proposed Salmonella Framework. This proposed policy contemplates 
actions that exceed USDA's statutory authority, that would be extremely 
difficult and perhaps impossible to implement, and that are not 
consistent with modern food safety approaches. Moreover, the lack of 
supporting information and data make it extremely difficult to 
meaningfully evaluate the policies and suggest the agency is changing 
its longstanding process of using science to inform policy. The one 
certainty about this policy is that it would result in hundreds of 
millions of pounds of chicken being thrown into landfills each year, 
exacerbating food insecurity and driving up the cost of chicken.
Salmonella in Certain Not-Ready-To-Eat Breaded and Stuffed Chicken 
        Products
    In addition to the Salmonella Framework, USDA has also indicated it 
is considering declaring Salmonella an adulterant when present above a 
threshold level in certain not-ready-to-eat (NRTE) breaded and stuffed 
chicken products that require cooking but may appear ready-to-eat (RTE) 
to a consumer because of breading (e.g., chicken kiev or chicken cordon 
bleu). A subset of NCC members produce various types of these products, 
which are consumed safely nearly every time they are eaten. NCC and its 
members have worked for more than a decade to develop and refine best 
practices for these NRTE but appear RTE products, including labeling 
guidelines and intervention strategies, all of which are designed to 
ensure that consumers can prepare and consume these products safely. 
These efforts have successfully resulted in a substantial reduction of 
foodborne illness outbreaks related to this product category, reducing 
the incidence of ten Salmonella outbreaks in these products between 
1998 to 2015 down to just one from 2015 to present.
    While USDA's proposal is not yet public, we understand USDA is 
considering declaring Salmonella an adulterant when present at more 
than one cfu per gram in these products. Like with the broader proposed 
Salmonella Framework discussed above, USDA has not provided any 
scientific information to support this position. This change would also 
have serious economic impacts on industry, reducing availability of 
safe, nutritious products for consumers and eliminating jobs in rural 
communities. Based on a survey NCC conducted, on an annual basis, NCC 
member companies produce over 75 million pounds of finished NRTE but 
appear RTE stuffed chicken products, which equates to almost 193 
million servings and an estimated finished product annualized value of 
almost $284 million dollars. Declaring Salmonella an adulterant in 
these products would undermine their commercial viability and would 
likely result in the closure of five total production lines, job losses 
for almost 550 full-time-equivalent employees, and the departure of 
smaller producers from the market entirely. NCC estimates the net 
economic costs of this proposal at more than $100 million annually to 
those NCC member companies. It is unclear why USDA is devoting so much 
attention and effort to a niche product category that is not likely to 
materially affect overall public health. The poorly thought-out policy 
works against several goals of the current presidential Administration 
and Congress by increasing food prices, decreasing competition, and 
eliminating jobs in rural areas.
    NCC has long sought to work with USDA to develop a science-based 
policy that enhances food safety of these products and benefits 
consumers without the drastic negative impacts described above. In 
particular, NCC has identified alternative approaches that use 
mandatory safety labeling to ensure consumers properly prepare these 
products, an approach recommended by one of USDA's own committees. NCC 
has twice petitioned USDA to adopt regulations establishing labeling 
requirements for NRTE stuffed chicken breast products that may appear 
RTE and issue a Compliance Guideline for developing and communicating 
validated cooking instructions for such products, neither of which has 
been acted on, and a copy of NCC's most recent petition is attached for 
further reference.\45\ Alternatively, or in addition to, these labeling 
interventions, USDA could work with industry to conduct baseline 
sampling on raw chicken source material to assess the presence of 
Salmonella before products enter a manufacturing facility and develop 
performance standards for raw materials based on that information.
---------------------------------------------------------------------------
    \45\ Exhibit 6, NCC Petition Re: NRTE Stuffed Chicken Breast 
Products (Feb. 25, 2022).
---------------------------------------------------------------------------
          * * * * *
    In short, the broiler industry is committed to continuing to 
produce safe, wholesome, high-quality protein for American consumers 
and supporting rural economies across the country. Congress can help us 
achieve these goals by ensuring Federal regulatory requirements are 
based in science and common sense, are achievable, and do not 
jeopardize the industry efficiency we have worked so hard to build. To 
supplement my testimony, I am enclosing as attachments rulemaking 
comments, reports, and petitions providing more detail on the chicken 
industry and our concerns with the regulatory approaches I have 
discussed.
    Thank you for this opportunity to appear before the Committee and 
for your continued efforts to support America's meat and poultry 
industry. Chicken is the most important protein in the world, and we 
are proud of the work our industry does to feed, employ, and support 
hard-working Americans. I look forward to answering your questions.
Exhibit 1: NCC 2020 U.S. Broiler Chicken Industry Sustainability Report
September 21, 2020

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Table of Contents
Introduction
Air, Land and Water
Broiler Health and Welfare
Employee Safety and Wellbeing
Food and Consumer Safety
Community Support
Food Security
What's Next?
Introduction
A Letter from Mike Brown, President of the National Chicken Council

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                                          It has been a decade since I 
                                        was named President of the 
                                        National Chicken Council. In 
                                        those 10 years, much has 
                                        changed. And no changes hit as 
                                        profoundly--or as quickly--as 
                                        those that we both responded to 
                                        and initiated in 2020.

                                          Change arrives in fits and 
                                        starts. We can see it coming 
                                        and it can surprise us. I have 
                                        been constantly impressed by 
                                        and grateful for the resilience 
                                        and the creativity of our 
                                        industry when responding to 
                                        change--both the long view 
                                        solutions that are best 
                                        implemented slowly and the 
                                        rapid deployments de-

manded by immediate need. We have shown ingenuity and commitment in the 
face of change, regardless of the challenge.
    Nowhere has the industry's commitment to innovate been better 
revealed than in our sustainability efforts. So, in a time of quick and 
unquestionable change, the moment seems right to celebrate those 
efforts in a way that gathers an overview of our sustainability 
progress, stories and commitments.
    What you will read in the following pages represents National 
Chicken Council's (NCC's) inaugural sustainability report. It is the 
culmination of many years of work and, also, humbly, the starting point 
for many more years of collective effort by the U.S. chicken industry. 
Effort that brings to life our commitment to environmental and social 
responsibility, and recognition that continuous improvement is critical 
to address today's sustainability challenges. Effort made to ensure 
both a healthier industry and a healthier planet into the future. 
Effort that proves, again, our mission to always change for the better.
    As this report is coming out, NCC and many of our members are also 
actively engaged in a multi-year effort by the U.S. Roundtable for 
Sustainable Poultry & Eggs to capture the sustainability of all U.S. 
poultry through a framework that will help us guide future work and 
change.
    So, about all this change . . .
    The chicken industry has a long history of adapting to difficult 
situations and meeting changing demand. 2020 was no different in that 
way. The COVID-19 outbreak reminded us that our food system has long 
been ``critical'' and ``essential'' before those words became part of 
our daily pandemic vocabulary.

    Our top priorities in 2020 were two-fold: keeping our essential 
workers safe and keeping chicken stocked in the meat case. Chicken 
producers and their industry allies went above and beyond to ensure 
America's No. One protein continued flowing to store shelves.

    In this, it was imperative that a proper balance was struck between 
ensuring a steady supply of food while maintaining the health and 
welfare of the people who work tirelessly to produce and deliver that 
food. Chicken producers did everything they could to keep workers 
healthy and safe while keeping America fed--in that order.
    The impact of this balance? Half of Americans who eat chicken say 
they ate it more than any other protein during the COVID-19 challenges 
of 2020. In fact, during the first 9 months of COVID-19 in the U.S., 
retail chicken sales increased 19.5% from the same period in 2019. We 
more than kept pace with Americans' demand for chicken while 
simultaneously implementing crucial safeguards that protected our 
workers.
    If we can rally and adapt this effectively in a time of crisis, I 
have no doubt we can combine our historical knowledge with newfound 
capabilities born of the pandemic and apply them to sustainability 
opportunities in the brighter times ahead of us. In fact, what you will 
find in these pages should be inspirational, highlighting our successes 
to date and the promise of innovations to come.

    Innovation is at the core of our inception as an industry--and 
remains at our core today.

    In 1923--just shy of 100 years ago--Cecile Long Steele of Delaware 
faced down a surprising challenge and ended up inventing the modern 
chicken industry. She ordered 50 chicks for egg production and 
received, instead, 500 due to a clerical error. She kept and raised the 
chicks, selling them for meat. Within 2 years, she was raising 10,000 
meat-type chickens.
    In her world, chickens generally ended up in a stew pot only when 
they got older and their egg-laying days were dwindling. But 
happenstance and her entrepreneurial ingenuity harnessed by the Roaring 
20's economy, advances in refrigeration, and improved transportation 
technology--and the rest is broiler history.
    Cecile Long Steele's pioneering spirit nearly a century ago still 
drives us. Over the past decades, our industry has made huge strides in 
embracing innovation to increase the sense of responsibility that is 
also at our core--a responsibility to care for the planet, our workers, 
and our most important asset: our chickens.
    You will see this pioneering spirit and commitment come to life 
here through the passion of small farmers, the technology breakthroughs 
of processors, the impactful commitments of distributors, and more.
    This report is by no means exhaustive. Nor is it our final report. 
For the chicken industry, sustainability means being responsible 
stewards of land and water, animal and feed management, our people, and 
communities into the future. Sustainability is a journey--our journey 
as a national industry and member of the international community.
    My home in Delaware isn't too far from where Mrs. Steele started 
raising her chickens. I have a special appreciation for the land and 
water on the Eastern Shore, and I see firsthand everything chicken 
producers do to protect and preserve it.
    And while the modern version of our industry may have started very 
near where I write this in Delaware, it now extends to nearly every 
corner of this country and, in fact, much of the world.
    You will see in the pages ahead, based on new data from the Broiler 
Production System Life Cycle Assessment: 2020 Update, that the efforts 
and leadership of those who carry on and improve upon this tradition 
are making measurable progress.
    The numbers tell us that collectively we have made significant 
improvements in key sustainability intensity metrics (environmental 
footprint per bird) between 2010 and 2020.
    We are feeding more people and we are raising each bird with less 
environmental impact and resources.
    Having come so far in the past 10 years, we are nevertheless 
committed to achieve additional progress in the next 10 and beyond.

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Mike Brown,
President of the National Chicken Council.

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Our Approach to Sustainability

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          If you're not taking care of your soil and your air, then you 
        have nothing. And, making sure that we do that, either through 
        our cropland production or in our chicken houses, it's just our 
        lifeblood. It's important for us to run a farm that is 
        sustainable because we have children who will inherit this 
        farm, and we want to make sure they can have this farm in 100 
        years.
                                                         Rachel Rhodes.

    Throughout every step of the chicken supply chain, our industry is 
looking toward the future.

    With the help of technology, modern breeding, nutrient management, 
feed conversion and improved animal husbandry practices, the U.S. 
chicken industry has significantly reduced the use of water, farmland, 
electricity, and other valuable natural resources, while reducing 
greenhouse gas emissions, over the last century. This past decade our 
industry has been particularly effective in these areas.
    But our commitment to the future certainly does not end with our 
commitment to our planet and our birds. For us, ``sustainability'' 
encompasses the many ways that we conduct business responsibly--yes, 
for our planet and our birds, but also for the many people and 
communities affected by our work and our products.
    Sustainability is a journey of collective successes and growth 
areas, which are driven by and include the many companies, 
organizations, and individuals who are diligently pushing our industry 
and international community toward a more sustainable future.

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                                          Our stakeholders are global--
                                        defined by the people who work 
                                        in our industry, consume 
                                        chicken, or are in any way 
                                        impacted by the industry. We 
                                        have made a conscious effort to 
                                        elevate those voices in this 
                                        report with information 
                                        supported by data and actual 
                                        human experience.
                                          As farmer Rachel Rhodes 
                                        articulates so eloquently, this 
                                        industry is our lifeblood. Our 
                                        commitment to feeding our 
                                        country, and the world, is 
                                        meaningless if it does not 
                                        serve to benefit those who will 
                                        follow in our footsteps for 
                                        generations to come.
Arbogast Farms
Lauren Arbogast, Family Partner/Farmer

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A Culture of Sustainability: Generation by Generation
    Sustainability can be a tricky word. Practices vary from farm to 
farm and region to region, leaving a bit up to decision-makers and 
agriculture families. But regardless of the personal definition or area 
of impact, the root of sustainability packs the same punch--striving to 
do what's best for the next generation, one step at a time.
    Our farm, Arbogast Farms, began in the 1970's with a few beef 
cattle and a lot of free-range turkeys. As the farm evolved over the 
years, the turkeys moved into cutting-edge barns, the cow herd 
dwindled, and farm management started the then-radical practice of no-
till for the crop fields. In the early 2000s, the one remaining turkey 
house was converted to a chicken house, four new state-of-the-art 
chicken houses were built, and the beef cow herd was also strategically 
upgraded. Fields that had been no-till for decades now added in crop 
rotations and cover crops. And in 2020, our farm installed solar panels 
on all five chicken houses, lessening our impact on the electrical 
grid.
    As a working multigenerational farm, there are many pieces to the 
puzzle of working together for the common goal of sustainability. 
Without a doubt, each member of the farm advocates for practices that 
ensure the next generation will have more opportunities on the same 
land and resources. Little by little, decision by decision, our farm 
has made sustainability common practice.
    We at Arbogast Farms are looking toward the future with optimism. 
We have the next generation coming up on the farm, learning and 
watching, and, also, inventing and doing.
    We hope we have created a culture that looks at innovation and 
sustainability as a baseline, not an end goal. We look to continually 
improve our practices in this generation and into the next, leaving our 
land and resources in a better position than where we found them.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                                 Aviagen
 
                       Committed to Sustainability
 
    One of the most exciting environmental sustainability projects in
 our industry undertaken globally is a campaign by Aviagen to gather
 information to better define their sustainability footprint.
    This new project is their most comprehensive to date, taking into
 consideration their in-house footprint, while also considering the
 sustainability benefits to the industry with broiler chicken genetic
 advancements.
    Knowing where we stand today helps us know where we need to be
 going.
    Aviagen and others taking on the task of defining their footprint
 help us all determine our most impactful direction.
------------------------------------------------------------------------

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What You'll Find in This Report
    We organized this report around the six broad topics that are most 
important for our industry:

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        Air, Land and Water
                  Our industry's environmental impacts and 
                contributions to a healthy planet through emissions 
                reductions and responsible use of water and land
resources including the results of the Broiler Production System Life 
Cycle Assessment: 2020 Update.

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        Broiler Health and Welfare
                  Our industry's animal husbandry practices that 
                support broilers' health, nutrition, comfort and 
                overall well-being.
                
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        Employee Safety and Wellbeing
                  Our commitment to worker safety and well-being, and 
                the ways that we keep workers safe.

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        Food and Consumer Safety
                  The many ways that our industry supports consumers' 
                health, by providing affordable, safe and essential 
                nutrition.

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        Community Support
                  This is about our industry's support for local 
                communities through the creation of jobs and donations 
                of money and food to businesses, charity or-
ganizations and others.

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        Food Security
                  Our industry's contributions to ensuring 
                uninterrupted access and availability of affordable, 
                nutrient-dense food.
                
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                                          These are the areas where our 
                                        industry's efforts matter 
                                        most--for supporting industry 
                                        growth and for producing and 
                                        providing food to people 
                                        responsibly, in ways that 
                                        protect communities and the 
                                        planet and ensure food is 
                                        available when people want and 
                                        need it.
                                          These also are the broad 
                                        topics that consumers and our 
                                        many other stakeholders have 
                                        told us are important to them. 
                                        While our industry's 
                                        environmental impacts (Air, 
                                        Land and Water) might be top of 
                                        mind for many people, we 
                                        recognize that other 
                                        individuals might feel as 
                                        strongly, or more strongly, 
                                        about animal welfare or one of 
                                        the other topics we have 
                                        included here.
                                          We also recognize there is 
                                        overlap of these material 
                                        topics, with progress in some 
                                        areas helping to drive progress 
                                        in others. For these reasons, 
                                        all six topics are important 
                                        and discussed in this report to 
                                        demonstrate how the industry is 
                                        innovating to meet needs and 
                                        expectations.
                                          As you will read, poultry 
                                        operators across the entire 
                                        value chain are making 
                                        commitments and taking action. 
                                        From feed mills to breeder 
                                        farms, hatcheries, grow-out 
                                        houses (the barns where broiler 
                                        chickens live and grow), 
                                        processing plants, and retail/
                                        foodservice operators. From 
                                        large integrators to small
family farms. Organizations of all sizes and types are making 
meaningful progress and contributing to the industry's collective 
journey of continuous sustainability improvement.
Foreword on Global Impact

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                          The U.N. Sustainable Development Goals (SDGs) 
                        guide our responsibility approach. 
                        Collectively, the 17 SDGs provide a blueprint 
                        for a better and more sustainable future for 
                        all people and for the planet. The SDGs present 
                        a challenge and an opportunity for all of us--a 
                        global

call to action to drastically decrease poverty, hunger, climate change 
and inequality by 2030.

    By delivering on these goals, we believe we can have the biggest 
positive impact.

    These are the areas where our contributions are most important for 
improving lives and fostering environmental stewardship.
    The U.S. chicken industry is doing its part to drive progress, and 
we intend to continue our efforts.
    To guide the path forward on behalf of the entire U.S. chicken 
industry, the NCC actively seeks partnerships and alliances with other 
organizations, to identify opportunities for synergy and leverage 
collective strengths.
    Feeding people, and doing so equitably and sustainably, requires 
combined effort.
    The constellation of activities involved in producing, processing, 
transporting, and consuming food (i.e., entire food systems) must all 
operate cohesively and in sync.
    Food systems must withstand many disruptions--everything from 
extreme weather events to pandemics like COVID-19, biosecurity issues, 
and cybersecurity breaches. The U.S. chicken industry stood up to all 
of these challenges in 2020 alone.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
    We are particularly inspired by four of the SDGs:
 
              Goal #2                              Goal #8
 
            Zero Hunger                Decent Work and Economic Growth
 
    End hunger, achieve food             Promote sustained, inclusive
 security and improved nutrition,     and sustainable economic growth,
 and promote sustainable              full and productive employment,
 agriculture.                         and decent work for all.
 
              Goal #12                             Goal #17
 
    Responsible Consumption and           Partnerships for the Goals
             Production
 
    Ensure sustainable consumption       Strengthen the means of
 and production patterns.             implementation and revitalize the
                                      global partnership for sustainable
                                      development.
------------------------------------------------------------------------

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                          The U.N. is calling for transformation of the 
                        world's food systems to be healthier (nutrient-
                        based), more sustainable, and more equitable.
                          As an active member of the Animal Agriculture 
                        Alliance, we are aligned with the animal 
                        agriculture community, which seeks to pro-
mote practical, broad-based, action-oriented solutions backed by 
science, innovation and proven impact--solutions that include producers 
of all sizes and types at many points in their journey for continuous 
improvement and more sustainable systems.

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                                                  The U.S. Roundtable 
                                                for Sustainable Poultry 
                                                & Egg (US-RSPE) is 
                                                another one of NCC's 
                                                key partners. We are 
                                                working closely with 
                                                them on the first-ever 
                                                sustainability 
                                                reporting framework for 
                                                the full U.S. supply 
                                                chains for chicken, 
                                                turkey and eggs, which 
                                                will launch
in early 2022.
    The NCC will continue to look for opportunities to collaborate with 
others to achieve greater progress toward sustainable development.
    By collaborating whenever possible, and by supporting our members' 
efforts to deliver sustainable, safe, affordable, and nutrient-dense 
food, we are continuing to drive the solutions that the world needs.

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Leadership Profile
National Chicken Council

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                        Ashley Peterson, Senior Vice President of 
                        Scientific & Regulatory Affairs

                          An Appreciation for Seasons, Blisters and 
                        Wholesome Food

                          Growing up in rural Kentucky, spending 
                        countless hours with my granddaddy on our small 
                        farm and working until my hands were blistered, 
                        I quickly learned how to appreciate where my 
                        food came from and the sacrifices it took to 
                        feed our family--generation after generation.
                          The acres and acres of vegetable gardens were 
                        never weeded or tilled

enough as the summer crops were going to be canned, frozen, or 
otherwise preserved to feed everyone for the coming year. I thought I'd 
never get to the bottom of the bushels of ripe tomatoes, shuck enough 
corn, or shell enough black-eyed peas and lima beans under the big oak 
trees surrounding the old farmhouse.
    When it got cold, it was time for butchering. I'll never forget one 
Saturday afternoon I was hanging out in the chicken house (a common 
place to find me as a kid--which, in hindsight, Leadership Profile 
makes sense of my work in this amazing industry), and the rooster 
decided he didn't like me hanging out with his ladies . . . and spurred 
me up my leg.
    Not sure how old I was, but I went to the house and found my 
granddaddy. Without a word he headed off to let that rooster know who 
was boss. My grandma made the best chicken and dumplings ever--not to 
mention the fried okra. I'm not sure why but she couldn't make good 
fried chicken to save her life--not that you'd want to make fried 
chicken with a mean old rooster anyhow . . . but he went well with 
those dumplings.
    Every year a steer and three hogs would be subject to my 
granddaddy's appreciation, expertise, and dexterity. I'll never forget 
the time I was finally ``old enough'' to help slaughter a steer--that 
was something for a 10 year old. We'd hang the steer in the tobacco 
barn off the bucket of an old John Deere Crawler until it was cold 
enough for butchering.
    For the hogs, we had a large trough we'd put over a fire to heat up 
the water for scalding. Once we started the butchering and had enough 
fat separated from the carcasses, it was my job to render the fat--
separate the lard from the cracklins.
    Now if you've never had fresh hot (and I mean burn the skin off 
your mouth hot) cracklins, you haven't lived.
    Once rendered, we'd ladle the fat into a lard press (which also 
served as the sausage stuffer) lined with cloth and collect the lard 
would be used for cooking and topping off jars--my grandma even made 
lye soap. We also made our own sausage, and I've never had the same 
since.
    Looking back over these experiences, one thing was for certain--I 
learned to keep cold things cold, hot things hot, and keep things clean 
when it came to food preparation. I learned that though the animals we 
raised were raised for a purpose, they would always be treated humanely 
and with the respect they deserved.
    In today's world, most people do not have these experiences, and I 
am thankful for the blisters, countless working hours, and appreciation 
it instilled in me about where our food comes from and all of the hard 
work that goes into feeding the world safe and wholesome food.
Air, Land and Water
    It takes a healthy planet, fresh water, fertile soil, and clean air 
to raise and produce chicken.

    Through continuous innovation, the chicken industry has become 
significantly more efficient in its use of water, farmland, 
electricity, and other valuable resources over time, and has reduced 
greenhouse gas emissions.
New Life Cycle Assessment Shows Substantial Progress Across All Key 
        Impact Categories
    For this report, we commissioned an updated sustainability 
assessment of U.S. broiler production to better reflect current 
production systems. And what a difference a decade of dedication can 
make.
    Using new life cycle inventory data, highly regarded third-party 
expert Dr. Greg Thoma and his colleague Ben Putman quantified the 
environmental impact of U.S. broiler production across a broad range of 
impact categories. The results of the assessment are documented in the 
Broiler Production System Life Cycle Assessment: 2020 Update,\1\ a 
fresh Life Cycle Assessment (LCA) that showcases where we are now, how 
the sustainability impacts have changed in the past 10 years, and where 
we might focus next to make continuous improvements.
---------------------------------------------------------------------------
    \1\ https://www.nationalchickencouncil.org/wp-content/uploads/2021/
09/Broiler-Production-System-LCA_2020-Update.pdf
---------------------------------------------------------------------------
    An LCA is a quantitative environmental method used to compile and 
assess environmental impacts of products, processes, and services over 
their entire life cycle. The goal of the 2020 LCA was to focus on the 
chicken industry's three primary levers of sustainability:

  1.  Feed conversion ratio and average daily gain (including typical 
            market live weight)

  2.  Feed composition (industry average ration formulation), and

  3.  Litter production and management.

    What happened between 2010 and 2020 in U.S. broiler production? 
Broiler production increased 21%.
    In addition, all key sustainability intensity measures improved 
between 13% and 22%. For every kg live weight of broiler (and cull 
breeder hen) produced during the 10 year time period:

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          Per kg live weight broiler and cull breeder hen: Land use 
        decreased from 2.13 to 1.85 m\2\a crop eq; carbon footprint 
        decreased from 1.23 to 1.00 kg CO2 eq; water 
        consumption decreased from 0.29 to 0.25 m3; fossil resources 
        use decreased from 0.27 to 0.21 kg oil eq; and particulate 
        forming emissions decreased from 2.36 to 2.03 g 
        PM2.5 eq.

    Keep in mind that these improvements were made on the heels of 
substantial improvements made between 1965 and 2010. According to the 
prior life cycle assessment, producing the same amount of chicken in 
2010 as in 1965 was already having 50% less impact on the environment. 
By 2010, our industry data showed:

 
 
 
    75%.....  fewer resources required in poultry production
    36%.....  reduced impact of poultry production on greenhouse gas
               emissions
    72%.....  decrease in farmland used in poultry production
    58%.....  decrease in water used in poultry production
 

    The improvement in intensity metrics does not tell the complete 
story.

    We recognize that cumulative sustainability impacts are also very 
important. In contrast to the intensity metrics relating to each bird 
(or each kg of bird) produced, ``cumulative'' measures reflect overall 
environmental impacts by the entire U.S. broiler industry--the total 
amount of resources used and greenhouse gases emitted--in a given year.
    The 2020 LCA shows that, from a cumulative standpoint, there were 
improvements in two key sustainability measures, despite the 21% 
increase in broiler production between 2010 and 2020.

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    The three other key sustainability measures showed increases during 
the 10 year time period, from a cumulative standpoint.


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          Land use up 5.4%

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          Water consumption up 5.4%

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          Particulate forming emissions up 4.4%

    Percentage change in five key sustainability measures between 2010 
and 2020 (total production of broilers and cull breeder hens):

------------------------------------------------------------------------
                                                               Percent
         Impact category               2010         2020        change
------------------------------------------------------------------------
                                Lan47,157,854,a 49,701,161,         5.4%
                                           711          527
    Carbon footprint (kg CO2 eq)   27,225,935,  27,000,732,        ^0.8%
                                           616          155
        Water consumption (m\3\)   6,401,558,6  6,748,789,9         5.4%
                                            72           20
Fossil resources use (kg oil eq)   6,035,302,9  5,691,972,9        ^5.7%
                                            38           56
Particulate forming emissions (kg   52,283,488   54,568,949         4.4%
                        PM2.5 eq)
------------------------------------------------------------------------

    These increases are still far below the increases in broiler 
production, which is an impressive and promising trend. It is often the 
case that growth of a sector outpaces the improvement in intensity. Had 
the impact categories shown increases that kept pace with broiler 
production in the past 10 years, then all impacts would have seen a 21% 
increase. Feed is the primary driver of the impacts. What's happening 
on the farms in terms of feed, and feed conversion ratio, is driving 
the progress. As compared to 2010, in 2020, we saw an 8.7% improvement 
in feed conversion ratio--total broiler production increased by 21%, 
with only an 11% increase in total feed consumed.

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                                                  Simply put, our 
                                                industry is producing 
                                                more and using less.

                                                  We have bigger birds, 
                                                we have more birds, and 
                                                we are achieving these 
                                                gains with greater 
                                                efficiency and a 
                                                lighter environmental 
                                                footprint than ever 
                                                before.
                                                  Chicken production 
                                                has long had a less 
                                                significant 
                                                environmental footprint 
                                                than almost any other 
                                                animal agriculture 
                                                industry. We have made 
                                                meaningful strides in 
                                                minimizing 
                                                environmental impact 
                                                with the help of 
                                                technological 
                                                advancements and 
                                                improved animal 
                                                husbandry practices.
                                                  Now, let's dive 
                                                deeper into why chicken 
                                                production in the U.S. 
                                                is more sustainable 
                                                today than ever before 
                                                . . .
Point of View
Aviagen
Jan Henriksen, CEO

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                          Our climate is changing, and people and 
                        governments around the world are seeking ways 
                        to protect our planet.
                          Because food production is a primary driver 
                        of climate change, our challenge will be to 
                        feed the world's expanding population with a 
                        reliable and quality source of nutrition, while 
                        reducing the effects of production. One 
                        promising solution lies with poultry.
                          Chickens are naturally gentler on the 
                        environment than other livestock. On top of 
                        that, chicken companies have been working for 
                        decades to breed efficiencies that not only 
                        produce healthier birds, but also

make commercial chicken production environmentally responsible. Simply, 
we see poultry as the responsible protein.
    Sustainable intensification has become a global aspiration in the 
quest to increase food production from existing farmland while lowering 
pressure on the environment.
    Over the past decade, broiler breeding companies have put 
significant resources and effort into creating efficiencies in chicken 
production that support sustainable intensification.
    One such efficiency is a healthy feed conversion rate (FCR). 
Today's farmers can raise a healthier and more robust chicken more 
efficiently.
    Another benefit is in the area of land use. As our global 
population continues to swell, agricultural land will become more and 
more limited.
    With a lower FCR, less land will be needed to grow feed. The grain 
not used for poultry feed can be used for other purposes, and the land 
can be repurposed for other crops.
    The important conclusion is that poultry's naturally lower resource 
consumption, coupled with innovative breeding efficiencies, means fewer 
resources are required to produce an increasing volume of high-quality 
chicken meat.

   Poultry greenhouse gas emissions are naturally low.

   Chicken production demands far fewer resources.

   Using less land means less destruction of natural wildlife 
        habitats.

   Chickens are more water-efficient than other livestock.
Air
    The production of all food--whether it's meat, seafood or fruits 
and vegetables--results in greenhouse gas (GHG) emissions.

    Farmers want the best air quality not only for their chickens, but 
for the health of their family, employees and communities. The 
following are some of the ways our members act on their commitment to 
clean air.
The Role of Technology
    Even with a relatively small footprint, chicken companies are 
regularly seeking accessible and affordable technology upgrades that 
will improve the ways broiler production affects air quality.

  1.  LED lighting

  2.  Computer controls

  3.  Solar panels

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          LED Lighting

          In recent years, most chicken farms have switched to LED 
        lighting, which can result in energy savings of 80-85% compared 
        to traditional incandescent lightbulbs.

                  Michelle Chesnik's farm in Maryland LED bulbs on the 
                farm help her realize a 25-35% savings in energy. By 
                using energy efficient lightbulbs, they lower their 
                cost while taking better care of the environment.
                  Tim and Deena Morrison's farm in Kentucky They 
                minimize their energy use by regulating the lighting 
                inside their chicken houses. Dimmable lightbulb 
                technology aids in maintaining a healthy environment 
                for the chickens and decreases inefficient use of 
                lighting.
                  Rachel Rhodes' farm in Maryland LED lights on the 
                farm help mitigate energy usage. And, controllers tell 
                them when the lights go on and when the lights go off. 
                If something's askew it can be checked right away.

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          Computer Controls

          Modern grow-out houses are mostly controlled by sophisticated 
        computers that make continuous changes in temperature and 
        ventilation to maintain optimal environmental conditions for 
        the chickens, while saving gas and electricity.

                  Tim and Deena Morrison's farm in Kentucky Their 
                chicken house is monitored by a master computer that 
                controls the chickens' dimmable lights based on outdoor 
                temperatures, time of day and age of the flock. Along 
                with lighting, the control computer also regulates 
                airflow and temperatures to maximize chicken health 
                over each stage of the flock's life. While chicks grow, 
                their environment also needs to change. The controller 
                makes these environmental changes efficiently and 
                effectively.
                  Terry Baker's farm in Delaware Each chicken house has 
                its own computer and it's the brain of the chicken 
                house. It controls the fans, the light, the feed, the 
                water, the temperature, the heaters--all with an app on 
                his phone--which gives him instant access to maintain 
                the health of the birds, regardless of where he is.

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          Solar Panels

          Some chicken farmers are installing solar panels in order to 
        limit their energy use, producing their own electricity on-
        site.

                  Terri Wolf-King's farm in Maryland She installed 
                solar panels on her farm to help lower the energy bill 
                and environmental footprint. Since installation, she 
                has seen a significant reduction in energy use.
                  Tim and Deena Morrison's farm in Kentucky Their solar 
                panels have saved the equivalent usage of 60-70 tons of 
                coal per year.
                  Terry Baker's farm in Delaware The farm is now 
                entirely run on solar.

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Ammonia Mitigation
    Ammonia is a natural byproduct of chicken production. For farmers, 
there are many solutions to help improve air quality on their farms and 
reduce ammonia--starting with planting foliage around their chicken 
houses to capture ammonia and collect dust. These plants often serve a 
dual purpose of reducing potential odors.
    Farmers also regularly monitor ammonia levels within their chicken 
houses. Although useful in fertilizers, certain levels of ammonia in 
the chicken house can be damaging to the chicken, the farmer and the 
environment. For this reason, farmers use litter treatments to aid in 
the retention of ammonia, as well as ventilation and monitors to ensure 
the health of their flock.

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                  We planted Miscanthus, arundo and switchgrass between 
                the chicken houses and in front of tunnel fans to 
                capture ammonia and collect dust and particles. The 
                plants also help reduce potential odors from the 
                houses. Using computer technology, I can track gas 
                levels in the chicken house, like ammonia, from a 
                smartphone.
                                                           Terry Baker.
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                  We planted greenery around the farm to help lower our 
                carbon footprint. The pollinators, especially, provide 
                a resource for insects and other wildlife that call the 
                local ecosystem home.
                                                           Jenny Rhodes
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                  Our farm is encircled with a vegetative buffer that 
                consists of hybrid willows and green giant arborvitaes. 
                This vegetative buffer acts as a windbreak saving 
                electricity and fuel, helps capture dust and 
                particulates from the fans, and makes the farm more 
                aesthetically pleasing to neighbors.
                                                       Georgie Cartanza
Staying Local

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                                                  In addition to 
                                                technologies, creative 
                                                foliage solutions, and 
                                                various ventilation and 
                                                ammonia mitigation 
                                                techniques, localizing 
                                                production facilities 
                                                is another way the 
                                                chicken industry works 
                                                hard to be efficient 
                                                with resources. Despite 
                                                its global reach, 
                                                American chicken 
                                                production is an 
                                                extremely local 
                                                business.
                                                  The distance from the 
                                                hatchery to the farm to 
                                                the processing plant is 
                                                usually no more than 60 
                                                minutes away from one 
                                                another. Localized 
                                                production between the 
                                                hatch-

ery, farm, and processing plant reduces time traveled, emissions, and 
costs. This efficiency and localization ties directly to a reduction of 
GHG emissions.
Air Leadership Snapshots

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                                                JBS Makes Global 
                                                Commitment to Achieve 
                                                Net-Zero
                                                  Greenhouse Gas 
                                                Emissions by 2040

                                                  In March of 2021, JBS 
                                                announced a commitment 
                                                to achieve net-zero 
                                                greenhouse gas (GHG) 
                                                emissions by 2040. The 
                                                commitment spans the 
                                                company's global 
                                                operations, including 
                                                Pilgrim's Pride 
                                                Corporation as well as 
                                                its diverse value chain 
                                                of agricultural 
                                                producer partners, 
                                                suppliers, and 
                                                customers in their 
                                                efforts to reduce 
                                                emissions across the 
                                                value chain.
                                                
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                                                Sanderson Farms Sees 
                                                Continuous Improvement 
                                                in En
                                                  ergy Use Reduction

                                                  In 2008, a baseline 
                                                of gas, water, and 
                                                electricity usage was 
                                                established at 
                                                Sanderson Farms. The 
                                                Company continues to 
                                                measure against this 
                                                baseline to improve our 
                                                operations and to show 
                                                continuous improvements 
                                                across all locations. 
                                                Since 2008, Sanderson 
                                                Farms has seen a 20.4% 
                                                reduction in 
                                                electricity usage, 
                                                38.3% reduction in 
                                                natural gas usage, and 
                                                44.6% reduction in 
                                                water usage (all per 
                                                WOG lb).
Air Leadership Profiles
Tyson Foods
Leigh Ann Johnston, Director, Sustainable Food Strategy

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                          Tyson Foods' ambition is to be the most 
                        sustainable and transparent food company in the 
                        world and we're working hard every day to make 
                        the ambition a reality. Tyson recently 
                        announced a target to achieve net zero 
                        greenhouse gas (GHG) emissions across our 
                        global operations and supply chain by 2050. 
                        Tyson is excited about the work that will be 
                        done to achieve this target, but realize we 
                        cannot do this alone. Partnership and 
                        collaboration is critical and we're looking 
                        forward to working with our supply chain 
                        partners, NGO's, customers, academia, and other 
                        stakeholders in order to make the greatest 
                        impact.
Sanderson Farms
Stephanie Shoemaker, Manager, Environmental (Regulatory & Permitting)

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                          Sanderson Farms has been installing Pressure 
                        Swing Adsorption systems at every new facility 
                        since 2012, which reduces our dependence on 
                        purchased natural gas, and creates a renewable 
                        energy resource that can be used seamlessly 
                        used in the processing facility. The 
                        Environmental and Engineering Departments of 
                        Sanderson Farms perform daily reviews of 
                        utility usage (gas, water, electricity) of all 
                        facilities to ensure all are operating as 
                        efficiently as possible. Any corrections and 
                        adjustments are made immediately to improve 
                        efficiencies, without waiting for the monthly 
                        utility bill to arrive.
Land
    What goes on the land and in the land impacts everything that comes 
from the land--and how that land might be engaged for generations to 
come.
    No one is more aware of this than our farmers.

    As measured by our 2020 LCA Update, assessing land use helps us see 
how that use--and changes in that use--affect biodiversity. 
Biodiversity is protected and supported when less land is used for 
agricultural (and other human) purposes. The 2020 LCA Update showed 
that our chicken industry is doing a great job conserving land 
resources.
    Specifically, land use per kg of production (broilers plus culled 
hens) decreased by 13% between 2010 and 2020. Although cumulative land 
use by the industry increased by 5.4%, production increased by a full 
21% to serve the critical societal benefit of feeding people.
    Litter management is another important land-related measure for our 
industry. We learned from the 2020 LCA Update that poultry litter is 
not a strong driver of climate impacts. Only the emissions from litter 
that is classified as ``waste'' get assigned back to the animal 
husbandry stage--a tiny fraction, as shown below.*
---------------------------------------------------------------------------
    * The 2020 LCA update followed the U.N.-supported LEAP guidelines, 
which is a science-based methodology that defines three specific 
options for allocating and accounting for litter emissions: residual, 
co-product, and waste.
---------------------------------------------------------------------------
    Litter management is a key sustainability lever that is being 
impacted directly by our chicken breeders. In practical, on-the-ground 
terms, chicken litter, or poultry litter, is not a waste product. It 
is, in fact, an extremely valuable resource in agriculture. This mix of 
chicken manure, spilled feed, feathers, and material used for bedding 
in the houses is something our farmers value highly. Most often, our 
farmers collect and store litter to be used as an organic fertilizer 
for crops--on their farms or nearby farms. Plants feed the chickens and 
chickens fertilize the plants--it's a closed, sustainable nutrient 
loop.

    The nature of transactions regarding poultry litter disposal in the 
U.S., and their consequences on output classification according to 
U.N.-supported Livestock Environmental Assessment and Performance 
(LEAP) guidelines.

------------------------------------------------------------------------
                        Fraction of litter from
     Disposal     -----------------------------------   Classification
   transaction         Broilers          Breeders
------------------------------------------------------------------------
          Sold                50%            36.3%        Co-product
Hauled off for a             3.2%             4.2%             Waste
            fee
      Bartered              36.1%              39%          Residual
    Given away              10.7%            20.5%          Residual
------------------------------------------------------------------------

Our Farmers Speak: Land, Litter and Longevity

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                                                  ``Like many chicken 
                                                farmers, we've 
                                                installed concrete 
                                                heavy use area pads 
                                                (HUA pads) at the 
                                                entrance of each 
                                                chicken house. These 
                                                concrete pads allow for 
                                                easier collection of 
                                                chicken litter without 
                                                any elements getting 
                                                lost or spread into the 
                                                ground. This litter is 
                                                then composted and 
                                                recycled to be used as 
                                                a natural and organic 
                                                fertilizer.''
                                                         Rachel Rhodes.

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                                                  ``All poultry litter 
                                                from my chicken houses 
                                                is stored and 
                                                composted, and then 
                                                used as a fertilizer 
                                                for my row crops. 
                                                Litter from poultry 
                                                farming is a community 
                                                recycling effort. I 
                                                often buy litter from 
                                                other farmers to be 
                                                used as fertilizer on 
                                                my crops. To maximize 
                                                the effectiveness of 
                                                the litter as 
                                                fertilizer, I work with 
                                                outside counsel to 
                                                create a nutrient 
                                                management plan.''
                                                       Terri Wolf-King.

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                                                  ``We make sure that 
                                                100% of our chicken 
                                                litter supply is used 
                                                as all-natural slow-
                                                release plant food on 
                                                row crops. About half 
                                                of our litter is sold 
                                                to a broker who sells 
                                                the fertilizer to other 
                                                local crop growers. On 
                                                Morrison Farm, a soil 
                                                nutrient management 
                                                plan is created that 
                                                optimizes the spread of 
                                                the rest of the 
                                                fertilizer.''
                                                  Deena & Tim Morrison.

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                                                  ``100% of the poultry 
                                                litter on our farm is 
                                                recycled and reused. We 
                                                collect poultry litter 
                                                from the chicken houses 
                                                and move it to a 
                                                secured shed. We then 
                                                work with a broker to 
                                                find other farmers who 
                                                recycle the chicken 
                                                manure as an organic 
                                                fertilizer on row crops 
                                                and mushrooms. 
                                                Nutrients generated as 
                                                a byproduct are 
                                                accurately tracked and 
                                                reported to the state 
                                                in our annual nutrient 
                                                management report.''
                                                           Terry Baker.
Heather & Mike Lewis on Land Management

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                                                  In 2020, Heather and 
                                                Mike's exemplary 
                                                commitment to 
                                                environmental 
                                                stewardship was 
                                                recognized by the U.S. 
                                                Poultry and Egg 
                                                Association when the 
                                                couple was awarded the 
                                                Family Farm 
                                                Environmental 
                                                Excellence Award. The 
                                                prestigious award 
                                                reflects the industry's 
                                                commitment to serving 
                                                as responsible stewards 
                                                of land, water, and 
                                                feed management, and 
                                                maintaining and 
                                                advocating for the 
                                                humane treatment of our 
                                                most important asset: 
                                                our chickens. In their 
                                                own words, hear how 
                                                they approach their 
                                                commitment to the land 
                                                in particular reduce 
                                                time traveled, 
                                                emissions and costs. 
                                                This efficiency and 
                                                localization ties 
                                                directly to a reduction 
                                                of GHG emissions.

          We practice no-till farming on our land to help prevent soil 
        erosion as well as protect the nutrients that are in the soil. 
        Leaving a crop residue on the ground and using a cover crop 
        also helps to improve soil health. The years that we have corn 
        in our fields, we save some of the fodder and grind it up into 
        new bedding for the chickens. We also use recycled pallets for 
        bedding. We bring a shredder in that has a large magnet on it--
        in go the pallets, out comes nice bedding for our chickens.
                                                         Heather Lewis.
                                                  We have a Nutrient 
                                                Management Plan that is 
                                                written by a trained 
                                                engineer/agronomist. 
                                                The expert helps us 
                                                ensure that we are 
                                                doing what's best for 
                                                our soil and the land 
                                                around it. We windrow 
                                                our litter between 
                                                flocks letting it heat 
                                                up to kill any 
                                                pathogenic bacteria or 
                                                organisms and equalize 
                                                the moisture 
                                                throughout. Then we 
                                                reuse it, spreading it 
                                                back out for even 
                                                bedding.
                                                            Mike Lewis.
Land Leadership Profile

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                                                Deerfield Farms

                                                Jenny Rhodes, Farmer & 
                                                Owner

                                                  I am a 10th 
                                                generation farmer. I am 
                                                able to farm today 
                                                because the generations 
                                                before me took care of 
                                                the land the best way 
                                                they knew how. Today, I 
                                                am able to use the 
                                                latest research-based 
                                                information to make my 
                                                farm the most 
                                                sustainable it can be. 
                                                I have learned to lead 
                                                by setting an example 
                                                for other farmers to 
                                                follow.
                                                  Every day I am 
                                                thinking, ``What is the 
                                                next step in 
                                                sustainability?'' 
                                                Artificial and machine 
                                                intelligence--even 
                                                remote sensing--will 
                                                help us as farmers and 
                                                growers become even 
                                                more efficient. I am 
                                                also very interested in 
                                                blockchain technology 
                                                to help trace food from 
                                                farm to fork. All of 
                                                this potential makes 
                                                this exciting and 
                                                important work.
                                                  We recently installed 
                                                pollinator plots on the 
                                                farm. The plots provide 
                                                nectar or pollen for a 
                                                variety of pollinators 
                                                like bees, butterflies, 
                                                and birds. We have a 
                                                few deer, groundhogs, 
                                                and turkeys that like 
                                                to graze the plants. My 
                                                grandchildren like to 
                                                walk in the plot, too. 
                                                This has reduced my 
                                                carbon footprint on my 
                                                farm, with no grass 
                                                cutting in these areas, 
                                                the plot is a cover 
                                                crop scavenging 
                                                nutrients, keeping soil 
                                                in place and improving 
                                                soil heath.

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                                                Foster Farms

                                                From Waste to 
                                                Agricultural Value

                                                  Much of the waste 
                                                material from Foster 
                                                Farms poultry ranches 
                                                is rendered into 
                                                byproducts that can be 
                                                used in cattle and 
                                                aquaculture feed as 
                                                well as pet food.
                                                  Each year, Foster 
                                                Farms poultry 
                                                operations produce more 
                                                than 450,000 tons of 
                                                manure almost all of 
                                                which is converted into 
                                                compost, soil 
                                                amendments, 
                                                conventional
and organic fertilizers.
    Since 2016, Foster Farms has been working with local California 
farmers to grow organic feedstock utilizing our organic fertilizers for 
our organic poultry ranches thereby creating a renewable cycle of 
sustainability. More recently, Foster Farms has begun working with the 
Food to Fork project to develop feedstock from recovered commercial 
food waste. Even feathers are finding a new use.
    Owing to feather absorbency, Foster Farms is participating in a 
U.S. Air Force project aimed at developing flotation mats that could be 
used to clean up fuel spills over water.
Water
    From the farm to market, water is required throughout the various 
steps of broiler production--and water consumption (per kg of bird 
produced) is down an additional 13% this past decade.

    There are several ways that water is used throughout the production 
process:

  1.  To water crops (namely corn and soybeans) for chicken feed

  2.  For the chickens to drink on the farm

  3.  To cool the birds via evaporative cooling cells during warmer 
            temperatures

  4.  To clean and rinse chicken carcasses at the processing plant

  5.  To clean and sanitize equipment at the processing plant

    Water conservation is a pivotal part of running a successful 
chicken farm. Farmers today monitor and record water usage to ensure 
their flock is receiving the essential amount of clean water. Wells and 
waterlines are sanitized on a regular basis. Following are some of the 
innovative practices farmers implement to sustainably reduce, save and 
recycle water on their farms:

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          Computer Monitoring

          Growout houses are equipped with computer systems that 
        measure and monitor water usage on the farm. Farmers diligently 
        watch for any abnormal water use patterns to help identify any 
        problems such as water leaks, which saves water.

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          Nipple Dispenser Systems

          Most modern chicken farms use ``nipple'' watering systems as 
        another watersaving tool. Nipple watering systems are pin-
        activated water dispensers, much like a rabbit or hamster water 
        bottle with the ball bearing. When the birds press the pin, 
        water is released. This helps limit any water being spilled on 
        the poultry litter, or floor, and it only dispenses water when 
        the birds want to drink.

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          Cooling Pads

          Most grow-out houses are also equipped with cooling systems 
        that consist of cool cell pads, which evaporate water at one 
        end of the house and have large tunnel exhaust fans at the 
        other end. This not only keeps the chickens cool, but also 
        recycles water on the farm.

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                                                The Role of Technology 
                                                at Processing Plants to 
                                                Improve 
                                                  Air Quality and Water 
                                                Conservation

                                                   Enhanced air 
                                                handling systems and 
                                                ventilation to 
                                                    boost air quality.

                                                   Modernized 
                                                water reuse, filtration 
                                                and treatment sys-
                                                    tems to conserve 
                                                water and increase 
                                                water efficiency.

Water Usage and Feed Conversion
    Chicken feed is primarily a mix of corn and soybean meal that is 
formulated by certified animal nutritionists. This ensures that each 
bird gets the right nutrients at the right time. Nutritious feed 
results in chickens requiring less food to grow. Chicken feed never 
contains added hormones or steroids--it's the law.
    Growing corn and soybeans for the production of chicken feed is the 
largest source of water consumption in broiler production. The good 
news, however, is that broiler production requires a very small amount 
of feed.
    The feed conversion for broilers (amount of feed needed to produce 
1 kg of broiler live weight) is among the lowest in all of U.S. animal 
agriculture. And the feed conversion ratio has decreased significantly 
in the past decade.
    As previously noted in this report, the industry has achieved an 
8.7% improvement in feed conversion ratio for broiler production 
(enabling a 21% increase in production with only 10.7% increase in feed 
consumed).
    All of these factors result in chicken requiring less feed and 
water to grow to market weight, which results in chicken having less of 
an environmental impact.

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                                                  Chickens are the most 
                                                efficient converters of 
                                                feed into meat of all 
                                                land-based livestock 
                                                species due to several 
                                                key factors:

                                                   Traditional 
                                                breeding

                                                   Nutritious 
                                                feed tailored to each 
                                                stage of a chicken's 
                                                    life

                                                   Better 
                                                living conditions 
                                                through climate-
                                                controlled 
                                                    barns and new 
                                                technology, and 
                                                protection from ex-
                                                    treme temperatures, 
                                                predators and disease

                                                   Up-to-date 
                                                biosecurity practices

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Nutrient Management Plans and Water Quality
    Farmers are required, by U.S. Federal law, to follow what are 
called ``Nutrient Management Plans'' when fertilizing crops and 
managing animal manure. These plans specify how much fertilizer, 
manure, or other nutrient sources may be safely applied to crops to 
achieve yields and prevent excess nutrients from impacting waterways.
    Nutrient Management Plans are generally required for all 
agricultural land used to produce plants, food, feed, fiber, animals or 
other agricultural products, and serve as key mechanisms for protecting 
water quality.
    A specific solution that is widely used and helps protect water 
quality is the use of heavy use area concrete pads (HUA pads) around 
the entrances to grow-out houses. HUA pads help with water quality by 
keeping litter from being washed away. Litter that farmers do not 
immediately use is placed in a shed, which further ensures that the 
litter does not enter local water sources.
    In addition, farmers often minimize water runoff from their farms 
(and emissions) by planting vegetative buffers between chicken houses, 
which help to absorb any water, dust, or emissions on the farm.
Our Farmers Speak

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                                                  ``The latest tech 
                                                allows us to check for 
                                                leaks in our 
                                                waterlines, conserve 
                                                energy usage, and flag 
                                                potentially harmful 
                                                ammonia levels. These 
                                                efforts reduce waste, 
                                                runoff and emissions.''
                                                         Rachel Rhodes.

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                                                  ``We use waterline 
                                                technology to get 
                                                chickens the water they 
                                                need while limiting 
                                                waste or spillage. 
                                                These waterlines--
                                                nipple systems--allow 
                                                us to be certain the 
                                                only water going into a 
                                                grow house is going 
                                                into the bird. With 
                                                this technology, we can 
                                                easily check that there 
                                                are no leaks.''
                                                      Michelle Chesnik.

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                                                  ``I adopted 
                                                conservation practices 
                                                to reduce infiltration 
                                                of nutrients into 
                                                groundwater--like 
                                                construction of manure 
                                                storage buildings, use 
                                                of composters, and 
                                                plenty of HUAs.''
                                                      Georgie Cartanza.

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                                                  ``Evaporative cooling 
                                                pads capture dew and 
                                                rainwater, recycling an 
                                                important resource and 
                                                saving energy. Natural 
                                                or applied heat to the 
                                                cooling pad releases 
                                                this stored moisture 
                                                and cools the chicken 
                                                house on hot days, 
                                                lowering our reliance 
                                                on additional energy 
                                                sources and cutting 
                                                costs.''
                                                        Janice Vickers.

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                                                  ``Our farm has one 
                                                well for each of the 
                                                two chicken houses. By 
                                                monitoring and 
                                                recording the water 
                                                usage on the farm 
                                                daily, I can see how 
                                                much water is being 
                                                used, to ensure the 
                                                well-being of the 
                                                chickens without being 
                                                wasteful. Wells and 
                                                water lines are 
                                                inspected regularly, 
                                                and they are sanitized 
                                                at least twice a 
                                                week.''
                                                       Terri Wolf-King.

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                                                  ``In the Chesapeake 
                                                Bay area of Maryland, 
                                                newly established farms 
                                                in the state are 
                                                required to have a 
                                                storm water management 
                                                plan, so we make sure 
                                                that all water leaving 
                                                the farm, including 
                                                water running off the 
                                                top of the chicken 
                                                houses, percolates 
                                                through a pond.''
                                                          Jenny Rhodes.

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                                                  ``We installed a 
                                                number of bogs and 
                                                plant material to 
                                                filter water before it 
                                                leaves the farm. These 
                                                serve as environmental 
                                                buffers to guide, 
                                                utilize, and retain 
                                                rainwater. Grassy 
                                                swales help guide and 
                                                retain storm water and 
                                                plants maximize the 
                                                absorption of any 
                                                nutrients moved by 
                                                precipitation. We also 
                                                have a pond that isn't 
                                                just scenic--it 
                                                collects and holds much 
                                                of the rainwater that 
                                                falls here and is 
                                                regularly stocked with 
                                                a variety of fish to 
                                                keep it self-
                                                sustaining.''
                                                           Terry Baker.
Water Leadership Profiles
Harrison Poultry
David Bleth, President & CEO

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                          My favorite aspect of sustainability 
                        initiatives is they actually reduce costs; they 
                        do not increase them as many may believe.
                          We believe that clean potable water is our 
                        most precious resource and conserving it is a 
                        daily conscious effort. Whether at home or 
                        work, repairing any dripping issues saves so 
                        much water over time.
                          We have invested over $1 million in water 
                        conservation equipment that has reduced our 
                        company's water usage by 78 million gallons 
                        annually.

Sanderson Farms
Stephanie Shoemaker, Manager, Environmental (Regulatory & Permitting)

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                          The Environmental and Engineering Departments 
                        of Sanderson Farms collaborate to address water 
                        conservation and other resource usage. Not only 
                        is prioritizing sustainability critical to our 
                        success, it is simply the right thing to do. A 
                        prominent goal of ours over the next 5-10 years 
                        will be to identify new methods to renew, 
                        reuse, reduce and recycle waste from our 
                        wastewater treatment and processing facilities.

Water Leadership Snapshots
Tyson Foods
    Water In Context

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                                                  A specific example of 
                                                our current water 
                                                stewardship efforts is 
                                                the work we're doing to 
                                                establish contextual 
                                                water targets at 
                                                several of our plant 
                                                locations. Contextual 
                                                water targets consider 
                                                local environments and 
                                                conditions in order to 
                                                make meaningful change 
                                                in water usage. We've 
                                                currently implemented 
                                                targets at four 
                                                priority facilities and 
                                                will continue to 
                                                develop targets for 
                                                additional locations in 
                                                the future.

Simmons Foods
    Clean Water: A Point of Pride

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                          Sparkling, clean water is a point of pride at 
                        the Simmons Foods wastewater treatment facility 
                        in Southwest City, Missouri. In fact, because 
                        of the sustainability efforts of our team 
                        members, 2 million gallons of clean, safe water 
                        is released back into nature each day.
                          Simmons award-winning facility treats 
                        wastewater from adjacent poultry and ingredient 
                        processing plants. Since it's in a rural 
                        setting without municipal infrastructure, 
                        Simmons Foods built a system dedicated to 
                        treating the daily volume of process water 
                        flowing out of those production facilities.

    As an industry leader that uses about 4 gallons of water per 
chicken during processing, about twenty percent less than the industry 
average, it's significant that Simmons Foods is not only using less 
water, but also returning clean and safe water to Cave Springs Branch, 
a tributary of Honey Creek and Grand Lake in Southwest Missouri.
    Since 1982, Simmons team members treat water and liquid organic 
matter called ``process water'' in compliance with Federal and state 
environmental standards. Team members use physical, chemical and 
biological processes to remove solids, bacteria or any other organic 
matter before it is released about 350 yards from the processing 
facility.
    In addition to maintaining healthy aquatic ecosystems around 
Simmons' Southwest City operations, the facility has achieved more than 
2 decades without a notice of violation and has earned the U.S. Poultry 
Clean Water award twice since 2008.
    The water treatment facility is so effective, it's used to host 
classes in partnership with the Crowder College Environmental Science 
Program. In addition to students, community members, local leaders and 
elected officials are invited to tour the facility to see the process 
first-hand and hear about our commitment to sustaining the environment.
House of Raeford Farms
    Prioritizing Water Wherever We Are

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                                                  Bob Johnson, CEO and 
                                                owner, along with a 
                                                dedicated board of 
                                                directors, have made 
                                                the quality of our 
                                                wastewater systems a 
                                                priority across the 
                                                company.
                                                  Under the oversight 
                                                of environmental 
                                                manager Chris Murray, 
                                                new and upgraded 
                                                treatment systems have 
                                                resulted in dramatic 
                                                improvements in 
                                                wastewater quality.
                                                  Since 2014, the 
                                                company has invested 
                                                nearly $20 million in 
                                                upgrading our 
                                                wastewater treatment 
                                                facilities at all 
                                                locations across the 
                                                Southeast U.S.

    This has been a major commitment to safeguarding the environment, 
especially in water conservation and pollution control.

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         Rose Hill, North Carolina

      In 2014, we installed a new Diffused Air Flotation (DAF) system 
        at this processing plant in an effort to clean up our staging 
        lagoon and reduce the volume of Plant Available Nitrogen (PAN) 
        released on the spray fields. Within 3 months, the PAN level 
        decreased by over 50%, thereby reducing pollution 
        significantly. Rose Hill is continuing improvements to the 
        wastewater operation by expanding the amount of land used for 
        spraying treated water, thus reducing the concentration in any 
        one area.

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         Wallace, North Carolina

      We rebuilt this processing facility after a devastating fire 
        destroyed the plant in 2017. As a result, we decided to upgrade 
        the wastewater treatment operation to allow for future growth 
        and to install new equipment with the latest environmentally 
        friendly features. One of the most significant gains from the 
        improvements was the water reuse system that pushes back 80,000 
        gallons of treated water per day to the plant. This is a major 
        savings in annual water usage of over 20 million gallons.

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         Arcadia, Louisiana

      To control the toxicity of treated wastewater, we added an anoxic 
        basin, the first ever used in the company, to reduce nitrates 
        and achieve toxicity testing compliance. This innovation 
        inspired upgrades in our Greenville, West Columbia, and 
        Hemingway, South Carolina, locations as well as our Forest 
        Park, Georgia, operation.

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Broiler Health and Welfare
    From when baby chicks arrive at the farm, to the time when broiler 
chickens are taken to be processed, the health and welfare of the flock 
is a priority for chicken farmers and poultry companies.

    Without healthy, properly cared for broiler chickens, there would 
be no chicken industry. We recognize that we have an ethical obligation 
to make sure that the chickens on American farms are well-cared for and 
treated with respect.
    Broiler health and welfare begin at the farm level. Chicken farmers 
have long recognized the need to properly care for their animals.
    The industry continues to innovate and improve animal husbandry 
practices to help protect the birds' health, nutrition, care and 
comfort during their lives.
NCC's Animal Welfare Guidelines Certified by Leading Welfare Auditor 
        Organization
    To help ensure that broiler chickens receive optimum care during 
their lives, NCC developed the NCC Animal Welfare Guidelines and Audit 
Checklist, which have been widely adopted by chicken farmers and 
processors. The NCC Welfare Guidelines were developed based upon the 
opinions of the World Organization for Animal Health.
    According to the World Organization for Animal Health Terrestrial 
Animal Health Code, good welfare is when the animal is healthy, 
comfortable, well-nourished, safe, and not suffering from pain, fear, 
or distress. Animals must also be able to express behaviors that are 
important for their physical and mental state. Animals' physical needs 
are relatively easily discussed, described, and studied, but their 
mental states and needs can be more difficult to characterize. We 
recognize this understanding is an ongoing discussion and evolving 
science. With that in mind, the NCC Broiler Welfare Guidelines are 
updated every 2 years to include new science-based parameters.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
    The NCC Welfare Guidelines define the following essential elements
 of broiler chicken care:
 
     Raised by personnel trained to properly handle and care for
     the chickens
 
     Access to adequate amounts of nutritious feed and clean
     water
 
     Room to grow and express normal behavior
 
     Housing that provides protection from the environment,
     disease and predatory animals
 
     Professional veterinary care
------------------------------------------------------------------------

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                                 The NCC Welfare Guidelines were 
                                certified by the Professional Animal 
                                Auditor Certification Organization 
                                (PAACO), a leading authority on animal 
                                welfare auditing, which provides high 
                                quality training and certification 
                                credentials for auditors and audits.
                                 These guidelines cover every phase of 
                                a chicken's life and outline
science-based recommendations for proper treatment. The guidelines are 
updated every 2 years with assistance from an academic advisory panel 
consisting of poultry welfare experts and veterinarians as well as 
industry experts from across the U.S.
Chickens Today Are Healthier Than Ever Before
    Chicken companies, farmers and veterinarians take pride in the way 
they care for their chickens so much so that chickens today are as 
healthy as they've ever been.
    All current measurable data--livability, disease, condemnation, 
digestive and leg health--reflect that the national broiler flock is 
healthier than in years past.

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Leadership Profile
Perdue Farms
Mike Levengood, Vice President, Chief Animal Care, Officer & Farmer 
Relationship Advocate

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                         Perdue has been raising poultry for more than 
                        100 years, and I have been for 37 years. We 
                        have implemented many innovative technologies 
                        that help us address birds' needs, such as 
                        improved water systems, environmental controls 
                        in the housing, and advances in animal care 
                        that yield improved nutrition and health.
                         As part of Perdue's pioneering Commitments to 
                        Animal Care that we rolled out in 2016, we are 
                        continuously elevating the standards to which 
                        our poultry is raised and remaining open and 
                        transparent with our customers and consumers 
                        who are interested in knowing about how

their poultry's quality of life.
    My main daily focus is communication with our farmers and flock 
advisors. Our team makes a great effort to not only ensure compliance 
with our raising standards, but also to make sure that our farming 
partners understand the ``why'' behind our drive to constantly raise 
the bar. My goal is to foster our culture of dedication to animal 
husbandry. At the end of the day, it's good for the farmers, the birds, 
and the consumer.
    Our thinking extends beyond the ``needs'' of our birds to include 
their ``wants.'' We continuously look for ways to do more to keep our 
birds happy--things like increasing natural light, enrichments and 
outdoor access. We are also looking very hard at ways to refine our 
processes, including how we move birds from the farmer's house to the 
harvest plant, automate catching, and modernize stunning equipment.

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Leadership Profile
Merck Animal Health
Jessica Meisinger, Ph.D., Veterinary & Consumer Affairs

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                         I've always loved animals and sustainability, 
                        and this job has been the perfect melding of 
                        the two. One of my favorite aspects of my role 
                        is helping Merck be more sustainable and be a 
                        better company. I interact and help connect all 
                        of the pieces of the company. We are focused on 
                        diversity, equity and inclusion, animal 
                        welfare, veterinary well-being, anti-microbial 
                        resistance in addition to reducing our 
                        environmental impact.
                         The Merck Sustainability Team of Excellence is 
                        cross-functional. People across the company 
                        from the human pharmaceutical side to the ani-

mal health side are involved. We have a real opportunity to make a 
difference in our products and packaging that promotes greater animal 
health while achieving our sustainability goals. Packaging is a big 
concern of our customers. One initiative we are working on is looking 
at ways to reduce, eliminate or produce recyclable packaging for our 
animal health products.
    One of the biggest trends in animal health is incorporating new 
monitoring and identification technologies. These new technologies are 
bringing efficiencies to our customers' operations that are focused on 
animal health and prevention. Innovations like these help us continue 
to be the best and most sustainable company we can be.
    In my personal life, living sustainably can be challenging because 
I have a 2 year old and a 3 year old--but I want them to learn by 
example and see everyone's efforts matter. Our family has started 
composting, and we have a garden where we grow our own vegetables. We 
buy a lot of items like clothes second-hand and use them for as long as 
possible. I research and support brands that are socially responsible, 
including Merck products.
What's Good for the Chicken Is Good for the Farmer

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                                                 Put simply, a farmer's 
                                                livelihood depends on 
                                                the health of their 
                                                flock.

                                                 Farmers dedicate their 
                                                lives to the safety and 
                                                health of their 
                                                chickens and, with 
                                                that, Americans can 
                                                feel secure about the 
                                                meat they are buying 
                                                for themselves and 
                                                their families.
                                                 There is a tremendous 
                                                amount of science and 
                                                animal husbandry that 
                                                goes into breeding and 
                                                raising today's chick-
ens.
    Through traditional breeding, breeders ensure bird size and growth 
rate never comes at the expense of the birds' health or welfare.
Farmer Profile
Rachel Rhodes

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                                                 Our top priority as 
                                                farmers is 100% focused 
                                                on our birds' health 
                                                and well-being--
                                                watching our freshly-
                                                hatched chicks arrive, 
                                                caring for them, making 
                                                sure that they have 
                                                enough food and water, 
                                                and that they have the 
                                                perfect environment to 
                                                grow and thrive so we 
                                                can provide healthy, 
                                                affordable food for the 
                                                consumer.
                                                 The health of our 
                                                birds is just as 
                                                important as the health 
                                                of our children, 
                                                because our birds are 
                                                just like our children. 
                                                When our children 
                                                aren't feeling well, I 
                                                make a little

`treatment sheet,' detailing when they receive medication, how much 
they are given, etc. The same goes for our birds. When they aren't 
feeling well, we carefully monitor how much water they drink, if 
they're not as active, if they're given a probiotic, and how much 
they're given.
    These practices ensure that we're proactively meeting the well-
being of our birds by providing them with the care and commitment that 
we would give our own family.

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      How Do Chicken Farmers, or Contract Growers, Partner with Chicken 
            Compa-
              nies?
   
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                                                  A contract chicken 
                                                grower is an 
                                                independent farmer who 
                                                chooses to invest and 
                                                build chicken houses, 
                                                working under contract 
                                                with a chicken 
                                                production and 
                                                processing company to 
                                                raise chickens for 
                                                them.
                                                  More than 90% of all 
                                                chickens raised for 
                                                meat in the U.S. 
                                                (broiler chickens) are 
                                                raised by contract 
                                                farmers, who are 
                                                thriving in helping to 
                                                produce America's No. 
                                                One protein. In fact, 
                                                chicken companies have 
                                                waiting lists of 
                                                potential family farms 
                                                who want to partner 
                                                with them and enter 
                                                into the chicken 
                                                business.
                                                  Chicken companies 
                                                work closely with their 
                                                farmers to build 
                                                relationships based on 
                                                a shared goal of 
                                                success, and these 
                                                relationships have 
                                                helped family farms 
                                                succeed.
                                                  This system has 
                                                allowed us to insulate 
                                                farmers from the risk 
                                                of changing market 
                                                prices for chicken and 
                                                feed ingredients, such 
                                                as corn and soybean 
                                                meal, which represent 
                                                the vast majority of 
                                                the cost of growing a 
                                                chicken. In other
words, farmers are guaranteed a consistent price for their efforts, no 
matter what the markets are doing.
    Those who perform better receive bonuses. The system has worked 
well for decades and kept tens of thousands of families on farms who 
otherwise would have had to get out of agriculture altogether.

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      Farmers take on about 20% of the cost of raising a flock
Ongoing Commitment to Research and Improving Broiler Care
    For decades, chicken producers have evolved on-farm care, 
transport, handling, processing and genetics to improve welfare 
outcomes while meeting everchanging consumer preferences.
    Whether it's looking at space and housing, studying different 
nutrition programs, breeding for the healthiest birds, or working to 
eradicate diseases, the industry remains committed to continual 
improvement to do what is best for the bird, and ultimately, the 
consumer.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
The Role of Technology at Processing Plants to Enhance Animal Welfare
 
    Installed cameras and monitoring systems to observe the handling of
 the birds to optimize their welfare and offer auditing transparency.
------------------------------------------------------------------------

Tyson Foods
    Leading the Way In Animal Welfare Through the Tyson Foods Broiler 
Research Farm

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                                                  Tyson Foods' Broiler 
                                                Welfare Research Farm 
                                                is a testing ground for 
                                                research on key aspects 
                                                of broiler chicken 
                                                welfare, such as 
                                                lighting, enrichments 
                                                and stocking density. 
                                                The research is based 
                                                on an approach that 
                                                allows animal choice to 
                                                guide our actions. 
                                                Because chickens can't 
                                                tell us what types of 
                                                housing they prefer, we 
                                                create a variety of 
                                                options within one 
                                                environment and then 
                                                observe animals' 
                                                behavior. We use a 
                                                science-based approach 
                                                to evaluate the impact 
                                                of the different 
                                                choices on measurable 
                                                outcomes of animal 
                                                welfare and health.
                                                  We are conducting 
                                                ongoing research of the 
                                                optimum lighting 
                                                conditions for 
                                                chickens' welfare. 
                                                Findings suggest birds 
                                                are best able to 
                                                display their natural 
                                                behaviors in
housing with a gradient lighting from bright to subdued, so they can 
feed in the bright area and rest where there's less light.
    We're also conducting ongoing enrichments research to evaluate 
natural behaviors. Objects like ramps, huts and boxes are placed in the 
house to provide a more interesting or ``enriching'' environment for 
the chickens. Initial results of the research have shown a strong 
preference toward the huts.
Employee Safety and Wellbeing
    The U.S. chicken industry puts safety above all else. We are always 
looking for ways to improve safety across the supply chain in order to 
keep our employees safe and supported.

    Our collective commitments and investments in safety have made a 
big difference over the years, especially in processing plants. Chicken 
processors continue to focus on the prevention of workplace injuries. 
By acknowledging the benefit of implementing ergonomics and medical 
intervention principles, while continually implementing new technology 
and automation in the workplace, processors have dramatically improved 
employee safety.
The Industry's Safety Record Speaks for Itself

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      The poultry processing sector has achieved an 86% decline in 
            Occupational Safety and Health Administration (OSHA) 
            recordable injuries and illnesses over the past 25 years, 
            and injuries and illnesses continue to decline, according 
            to the most recent report released by the U.S. Department 
            of Labor's Bureau of Labor Statistics (BLS).

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      The total recordable poultry processing illness and injury rate 
            for 2019 was 3.2 cases per 100 full-time workers (per 
            year), down from 3.5 in 2018. This was below the total 
            recordable illness and injury rate for the entire food 
            manufacturing sector, which was 4.0 cases per 100 full-time 
            workers per year.

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      In fact, injuries in poultry processing have fallen below the 
            levels of ``all manufacturing,'' not just food 
            manufacturing, for the first time since OSHA began 
            recording rates.

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Leadership Profiles
Pilgrim's
Lisa Burdick, Head of HR, Safety and Operational Excellence

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                                                  Lisa Burdick says 
                                                that diversity is one 
                                                of the company's 
                                                greatest strengths: Our 
                                                life experiences are as 
                                                unique as we are, but 
                                                we all have one thing 
                                                in common: we've found 
                                                opportunity here. A 
                                                perfect example of this 
                                                is Jordan Shaw,\2\ a 
                                                production supervisor 
                                                at our Nacogdoches, 
                                                Texas, facility.
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    \2\ https://jbsstories.jbssa.com/2021/04/11/jordan-shaw/.
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                                                  In 2016, Shaw found 
                                                himself homeless and 
                                                sleeping in a park. He 
                                                started on the cone 
                                                lines at Pilgrim's 
                                                cutting shoulders, but 
                                                he wanted to show the 
                                                team that he was a hard 
                                                worker, a team player 
                                                and he could motivate 
                                                the people around him. 
                                                Jordan's determination 
                                                led him to earn

Employee of the Month, and shortly after, he became a lead person on 
the production floor.
    Jordan says working at Pilgrim's taught him discipline and 
transformed him into a role model for his family. Our team members, 
like Jordan, are what I love about my job: helping open doors of 
opportunity.
OK Foods, a Bachoco Company
Bryan Burns, General Counsel and Vice President, Environmental Health 
and Safety

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                                                  In late 2018, I was 
                                                asked to lead our Risk 
                                                and EHS Department. Our 
                                                EHS, Operations, and 
                                                Human Resources Teams 
                                                collaborated and 
                                                engaged in coordinated 
                                                efforts to promote a 
                                                safety culture within 
                                                our company and to 
                                                reduce our injury 
                                                rates. In a 2\1/2\ year 
                                                period, we have 
                                                achieved more than a 
                                                50% reduction in our 
                                                OSHA recordable 
                                                injuries, and our OSHA 
                                                and DART rates are now 
                                                better than industry 
                                                averages. We did this 
                                                through a boots-on-the-
                                                ground approach that 
                                                included eliminating 
                                                hazards, improving 
                                                training, and 
                                                encouraging employees 
                                                to report any hazards 
                                                or concerns. Most 
                                                recently, we began 
                                                regular

wall-to-wall inspections by the CEO and other members of the Executive 
Team, who walk through the facilities alongside our hourly team members 
to identify potential hazards and listen to their concerns.
    For us, sustainability starts with protecting our own people and 
making sure they have a safe and healthy workplace. We believe nothing 
we do at work is more important than taking care of each other.

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                The Role of Technology at Poultry Processing Plants to 
                Enhance Employee 
                  Safety

                   Computerized rehang, portioning, and debone 
                machines to decrease re-
                    petitive motion issues and protect workforce safety
Harrison Poultry
    Researching Innovative Tech Solutions to Improve Employee Safety

    At Harrison Poultry, we are going all-in on several artificial 
intelligence robotic projects. We have a team of engineers and industry 
veterans at our company who work together to brainstorm possible 
project ideas, and then give them the freedom to pursue them. Also, we 
are heavily involved with state university engineering departments, 
partnering on various cutting-edge projects.
    We believe artificial intelligence machines that have the ability 
to teach themselves how to improve on their daily performance is the 
most exciting 5 year trend. Vision system technology that communicates 
directly with equipment is starting to impact our world in really 
positive ways. Plus, we are developing ``smart'' machines that will be 
able to do the strenuous, heavy lifting, which will take the burden off 
our workers and help to keep them safe.
Evonik
    Highlighting the Sustainability Benefits of Bulk PAA in the Protein 
Industry

    Poultry processors use peracetic acid (PAA) solutions to maintain 
food safety compliance. Peracetic acid is the most widely used 
antimicrobial chemistry within the U.S. poultry industry. Over the past 
decade, expanded regulation and additional treated applications 
resulted in larger volume usage of PAA in processing plants. This 
increased volume, combined with a drive to improve safety and 
efficiency, led to the implementation of our bulk system, which 
provides a safe and sustainable solution to processors.
    Our first bulk system was installed at a customer site in 2012. 
Since then, we have transitioned much of our product volume to bulk and 
safely installed our systems at over 20 locations. Bulk delivery of PAA 
eliminates the need for one-way totes--and that's a big deal in terms 
of what's good for poultry customers, our business, and the 
environment.
    From an environmental footprint perspective, in addition to the 
tote materials, there are also significant transportation and water 
waste aspects to consider. Totes are shipped between manufacturing, 
customer, and recycling facilities, and these totes must be rinsed 
multiple times during their lifespan. These material, transportation, 
and water savings may seem meager, but consider that just one poultry 
bulk customer facility eliminates over 1,300 totes annually through 
this program.
Keeping Workers Safe and Healthy During the Pandemic

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                                                  As COVID-19 stay-at-
                                                home orders expanded 
                                                and increased demand 
                                                for fresh chicken 
                                                resulted in empty 
                                                grocery store shelves, 
                                                thousands of industry 
                                                workers answered the 
                                                call as federally 
                                                designated frontline 
                                                workers to help meet 
                                                the demand. Workers 
                                                showed up to help 
                                                maintain a steady 
                                                supply of food to keep 
                                                our fellow Americans 
                                                fed, and collectively 
                                                our industry worked 
                                                diligently to keep them 
                                                safe.
                                                  Chicken companies are 
                                                keeping workers safer 
                                                than ever because of 
                                                additional protective 
                                                measures adopted in 
                                                response to COVID-19. 
                                                Companies have been 
                                                following CDC and local 
                                                health department 
                                                guidelines. Many have 
                                                also consulted with 
                                                infectious disease 
                                                physicians to develop 
                                                site plans.

                                                  Their heightened 
                                                protective measures 
                                                include:

                                                   Increasing 
                                                cleaning and sanitation 
                                                frequencies and in-
                                                    tensities for 
                                                equipment and common 
                                                areas, such as 
                                                    the breakroom and 
                                                vending machines, at 
                                                processing 
                                                    facilities.

                                                   Increasing 
                                                frequency of 
                                                handwashing/sanitation 
                                                and 
                                                    expanding access to 
                                                hand sanitizing 
                                                stations.

                                                   Encouraging 
                                                employees to stay home 
                                                if they are not 
                                                    feeling well or 
                                                believe they may have 
                                                been exposed to 
                                                    the virus, while 
                                                still receiving pay.

   Heightened employee screening for any signs of illness, 
        including temperature checks before entering the plant.

   Practicing social distancing not only in common areas, such 
        as breakrooms and cafeterias, but also on production lines 
        where possible.

   Implementing travel restrictions and only allowing essential 
        personnel into the plant.

   Educating employees about the virus and ways to avoid 
        catching it, along with posting [] educational information in a 
        variety of languages.

   Training company nurses on CDC protocols for COVID-19.

   Providing personal protective equipment (PPE), including 
        masks and gloves, installing plastic dividers between 
        workstations and in breakrooms.
Supporting Employees' Overall Wellbeing
    We recognize that supporting our employees is a broad 
responsibility, which covers much more than safety programs, training, 
and other hallmark protections of safe workplaces.

    Chicken companies are finding additional ways to care for employees 
and their families--to show appreciation for hard work in helping to 
support an entire nation, and to support employees' health and 
wellness.

    Although policies vary, companies are doing things like offering 
paid sick leave, bonus/hazard pay and free chicken for employees, 
waiving the waiting period for short-term disability, and making 
personal time off policies more flexible.
Fieldale Farms
    Prioritizing Employee Health and Wellness

    Fieldale Farms is prioritizing health and wellness by establishing 
Fieldale Family Health Centers to provide employees and their families 
with low-cost medical services. Starting in 2004, Fieldale Farms 
established a family health center in Baldwin, Georgia. It was such an 
overwhelming success in meeting employees' needs that Fieldale opened a 
second family health center in Gainesville, Georgia, in 2012, and then 
a third one on-site at the Fieldale Murrayville, Georgia, processing 
plant in 2020.
    The Fieldale Family Health Centers provide a comfortable, inviting, 
and easy access point for employees and their families to seek care. 
The cost for medical treatment at these centers is only $15 per visit, 
and many are open for extended hours to provide medical services for 
employees working all shifts.
    Employees also get access to nutritional counseling, diabetes 
counseling, tobacco cessation products and services, and gym 
memberships. Every year over 500 employees take advantage of free 
mammogram services.
Perdue Farms
    Caring for Employees During COVID-19

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                                                  Take a look at how 
                                                Perdue Farms responded 
                                                to care for their 
                                                workers during the 
                                                pandemic:

                                                  We extended the hours 
                                                of many of our on-site 
                                                Wellness Centers, which 
                                                are staffed with local 
                                                healthcare providers 
                                                and are available to 
                                                our associates and 
                                                their families free of 
                                                charge.

                                                   We provided 
                                                support to associates 
                                                who were directly 
                                                    impacted--either 
                                                due to illness or CDC-
                                                mandated 
                                                    quarantine 
                                                requirements.

                                                   We 
                                                maintained an ongoing 
                                                dialogue with 
                                                associates 
                                                    and our communities 
                                                about the impact of 
                                                COVID-19 
                                                    on our business and 
                                                provided important 
                                                information to 
                                                    our associates in 
                                                multiple languages to 
                                                educate them 
                                                    on safety 
                                                requirements and CDC 
                                                best practices for 
                                                    when they were at 
                                                work, at home, and out 
                                                in the com-
                                                    munity.

                                                   We 
                                                temporarily waived the 
                                                5 day waiting period of 

                                                    short-term 
                                                disability for any 
                                                associate who contracts
    COVID-19, so that he or she could receive immediate benefits.

   All hourly associates received a temporary $1 per hour pay 
        increase and all Piece Rate associates, such as truck drivers, 
        a $40 per week pay increase.

   We fully funded our annual Profit-Sharing Bonus Program 
        payout to eligible associates 2 months early.

   Because the pandemic caused many associates to cancel their 
        vacation or personal time off (PTO), we temporarily removed the 
        PTO accrual maximum for all associates until July 6, 2020.

   We provided our production associates with food products to 
        take home for themselves and their families.

   Through our partnerships with local and state health 
        organizations, we worked persistently to fulfill our commitment 
        to provide all associates access to a vaccine.
Perdue Farms

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                                                  Mentoring Young 
                                                Farmers to Support 
                                                Their Development and 
                                                Long-term Success

                                                  As part of Perdue 
                                                Farms' desire to be the 
                                                Farmer's Choice, Perdue 
                                                Farms will launch a 
                                                young farmer 
                                                development group in 
                                                recognition of their 
                                                distinct needs.
                                                  In consultation with 
                                                young farmers, Perdue 
                                                Farms will explore 
                                                their priorities for 
                                                mentoring, information 
                                                and en-

gagement, and establish a program to support their development and 
long-term success.
Pilgrim's
    Investing In the Futures of Team Members, Their Families and 
Communities

    Throughout the global pandemic, Pilgrim's team members and 
communities have looked to Pilgrim's for reassurance during the crisis. 
Toward that end, Pilgrim's has committed to providing $20 million of 
meaningful investments in projects that have a lasting impact in our 
communities for generations to come. Pilgrim's is committed to 
supporting ongoing learning and professional development.
    In March 2021, Pilgrim's launched the Better Futures Program to 
provide meaningful investments in the futures of team members, their 
families and communities. The company is building the largest free 
college tuition program in rural America. The Better Futures Program 
provides team members and their child dependents the opportunity to 
pursue their higher education dreams for associate degrees and trade 
certificates at community and technical colleges tuition-free. ``We 
recognize and believe in the transformative power of higher education 
and the opportunities that come from education, coursework, and 
technical skill training.''
    As of July 2021, more than 1,250 team members and dependents have 
enrolled in community colleges across rural America as part of the 
program.
Tyson Foods
    Providing Frontline Team Members With Job Skills Training and 
Workforce Certifications

    At Tyson Foods, a key way we support our frontline team members is 
through Upward Academy--an innovative education program we created to 
help team members develop important life skills. In FY 2020, we 
increased the number of locations offering free and accessible classes 
in English as a Second Language (ESL), General Educational Development 
(GED), citizenship and financial and digital literacy to 59 locations. 
When the COVID-19 global pandemic disrupted in-person classes, Upward 
Academy pivoted to offer virtual classes so team members could continue 
their education.
    We also launched Upward Pathways, a new approach to create 
opportunities for upward mobility to team members who exit Upward 
Academy or those who are not fully utilizing their skills and 
experience and looking for a next step. These career pathways leading 
to advanced training and opportunities are a first for Tyson Foods. The 
addition of Upward Pathways gives all team members access to a robust 
and equitable career pathway, strengthening an internal pipeline of 
skilled team members in an increasingly complex production environment.
Food and Consumer Safety

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                                                  Americans eat more 
                                                chicken than any other 
                                                protein--approximately 
                                                160 million servings 
                                                every day. In addition 
                                                to being nutritious and 
                                                affordable, chicken 
                                                producers spend 
                                                considerable time and 
                                                resources to make sure 
                                                our products are as 
                                                safe as possible and 
                                                meeting stringent U.S. 
                                                Department of 
                                                Agriculture (USDA) 
                                                standards.

                                                Our Strong Food Safety 
                                                Record

                                                  The U.S. chicken 
                                                industry has an 
                                                excellent food safety

record. Our industry's strong safety record is based, in part, on 
strict Federal monitoring and inspection.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
    All chicken produced in the United States is closely monitored and
 inspected by the USDA's Food Safety and Inspection Service (FSIS)
------------------------------------------------------------------------

    The FSIS is the public health agency in the USDA that is 
responsible for inspection at chicken processing facilities.
    Federal inspectors are present at all times during operation in 
chicken processing plants. In a federally inspected slaughter 
operation, every bird is inspected, and inspectors have the authority 
to stop production for food safety violations. The U.S. meat and 
poultry inspection system complements industry efforts to ensure that 
the nation's commercial supply of meat, poultry, and egg products is 
safe, wholesome, and correctly labeled and packaged. Food safety 
standards are applied to all chicken products produced in the U.S.
Applying Effective Food Safety Controls

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                                                  To comply with food 
                                                safety standards and 
                                                protect consumers, 
                                                organizations across 
                                                the entire broiler 
                                                value chain implement 
                                                food safety management 
                                                controls. Standard 
                                                operating procedures 
                                                include quality 
                                                assurance and food 
                                                safety training, 
                                                sanitation protocols, 
                                                hazard controls, and 
                                                interventions that are 
                                                designed to eliminate 
                                                or reduce foodborne 
                                                pathogens.
                                                  While recalls are 
                                                rare, our industry has 
                                                robust trace-back and 
                                                trace-forward 
                                                capabilities to ensure 
                                                that products can be 
                                                identified, if needed, 
                                                and promptly removed 
                                                from
the marketplace. Our industry also performs a comprehensive root cause 
analysis to identify in the issue in the system that resulted in the 
recall and to prevent future incidents.
Improving Food Safety through Research and Investment in Innovative 
        Technologies
    Poultry companies have invested tens of millions of dollars in 
technology and other scientifically-validated measures to enhance the 
safety of chicken products. By supporting food safety research and 
applying the best science, research and technology available, the 
entire industry is better equipped to break the chain of foodborne 
illness at every stage of production.

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                          We're working every day to improve:

                           Expanded and more sensitive 
                        detection technologies for pathogens

                           Continued research and focus on on-
                        farm and in-plant interven-
                            tions to control pathogens

                           Expanded use of robotics, imaging 
                        systems, sensors, etc.

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Tyson Foods
    Ensuring Food Safety, While Conserving Water

    Water conservation is a leading sustainability challenge that 
Tyson's Food Safety and Quality Assurance (FSQA) team is working to 
address as part of our management of food safety and quality. USDA 
regulation prescribes specific conditions under which water can be 
reused for the same purpose (i.e., chilling or washing). That said, 
there is some need for technical expertise in developing the parameters 
for the reuse as we have food safety objectives that must be 
considered. This is where the FSQA team leads. We work collaboratively 
with the plant operations, engineering, environmental, and laboratory 
services to identify the best applications and methods for water reuse 
while addressing the regulatory requirements for demonstrated reduction 
in microbiological, physical, and chemical concerns.

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                                                Key Role Consumers Play 
                                                In Ensuring Food Safety

                                                  We all play an 
                                                important role in 
                                                ensuring food safety 
                                                for our families. Here 
                                                are some important 
                                                steps you can take at 
                                                home to significantly 
                                                reduce any risks of 
                                                foodborne illnesses:

                                                  Clean--Wash hands and 
                                                surfaces often.
                                                  Separate--Don't 
                                                cross-contaminate. Use 
                                                a separate cutting 
                                                board for raw chicken. 
                                                Do not rinse raw 
                                                poultry in the sink.
                                                  Cook--Cook chicken to 
                                                165 Fahrenheit.
                                                  Chill--Refrigerate 
                                                promptly.

    Instructions for safe handling and cooking are printed on every 
package of meat and poultry sold in the United States. For additional 
information on safe handling and cooking practices, visit The 
Partnership for Food Safety Education's The Fight BAC!' 
site.\3\
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    \3\ https://www.fightbac.org/.

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      Chicken Check In: Where You Can Learn More About the Chicken You 
            Serve 
              to Your Family

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                                                  When the National 
                                                Chicken Council first 
                                                introduced Chicken 
                                                Check In over 5 years 
                                                ago, it was one the 
                                                first resources in the 
                                                industry to offer a 
                                                consumer-friendly and 
                                                transparent look at 
                                                chicken production in 
                                                the U.S. Chicken Check 
                                                In remains a key 
                                                resource where 
                                                consumers can learn and 
                                                see how broiler 
                                                chickens are raised and 
                                                get answers to 
                                                frequently asked 
                                                questions about all 
                                                things chicken.
                                                  For additional 
                                                information on how 
                                                broiler chickens are 
                                                raised and produced, 
                                                and the benefits and 
                                                safety of eating 
                                                chicken, visit Chicken 
                                                Check In.\4\
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    \4\ https://www.chickencheck.in/.
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Community Support

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                                                  Our members may feed 
                                                the nation--and the 
                                                world--but they are 
                                                acutely aware of their 
                                                reliance on local 
                                                talent and passion in 
                                                the communities they 
                                                call home. Our broader 
                                                ambitions and hopes for 
                                                this industry are 
                                                meaningful and possible 
                                                only to the extent that 
                                                we are anchored on the 
                                                best interests of the 
                                                places and unique 
                                                cultures where we 
                                                create our livelihoods.
                                                  In this section you 
                                                will find some poignant 
                                                examples of the 
                                                commitments our members 
                                                make daily to assure we 
                                                collectively play a 
                                                visible, positive role 
                                                in our communities.

                                                Pandemic Giving and 
                                                Beyond

                                                  Throughout the 
                                                pandemic and 2020, 
                                                chicken companies
all around the country gave back--and continue to give back--to their 
local communities by making donations to food banks, soup kitchens, 
local health care facilities, police, and fire stations. Companies are 
providing free chicken for their employees so they don't have to look 
for it in the store. Every weekend, you can find a company selling 
chicken at reduced prices right out of trucks in the local community. 
In coordination with Meatingplace News, we have compiled a snapshot of 
NCC member community donations in 2020. This does not represent every 
commitment by every member, but provides a rough estimate of meals--and 
hope--delivered in a challenging year.

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      2,540,000+ pounds of protein

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      132,800,000+ million dollars

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      981,000+ in grants

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      22,000,000+ meals
Mountaire Farms

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                                                  Giving Back to Local 
                                                Communities

                                                  During COVID, 
                                                Mountaire Farms was 
                                                dedicated to helping 
                                                feed the communities 
                                                where we do business. 
                                                When food was 
                                                disappearing from store 
                                                shelves as people began 
                                                panic buying, we 
                                                stepped up to help--and 
                                                we were determined to 
                                                make sure that our 
                                                local communitywas fed 
                                                first.
                                                  We partnered with one 
                                                of our customers, 
                                                Hocker's Super Store, 
                                                and brought a truckload 
                                                of chicken to the 
                                                parking lot to sell 
                                                directly from the back 
                                                of the truck so 
                                                customers didn't even 
                                                have to leave their 
                                                vehicles. It proved so 
                                                popular our company 
                                                began partnering with 
                                                local fire departments 
                                                and churches who kept a 
                                                portion of the proceeds 
                                                as a fundraiser. We 
                                                held dozens of 
                                                truckload sales events 
                                                across multiple states 
                                                on the East Coast. 
                                                Additionally, we 
                                                donated almost a 
                                                million pounds of 
                                                chicken to first 
                                                responders, health care 
                                                workers, and those in 
                                                the community who were 
                                                laid off during the 
                                                pandemic.
                                                  Our Mountaire Cares 
                                                program works with 
                                                numerous nonprofits and 
                                                community groups to 
                                                benefit the community. 
                                                Our quarterly service 
                                                projects involve making 
                                                a big impact through 
                                                volunteer efforts with 
                                                groups like the Boys 
                                                and Girls Club and 
                                                Habitat for Humanity. 
                                                Our signature event--
                                                Thanksgiving for 
                                                Thousands--prepares a 
                                                complete meal in a box 
                                                and we've fed more than 
                                                a million people in

the 26 years we've been organizing this event. We've expanded to 
Christmas and Easter, too. Every month, our food pantry program 
delivers free chicken to more than 40 organizations that rely on our 
chicken to feed people in need.
Elanco Animal Health
    A Foundation That Feeds

    While Elanco has long committed to caring for the health and well-
being of its employees, customers, animals and the communities in which 
they operate, 2020 brought about heightened challenges. In the U.S., 
the Elanco Foundation awarded grants to several food banks to purchase 
900,000 pounds of food that provided nearly 750,000 meals for hungry 
families. Additionally, a grant from the Foundation to the European 
Food Bank Federation helped address [heightened] EU food security needs 
by funding the installation of cold and frozen storage rooms at three 
food banks in the Czech Republic and one in Greece, and the purchase of 
two refrigerated delivery trucks, one in Estonia and one in Lithuania.
    Established in 2019 by Elanco Animal Health, the Elanco Foundation 
amplifies the company's philanthropic impact by improving the well-
being of people and animals around the world. The Foundation is 
committed to advancing sustainable growth by making strategic 
investments in programs focused on promoting food security and the 
human-animal bond.

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    Established in 2019 by Elanco Animal Health, The Elanco Foundation 
is a private, corporate foundation that amplifies Elanco's 
philanthropic impact by improving the well-being of people and animals 
around the world.

    The Foundation is committed to advancing sustainable growth in its 
focus areas of human-animal bond, food security and the environment.

    Its ability to pivot in 2020 with a strong focus on food security 
proves the Foundation's flexibility and resilience will be able to help 
others for years to come.
Perdue Farms
    Delivering Hope to Our Neighbors' Amid the Pandemic

    As a food company, we are uniquely positioned to help thousands of 
Americans experiencing food insecurity amid the pandemic through our 
``Delivering Hope To Our Neighbors''' initiative.
    Since 2000, Perdue Farms has partnered with Feeding 
America' and its network of food banks to help neighbors in 
our communities who are struggling with food insecurity. During our 
Fiscal Year 2020, we delivered more than 86 million pounds of protein 
to regional food banks serving our communities--the equivalent of 71 
million meals. Perdue Farms was one of the first meat companies to 
implement a formal program for ongoing donations of perishable protein 
products, creating a model for other companies to follow.
    Since March 2020, Perdue delivered more than 4 million pounds of 
protein to support food bank pandemic-relief efforts in our communities 
and beyond, and in support of frontline healthcare workers, first 
responders, and community-based hunger-relief programs.

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    Throughout the pandemic, Perdue Farms provided support to its 
neighbors in numerous ways.
    One of the co-founders at West Annapolis Pop Up Pantry, Diana Love, 
a recipient of 33,000 Perdue Farms protein meals in 2020 states 
perfectly the reason our food bank work is so important: ``Hungry 
bellies can't fight illness, foster children's growth or contribute to 
productive lives. This donation helps our families do all of these 
things.''
Wayne Farms
    One Nurse, Many Families, Amazing Impact

    Dobson is a small community in the foothills of the Blue Ridge 
Mountains and home to a Wayne Farms processing plant. When COVID-19 had 
a ripple effect, both professionally and personally for Wayne Farms 
team members, Candace Wilmoth became her own pebble in a pond to create 
rings of influence, positivity, and to meet the moment with creative 
thinking and action.
    As a nurse at the facility and accustomed to providing on-site 
medical care for any number of needs on a given day, Candace knew that 
unprecedented times called for unprecedented measures.

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          Caring doesn't start and stop at the front door. It's 
        something I've always been drawn to, and whether it's at the 
        plant or in our community, I can't help but extend a hand when 
        I see a need. I'm just one person but each person has the 
        ability to make a big difference if they want to.
                                  Candace Wilmoth, Nurse at Wayne Farms

    Internally, along with a group of team members who made-up a 
``COVID-19 Vaccine Task Force,'' Candace leveraged county relationships 
and collaborated to hold vaccination events, and oversaw the 
coordination of transportation and logistics to make getting vaccinated 
easier, for those who wanted it.

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                                                  Outside, in her 
                                                community, Candace saw 
                                                area families 
                                                struggling with new 
                                                distance learning 
                                                requirements. Many did 
                                                not have access to the 
                                                technology or supplies 
                                                they needed. In 
                                                response, Candace 
                                                organized fundraisers 
                                                and collection drives 
                                                for computers, 
                                                notebooks, pens, 
                                                earbuds, and other 
                                                school supplies needed 
                                                for online learning. As 
                                                a result of her 
                                                leadership, Wayne 
                                                Farms' Dobson facility 
                                                donated $10,000 to the 
                                                Surry County School 
                                                system. All her
efforts made a significant impact for her Dobson team members and area 
families.
    Candace Wilmoth is just one example among many who take to heart 
the company's philosophy of ``Amazing Starts with Me.''

    Just one idea, one person, one step forward can lead to bigger and 
better ideas for our companies and communities.

    Candace's leadership is a positive example of how the chicken 
industry improves the lives of many, each day.
Leadership Profiles
House of Raeford Farms
Dave Witter, Manager, Corporate Communications & Sustainability

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                                  I have always been passionate about 
                                outreach to those in our communities 
                                needing assistance.
                                  Through my work with our nonprofit 
                                organization House of Raeford Farms 
                                FLOCK, I have been able to contribute 
                                to the company's continuing efforts in 
                                food security and youth development 
                                especially.
                                  Driven by compassion for others, 
                                FLOCK walks alongside folks who are 
                                already doing great work in their 
                                communities and supports them in their 
                                mission. We believe companies in our 
                                industry

that do well should also do good.
Wayne Farms
Candace Wilmoth, Nurse

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                                  During a time when so many could have 
                                just given up, I witnessed quite the 
                                opposite.
                                  Through my personal experiences at 
                                Wayne Farms in Dobson, North Carolina, 
                                I have seen people really show up when 
                                they did not have to. For example, 
                                community chicken sales, fundraisers 
                                for school supplies, canned food 
                                drives, and just being present to 
                                ensure our world of poultry kept 
                                turning during a pandemic.
                                  Witnessing that unity and teamwork 
                                for the greater good is life-changing, 
                                honestly. It was an honor to be a part 
                                of it all. It made

us all stronger.
Pilgrim's
Brian Paulsen, Head of Environment

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                                                  Our facility 
                                                environmental teams 
                                                work to be active 
                                                stewards in the local 
                                                community environment 
                                                efforts and wildlife 
                                                management. In 2020, we 
                                                helped manage local 
                                                tree planting events 
                                                with 19 elementary 
                                                schools, planting more 
                                                than 500 trees. It was 
                                                great to see the 
                                                younger generation's 
                                                excitement about 
                                                environmental 
                                                stewardship.

Aviagen North America
Sara Reichelt, Director of Animal Welfare and Sustainability

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                                                  We regularly engage 
                                                in local environmental 
                                                outreach programs and 
                                                recently teamed up with 
                                                a local high school in 
                                                Elkmont, Alabama, for 
                                                an outdoor clean-up to 
                                                help the school prepare 
                                                to grow vegetables, 
                                                while giving students a 
                                                space to be proud of. 
                                                No sustainability 
                                                action is too small to 
                                                make a difference.

Zoetis
Jeff Sizelove, Senior Vice President, U.S. Poultry

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                          This year, Zoetis announced long-term 
                        sustainability goals as our Driven to Care 
                        initiative. While sustainability has always 
                        been a part of our business, Driven to Care 
                        guides how we integrate sustainability in all 
                        aspects of our strategic business planning and 
                        resource allocation. It focuses on three 
                        strategic areas:

                                1.  Communities (Care and 
                                Collaboration)

                                2.  Animals (Innovation in Animal 
                                Health)

                                3.  Planet (The Drive to Protect Our 
                                Planet)

    Under each of these areas, we will build upon our experiences in 
supporting communities when disasters strike; increase veterinary care 
for animals in emerging markets; provide innovative solutions that 
assist productive and sustainable farms; combat diseases that pose the 
biggest risks to animals and humans; and minimize our operations' 
impact on the planet, including rethinking our packaging to reduce its 
environmental footprint.
    By supporting and partnering with our customers, colleagues, 
communities and the people who care for animals, we achieve more by 
working together toward our common sustainability goals.
Food Security
    We recognize that food is a basic human need and fundamental right. 
Everybody needs, and deserves, reliable access to sufficient safe, 
affordable, and nutrient-dense food. This is food security. 
Unfortunately, food security is a serious challenge for many people, 
both in the U.S. and around the world.

    As chicken producers, we play an important role: supplying the 
world with safe and nutritious food. Over the past decade, we have 
expanded chicken production dramatically to meet growing demand. We now 
produce 21% more chicken by weight than we did 10 years ago.

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      Our chicken is not only feeding Americans, but people all over 
            the world. In 2020, Broiler exports totaled 7.4 billion 
            pounds.
Providing Americans and People Around the World with Affordable, 
        Nutritious Protein
    According to the 2020-2025 Dietary Guidelines for Americans, 
chicken is a lean protein food that can help people across all life 
stages.

   Provides vitamins and minerals involved in brain function

   Builds muscle

   Promotes heart health

   Strengthens bones

   Aids in weight loss
Continuing Our Efforts to Enhance Food Security
    Our industry is positioned to help enhance food security. CEO Jan 
Henriksen of global poultry breeding company, Aviagen, says it well:

          Our challenge [as a society] will be to feed the world's 
        expanding population with a reliable and quality source of 
        nutrition, while reducing the effects of production. One 
        promising source lies with poultry.

    We are continuously looking for ways to improve the world's food 
systems--through collaborations and support for our members--to help 
ensure that everyone has reliable access to the food they need and 
deserve.

          The pandemic shed a harsh light on the ongoing issue of food 
        insecurity. For many Americans, the pandemic forced thousands 
        of people to seek assistance with putting a meal on the table 
        for the first time. As a food company, Perdue Farms was 
        uniquely positioned to help.
Applying Biosecurity Measures to Safeguard Health
    One way that our industry seeks to enhance food security is by 
implementing what are called ``biosecurity measures.'' Biosecurity 
measures are things we do, as part of chicken production and care, to 
reduce the risk of introduction and spread of diseases. These 
activities and innovations go hand in hand with veterinary care to keep 
our birds healthy while also reducing the need for antibiotics.
Zoetis
Jeanette Ferran Astorga, Head of Sustainability and President of the 
Zoetis Foundation of HR, Safety and Operational Excellence

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                                  As Head of Sustainability at Zoetis 
                                and President of the Zoetis Foundation, 
                                I spearhead our commitments to 
                                communities, animals, and the planet, 
                                which we recently formalized through 
                                Driven to Care, our long-term 
                                sustainability initiative.
                                  We believe that healthier animals 
                                make a healthier world, and our 
                                sustainability aspirations build on our 
                                purpose to nurture the world and 
                                humankind by advancing care for 
                                animals.
                                  We recently announced a $35 million 
                                commitment through our newly-formed 
                                Zoetis Foundation, which will focus its 
                                grantmaking

on strategic priority areas to enable thriving professions and 
livelihoods for veterinarians and farmers.
    As the leading animal health company, Zoetis is uniquely positioned 
to drive a healthier, more sustainable future for animals, people, and 
the planet. For example, our African Livestock Productivity and Health 
Advancement (A.L.P.H.A.) initiative is helping us achieve one of our 
aspirations to grow access to veterinary care in emerging markets.
    Through innovative solutions, diagnostics and education, Zoetis is 
making an impact not only for smallholder farms and veterinarians, but 
for entire communities.
    In Africa, we've committed to treating 200 million chickens with 
positive implications on smallholder livelihoods, food security and the 
environment by 2025. In the 4 years since A.L.P.H.A.'s inception, we 
have administered 1.7 billion doses of vaccines and medicines, 
established ten serology labs, and reached hundreds of thousands of 
farmers, veterinarians and para-veterinarians through training 
programs.
    True leadership in sustainability requires innovation. One example 
is our collaboration with Colorado State University, where we have 
established the Zoetis Incubator Research Lab to explore the livestock 
immune system and target new immunotherapies--paving the way for new 
alternatives to antibiotics in food-producing animals, as a way to 
combat diseases that pose the biggest risks to animals and humans. The 
initial focus is biotherapeutics for cattle, which could yield broader 
implications for pigs and poultry.
    We're also committed to helping our customers achieve their 
sustainability goals with healthier, more productive chickens. As an 
example, in ovo vaccination with our Embrex' 
Inovoject' and Embrex' Inovoject' 
NXT' biodevices helps provide effective immunization results 
and supports better bird health and welfare, as well as increasing 
hatchery efficiency.

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                                                Teaching Others to 
                                                Produce Chickens

                                                  Knowledge of best 
                                                practices also supports 
                                                food security. With 
                                                decades of experience 
                                                and expertise, the U.S. 
                                                chicken industry is the 
                                                foremost expert in 
                                                chicken production
                                                  We know how to 
                                                produce chickens 
                                                sustainably and safely. 
                                                And, while we export 
                                                our U.S.-produced 
                                                chicken to people all 
                                                over the world, we also 
                                                go to other countries 
                                                to teach local farmers 
                                                to better care for 
                                                their own birds.

    By doing so, we empower these farmers to improve food security for 
themselves, their families and their communities.
Cobb Vantress
Leasea Butler, Director of Business Development
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                                  I've always had a passion for caring 
                                for animals, which came from a deep-
                                rooted culture in my family. Although 
                                my parents worked in plumbing, it was 
                                the family farm that had my heart. I 
                                didn't know then that bottle-feeding 
                                calves and butchering chickens on the 
                                farm would lead me to a life serving 
                                others.
                                  Farm life was not easy, but I loved 
                                it, and I would learn much later in 
                                life a word to describe my passion for 
                                agriculture. I didn't know after high 
                                school where I was heading, but I knew 
                                I sought knowledge of animals. So, 
                                straight off the farm to school I went 
                                to

study poultry science at the university. I learned so much through 
school, but my 20+ years at Cobb Vantress have given me the opportunity 
to fill my ``life book'' with not only knowledge about chickens, but 
knowledge of cultures, people, differences, and how agriculture and 
poultry intertwine to bring us all together.
    Recently, Cobb has allowed me the opportunity to take my book of 
knowledge to African communities to teach others about sustainable food 
production and agriculture, leading me back to my roots.
    Specifically, 2 years ago, I had the opportunity to volunteer in 
Mozambique. During a project focused on global sustainability and 
agriculture development in rural East Africa, I taught farmers how to 
meet the nutritional, health, and husbandry needs of chickens. This in 
turn allowed the farmers to care for the birds to provide their 
families with nutritious protein from locally grown chicken meat or 
eggs. Business skills were also taught to the farmers to encourage best 
management practices and economic practices.
    Farmers not only use the poultry to provide for their local 
families, but also sell the birds or eggs for a profit. When a chicken 
is properly cared for, they produce more eggs and meat, making them the 
most economic protein source for African small holder farmers and their 
families. I've learned from so many of the women and men that I've 
worked with in Africa. I've learned how much poultry has been a part of 
their culture as it is in our company culture.
    My most cherished memory of my volunteer effort in Africa was 
teaching a little girl named Agape and her family how to care for their 
chickens. Agape, full of life, was so excited to hold a baby chicken 
that would ultimately provide food security for her family. The image 
of her smile and little hands holding that day-old layer chicken and 
how I was able to partner with her family's future will never escape my 
memory.
    I was led to share my book of knowledge with communities in Africa 
to show them how to raise and care for chickens, to empower them to 
have a sustainable source of protein and to provide income for their 
families. Back home in North America, I continue to share that same 
book in my daily life to help people care for poultry and to provide 
for their families on commercial broiler and breeder farms. Agape, 
abounding love of a little girl to care for animals to care for her 
family. Agape, to give to others the precious gift of knowledge.
What's Next?
    We are proud of our industry's sustainability efforts,and proud to 
have shared this first U.S. broiler chickenindustry sustainability 
report with you.

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                                                  This is an important 
                                                step in our collective 
                                                journey as an industry. 
                                                Our efforts will 
                                                continue, as they must, 
                                                to support our planet 
                                                and society for the 
                                                decades to come.
                                                  Looking ahead, we are 
                                                focused on sustainable 
                                                development and the 
                                                critical role of food 
                                                systems that include 
                                                our chicken industry. 
                                                We recognize the 
                                                importance of 
                                                continuing progress on 
                                                the SDGs through the 
                                                work of our members and 
                                                through partnerships 
                                                with other 
                                                organizations to 
                                                leverage our collective 
                                                strengths.
                                                  We look forward to 
                                                the US-RSPE's release 
                                                of the first-ever 
                                                multi-stakeholder 
                                                reporting framework for 
                                                the full U.S. supply 
                                                chains for chicken, 
                                                turkey, and eggs. The 
                                                new framework will 
                                                become a valuable tool 
                                                to guide our members on 
                                                their sustainability 
                                                strategies and 
                                                reporting. We will 
                                                encourage members to 
                                                use the framework to 
                                                measure their 
                                                sustainability impacts 
                                                and make meaningful 
                                                disclosures--whether 
                                                they are beginning 
                                                their sustainability 
                                                journeys or already 
                                                have mature programs.
                                                  Opportunities 
                                                revealed by the 
                                                described Broiler 
                                                Production System Life 
                                                Cycle Assessment: 2020 
                                                Update also set the 
                                                groundwork for next 
                                                steps for the chicken 
                                                industry. Based on the 
                                                data, we know that all 
                                                five key sustainability 
                                                intensity metrics 
                                                improved significantly 
                                                in the past de-

cade. We also know that additional improvements are possible going 
forward.
    The research revealed that our continued areas of greatest impact 
and improvement will come from factors affecting feed consumption and 
feed conversion ratio. Therefore, further innovations in genetics, feed 
additives and supplements should be seen as part of our next 
sustainability frontier.

          The future of our planet, people and communities depends on 
        us doing our part, and we are committed.

    Also based on the 2020 LCA, we learned that external factors 
associated with increasing crop production, improving fuel efficiency, 
and increasing adoption of renewable energy sources should become an 
integral part of our extended purview.
    Finally, we are mindful of regional differences that affect the 
opportunities for achieving sustainability progress. Knowing that one-
size-does-not-fit-all regarding geography, we will consider regional 
differences when we advance new solutions. This is true for NCC as well 
as for our members.
    Individual NCC members might use learnings from the 2020 LCA as the 
starting point for their own footprint assessments, to help them 
identify organization-specific opportunities for continuous 
improvement, as will US-RSPE's sustainability framework.
    Our chicken industry will continue to innovate as responsible 
stewards to advance sustainability while feeding the world.
Exhibit 2: NCC Comments to Docket No. AMS-FTPP-21-0044 Transparency in 
       Poultry Grower Contracting and Tournaments (Aug. 23, 2022)
August 23, 2022

  Submitted electronically via regulations.gov

  Bruce Summers,
  Administrator,
  Agricultural Marketing Service,
  United States Department of Agriculture

  Docket Clerk,
  Agricultural Marketing Service,
  U.S. Department of Agriculture,
  Washington, DC

  Re: Docket No. AMS-FTPP-21-0044, Transparency in Poultry Grower 
            Contracting and Tournaments

    Dear Mr. Summers:

    The National Chicken Council (NCC) appreciates the opportunity to 
provide comments on the United States Department of Agriculture (USDA) 
Agricultural Marketing Service (AMS) proposed rule ``Transparency in 
Poultry Grower Contracting and Tournaments'' (Proposed Rule).\1\ NCC is 
the national, nonprofit trade association that represents vertically 
integrated companies that produce and process more than 95 percent of 
the chicken marketed in the United States. NCC members would be 
directly affected by the Proposed Rule.
---------------------------------------------------------------------------
    \1\ 87 Fed. Reg. 34980 (June 8, 2022), https://www.govinfo.gov/
content/pkg/FR-2022-06-08/pdf/2022-11997.pdf.
---------------------------------------------------------------------------
    As explained in more detail in these comments, NCC is deeply 
concerned that the Proposed Rule would have a devastating financial 
impact on the U.S. chicken industry by raising costs and administrative 
burdens, contributing to increased food prices for consumers, and 
ultimately destabilizing a successful compensation system. This would 
lead to negative ancillary impacts on other related sectors through 
less efficient use of inputs and resources used for producing poultry 
such as feed and energy. NCC opposes the Proposed Rule. We urge AMS to 
withdraw it and refrain from further steps that would undermine a 
successful compensation system. If AMS were to nonetheless proceed with 
this rulemaking, we have identified several issues for further 
consideration.
    These comments begin with an Executive Summary (Part I), followed 
by a brief description of the benefits of the poultry grower 
compensation system (Part II), fundamental concerns with the Proposed 
Rule (Parts III and IV), and comments on specific aspects of the 
Proposed Rule (Part V).
I. Executive Summary
    NCC opposes the Proposed Rule and urges AMS to withdraw it in its 
entirety. The current poultry grower compensation system has long 
worked well to fairly and appropriately reward high-performing growers 
and drive efficient use of resources. The proposal would undermine the 
efficiency and global competitiveness of the U.S. broiler industry by 
imposing needless costs and rigid mandates with no quantifiable benefit 
but with clear negative impacts. This will ultimately inject costs and 
inefficiencies into the supply chain at a time when inflation and 
access to affordable food are key concerns to the American public. 
Further, the proposal contradicts the clear intent of Congress, is well 
beyond AMS's mandate under the Packers and Stockyards Act (PSA), and is 
arbitrary and capricious under the Administrative Procedure Act (APA).
    If AMS moves forward with this rulemaking despite these concerns, 
NCC has identified several issues requiring further consideration, 
including the following:

   Assess the true cost of the Proposed Rule: AMS's cost 
        assessment overlooks numerous key costs industry would shoulder 
        to comply with the Proposed Rule and significantly 
        underestimates the actual costs of the proposal, including the 
        Proposed Rule's potential effects on inflation.

   Address all PSA amendments in a single rulemaking: AMS has 
        positioned the Proposed Rule as part of a broader set of 
        planned changes to AMS's PSA regulation. AMS should address all 
        amendments to PSA regulations in a single rulemaking and avoid 
        a piecemeal approach that imposes shifting requirements and 
        hidden costs over several years.

   Limit scope of disclosures: AMS should limit the scope of 
        the proposed required disclosures to only information that 
        would actually affect grower compensation expectations and omit 
        all information that is publicly available or unrelated to 
        compensation. Several of the proposed disclosures are unhelpful 
        and introduce unnecessary complexity into an already highly 
        regulated process.

   Omit the proposed governance framework and certification: 
        AMS should omit the proposed governance framework and 
        certification in its entirety as this proposal is an incredibly 
        costly measure that does not provide useful information and 
        does not address a real concern.

   Eliminate the required disclosure of forward-looking 
        projections: All forward-looking projections should be omitted 
        from a final rule, as they by definition cannot be accurate and 
        risk causing significant confusion.

   Eliminate the requirement that minimum annual placements and 
        minimum stocking densities be included in contracts: The 
        proposal's requirement that contracts specify minimum annual 
        placements and minimum stocking densities goes well beyond mere 
        disclosure, imposes terms on private contracts, and would 
        wrongfully impede the ability to adjust to market dynamics.

    In addition to these points, we have identified several other 
aspects of the Proposed Rule that are vague, unnecessary, unworkable, 
or would otherwise require clarification.
II. The Current Poultry Grower Contracting System Is a Well-Designed, 
        Efficient Structure That Benefits Growers, Dealers, and 
        Consumers
    NCC supports the current poultry grower compensation system because 
it rewards family farmers for their hard work efficiently raising high-
quality birds. The current system's fair, honest contracts provide a 
target pay that high-performing growers can supplement with the 
efficient use of resources necessary to produce poultry. This system 
promotes superior results that lower the cost of raising chickens for 
the benefit of growers, live poultry dealers (``dealers''), and 
consumers.
    The system also efficiently allocates economic risk to the parties 
best prepared to burden it--dealers supply growers with broiler 
chickens, feed, veterinary care, technical advice, and other resources, 
alleviating most of the economic risk from their contract growers as 
compared to independent growers. Meanwhile, contract growers provide 
high-quality, day-to-day care, land, and housing for their birds. This 
mutually beneficial partnership supports the economic viability and 
independence of family farms by averting risk and promoting stable and 
predictable income.
    Indeed, a March 2022 study conducted by Dr. Tom Elam (the ``Elam 
Study,'' attached as Appendix A) found widespread benefits and support 
for this model as mutually beneficial, successful, and profitable.\2\ 
USDA's own data shows that over the last decade, poultry growers on 
average earned more than the average farm income.\3\ Average grower 
payments per square foot and payments per pound have increased steadily 
over the past thirty years, and raising broilers generated more than 
$3.6 billion in payments to growers in 2020 (in 2012 dollars), income 
that sustains rural communities and gets reinvested back into American 
agriculture.\4\ Revealingly, the Elam Study shows that even with the 
onslaught of the COVID-19 pandemic, lockdowns, and unprecedented 
economic disruption, growers earned more in payments from dealers than 
in any prior year, reflecting the value of the current grower 
compensation model. Had growers owned their own birds, they would have 
faced devastating market conditions and met financial ruin. Instead, 
under the current system, they thrived.
---------------------------------------------------------------------------
    \2\ T. Elam, Live Chicken Production Trends, FarmEcon, LLC (Mar. 
2022), https://www.nationalchickencouncil.org/wp-content/uploads/2022/
03/Live-Chicken-Production-FARM
ECON-LLC-2022-revision-FINAL.pdf [hereinafter ``Elam Study''].
    \3\ Id. at 10 (citing USDA, Agricultural Resource Management 
Survey, https://my.data.ers.usda.gov/arms/tailored-reports).
    \4\ Id. at 7. Notably, this figure encompasses payments from 
integrators to growers. It does not encompass other payments such as 
COVID-19 relief payments.
---------------------------------------------------------------------------
    The American poultry industry is the most competitive in the world 
in significant part because the poultry grower compensation system 
encourages innovation and investment in the best equipment and 
practices. NCC is proud to represent an industry that consistently and 
continuously produces affordable protein, even in times of soaring 
across-the-board inflation and economic distress that increase prices 
for consumers.
    The competitive nature of this industry and existing requirements 
incentivize and ensure poultry processors operate fairly and justly. 
Most growers are in a position to choose between partnering with two or 
more processors and can readily cut ties with a bad business partner. 
Over 50% of growers have been with their current dealer for 10 years or 
more, a statistic unchanged from 2015, with an additional 20% having 
been with their current dealer for over 5 years.\5\ Given that the 
majority of poultry growing contracts during the study were for 5 years 
or less, and \1/3\ were flock-to-flock arrangements, these statistics 
show that growers find their relationships with dealers beneficial and 
willingly continue doing business after their initial contracts end. 
Moreover, chicken processing plants are expensive and only provide 
sufficient return on investment if they operate at full capacity. 
Processors that gain a reputation as bad business partners, including 
by attempts to manipulate a grower's performance or otherwise drive 
away growers, would quickly see their plants under-supplied and their 
grower pool taken by competitors. Notably, AMS cites no evidence of 
actual unfair dealings to support this proposal.
---------------------------------------------------------------------------
    \5\ Id. at 3.
---------------------------------------------------------------------------
III. AMS's Proposal Exceeds Its Statutory Authority, Contradicts 
        Congressional Direction, and Is Arbitrary and Capricious
A. The Proposed Rule exceeds AMS's statutory authority under the PSA
    AMS grounds the Proposed Rule in Section 202(a) of the PSA, which 
makes it a violation for any live poultry dealer to ``[e]ngage in or 
use any unfair, unjustly discriminatory, or deceptive practice or 
device.'' \6\ However, AMS fundamentally fails to identify how plainly 
written poultry growing arrangements are unfair, unjustly 
discriminatory, or deceptive. Indeed, they are not.
---------------------------------------------------------------------------
    \6\ 7 U.S.C.  192(a). AMS also cites PSA Section 410(a)'s full-
payment provisions, but nowhere does AMS allege that dealers do not pay 
growers as called for under their contracts, nor would the Proposed 
Rule do anything to address actual payments; the stated aim of the 
Proposed Rule is to provide more information.
---------------------------------------------------------------------------
    Instead, AMS attempts to justify the Proposed Rule by arguing that 
poultry growing arrangements are ``incomplete contracts,'' by pointing 
to information asymmetries, and by revisiting well-worn allusions to 
vaguely described grievances made by unidentified growers. As explained 
below, we question the sufficiency of these statements to support the 
rulemaking record to begin with. Even if these statements were true, 
however, they do not establish that Section 202(a) of the PSA 
authorizes AMS to mandate onerous disclosures as part of the 
contracting process. First, to the extent that AMS is concerned that 
some conditions affecting compensation may not be encompassed in the 
contract, that is common in many entirely lawful business arrangements. 
A supply agreement might not have minimum volume requirements, an 
author's publisher agreement does not specify how many books will be 
sold, an accountant's engagement letter might not specify how many of 
hours of work the client will request, and a farmer renting a stall at 
a farmers['] market has no guaranteed buyers. None of those situations 
are unfair or deceptive practices, and indeed, the Federal Trade 
Commission has not prohibited them despite also having authority to 
address deceptive practices in other sectors. Moreover, unlike all of 
these examples, a dealer has an economic interest in keeping growers' 
farms in steady operation, as dealers also invest costs into the 
dealer-grower relationship and have every incentive to keep their 
growers in production.
    Second, all markets have information asymmetry; perfect information 
symmetry exists only in economics textbooks. The fact that dealers may 
possess information about their businesses not known to growers and 
that growers may possess information not known to dealers does not in 
any way mean that dealings between the parties are unfair or involve 
deceptive practices. Tellingly, most, or all, of AMS's proposed 
disclosures in no way affect how a grower's settlement will actually be 
calculated. Settlement calculations are defined through contracts, and 
growers are provided at settlement all the information necessary to 
determine how the payment was determined. Growers also have ample 
opportunity to understand the market before entering into an agreement, 
including by consulting lenders, financial advisors, agriculture 
extension offices, and their community members. Further, other remedies 
are available in the exceedingly unlikely event that a dealer would 
actually fraudulently induce a grower to sign a contract. AMS has not 
established that the mere existence of a potential information 
asymmetry requires the proposed disclosures to remedy unfair or 
deceptive practices. Section 202(a) requires that parties not engage in 
unfair or deceptive practices; it does not require that all parties 
have the exact same information.
    Finally, to support its position that widespread Section 202(a) 
violations would occur without the proposed disclosures, AMS provides 
only vague references to complaints by growers. AMS provides no details 
about these purported complaints, including what specifically they 
alleged happened, when they were lodged, whether they were 
substantiated, or even how many AMS has received. The long history of 
rulemaking on this topic has been peppered with allusions to thinly 
described complaints, but never has AMS provided any real detail. Even 
more tellingly, no court has ruled that the current grower compensation 
system violates Section 202(a), nor has AMS taken enforcement action on 
this basis despite decades of use. In short, AMS has failed to 
establish that the Proposed Rule is necessary to prevent PSA Section 
202(a) violations.
B. The Proposed Rule Is Contrary to Congressional Purpose
    More than a decade of clear Congressional direction reinforces that 
AMS lacks authority under the PSA to conduct this rulemaking. USDA has 
a long history of overseeing the PSA through established regulations 
and within the guardrails established by extensive Federal appellate 
case law about the scope of PSA Section 202. The PSA has been law for 
more than 100 years, and Congress has amended it as needed over the 
years when it determined additional authorities or requirements were 
needed.
    Congress also addresses PSA issues periodically through farm bills 
and the appropriations process. Congress most recently addressed PSA 
issues through the 2008 Farm Bill and subsequent appropriations bills. 
In the 2008 Farm Bill, Congress directed USDA to identify the criteria 
that would be used to evaluate whether four different types of conduct 
violated the PSA.\7\ In 2008, the broiler industry was using more or 
less the same style of grower compensation system as is being used 
today. Notably, although Congress directed USDA to address several 
topics, the 2008 Farm Bill did not direct USDA to take any actions 
related to poultry grower compensation or the so-called tournament 
system. When USDA responded with a wide-ranging proposed rule that 
addressed poultry grower ranking systems, among other topics, in great 
detail, Congress used its appropriations powers to prevent USDA from 
finalizing and implementing the rulemaking for several years.\8\ When 
the appropriations restriction eventually lapsed, USDA never further 
pursued rulemaking to address poultry grower compensation.
---------------------------------------------------------------------------
    \7\ H.R. 6124, 110th Cong.  1106 (2008).
    \8\ Consolidated and Further Continuing Appropriations Act, 2015, 
H.R. 83, 113th Cong.  731 (2014); Consolidated Appropriations Act, 
2014, H.R. 3547, 113th Cong.  744 (2014); Consolidated and Further 
Continuing Appropriations Act, 2013, H.R. 933, 113th Cong.  742-43 
(2013); Consolidated and Further Continuing Appropriations Act, 2012, 
H.R. 2112, 112th Cong.  721 (2011).
---------------------------------------------------------------------------
    This history demonstrates exceedingly clear Congressional direction 
about the nature of topics appropriate for USDA rulemaking under the 
PSA. Through the 2008 Farm Bill, Congress provided USDA with clear 
direction to address topics that Congress determined needed additional 
regulations. Congress was undoubtedly well aware of the types of 
poultry grower compensation systems being used, as those systems had 
been in place for many years. Nonetheless, Congress specifically did 
not direct any action with respect to poultry growing arrangements. 
This directly reflects Congress's view that the prevailing regulatory 
framework for poultry growing arrangements be maintained. If that were 
not direction enough, when USDA attempted nonetheless to change the 
prevailing regulatory structure, Congress promptly stepped in and used 
its appropriations authority to halt further rulemaking on poultry 
grower compensation systems, maintaining that prohibition for years. 
Moreover, Congress did not intervene when USDA stopped pursuing and 
eventually withdrew the proposed rule on poultry grower compensation 
systems.
    Taken together, this sequence of events clearly shows how, over 
more than a decade, Congress expressed its consistent view that the 
then-existing approach toward poultry grower compensation systems was 
the desired one and that USDA was overstepping by trying to change the 
system. Despite the current poultry grower compensation system being in 
use for decades, no Federal court has held that the system violates 
Sections 202(a) of the PSA, further reinforcing that the current 
regulatory approach, not the proposed one, is the one intended by 
Congress.
    Given this clear direction from Congress, whether to take any steps 
to change the current poultry grower compensation system is a major 
question requiring Congressional direction. As such, AMS may not expand 
its regulatory framework to change or undermine the currently used 
system. As recently stated by the Supreme Court in West Virginia v. 
EPA, in certain cases of ``economic and political significance,'' an 
agency must demonstrate ``clear Congressional authorization'' to 
exercise its powers.\9\ As evidenced by the amount of public attention 
devoted to chicken industry contracting and attention from the highest 
levels of USDA and the White House, chicken grower contracting has 
taken on ``political significance.'' It is also of great economic 
significance, as it drives billions of dollars in revenue to growers 
and forms the foundation for the U.S. broiler industry, benefiting 
growers, processors, and consumers. Not only does AMS lack the 
necessary ``clear Congressional authorization'' to advance rulemaking 
into this topic, Congress has also already voiced its support for the 
current system and its objection to USDA efforts to further regulate 
the existing poultry grower compensation system.
---------------------------------------------------------------------------
    \9\ 142 S. Ct. 2587, 2613-14 (2022).
---------------------------------------------------------------------------
C. The Proposed Rule Is Based on a Flawed Administrative Record and 
        Thus Is Arbitrary and Capricious
    The Proposed Rule is based on a flawed administrative record that 
reflects a fundamental misunderstanding of poultry contracting 
supported only by unsubstantiated hearsay. This flawed administrative 
record renders the Proposed Rule arbitrary and capricious under the 
APA.\10\
---------------------------------------------------------------------------
    \10\ 5 U.S.C.  706(2)(A).
---------------------------------------------------------------------------
    The Proposed Rule is fundamentally unnecessary for the efficient 
operation of the chicken raising market. AMS justifies the Proposed 
Rule as being necessary to address the perceived ``gap between expected 
earnings and the ability to actually achieve those outcomes through 
reasonable efforts by the grower'' by ``increas[ing] transparency in 
all poultry growing contracting.'' \11\ In fact, the chicken grow out 
market has long operated efficiently without these government-mandated 
disclosures, and most of the proposed disclosures would not provide any 
meaningful information about what income a grower might anticipate from 
a contract that is not already provided due to private market dynamics.
---------------------------------------------------------------------------
    \11\ 87 Fed. Reg. at 34980.
---------------------------------------------------------------------------
    Broiler processors have long used various permutations of 
competitive grower compensation systems to drive efficiency in 
production. In many ways, this is no different than any arrangement 
between a business and a service provider, in which service providers 
compete with others to provide the highest quality services as 
efficiently as possible and buyers of those services compete with each 
other to secure the best providers at favorable prices. This process 
has resulted in a highly efficient market and is an important driver of 
the global cost-competitiveness of U.S. chicken meat. Chicken meat has 
never been more affordable in the U.S. on a real-dollar basis or when 
viewed against a typical household's overall buying power, even 
considering the immense inflationary pressures facing consumers and 
businesses from all directions. AMS fails to explain why these broadly 
recognized economic principles do not apply in the poultry growing 
market. In fact, AMS has previously conceded that the economic 
literature on the industry supports a finding of no anticompetitive 
market power effects, which one would expect to see before intervening 
in a market.\12\
---------------------------------------------------------------------------
    \12\ See Unfair Practices and Undue Preferences in Violation of the 
Packers and Stockyards Act, 81 Fed. Reg. 92711 (Dec. 20, 2016) (noting 
that in a review of thirty-three studies published since 1990 relevant 
for assessing the effect of concentration on commodity or food prices 
in agricultural sectors, a majority of the studies ``found no evidence 
of market power, or found that the efficiency gains from concentration 
were larger than the market power effects'').
---------------------------------------------------------------------------
    The chicken growing contracting process is highly efficient and is 
also mutually beneficial for both parties. If it were not, contracts 
would not be extended through mutual agreement, entrepreneurs would not 
continue to enter the poultry raising business, and growers would shift 
away from poultry production to other substitute agricultural land 
uses. Instead, contracts are regularly renewed (even flock-to-flock 
arrangements), farmers willingly invest in improving their farming 
operations, and a thousands-strong waiting list of farmers seeking to 
enter the chicken raising business or expand their farms to raise even 
more birds, willingly investing to improve farming operations.\13\ 
Although NCC understands AMS is aware of at least one study 
demonstrating growers' interest in renewing their agreements (the Elam 
Study discussed elsewhere in these comments), AMS fails to address this 
in its proposal.
---------------------------------------------------------------------------
    \13\ See Elam Study at 3, 4, 11, 12.
---------------------------------------------------------------------------
    Further, AMS's characterization of growers as being 
unsophisticated, financially uninformed neophytes who are unable to 
understand contracts and make informed business decisions does a great 
disservice to rural America. The history of PSA rulemaking over the 
past twelve years has been rife with vague suggestions and insinuations 
that growers are in some manner misled or mistreated during the 
contracting process. But at no point in numerous rulemakings over more 
than a decade has AMS actually identified specific instances that would 
constitute a PSA violation or even concretely demonstrated that the 
perceived harm is real and widespread at a level justifying costly and 
invasive regulations that will harm industry participants, including 
growers and consumers. Nor has AMS obtained court rulings that find the 
vaguely alluded-to conduct violates the PSA. Instead, AMS would base 
this rulemaking on conjecture and vague allusions to unsubstantiated 
complaints, many of which likely date back to a listening session more 
than a decade ago.
    In fact, chicken growers are savvy small business owners, many of 
whom have decades of farming experience and are part of multi-
generation farming families. They understand the business and enjoy 
average incomes that exceed that of the typical American farmer.\14\ At 
the same time, chicken growers know they do not have 9 to 5 jobs in 
air-conditioned offices. They choose to enter and stay in the business 
because they are committed to farming, and those who value hard work 
and innovation see their efforts rewarded. They understand how to read 
their contracts, project income under various scenarios, and maximize 
their income by raising birds as efficiently as possible.
---------------------------------------------------------------------------
    \14\ Id. at 10.
---------------------------------------------------------------------------
    Moreover, like most businesses in the country, many chicken farmers 
rely on loans to finance parts of their operations. This market 
attribute provides additional protection for farmers that displaces 
AMS's theoretical concerns. The banks that specialize in agricultural 
lending to chicken growers have an extremely sophisticated 
understanding of the chicken industry, and they are able to make 
informed decisions about a farmer's creditworthiness and likely income 
based on a farmer's experience with the industry and the contents of 
existing contracts. If a lender does not believe a particular contract 
would provide adequate income for a chicken grower to meet his or her 
loan obligations, the lender is unlikely to issue the loan. This aspect 
of the private market provides an incentive for the dealer to ensure 
that the chicken grower has the information necessary for the grower 
and lender to evaluate the contract, as the dealer has an interest in a 
grower being able to secure necessary financing on favorable terms. 
Importantly, this happens through efficient market dynamics and in the 
absence of costly and prescriptive regulations. And just as 
importantly, it works. For example, the Elam Study found that the 
deficiency percent and charge-off percent for poultry grower loans 
amount to merely \1/3\ of the average agricultural loan, based on Small 
Business Administration loan quality data.\15\ The data overwhelmingly 
show that growers and their lenders are able to effectively and 
accurately evaluate expected income from poultry growing arrangements 
without the burdensome and largely uninformative disclosures called for 
in the Proposed Rule. AMS entirely overlooks the role that lenders play 
in helping to structure the poultry raising market, despite the fact 
that agricultural loans are administered by a sister agency, yet again 
underscoring the arbitrary and capricious nature of this rulemaking and 
lack of an adequate administrative record.
---------------------------------------------------------------------------
    \15\ Id. at 11.
---------------------------------------------------------------------------
    Under current practices, growers are provided contracts that 
clearly set forth how their payments are determined. With this 
information, a grower can review the contract, assess his or her 
ability to perform as well as or better than his or her competitors, 
and make an informed decision as to whether to enter the chicken 
raising business. Other American small business owners make critical 
business decisions with much less information. Moreover, at settlement, 
dealers provide the information necessary for growers to understand 
their payment under the contract, and growers with concerns about 
payments can raise those concerns directly with the dealer or pursue 
numerous other avenues for relief.
    Importantly, none of the factors identified in the proposed 
disclosures meaningfully impact grower payments over the length of a 
typical growing arrangement. Dealers provide growers with inputs from a 
common supply in an essentially random manner (with the obvious 
exception of growers supplied with specific types of birds or specific 
feeds to meet various specifications, which would already be separately 
addressed). While inputs may naturally vary due to the practical 
reality that the industry involves live animals, such as slight 
variations in feed supply or in breeder flock age, any natural 
discrepancy would naturally dissipate over the life of a typical 
growing arrangement, and any such variation is statistically 
insignificant over time. Providing precise inputs while accounting for 
minor flock-by-flock variations would rigidly impose extremely 
complicated systems on dealers that would certainly increase costs on 
the sector and that would not result in greater overall grower 
compensation or more efficient results. In fact, a grower would be 
disappointed to see his or her payment adversely adjusted because of a 
minor variation in a dealer input, when in reality his or her excellent 
care and hard work was the actual reason the flock performed well.
    Fundamentally, the grower's skill and expertise in managing the 
birds and deploying the grower's resources drives grower payments under 
broiler production contracts. The proposed disclosures entirely fail to 
acknowledge this premise. In contrast, under the current system, a 
grower's skills and efficiency are reflected in settlement payments. 
The information covered in the proposed disclosures is ancillary at 
best and, in many cases, immaterial to grower payments. Requiring 
complicated disclosures as contemplated in the Proposed Rule will not 
improve a grower's ability to project income. AMS again glosses over 
the disconnect between the broad and burdensome disclosures and how 
settlement payments are actually determined under the parties' agreed-
upon terms. There must be a ``rational connection'' between a 
regulation and the issue it is trying to address, but the clear 
disconnect between the disclosures and how payments are actually 
determined means that standard is not met.\16\
---------------------------------------------------------------------------
    \16\ Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto Ins. Co., 
463 U.S. 29, 43 (1983).
---------------------------------------------------------------------------
    Further, the proposed governance and certification framework is 
entirely unnecessary, does not achieve the Proposed Rule's objectives, 
is well outside the scope of the basis for the rulemaking, and, as 
discussed further below, would impose exorbitant compliance costs on 
the chicken supply chain with no benefit. Even if the disclosures 
called for under the Proposed Rule helped growers better project their 
income under contracts, AMS has not identified any compelling reason to 
suggest the information provided would be inaccurate or would otherwise 
require the proposed complex auditing and oversight scheme seemingly 
inspired by public financial reporting for publicly listed companies. 
Companies have been required to maintain various documents showing 
compliance with the PSA for decades and have successfully met those 
requirements without cumbersome and costly auditing and certification 
functions. There is no evidence that such a function would improve the 
reliability of disclosed information. However, these functions would be 
needlessly costly to the detriment of growers, dealers, and consumers. 
Including this provision is likewise arbitrary and capricious.
    Moreover, proposed  201.100(f)(1)(ii) would apparently have the 
proposed governance framework apply not only to the proposed 
disclosures but also to all of PSA compliance. PSA compliance beyond 
disclosures falls well outside the scope of this rulemaking. If 
additional compliance is considered at all, it should be addressed in a 
separate rulemaking appropriately focused on those issues. Many aspects 
of PSA compliance are not conducive to auditing systems, and nothing 
indicates that such a system would materially improve PSA compliance. 
Finally, as written, the proposed governance framework would apparently 
apply only to live poultry dealers, which would create troubling 
inconsistencies in how companies marketing different species would have 
to demonstrate compliance with the PSA.
    AMS's rationale for the proposed governance framework suffers an 
even more egregious and alarming flaw in the record. As justification 
for the need for the burdensome governance framework, AMS points to 
``current civil and criminal actions'' against various individuals or 
companies alleging certain antitrust violations, citing to a press 
release indicating that the Department of Justice had brought charges 
against certain individuals.\17\ It is entirely inappropriate for an 
agency to point to ongoing criminal or civil litigation to justify 
rulemaking of any kind. The mere filing of a civil complaint or 
criminal charges in no way indicates the alleged events actually 
occurred or that the individuals or companies are liable for or guilty 
of the conduct. Defendants are presumed innocent unless proven guilty, 
and an agency should never use unproven charges as the basis of a 
rulemaking or use the rulemaking process to influence public view of a 
case. Otherwise, there would be nothing stopping the government from 
bringing charges or filing complaints solely to manufacture an 
administrative record. Underscoring this point, the Department of 
Justice has dropped charges against several of the defendants in the 
case that AMS references as justifying the governance framework. This 
stated rationale deeply reinforces the arbitrary and capricious nature 
of the rulemaking.
---------------------------------------------------------------------------
    \17\ See 87 Fed. Reg. at 34996.
---------------------------------------------------------------------------
    Lastly, it has come to NCC's attention that officials at USDA or 
the Department of Justice may have on its own accord contacted growers 
about submitting comments to this rulemaking, and that it is possible 
these communications may have had the intent or effect of dissuading 
growers from submitting comments not in support of the Proposed Rule. 
NCC and our members place great weight on all Americans' First 
Amendment rights to speak their opinions freely, as well as on the 
freedom of all stakeholders to freely share their views on proposed 
regulatory action (or to refrain from doing so), to do so anonymously 
if they so desire, and above all, to do so without coercion or 
influence by the regulatory agency conducting the rulemaking. To the 
extent USDA or the Department of Justice has contacted growers or any 
other stakeholders in a manner that presents even the possibility of 
influencing the nature of comments that may be received, such action 
would irreparably poison the administrative record, and AMS would need 
to withdraw the rulemaking in its entirety.
    For all these reasons, as well as the specific infirmities 
discussed further below with respect to specific proposed provisions, 
the proposal is arbitrary and capricious and should be withdrawn.
IV. AMS Has Significantly Underestimated the Costs of Complying with 
        This Regulation
    AMS has significantly underestimated the costs of the Proposed Rule 
and failed to consider other adverse consequences of these regulations, 
including the risk of increased frivolous litigation, industry-wide 
efficiency losses, costs to farmers and consumers, and the effects on 
inflation.
    AMS predicts the 10 year aggregate combined costs to dealers and 
poultry growers under the Proposed Rule to be $20,492,160. AMS 
estimates that $9,039,442 of these costs will be carried by dealers and 
that an even greater amount--$11,452,718--will fall on poultry growers. 
These costs alone would affect the bottom line of growers and dealers 
with no clear benefit. Moreover, these exorbitant costs will burden 
food supply chains across the country in a time when severe inflation 
has raised the cost of food to record levels. Further, we fail to see 
how AMS can credibly claim this rule benefits growers when more of its 
financial burden is placed on the shoulders of those who it purports to 
protect and when AMS all but concedes the Proposed Rule will not 
actually increase overall grower pay.
    AMS has underestimated the hourly rates, number of people involved, 
and time required of executives, compliance officers, regulatory 
consultants, attorneys, and other services required to implement the 
Proposed Rule. For example, to implement the proposed governance 
framework, dealers would need to procure new data management systems 
and potentially custom software and substantially expand their 
compliance departments to collect, maintain, organize, and verify the 
information. Establishing compliance programs requires highly 
compensated skilled professionals, and smaller dealers may suffer the 
most due to their lack of scale to better absorb these costs. Because 
the Proposed Rule would require contracts be amended directly, dealers 
would incur extensive costs studying and evaluating necessary 
modifications, renegotiating thousands of contracts, and implementing 
each individual change. Similarly, growers would incur legal and 
advisory costs as they work to understand any changes and decide 
whether to accept them. The proposed disclosures would almost certainly 
generate frivolous litigation, and the proposed requirement to disclose 
prior and ongoing litigation could deter settlements, further 
increasing legal fees for growers and dealers as cases that would have 
otherwise settled drag out and cases that should never have been filed 
have to be litigated. AMS does not adequately consider any of these 
costs in the Proposed Rule.
    Moreover, AMS entirely fails to consider the negative effects of 
the proposed disclosures on growers, especially high-performing 
growers. AMS apparently contemplates that dealers might adjust payment 
based on various factors. AMS's presumption is entirely misplaced. If a 
dealer were to increase pay for lower-performing growers, that money 
would have to come from somewhere, and it might have to be offset by 
decreasing the income of high-performing growers who are accustomed to 
being rewarded for their hard work. This would lead to payment 
compression and fewer incentives and rewards for the best performers. 
It would also harm the highest-performing growers, especially those 
with excellent track records who have invested in their farming 
operations based on an understanding that their high performance will 
continually be rewarded.
    Removing incentives for high performance would trigger a vicious 
cycle of efficiency and productivity losses as growers who are no 
longer rewarded for high performance have fewer incentives to perform 
highly. This would compromise the overall global competitiveness and 
the resources of the U.S. chicken industry, shrinking the pool of 
revenue available to growers and driving up costs while also further 
squandering our already limited resources during a period of already 
historic inflation. Dismantling the current structure, which rewards 
higher performance, will disincentivize growers from making their 
operations more efficient and risks raising the cost of production, 
ultimately harming consumers, integrators, and growers alike. The 
American chicken industry is extremely competitive worldwide, due in 
large part to efficiencies and innovation driven by the current system. 
Under the proposal, AMS risks increasing costs, reducing efficiencies, 
and stifling innovation, which could make the American chicken industry 
less competitive against growing international competition to the 
detriment of American agriculture as a whole.
    Finally, AMS fails to consider the negative consequences of 
injecting needless and extensive production costs into the broiler 
supply chain in the midst of the highest inflationary period in forty 
years. Chicken has earned its place on the table through a relentless 
focus on efficiency at all steps of production, making it America's 
number one, and most affordable, animal protein. However, supply chain 
disruptions, loose fiscal and monetary policy, labor shortages, rising 
feed costs, lingering effects of the coronavirus pandemic, and 
geopolitical events have all placed immense cost pressures on the 
supply chain. AMS's reckless injection of additional costs into the 
supply chain will hurt everyone who touches chicken-growers, dealers, 
and consumers. As an affordable and nutritious food, chicken is an 
especially important protein source for food insecure individuals and 
those who participate in USDA's nutrition assistance programs. AMS has 
failed to consider the negative consequences to society of increased 
production costs and especially the consequences to the nation's most 
vulnerable individuals who may find themselves able to afford less 
chicken. AMS's cost estimates are likely low by orders of magnitude.
    Worse, AMS proposes to impose these costs without identifying any 
real quantifiable benefit. AMS can only point to a highly theoretical 
explanation that ``a risk averse producer will benefit economically 
from a reduction in revenue risk.'' \18\ In short, AMS concedes that 
growers will not actually earn more income overall under the proposal 
and alleges only that the costs of the rule may make it somewhat easier 
for growers to predict how much income they might earn. AMS tries to 
assign a theoretical dollar value to this benefit by hypothesizing the 
value of reduced uncertainty around revenue for individuals with 
theoretical amounts of risk aversion, conjuring a wide range of 
potential 1 year and 10 year discounted values based on possible 
variations in net revenue. These figures range from about $1.5 million 
at the low end of the 1 year range to $305 million at the high end of 
the discounted 10 year range. In other words, AMS believes that growers 
might benefit from the assumption that they would have a better idea of 
how much money a contract might bring and further attempts to assign an 
economic value to having that certainty. Critically, AMS does not 
propose that a grower would actually make more money, just that the 
grower might have a better idea of how much money he or she would make 
(in fact, the added costs would likely decrease overall grower pay in 
the aggregate). This attempt to quantify benefits strains credulity and 
belies the lack of any real benefit to justify the costs of this 
proposal. Put differently, under one scenario, AMS's analysis says it 
is worth $305 million to growers over 10 years to be able to better 
predict how much income they will make under their contracts (again, 
not to actually make more money under the contracts, just to know with 
greater certainty how much they will make). This would mean that 
rational growers collectively should be willing to pay up to $305 
million dollars right now to receive the income clarity the Proposed 
Rule would supposedly bring. Of course, no grower would actually make 
such an offer, reinforcing that AMS's attempt to quantify the benefits 
constitutes hand-waving at best.
---------------------------------------------------------------------------
    \18\ 87 Fed. Reg. at 35008.
---------------------------------------------------------------------------
    At bottom, AMS is proposing to inject tens of millions of dollars 
of compliance costs into the chicken supply chain with no actual 
benefits. At a minimum, AMS must conduct a properly comprehensive cost-
benefit analysis that better reflects the exorbitant costs of this 
Proposed Rule and compares those against any real, quantifiable 
benefits. AMS should withdraw the proposal entirely.
V. Comments on Proposed Regulations
    Although NCC strongly urges AMS to withdraw the Proposed Rule for 
the reasons explained above, if AMS moves forward with the rulemaking, 
we urge it to revise the proposal to reduce the costs imposed on 
stakeholders and better focus the rule on AMS's goal of providing 
useful, essential information to growers. In particular, we highlight 
the following considerations.
A. AMS Should Limit the Scope of the Proposed Regulations and Ensure 
        the Timing of These Disclosures Reflects Business Realities
1. Scope of Information Subject to Disclosure
    AMS states the goal of the Proposed Rule is to provide growers with 
information that USDA believes will help growers anticipate income 
under poultry grower contracts. To achieve its goal, AMS should focus 
only on those disclosures that might inform grower incomes. To this 
end, NCC recommends AMS omit from the required disclosures the 
following items that are irrelevant for determining how much income a 
grower may earn: dealer's bankruptcy history, litigation history, 
general rights and obligations under the PSA, payment information for 
different regions, and breeder flock information.
    The scope of these data would result in extremely lengthy, 
burdensome disclosures, especially for large dealers, that will not be 
helpful for growers and will only introduce confusion and complexity 
into contracting. Omitting the requirements listed above would reduce 
the costs of the rule and the administrative burden on dealers. 
Similarly, its omission would help reduce confusion over the 
disclosures provided and focus growers' attention on information that 
might be indicative of income.
    Likewise, AMS should not place on dealers the administrative burden 
of collecting publicly available information. For information like 
bankruptcy proceedings, anyone, including growers, can easily obtain 
that information at their own initiative. Similarly, growers, not 
dealers, are in the best position to understand a grower's variable 
costs. In addition, AMS should not include in its required disclosures 
any item that would be included in the poultry grower contract 
arrangement.
    Further, AMS must ensure that competitively sensitive information 
is protected. Some of the information that would be disclosed under the 
Proposed Rule may be competitively sensitive information. For example, 
grower payments may provide information about the company's costs and 
live side operations. Breeder information, such as strategic changes in 
breed or efforts to deal with chick health, might be proprietary, 
especially if a third-party breeder is used. Details about feed outages 
or other internal operations might reveal proprietary information that 
would adversely and unfairly negatively impact a company's competitive 
position. To the extent that any competitively sensitive or proprietary 
information is required to be released under a final rule, it is 
imperative that growers respect the proprietary nature of the 
information and not share it beyond their advisors, and that companies 
be allowed to take steps to ensure their information is properly 
protected.
    Finally, in limiting the Proposed Rule to only those factors that 
might conceivably advance AMS's stated goal, AMS should eliminate the 
proposed governance framework, which, as explained, is unnecessary and 
costly.
2. Scope of Regulated Parties
    We urge AMS to exclude from the scope of the Proposed Rule poultry 
grower compensation systems where there is a fixed base pay plus an 
incentive-based bonus, regardless of how the bonus is calculated. The 
regulations appear to contemplate only two contract types--flat payment 
or a tournament system. In today's business environment, there are many 
forms of contracting. NCC urges AMS to ensure its proposed regulations 
allow sufficient flexibility to accommodate different types of 
contracts and allow for innovative contracting. AMS's proposed 
regulations should maintain a key feature of the current grower 
compensation system: allowing performance incentives for global 
competitiveness of the industry and rewarding the top performers and 
those who invest in state-of-the-art practices and technologies. AMS 
can accommodate market innovation and other ways of contracting by 
revising the definition of ``poultry grower ranking system'' in 7 CFR  
201.2 to address grower base payments as follows:

          Poultry grower ranking system means a system where the 
        contract between the live poultry dealer and the poultry grower 
        provides for base payment to the poultry grower based upon a 
        grouping, ranking, or comparison of poultry growers delivering 
        poultry during a specified period.

    In addition, the contract scenarios identified in the Proposed Rule 
are overly simplified. For example, a poultry growing contract could 
have both new and older housing in the same complex under the same 
agreement. In addition, poultry growing contracts may cover multiple 
complexes. AMS should ensure the Proposed Rule reflects and 
accommodates differing contract structures.
    Further, AMS should not exempt small dealers from the requirements 
of this rule. In  201.100(e), the Proposed Rule would exempt small 
dealers slaughtering fewer than two million live pounds of poultry 
weekly from needing to provide a true written copy of the poultry 
growing arrangement and the Live Poultry Dealer Disclosure Document 
(``Disclosure Document'') to growers. If, as AMS asserts, the 
information in the Disclosure Document is necessary for growers to make 
informed decisions about investments in their business, no dealer 
should be exempt from these requirements. The exemption could result in 
growers leaving a dealer complying with the regulations for a small 
dealer not subject to the same requirements.
3. Timing of Disclosures
    The Proposed Rule would require dealers to furnish the Disclosure 
Document whenever a dealer seeks to renew, revise, or replace an 
existing growing contract or establish a new contract that does not 
contemplate modifications to existing housing specifications. Because 
contracts may be regularly amended to reflect changes in the business 
environment, NCC urges AMS to modify the Proposed Rule to require 
dealers to furnish the required information only at initial signing, 
and then on a periodic basis (e.g., every year). This scheduled 
disclosure of information would reduce administrative burdens on 
dealers, ensure uniformity of the disclosures provided, and alleviate 
confusion from growers who may receive different information at 
different times.
B. AMS Should Address All Amendments to PSA Regulations in One 
        Rulemaking. Otherwise, All Changes Required of Industry Should 
        Have a Single Implementation Date
    NCC is concerned that AMS is taking a piecemeal approach to 
promulgating regulations for industries regulated by the PSA and urges 
the agency to propose and implement all amendments in a single 
rulemaking process. This Proposed Rule and the advance notice of 
proposed rulemaking (87 Fed. Reg. 34814 (June 8, 2022)) issued on the 
same day as the Proposed Rule signal AMS intends these regulatory 
actions to be the first in a line of planned changes affecting the 
poultry industry. Imposing constant regulatory changes on poultry 
growers and dealers would spurn confusion, needless costs, uncertainty, 
and frustration with shifting requirements.
    In this already highly regulated sector operating on thin margins, 
and given the multitude of uncertainty from external market factors, 
businesses need certainty and predictability from regulators. Dealers 
can only effectively shield growers from risk as described in section I 
above if dealers themselves are afforded some level of certainty from 
regulators. Affected parties can only evaluate the impact of proposed 
changes and the actual costs of regulations if they are shown the 
entire regulatory structure the agency proposes to implement. A 
piecemeal approach obscures USDA's true intent, hides costs of constant 
transitions, and fuels distrust in government. NCC urges AMS to be 
transparent with industry about its plans.
    Similarly, NCC anticipates AMS plans to incorporate the changes to 
7 CFR  201.2 (terms defined) in future rulemakings. AMS should afford 
industry the opportunity to comment on the changes to these definitions 
with a full understanding of how they will apply to planned amendments.
    Even if AMS moves forward with its piecemeal approach to 
rulemaking, it should implement a uniform effective date for all 
changes to PSA regulations currently identified in the Unified Agenda, 
including ``Clarification of Scope of the Packers and Stockyards Act 
(AMS-FTPP-21-0046)'' (RIN 0581-AE04) and ``Unfair Practices in 
Violation of the Packers and Stockyards Act (AMS-FTPP-21-0045)'' (RIN 
0581-AE05). Because the Proposed Rule contemplates that firms develop 
and audit data in a certain way and that firms must disclose 5 years of 
data, the effective date for disclosures by definition must be 5 years 
after the implementation date for the auditing system. Any effective 
date before 5 years after the implementation of the auditing system 
would prevent consistent comparison and undermine the usefulness of any 
disclosures. This timeframe also allows industry sufficient opportunity 
to develop and implement the required data management systems and to 
educate growers on information provided. Any period less than 5 years 
is not sufficient because the industry would not be able to effectively 
adapt in light of the considerable differences in what and how 
information is maintained.
C. AMS Should Provide Ample Educational Resources for Regulated 
        Entities Regarding the Complex Changes in This Rule and Provide 
        Clarity on How the Proposed Regulations Would Be Enforced
    Based on our communications with members to date and reporting on 
the proposed regulations, we anticipate significant uncertainty from 
regulated entities as to how AMS intends to implement this rule. Given 
the breadth, complexity, and unique level of involvement in poultry 
growing contracts, NCC strongly urges AMS to provide additional clarity 
for industry through educational materials, information sessions, and 
template disclosures.
    In addition, AMS should work to ensure growers fully understand the 
information provided to them by dealers, including what it does and 
does not say. Instead of requiring contracting documents to include 
boilerplate disclaimers, AMS should undertake education initiatives to 
ensure contracts are fully understood. Finally, AMS should ensure its 
educational initiatives reach non-English-speaking growers. 
Specifically, AMS should ensure any educational events, guidance, 
templates, and other regulatory materials are available in other 
languages, particularly Spanish.
    As it develops implementing and educational materials, AMS should 
clarify how the agency plans to enforce its rule. In particular, NCC 
seeks clarity on the following enforcement-related components:

   How AMS will inspect the disclosure and auditing framework, 
        including how AMS will train staff to inspect financial 
        accounting systems;

   How frequently the Disclosure Document must be updated;

   How dealers can properly update the Disclosure Document to 
        correct errors if identified;

   How required disclosures should reflect operational changes 
        to placement schedules;

   If AMS moves forward with including forward-looking 
        projections in the rule, how the agency will evaluate the 
        accuracy of these projections. As discussed below, we reiterate 
        AMS should not penalize dealers if it forces them to estimate 
        projected income and costs that later turn out to be imperfect.
D. Comments on Proposed 7 CFR  201.100
1. Requirement To Include Minimum Placements and Stocking Densities in 
        Poultry Growing Contracts,  201.100(b)(5)
    The Proposed Rule would create a new paragraph at renumbered  
201.100(i)(2) requiring that contracts specify the minimum number of 
annual placements and the minimum stocking density for such placements. 
Imposing mandatory terms on private contracts is beyond the stated 
goals and scope of the rulemaking, and these changes should be removed 
from any final rule. According to AMS, this rulemaking is intended to 
address perceived information asymmetries through mandatory information 
disclosures to help growers better predict the income they might earn 
under poultry growing arrangements. But these proposed requirements are 
not mere disclosures. Rather, they would impose mandatory terms on 
private contracts, which is vastly different than requiring information 
disclosures.
    Poultry growing contracts do not necessarily include terms 
addressing guaranteed placement frequencies or durations. Accordingly, 
this provision would potentially require amending potentially every 
single grower contract. Doing so would impose substantial costs not 
accounted for in AMS's cost analysis, and it could cause substantial 
confusion if growers are all suddenly presented with new contracts to 
accommodate these terms. Moreover, the Proposed Rule does not account 
for the possibility that a grower may not wish to agree to amend a 
contract or, worse, could create a situation where a grower might 
refuse to enter into an agreement for the express goal of placing a 
dealer in a position of regulatory noncompliance to bolster a 
negotiating position. Moreover, including this information as a 
contract term is redundant to the information that would be included in 
the Disclosure Document, which would also include information about 
minimum annual placements and minimum stocking densities.
    Further, these proposed provisions fail to accommodate the breadth 
of potential contracts used in the industry. Many growers operate under 
flock-to-flock contracts, which some growers may prefer because they 
provide flexibility to choose whether to take a flock and the ability 
to seek other business partners. It is entirely unclear how a minimum 
annual placement rate and minimum stocking density would even be 
determined for a flock-to-flock contract. To the detriment of all 
involved, this provision risks eliminating flock-to-flock arrangements 
altogether. On the other end, some growers operate under long-term 
contracts of ten, fifteen, or even twenty years. These long-term 
contracts have their own benefits, including providing stability for 
growers and dealers alike and helping parties commit to a long-term 
business strategy. But it is impossible for anyone to predict placement 
frequencies or stocking densities ten or fifteen years out. For 
example, factors like increased growth rates, faster or slower growing 
breeds, target bird size, and cleaning practices, to name a few, could 
change significantly over a 10 year period, and all affect placement 
frequency and stocking density (for example, faster-growing birds may 
reduce grow-out time, allowing for more frequent placements, or larger 
target weights may reduce initial stocking density). By requiring that 
contracts guarantee minimum annual placements and minimum stocking 
densities for the length of the contract, AMS risks driving many 
desired contract types out of the market.
    Moreover, guaranteeing a minimum number of placements risks putting 
a party in breach of a contract and in violation of AMS regulations 
under situations that would not violate the parties' bargained-for 
agreement or constitute a PSA violation, leading to absurd results. For 
example, a contract signed in November that guarantees three flocks 
annually would likely see a grower receive at most one flock that year, 
which could be viewed as a breach of the contract and a violation of 
the Proposed Rule. A contract signed in late December might not see any 
flocks delivered that year. Similarly, any number of factors might 
result in a grower receiving fewer flocks than initially anticipated or 
even no flocks in a given year, such as natural disasters (floods, 
fires, hurricanes), public health emergencies and pandemics, avian 
disease outbreaks and APHIS quarantines, unexpected market shocks, a 
change in target bird size or breed, disruptions to key inputs, and 
planned facility repairs or renovations. Force majeure clauses or other 
contract provisions might address these situations, but it is unclear 
which provision AMS would view as prevailing, and in any case 
significant confusion could result. Likewise, a dealer should never be 
required to continuing providing birds to a grower who neglects or 
mistreats a flock, but a guaranteed placement provision might expose a 
dealer taking steps to protect bird welfare to breach of contract 
claims and allegations of PSA violations. Nor does this provision 
address how to handle a situation in which a grower does not want to 
receive a flock at a given time, perhaps due to medical issues, farm 
repairs, improvements, or labor shortages.
    Finally, AMS's concerns that contracts need to guarantee minimum 
placements and densities for growers to make sound financial decisions 
is misplaced. Chicken growers are experienced businesspeople who 
understand their business, and they have been able to make good 
decisions without this information for decades. Further, many farm 
operations are financed, typically through loans from sophisticated 
agricultural lenders. As demonstrated by decades of expanded poultry 
production,\19\ for years, banks have had little problem determining 
whether a grower's future income stream is sufficient to support a 
loan, even without guarantees. The market has thus demonstrated this is 
not an issue.
---------------------------------------------------------------------------
    \19\ United States Department of Agriculture Economic Research 
Service, Poultry Sector at a Glance, (June 13, 2022) https://
www.ers.usda.gov/topics/animal-products/poultry-eggs/sector-at-a-
glance/.
---------------------------------------------------------------------------
    In light of these considerations, AMS should not finalize proposed 
 201.100(i)(2). If AMS were to conclude this information must be 
provided, it would be more consistent with the rulemaking's rationale 
to include minimum annual placements and minimum stocking densities as 
tentative projections to be included in the Disclosure Document at 
proposed  201.100(b)(5) (discussed next). If AMS were to keep the 
proposed  201.100(i)(2) provisions in a final rule, it must revise the 
rule to accommodate the above concerns.
2. Disclosure of Minimum Placements and Stocking Density Disclosures in 
        Proposed  201.100(b)(5)
    All of the issues identified above in discussing proposed  
201.100(i)(2) also apply to the requirement in proposed  201.100(b)(5) 
that the Disclosure Document include the minimum annual placement 
frequency and minimum stocking density, and it is critical that AMS 
ensures that any final Disclosure Document requirement address those 
concerns as well. Moreover, given that AMS anticipates that growers 
will make financial decisions based on the Disclosure Document, 
information about placements and stocking density should be presented 
as tentative projections and expressly not as guarantees. The 
Disclosure Document should make clear that actual placements and 
densities may vary and will depend on any terms that might be specified 
in the contract as well as factors that might be outside any party's 
control and that growers should not rely on the projected placements.
3. Litigation Summary,  201.100(c)(1)
    The proposed requirement in  201.100(c)(1) to include [litigation] 
information should be omitted from any final rule because it is not 
relevant to a grower determining how much income the grower might 
anticipate receiving under a contract. If the purpose of the Proposed 
Rule is to provide growers with more information to determine how much 
income they might earn through a contract, it is hard to understand how 
information about litigation--much of which likely has nothing to do 
with grower contracts--is relevant to calculating what the contract 
says a grower might earn under different situations. In fact, the 
proposed litigation disclosure presents a number of issues:

   The proposed disclosure is overly inclusive of all 
        litigation. The proposed disclosure would appear to require a 
        dealer provide information about all litigation between the 
        dealer and growers, without regard for the nature or merits of 
        the case. The proposal would appear to require even the 
        disclosure of a case that resulted in sanctions against the 
        plaintiff for filing frivolous claims. Especially for larger 
        companies, this could result in a lengthy disclosure of 
        virtually no value that is difficult and costly to maintain and 
        distracts from more important elements of the agreement. There 
        is no useful reason to require all this be listed, especially 
        when companies have multiple subsidiaries, and many lawsuits 
        would have nothing to do with PSA issues.

   The disclosure risks skewing incentives in litigation. 
        Requiring that dealers list all litigation could create skewed 
        incentives not in the interest of any party to a litigation. 
        For example, if a dealer knows that settlements will be listed 
        on a disclosure, the dealer might be reluctant to settle cases 
        for fear of projecting a reputation as being quick to settle 
        and thus inviting more litigation, which would in turn make it 
        more difficult for growers and dealers to resolve disputes in 
        an efficient manner.

   Keeping this information current would be extremely 
        burdensome. Especially for larger companies that are more 
        likely to have multiple cases ongoing, it would be highly 
        burdensome for companies to have to maintain and update this 
        information on an ongoing basis, especially with cases 
        involving multiple parties and highly active dockets.

   Disclosure might violate court orders and settlement 
        agreements. There are a number of situations in which a dealer 
        might not be permitted to disclose information about a 
        litigation. For example, a key filing might have been made 
        under seal, or a settlement or court order might include a 
        confidentiality agreement preventing the parties from 
        disclosing any related information. As written, proposed  
        201.100(c)(1) would put a dealer in the position of having to 
        choose whether to violate AMS regulations by not disclosing a 
        case and certifying the disclosure or violating a court order 
        or settlement agreement.

   The 6 year period is inconsistent with the rest of the 
        Proposed Rule. It is not clear why AMS proposes that the 
        litigation disclosure cover 6 years while other aspects of the 
        proposal, such as the financial disclosures, cover shorter time 
        periods.

   It is unclear how to determine if a case fits into the 
        disclosure window. As proposed, a dealer must provide a summary 
        of litigation ``over the prior 6 years.'' It is unclear from 
        the proposal whether this would include cases filed in the past 
        6 years, cases that had an open docket at any point in the past 
        6 years, or something else.
4. Bankruptcy Information,  201.100(c)(2)
    As with the proposed litigation disclosure, it is unclear why 
disclosing a dealer's bankruptcy history would be relevant to 
determining how much income a grower might anticipate earning under a 
contract. A grower's potential income is based on the contract, not the 
dealer's bankruptcy history. Bankruptcy history is publicly available 
if a grower wants the information. For larger companies with multiple 
subsidiaries, there may be relatively complex histories, making this 
information both confusing and cumbersome to maintain. It is also not 
clear why AMS proposed a 6 year period for bankruptcy history when 
other provisions have shorter periods.
5. Statement Regarding Sale of Grower Facilities,  201.100(c)(3)
    Again, it is unclear how this provision relates to determining how 
much income a grower might anticipate earning under a contract, and 
including it in the Disclosure Document is unnecessary. If the parties 
wish to make any binding commitments about how facility sales will be 
handled and whether a contract may be transferred, the parties can 
address that in the contract itself.
6. Financial Disclosures,  201.100(d)
    The proposed financial disclosures in proposed  201.100(d) would 
require dealers to compile complex information, imposing significant 
costs on dealers but providing growers little of value because past 
economic information cannot be relied on to predict future economic 
conditions. Fundamentally, a grower's income is determined as specified 
in the contract and driven primarily by the grower's care and skill. If 
these disclosures are required, AMS should consider several points:

   Extraneous information not directly related to grower 
        payments should be omitted. As discussed earlier, financial 
        disclosures should require only the basic information necessary 
        for a grower to make a general assessment of potential income 
        under the agreement. Other information is extraneous for this 
        purpose and should be omitted given the burdens in assembling 
        and certifying this information. For example, the Disclosure 
        Document should not have to include contact information for a 
        state university extension service (proposed  201.100(d)(5)). 
        That information is readily available through other channels, 
        and AMS or state organizations can promote it through 
        educational outreach.

   Flexibility is critical. Dealers should be provided as much 
        flexibility as possible in how they present the required 
        information and should be expressly permitted in the regulation 
        to provide additional qualification or disclaimers as they 
        determine may be appropriate.

   Information should be limited to only the grower's local 
        complex. Different geographic areas face different economic 
        conditions that have little or no bearing on grower income in 
        different areas. For example, different regions will have 
        different costs of living, state and local tax structures, 
        state and local regulatory burdens, land costs, fuel costs, and 
        labor costs, to name but a few variations. Grower incomes may 
        vary across regions--even within the same company--to account 
        for these differences. Presenting income across a company or 
        for different complexes would be confusing because the income 
        might vary to reflect higher costs in some regions and would do 
        nothing to help a grower determine how much that grower might 
        earn in his or her local complex. The disclosure in proposed  
        201.100(d)(1) should be omitted from any final rule.

   The quintile-based reporting system is too complex. 
        Reporting normalized income by quintile would make the 
        information difficult to read and understand. If this is 
        included in a final rule, for simplicity, the disclosure should 
        present the average income for the complex and the upper and 
        lower bounds of the range.

   Five years of data is too long to be meaningful. Changes in 
        markets, product offerings, demand, global trade, and inflation 
        all make it difficult to draw meaningful conclusions from 5 
        year old data. If AMS mandates any such disclosure, a shorter 
        timeframe would be more appropriate.

   The disclosure needs to include a disclaimer that past 
        income does not guarantee any future payments. The amount of 
        detail called for in the proposed financial disclosures risks 
        confusing growers into making inappropriate assumptions about 
        future income. Just as with financial investments, mandatory 
        backward-looking generalized income information should be 
        accompanied by a disclaimer making clear that past performance 
        or income does not guarantee any future income, and that actual 
        income will be governed by the terms of the contract, the 
        parties' performance, and possibly factors beyond anyone's 
        control. Dealers should also be permitted to provide any 
        additional disclaimers in the Disclosure Document that they 
        determine may be appropriate.

   Forward-looking projections should not be required under any 
        circumstance. The supplemental forward-looking income 
        information contemplated in proposed  201.11(d)(3) is 
        inappropriate and should be omitted. First, it is entirely 
        unclear how a dealer might know that past grower annual 
        payments would or would not reflect projected grower payments, 
        as no one can predict future economic conditions. Second, it is 
        unclear what is meant when the proposal references past 
        payments not reflecting future payments ``for any reason.'' 
        Past grower payments will never exactly match future grower 
        payments, and there are any number of reasons that might cause 
        changes. For one, inflation means that there will inevitably be 
        changes year-to-year in payments, but that should be no reason 
        for needing to project future income. Third, it is impossible 
        for dealers or anyone else to predict what grower payments will 
        be in the future, and requiring dealers to make future 
        projections puts them in an impossible position while doing a 
        disservice to growers, who might mistakenly treat projections 
        as guarantees. As recent years have demonstrated, natural 
        disasters, geopolitical events, supply chain issues, and 
        inflation can all affect future economic conditions, and they 
        are impossible to predict. Fourth, it is unclear how far into 
        the future any projections would need to be made. Instead of 
        providing forward projections, all financial disclosures should 
        include a caveat that past information is not indicative of 
        future results and that results will depend on a variety of 
        factors, some outside any party's control, as well as the 
        grower's performance.

   If projections were required, they must be qualified and 
        exempt from any certifications. Projections are by definition 
        unlikely to be completely accurate, and in many cases, even 
        reasonable projections could be off by a significant amount. It 
        is impossible to certify the accuracy of a forward-looking 
        projection, which is one reason they are treated with such 
        caution in the financial world. If projections were to be 
        required, they must be exempt from any certifications, as no 
        officer can certify that a projection will be correct. 
        Moreover, projections would need to be accompanied by 
        substantial qualifiers explaining that the projections are 
        unlikely to reflect actual payments and should not be relied 
        on.

   The grouping scenarios in the Proposed Rule are too 
        simplistic. The Proposed Rule appears to contemplate that a 
        grower will raise the same type of bird in the same type of 
        housing. In reality, some growers may have a mix of older and 
        newer housing and may raise distinct types of birds. It is 
        unclear how a dealer would be expected to treat these and other 
        types of mixed situations in preparing the proposed financial 
        disclosures.

   AMS must clarify how to provide historical data for periods 
        before the effective date of any final rule. It is unclear how 
        AMS expects companies to obtain and handle financial data from 
        periods that predate the effective date of any final rule. 
        Companies may or may not currently possess the historical data 
        required to prepare the proposed disclosures. In the event a 
        company does possess such data, the company did not develop and 
        maintain it in anticipation of being used in financial 
        disclosures. AMS would need to explain how dealers can comply 
        with the financial disclosure and certification requirements if 
        historical data predating a final rule is required.

   Information about grower variable costs is inappropriate. 
        Dealers should not be required to collect, produce, or certify 
        the accuracy of information about grower variable costs. 
        Growers are responsible for understanding and controlling their 
        costs of production, in keeping with the efficient allocation 
        of responsibilities in poultry grower compensation frameworks. 
        Dealers do not systematically maintain all of this information, 
        and any information provided could be incomplete or inaccurate. 
        Proposed  201.100(d)(4) should be omitted. If the provision 
        were included in a final rule, it should be accompanied by 
        significant qualification, it should be specifically exempt 
        from any certification, and it should not have to be included 
        in any governance framework.
7. Governance and Certification,  201.100(f)
    The Proposed Rule includes a governance framework that AMS states 
is intended to ``ensure the accuracy and completeness of the Disclosure 
Document, and ensure the dealer's compliance with its obligations under 
the PSA and the regulations.'' AMS hopes the framework will ensure 
corporate attention and accountability. Such a governance framework is 
unnecessary for the proposal, needlessly costly and complex, and 
inappropriate for the type of information required in the proposed 
disclosures. In addition, AMS has grossly underestimated the costs 
associated with this portion of the Proposed Rule, especially because 
this requirement goes beyond the scope of this proposal and requires 
firms to evaluate their obligations under all PSA regulatory 
requirements. We urge AMS to omit this requirement from the final 
regulations for these reasons and those discussed earlier in these 
comments.
    If AMS were to include a governance framework in a final rule, it 
should simplify the requirements and provide additional clarity on what 
is required. AMS should particularly address the following:

   Clarify what ``reasonably designed'' means. AMS must clarify 
        the agency's expectations for a ``reasonably designed'' 
        governance framework, including providing an example of how 
        such a framework is designed with specifics about personnel 
        needs, review frequency, frequency of data updates, and nature 
        of executive review. The term ``reasonably designed'' should be 
        fully defined.

   Omit the requirement for certification by an executive 
        officer. This requirement is unnecessary and inappropriate for 
        a contract document. It is inappropriate to require an 
        individual corporate official to personally certify the 
        proposed disclosures. A grower could have recourse if deceptive 
        statements were made in an agreement regardless of whether 
        someone certifies the information, and including this 
        requirement appears to be motivated by an effort to inject 
        individual liability into what is in essence a private 
        commercial contracting issue, which is wholly inappropriate. 
        AMS should continue its longstanding approach of permitting 
        companies to determine how best to comply with any regulatory 
        requirements. If a certification is included, it should certify 
        that the disclosures are made pursuant to a system designed to 
        capture generally accurate information rather than to the 
        accuracy of any particular information.

   Exempt any forward-looking financial information required by 
        the regulation from any certification. This information is, by 
        definition, projections or estimates, the accuracy of which 
        cannot be guaranteed. Requiring a certification for forward 
        projections could lead growers to misunderstand the nature of 
        the projection and rely on it as guaranteed income.

   Clarify ``material fact.'' In relation to the certification, 
        AMS needs to explain and provide examples of what constitutes a 
        ``material fact'' such that its untruthfulness or omission 
        would render the Disclosure Document misleading.
8. Receipt by Growers,  201.100(g)
    Proposed  201.100(g) should be revised to require that a dealer 
maintain documentation that required disclosures were transmitted to a 
grower through a reliable means of communication, and the grower's 
signature should not be required as evidence of receipt by the grower 
within the required time period. The Proposed Rule appears to require 
that the dealer obtain the grower's signature as evidence that the 
disclosures were provided within the required timeframe. However, a 
dealer cannot control whether a grower signs the disclosures. For 
example, mail delays, illness, internet outages, a grower's delay in 
opening mail or email, vacation, natural disasters, or even a grower's 
refusal to sign could all prevent a dealer from obtaining the signature 
required under proposed  201.100(g)(2) despite timely delivery of the 
disclosures. AMS should revise any final rule to expressly allow 
dealers to show they used a reliable means of communication to deliver 
a disclosure in a timely manner, such as placing the disclosure in the 
mail, sending it by email, or delivering it by hand.
E. Comments on Proposed 7 CFR  201.214.
1. Placement Disclosures,  201.214(b)
    If the placement disclosures in proposed  201.214(b) are included 
in a final rule, AMS should consider several points:

   ``Health impairments'' requires clarification. It is unclear 
        what would constitute a health impairment of the flock or 
        breeder flock under proposed  201.214(b)(6). Health 
        impairments requiring disclosure should at the most be limited 
        to a medical diagnosis made in writing by a licensed 
        veterinarian that could reasonably affect the growth and 
        mortality of the broiler flock.

   Third-party breeder information should be considered. Some 
        companies might obtain birds or eggs from third-party breeder 
        operations, which might consider the identity of the source 
        farm to be proprietary information or subject to a 
        nondisclosure agreement. AMS should address how a dealer should 
        make the placement disclosures when required information is 
        unavailable to the dealer or when a dealer is prohibited by law 
        or contract from providing the information.

   Reinforce that adjustments are not required based on the 
        disclosed information. Proposed  201.214(b)(7) references the 
        disclosure of ``Adjustments, if any, that the dealer may make 
        to the calculation of the grower's pay based on the inputs in 
        (1) through (6) of this paragraph.'' We understand this to mean 
        that dealers are not required to make adjustments based on the 
        referenced information and that a payment system that does not 
        make adjustments based on this information would not be in 
        violation of the PSA. We urge AMS to reinforce this point in 
        any final rule.
2. Settlement Disclosures,  201.214(c)
    Proposed  201.214(c) requires disclosure of much of the same 
information as called for in  201.214(b), and the issues raised in the 
above discussion apply to proposed  201.214(c) as well. Moreover, 
dealers already provide the information used to calculate a grower's 
payment under their contracts. Providing the additional information 
called for in proposed  201.214(c) is unnecessary and would be 
confusing to the extent the information is not actually part of the 
contracted-for settlement calculation. If this disclosure were included 
in a final rule, AMS should address the following:

   Include proper context for the information. Because 
        disclosing at settlement information not actually used to 
        calculate payment could be confusing, dealers should be 
        permitted to include a statement providing context around the 
        information, including a statement that the disclosures address 
        only a limited number of factors and that the disclosed factors 
        are unlikely to fully or even substantially explain a grower's 
        relative performance.

   Clarify how to address multiple housing types. It is unclear 
        how a dealer should address in the comparison sheets situations 
        involving different housing types on the same farm. AMS should 
        clarify this and other situations that do not fit neatly into 
        the scenarios contemplated in the Proposed Rule.

   Clarify situations in which not all chicks are sexed. AMS 
        should provide clarity on how to address situations in which 
        the sex of birds may be known for some but not all of the 
        growers in the settlement pool.

   Clarify feed disruption. AMS should clarify exactly when a 
        feed disruption occurs, such as when the feed lines have run 
        completely empty. AMS should also address how to handle a 
        situation in which all participants in the settlement pool 
        experienced substantially the same feed interruption (for 
        example, in the case of a natural disaster that affected all 
        growers in the settlement pool).
          * * * * *
    NCC appreciates the opportunity to comment on the Proposed Rule. 
Please feel free to contact us with any questions. Thank you for your 
consideration.
            Respectfully submitted,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
Mike Brown,
President,
National Chicken Council.
                               appendix a
Live Chicken Production Trends [2022 Revision]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          [Chicks].

Dr. Thomas E. Elam, President FarmEcon LLC, [email protected]

March 2022

          Disclosures: This study was prepared for the National Chicken 
        Council. FarmEcon LLC was compensated for its preparation.
Introduction
    This study presents the results of a 2022 broiler industry survey 
designed to capture 2021 key live chicken production statistics. The 
survey was designed by FarmEcon LLC and data were collected from 
National Chicken Council (NCC) member companies. Conclusions drawn are 
those of FarmEcon LLC. Statistics collected from the responding 
companies included:

  1.  Number of live chicken production farmers;

  2.  Current contract duration;

  3.  Farmer tenure;

  4.  Newly granted contract duration;

  5.  Farmer age;

  6.  Farmer family experience in live chicken production;

  7.  Number of persons on waiting lists for entering live chicken 
            production;

  8.  Existing farmers wishing to expand current operations;

  9.  2021 farmer turnover by major reason for departure and;

  10. Variability of average live chicken contract fees compared to 
            beef and pork prices.

    In addition, the study summarizes several key trends in broiler 
production efficiency and returns. Loan quality data for live chicken 
producers will be discussed.
    Studies on broiler farmer returns and loan quality are not revised. 
There are no updates available for these two studies that this study 
utilized in 2015. However, more recent USDA 2021 poultry farmer 
financial returns data were found and are cited.
Survey Results
    The survey was collected during early 2022. Twenty companies 
representing 83% of 2020 top 32 U.S. chicken company production as 
reported by Watt Publishing responded.\1\
---------------------------------------------------------------------------
    \1\ Watt Publishing. Poultry USA. ``2020 Top Poultry Companies.'' 
March 2021. Pp 14-50.

  1.  Companies responding to the survey reported on 8,971 live chicken 
            farmers. The reported farmers held 10,921 production 
            contracts. The 83% response rate implies that the survey is 
---------------------------------------------------------------------------
            very representative of all 32 top chicken companies.

  2.  Companies responding reported current contract duration, in 
            years, as shown below.
Contract Length

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The 32% flock-to-flock percentage is 10 points lower than the 
            42% reported in a 2015 NCC survey done for the prior 
            version of this report. Other contract durations are 
            correspondingly higher than the prior report.
        Flock-to-flock contracts have no obligations for either party 
            past the current flock being grown. These contracts have 
            been criticized for not offering farmers long term 
            assurance of live chicken production with their current 
            company. However, long term contracts also can be canceled 
            for poor performance and not meeting contract terms. In 
            reality, a multi-year contract offers little additional 
            assurance over a flock-to-flock contract. Regardless of 
            stated contract duration, both parties need to agree that 
            the arrangement is beneficial if the contract is to 
            continue.
        Companies reported that long term contracts are required, and 
            granted, for new construction. In most cases these 
            contracts run for 10 years or longer as required by 
            lenders.

  3.  Respondents reported on the length of time that their current 
            farmers have been with their company. Results are shown in 
            the graph below.
Farmer Tenure

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        More than half the farmers have been with their current company 
            for 10 years or more. Almost \3/4\ have been with the same 
            company for 5 years or more. These results are almost 
            identical to the prior version of this report.

  4.  Companies reported on contract duration for newly granted 
            contracts. Responses fell into two broad categories. For 
            contracts granted on newly constructed houses, whether 
            expansion or for a new farm, contracts are granted to 
            satisfy any lender requirements. That was reported to be 
            generally 10 to 15 years. At the other end of the spectrum, 
            many new contracts were granted on a flock-to-flock basis 
            on existing farms with no lender requirements involved. 
            Several companies also reported new multi-year contracts 
            are granted even without a lender requirement involved.

  5.  Companies reported on the ages of their current farmers. The 
            results for those who track this data show that the vast 
            majority, 80%, of farmers are 40 years old or older. Only 
            14 farmers were reported to be under 20 years old. This age 
            structure together with the length of time farmers have 
            been with a company is seen as implying that live chicken 
            production is dominated by experienced live chicken 
            producer owner-operators.

        The live producer age structure implies that these farmers are 
            in the business for the long term. It also implies that 
            current farmers are, for the most part, financially 
            sustainable and stable. The relatively few farmers under 
            the age of 30 implies that entry may be somewhat difficult 
            for that age group.
        In contrast to the overall U.S. labor force,\2\ but in common 
            with all farm operators, chicken farmers have relatively 
            few participants in the under-30 age cohorts. Except for 
            the oldest cohorts, chicken farmers and all farm operator 
            \3\ ages are much more comparable.
---------------------------------------------------------------------------
    \2\ U.S. Bureau of Labor Statistics. Employment database found at 
http://www.bls.gov/cps/cpsaat03.htm. Accessed 2/27/2022.
    \3\ USDA. 2017 Agricultural Census report found at USDA/NASS Census 
of Agriculture Chapter 1, Table 52 (https://www.nass.usda.gov/
Quick_Stats/CDQT/chapter/1/table/52/state/US/year/2017). Accessed 2/27/
2022.
---------------------------------------------------------------------------
        Ages of chicken farmers indicate that they are generally 
            typical of other farmers but leave chicken farming at a 
            somewhat earlier age. This can be attributed to factors 
            such as ability to finance earlier retirement, time demands 
            of chicken raising, or that farm operators outside chicken 
            farming may remain part-time farm producers longer into 
            their later years. The relative lack of younger people in 
            farming reflects the difficulty of financing a farm at an 
            early age versus obtaining employment in other sectors. It 
            is often the case that entry into farming happens as a 
            result of an aging farm operator within the family of the 
            entering farmer being replaced by a younger family member.
        Age cohorts for the overall labor force, all farm operators, 
            and chicken farmers of the surveyed companies are shown in 
            the graphs below.

 
                                                    Chicken Farmers in
  U.S. Labor Force       All Farm Operators *             Survey
 
 
* Operators whose
 principal
 occupation is
 farming, 2017
 Census of
 Agriculture.
 

 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 

  6.  Companies reported on current farmer family experience in 
            contract chicken production. Of the current farmers 26% 
            were reported have to have had a family background in this 
            type of farming.

  7.  Companies reported that they have 1,672 applications from 
            potential live chicken producers who would like to get into 
            chicken production. Those applications are 19% of the 
            current farmers reported. This statistic is an indication 
            of the attractiveness of this type of farming for those not 
            involved in it today.

        Also reported were 335 open applications from existing farmers 
            for expansion of their existing operations.
        Taken together, these responses indicate active expansion and 
            investment interest on the part of potential and current 
            farmers. Indirectly the interest level shows that a 
            significant number of persons outside and inside live 
            chicken production regard it as an attractive farming 
            option and investment opportunity.

  8.  Companies reported on reasons for 2021 farmer departures. There 
            are many and varied reasons that farmers might leave a 
            chicken company. These, include among others, retirement, 
            financial distress in the farming operation, declining 
            health, farm catastrophes, to take an offer from another 
            company, and contract termination by a company.

  9.  Unfortunately, as in any business arrangement, not every 
            partnership works out to the satisfaction of both parties. 
            In the chicken farming business, we see both sides of this 
            fact. Producers can and do leave a company for what they 
            regard as a better opportunity with another company. 
            Companies have the right to terminate a farmer that is not 
            meeting their performance expectations or is not otherwise 
            living up to the terms of the contract.

        The least likely reason, accounting for only 0.7%, for a farmer 
            leaving broiler production was contract termination on the 
            part of their company. There are several reasons for a 
            contract termination, but the major ones are poor bird 
            performance and failure to adhere to contract terms.
        Put into a perspective of the total number of contract 
            producers and reasons for their leaving a company, contract 
            termination was the least numerous in 2021. Results of the 
            survey are presented in the graph below.
2021 Farmer Departures

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        In 2021 563, or 6.3%, of live chicken farmers left their 
            company. The ``All Other'' category includes farmers who 
            moved to a different company. In many cases farmers who 
            left chicken production sold facilities that remained in 
            production after that farmer departed chicken raising. Only 
            if a production facility is so obsolete that it is not 
            financially attractive to keep it in production is it 
            normally abandoned.
        Though not directly comparable, employee turnover due to job 
            separations in the overall economy averages 3-4% per 
            month.\4\ The 6.3% contract farmer figure is for an entire 
            year, and includes retirements. The major difference 
            between employee turnover and live chicken production is 
            that the chicken farmer has a significant financial 
            investment at risk in the business whereas most employees 
            do not. That farm investment makes chicken farmers, and 
            farmers in general, less mobile than employees.
---------------------------------------------------------------------------
    \4\ U.S. Bureau of Labor Statistics. Job Openings and Labor 
Turnover Summary. Job Openings and Labor Turnover Summary--2021 M12 
Results (https://www.bls.gov/news.release/jolts.nr0.htm) (bls.gov). 
Accessed 2/28/2022.
---------------------------------------------------------------------------
Live Chicken Production Technical Performance
    The table below shows selected average live chicken performance 
trends since 1925.\5\
---------------------------------------------------------------------------
    \5\ Source: 1925-2020 NCC: http://www.nationalchickencouncil.org/
about-the-industry/statistics/u-s-broiler-performance. Accessed 12/17/
2021.

----------------------------------------------------------------------------------------------------------------
                                                   Average Daily   Feed to Meat
      Year          Market Age     Market Weight       Gain            Gain        Feed Per Bird     Mortality
----------------------------------------------------------------------------------------------------------------
                   Average Days       Pounds,          Grams      Pounds of Feed    Pounds Feed       Percent
                                    Liveweight                     per Pound of     Per Broiler
                                                                   Live Broiler
----------------------------------------------------------------------------------------------------------------
         1925              112            2.50           10.12            4.70           11.75           18.00
         1935               98            2.86           13.24            4.40           12.58           14.00
         1940               85            2.89           15.42            4.00           11.56           12.00
         1945               84            3.03           16.36            4.00           12.12           10.00
         1950               70            3.08           19.96            3.00            9.24            8.00
         1955               70            3.07           19.89            3.00            9.21            7.00
         1960               63            3.35           24.12            2.50            8.38            6.00
         1965               63            3.48           25.06            2.40            8.35            6.00
         1970               56            3.62           29.32            2.25            8.15            5.00
         1975               56            3.76           30.46            2.10            7.90            5.00
         1980               53            3.93           33.63            2.05            8.06            5.00
         1985               49            4.19           38.79            2.00            8.38            5.00
         1990               48            4.37           41.30            2.00            8.74            5.00
         1995               47            4.67           45.07            1.95            9.11            5.00
         2000               47            5.03           48.54            1.95            9.81            5.00
         2005               48            5.37           50.75            1.95           10.47            4.00
         2006               48            5.47           51.69            1.96           10.72            5.00
         2007               48            5.51           52.07            1.95           10.74            4.50
         2008               48            5.58           52.73            1.93           10.77            4.30
         2009               47            5.59           53.95            1.92           10.73            4.10
         2010               47            5.70           55.01            1.92           10.94            4.00
         2011               47            5.80           55.98            1.92           11.14            3.90
         2012               47            5.85           56.46            1.90           11.12            3.70
         2013               47            5.92           57.13            1.88           11.13            3.70
         2014               47            6.01           58.00            1.89           11.36            4.30
         2015               48            6.12           57.83            1.89           11.57            4.80
         2016               47            6.16           59.45            1.86           11.46            4.50
         2017               47            6.20           59.84            1.83           11.35            4.50
         2018               47            6.26           60.42            1.82           11.39            5.00
         2019               47            6.32           60.99            1.80           11.38            5.00
         2020               47            6.41           61.86            1.79           11.47            5.00
                 -----------------------------------------------------------------------------------------------
   %1925-2020             ^58%            156%            511%            ^62%             ^2%            ^72%
----------------------------------------------------------------------------------------------------------------

    Over the entire 1925-2020 span there was a steady improvement in 
live chicken performance. In recent years the industry has held average 
days to market steady and allowed improved ADG performance to be 
expressed as higher average market weights. The result has been a bird 
that is 156% heavier than 1925 on about the same amount of feed and in 
58% fewer days. This improvement is due to both investments by chicken 
companies and the financial incentives offered in the contracts between 
the companies and their farmer partners.
    Feed-to-gain improvement has slowed since 1995. This is entirely 
due to raising birds to ever-heavier weights at a constant 47-48 
average days of age. Note that while days to market stopped declining, 
average market weights accelerated. All else equal, as chicken weights 
increase FCR performance tends to decline. Maintaining FCR at 
increasing average weights over time is actually a significant 
performance improvement. As will be shown below, increasing average 
weights at 47-48 days has also been a significant benefit for chicken 
farmers.
    Death loss declines were rapid until about 1960 but have plateaued 
at 4-5% in recent times.
    The next table translates chicken productivity increases into live 
pounds per square foot produced in farmer facilities and grower 
payments in current and 2012 dollars.

----------------------------------------------------------------------------------------------------------------
                  Average
                  Grower        Average      Live Young       Total                                    Average
                 Payment,       Grower        Chicken        Grower                    Live Pounds     Grower
     Year       Cents/Lb.,     Payment,     Production,     Payments,     % Change    Per Sq. Foot    Payments,
                  Current     Cents/Lb.,     000 Pounds    $2012, 000                                  Per Sq.
                  Dollars        $2012                                                               Foot, $2012
----------------------------------------------------------------------------------------------------------------
       1990           4.08          6.33     25,549,696    $1,617,672          4.8%         33.12         $2.10
       1991           4.11          6.19     27,170,780    $1,680,540          3.9%         33.44         $2.07
       1992           4.14          6.10     28,997,878    $1,768,320          5.2%         33.77         $2.06
       1993           4.22          6.08     30,474,243    $1,851,444          4.7%         34.09         $2.07
       1994           4.23          5.96     32,765,941    $1,954,314          5.6%         34.77         $2.07
       1995           4.32          5.97     34,352,980    $2,051,491          5.0%         34.93         $2.09
       1996           4.30          5.84     36,034,815    $2,104,723          2.6%         34.75         $2.03
       1997           4.46          5.96     37,207,401    $2,219,110          5.4%         34.87         $2.08
       1998           4.53          5.99     38,054,849    $2,280,572          2.8%         35.26         $2.11
       1999           4.68          6.09     40,444,167    $2,463,925          8.0%         36.09         $2.20
       2000           4.78          6.07     41,293,525    $2,508,363          1.8%         36.23         $2.20
       2001           4.87          6.07     42,335,507    $2,569,145          2.4%         36.03         $2.19
       2002           4.81          5.89     43,715,247    $2,575,580          0.3%         34.64         $2.04
       2003           4.90          5.88     44,317,531    $2,606,601          1.2%         37.22         $2.19
       2004           5.04          5.88     46,109,201    $2,709,460          3.9%         38.56         $2.27
       2005           5.24          5.92     47,578,696    $2,814,545          3.9%         39.15         $2.32
       2006           5.39          5.93     48,332,516    $2,863,716          1.7%         38.97         $2.31
       2007           5.43          5.82     49,089,999    $2,856,088         ^0.3%         38.56         $2.24
       2008           5.64          5.93     50,441,600    $2,992,748          4.8%         38.84         $2.30
       2009           5.62          5.90     47,752,300    $2,816,920         ^5.9%         38.19         $2.25
       2010           5.67          5.85     49,152,600    $2,877,597          2.2%         38.48         $2.25
       2011           5.78          5.86     50,082,400    $2,932,593          1.9%         39.40         $2.31
       2012           5.85          5.81     49,655,600    $2,883,515         ^1.7%         39.07         $2.27
       2013           5.93          5.78     50,678,200    $2,931,633          1.7%         39.12         $2.26
       2014           6.19          5.94     51,378,700    $3,053,616          4.2%         39.52         $2.35
       2015           6.27          5.97     53,376,200    $3,187,929          4.4%         40.03         $2.39
       2016           6.42          6.03     54,259,100    $3,271,137          2.6%         39.93         $2.41
       2017           6.63          6.10     55,573,900    $3,390,586          3.7%         39.04         $2.38
       2018           6.84          6.15     56,797,700    $3,494,614          3.1%         38.31         $2.36
       2019           6.93          6.13     58,259,100    $3,573,514          2.3%         38.08         $2.34
       2020           7.02          6.13     59,405,600    $3,644,069          2.0%         38.09         $2.34
              --------------------------------------------------------------------------------------------------
 % Increase          72.1%         ^3.1%         132.5%        125.3%           N/A         15.0%         11.4%
----------------------------------------------------------------------------------------------------------------

    Farmers have benefited from this improved performance. The 
investments made in genetics and feeds by their companies have 
increased the throughput of their facilities, resulting in increased 
production per square foot of their chicken housing. The table above 
shows how that increased performance has expressed itself in increased 
constant dollar farmer payments per square foot of their owned chicken 
housing.\6\ Payments per square foot in 2012 dollars did decline 
slightly between 2016 and 2020 as companies changed to slightly slower 
growing breeds.
---------------------------------------------------------------------------
    \6\ Sources: Agri Stats bird performance data, obtained 2/1/2022. 
GDP deflator, 2012=100, obtained from the U.S. Bureau of Economic 
Analysis at https://apps.bea.gov/iTable/
iTable.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey. 
Accessed 2/15/2022.
---------------------------------------------------------------------------
    While average current dollar farmer payments per pound of chicken 
have increased 72% since 1990, corrected for overall inflation, those 
payments have declined slightly. However, a 15% increase in average 
pounds of chicken production per square foot of farmer-owned housing 
has more than compensated for the decline in inflation-corrected 
payments per pound. Though declining slightly in recent years, the 
overall result is that inflation-corrected annual farmer payments per 
housing square foot have increased over 11.4% since 1990.
    The gains reflect both company investments in chicken performance 
and farmer improvements their housing required to take advantage of 
that increasing chicken performance capability.
    While farmer payments per pound are highly visible to both farmers 
and their companies, payments per square foot are not. Arguably, 
payment per square foot is a much better farmer payment and return on 
investment metric than payment per pound of chicken raised.
    Contract farmers and their companies have mutually benefited from 
the investments that have improved bird performance. Farmers who focus 
on payment per pound of chicken could be looking at a more meaningful 
metric that includes both a payment per pound measure and the 
productivity trend of their housing investment.
Live Chicken Producer Income Stability
    Survey data were collected for 2020-2021 monthly average chicken 
farmer payments per pound of live chicken production. From these data 
the average, standard deviation and coefficient of variation (CV) were 
calculated. The average over all months and all companies was 6.76 per 
pound, the standard deviation was 0.11 per pound, resulting in a CV of 
1.6%. This overall CV is a statistical measure of the variation in 
monthly average payments relative to the 2 year average. It has little 
meaning unless compared to other CV statistics for similar data.
    Spreadsheet data for U.S. average cattle and hog prices were 
obtained from the Economic Research Service of USDA and CV was 
calculated for each.\7\
---------------------------------------------------------------------------
    \7\ USDA/ERS. Historical Livestock Prices Spreadsheet. 
LivestockPrices.xlsx (https://view.officeapps.live.com/op/
view.aspx?src=https%3A%2F%2Fwww.ers.usda.gov%2Fwebdocs%2F
DataFiles%2F51875%2FLivestockPrices.xlsx%3Fv%3D8178.6&wdOrigin=BROWSELIN
K). Accessed 3/1/2022.
---------------------------------------------------------------------------
    For all slaughter cattle prices reported in the spreadsheet the 
average was $1.42 cents per pound, standard deviation $0.19 and CV was 
13%. For hogs the average was $0.55 per pound, standard deviation $0.16 
and CV 29%.
    Cattle and hog prices represent the payments to producers for each 
pound of live animal delivered to market. In that respect they are 
similar to broiler farmer fees received from broiler companies. 
However, in another respect broiler payments are different. Cattle and 
hog prices are market-based. Broiler farmer fees are contract-based. 
Broiler farmer fees paid to individual farmers are subject to variation 
around the contract average based on terms and conditions that 
determine premiums and discounts based on broiler performance. However, 
overall cattle and hog average prices also do not reflect variation in 
individual producer prices received based on live animal quality that 
also result in price premiums and discounts.
    Also, cattle and hog producers pay for feed and the animals they 
raise out of their income stream. Broiler farmers receive feed and 
chicks from their companies at no cost.
    The conclusion is that overall average producer payments per pound 
of live animal produced are much less variable for broiler farmers than 
payments to cattle and hog producers.
Live Chicken Producer Financial Performance
    Statistics on live chicken producer returns are not routinely 
gathered by USDA or any known university farm records systems. In 2011 
USDA did conduct a special financial survey that included live chicken 
farmers. Results of that survey are detailed in an August 2014 article 
by USDA economist James MacDonald.\8\ This study is reported here for 
historical context.
---------------------------------------------------------------------------
    \8\ MacDonald, James. ``Technology, Organization, and Financial 
Performance in U.S. Broiler Production.'' USDA. Economic Information 
Bulletin Number 126. June 2014. Found at Technology, Organization, and 
Financial Performance in U.S. Broiler Production (https://
www.ers.usda.gov/webdocs/publications/43869/48159_eib126.pdf?v=5006.2) 
(usda.gov). Accessed 2/1/2022.
---------------------------------------------------------------------------
    The survey showed that farmers who raise broilers under contract 
generally realize higher average incomes than other farm households and 
other U.S. households. However, the range of household incomes earned 
by broiler farmers is also wider than other groups.
    MacDonald compared average incomes using the median, at which half 
earn less than and half earn more. In 2011, the median income among all 
U.S. households was $50,504, while the median income among farm 
households was $57,050. The $68,455 median for chicken farmers was 
significantly higher than both all farm households and all U.S. 
households. Sixty percent of chicken farmers earned household incomes 
that exceeded the U.S.-wide median.
    In part the higher income spread was due to a wide scale of live 
chicken production among chicken operations. Larger producers may also 
be better at raising chickens and receive higher payments per pound 
based on their higher-than-average performance. Similar to all 
businesses, those who are most successful at raising chickens will tend 
to earn more income than those who are less successful.
    MacDonald also points out that the contracting system has 
substantially reduced some financial risks borne by contract farmers. 
Feed, medication and baby chick costs are the responsibility of the 
chicken company. As MacDonald points out, ``These risks are not small; 
feed prices rose or fell by at least five percent in 11 of the 60 
months between January of 2009 and December of 2013. Poultry companies 
also bear production risks that commonly affect farmers. For example, 
if weather or disease affects mortality among all farmers, base payment 
rates remain the same.''
    Comparing the top 20% of live chicken farmer returns to the same 
statistic for other farm households and all U.S. households shows a 
significant advantage for top performing contract chicken producers. 
Median incomes are also higher for chicken farmers, while at the bottom 
end, the lowest 20% are slightly lower than all farms, but comparable 
to the U.S. average. Chicken farmer incomes have a wider range than all 
farms and all households, but this is almost entirely due to the 
significantly higher level of the top 20% of chicken farmer incomes.
    The graph below shows the results for these three income 
categories.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    As this is only 1 year of data the results need to be viewed with 
some caution. Farm incomes, especially for farms not selling on 
contracts, can vary widely from year to year. Still, the results do 
tell a story about the relative returns of live chicken production. At 
the top end and on average, well-run chicken farms tend to earn 
significantly more than both the average U.S. farm and U.S. non-farm 
household.
    Recent USDA data also show that over the last decade poultry farms 
have on average financially outperformed the average farm. From 2010 to 
2021 average poultry farm net farm income was $59,800 compared to 
$38,200 for all farms.\9\ The averages cannot be directly compared to 
the medians reported in the MacDonald report but directionally the 
conclusion is the same.
---------------------------------------------------------------------------
    \9\ USDA, Agricultural Resource Management Survey. Found at USDA 
ERS Reports (https://my.data.ers.usda.gov/arms/tailored-reports). 
Accessed 3/7/2022.
---------------------------------------------------------------------------
Comparative Live Chicken Production Loan Performance
    Available agricultural lender statistics also strongly support the 
USDA survey showing that live chicken production has favorable returns 
compared to other farming activities.
    In 2015 NCC obtained loan quality data from the Small Business 
Administration, a significant lender to live chicken producers. The 
data showed significantly lower charge off and deficiency percentages 
for chicken producers compared to all agricultural loans.
    The deficiency rate for live chicken farmers was about \1/3\ the 
rate for all agricultural loans, and the charge-off rate was less than 
30% of all agricultural loans.
    These loan results also support the financial advantages of 
contract chicken production compared to other types of farming 
operations. The following graph summarizes an overview of these 
data.\10\ The vastly different chicken farmer loan results are largely 
due to the lower level of cost and income risks that are the result of 
the specific contracting arrangements between chicken farmers and their 
companies.
---------------------------------------------------------------------------
    \10\ Source: NCC. Data obtained from Government Loan Solutions, 
Inc. 9/11/2015.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Summary and Conclusions
    Data from the NCC survey and evidence from third party sources all 
show that live chicken production is broadly and generally being run by 
a group of effective and experienced farmers. Chicken farmers generally 
have higher incomes compared to all farms and all U.S. households, and 
have an age structure that is similar to all farm operators. Compared 
to the entire U.S. labor force both chicken farmers and all farm 
operators tend to be older than non-farm employees. This is seen as a 
result of the substantial financial investment often required to enter 
farming.
    The 2021 turnover rate of chicken farmers was 6.3%, the majority of 
which was voluntary or due to external factors beyond the control of 
companies and farmers.
    Responding companies also reported significant waiting lists for 
those who would like to enter live chicken production or expand 
existing operations.
    An analysis of farmer payment data obtained from Agri Stats showed 
that inflation-corrected farmer payment rates per square foot of farmer 
owned housing have increased over time. The increase is due to improved 
bird daily weight gain performance that has increased with no 
significant effect on feed used per bird. Chicken companies who furnish 
the feeds have benefited from the feed efficiency gains. Farmers who 
furnish live chicken housing have captured the benefits of increased 
growth rates.
    The current contracting system has helped promote the steady 
improvements in live chicken performance that have benefited chicken 
farmers, the companies they produce for, and ultimately consumers. Both 
farmers and their companies benefit from those performance gains.
    A USDA farm financial survey shows that broiler producers generally 
have significantly higher incomes than all other farming enterprises 
and the average U.S. household. The lowest 20% of contract farmer 
incomes are only slightly less than the similar statistic for all U.S. 
households, but lower than bottom 20% of all farm operators.
    SBA farm loan data show much lower loan deficiency and charge-off 
rates for live chicken production than all agricultural loans. These 
data support the findings of the USDA survey.
    Agri Stats data show that inflation-corrected farmer income per 
square foot of chicken housing has benefited financially from increases 
in chicken growth rate performance. Higher growth rates are primarily 
the result of breeding investments made by chicken companies and farmer 
investments in their own operations that help chickens realize their 
improving genetic potential. Average daily gains have decreased in the 
last few years, but have been partially offset by higher payments per 
pound.
    Viewed in totality, live chicken production is a viable, mutually 
beneficial and attractive farming enterprise for the vast majority of 
farm families who raise chickens in partnership with the companies they 
work with.
Exhibit 3: NCC Comments to Docket No. AMS-FTPP-21-0046 Poultry Growing 
    Tournament System Fairness and Related Concerns (Sept. 6, 2022)
September 6, 2022

  Submitted electronically via regulations.gov

  Bruce Summers,
  Administrator,
  Agricultural Marketing Service,
  United States Department of Agriculture

  Docket Clerk,
  Agricultural Marketing Service,
  U.S. Department of Agriculture,
  Washington, DC

  Re: Docket No. AMS-FTPP-21-0046, Poultry Growing Tournament Systems: 
            Fairness and Related Concerns

    Dear Mr. Summers:

    The National Chicken Council (NCC) appreciates the opportunity to 
provide comments on the United States Department of Agriculture (USDA) 
Agricultural Marketing Service (AMS) advance notice of proposed 
rulemaking entitled, ``Poultry Growing Tournament Systems: Fairness and 
Related Concerns'' (ANPR).\1\ NCC is the national, nonprofit trade 
association that represents vertically integrated companies that 
produce and process more than 95 percent of the chicken marketed in the 
United States. NCC members would be directly affected by changes to 
poultry grower contracting, including those contemplated in the ANPR.
---------------------------------------------------------------------------
    \1\ 87 Fed. Reg. 34814 (June 8, 2022), https://www.govinfo.gov/
content/pkg/FR-2022-06-08/pdf/2022-11998.pdf.
---------------------------------------------------------------------------
    As explained in more detail in these comments, NCC strongly opposes 
further rulemaking by AMS regarding the current poultry grower 
contracting system. In addition, we incorporate by reference our 
comments filed on August 23, 2022, to docket No. AMS-FTPP-21-0044 
regarding AMS's Transparency in Poultry Grower Contracting and 
Tournaments Proposed Rule.\2\ NCC is deeply concerned that changes to, 
or elimination of, the tournament system would have a devastating 
financial impact on the U.S. chicken industry by raising costs, 
contributing to increased food prices for consumers, and ultimately 
destabilizing a successful compensation system. NCC urges AMS to 
refrain from further steps that would undermine a successful 
compensation system.
---------------------------------------------------------------------------
    \2\ NCC Comments to Docket No. AMS-FTPP-21-0044, Comment ID AMS-
FTPP-21-0044-0487 (Aug. 23, 2022), https://www.regulations.gov/comment/
AMS-FTPP-21-0044-0487.
---------------------------------------------------------------------------
I. The Current Poultry Grower Contracting System Is a Well-Designed, 
        Efficient Structure That Benefits Growers, Dealers, and 
        Consumers
    NCC supports the current poultry grower compensation system and 
champions it as a structure that fairly rewards family farmers for 
efficient use of resources and innovation in raising high-quality 
birds. The current system's fair, honest contracts provide a target pay 
that high-performing growers can supplement with the efficient use of 
resources. This system promotes superior results that lower chicken-
raising costs, encourage efficient use of resources, and benefit 
growers, live poultry dealers (``dealers''), and consumers.
    To briefly describe the performance structure, dealers deliver 
broiler chicks to growers on the day the chicks hatch. Growers raise 
the chicks into broilers using feed, veterinary care, and other 
consultants like animal welfare experts that are provided by the 
dealer. Growers are responsible for providing quality housing, farm 
maintenance, on-farm inputs, and day-to-day care of the broilers.
    In a typical grow-out contract, growers and dealers agree on a pre-
determined target price per pound of weight gain based on an average. 
The specifics vary, but growers are usually either paid the target plus 
a bonus for high performance, or grower payments are adjusted slightly 
upward or downward from the target based on relative performance. 
Overall, regardless of the approach taken, growers earn a predictable 
payment plus the opportunity to earn a bonus for strong performance. 
This approach rewards skilled growers who have honed their management 
practices to most efficiently raise healthy birds.

    The tournament system's incentive-based pay structure rewards 
grower efficiency and innovation and promotes bird welfare.

    The current poultry grower compensation system operates like any 
arrangement between a business and a service provider, where a service 
provider competes with others to provide the best services as 
efficiently as possible to increase the provider's net compensation and 
where businesses compete to secure the best service providers at 
profitable rates. Growers are provided the same quality resources--
broilers, feed, access to veterinary care and consulting--and use their 
farming skills to produce high-quality birds at the lowest cost. This 
rewards-based system allows dealers to incentivize efficient use of 
resources, innovation in management practices, and grower investments 
in housing and care.
    Growers not only take seriously their responsibility to ethically 
raise their birds, but, through the current compensation system, they 
also have every business incentive to ensure their birds are well-cared 
for. Properly cared-for birds experience optimal growth rates and have 
lower mortality, both of which increase a grower's pay. This contract 
structure allows the well-being of birds to be a dealer's and grower's 
top priority because incentives are given to farmers who raise the 
healthiest, highest-quality birds. Similarly, dealers have every 
incentive to make sure their growers succeed and produce healthy, 
quality birds. If a dealer sees a flock struggling or identifies 
opportunities to increase efficiency, the dealer will provide the 
grower with assistance through technical experts that are familiar with 
the breed, business, and growing conditions to help the grower maximize 
his or her potential.
    This process results in a highly efficient market and contributes 
to the global cost-competitiveness of U.S. chicken meat. Chicken meat 
is a wholesome, nutritious lean protein that has never been more 
affordable in the U.S., both on a real-dollar basis and when viewed 
against a typical household's overall buying power. This is despite the 
immense inflationary pressures facing consumers and businesses from all 
directions.

    The tournament system efficiently allocates risk to the parties 
best equipped to handle it.

    The current poultry grower contracting system has evolved to 
efficiently allocate economic risk to the parties best prepared to 
burden it. In fact, data show that chicken companies remove 
approximately 97 percent of the economic risk from growers as compared 
to independent growers.\3\ Dealers supply growers with a variety of 
necessary inputs, including broiler chicks, feed, medication and 
veterinary care, technical advice, and other resources. This removes 
much of the economic risk from factors like shifting feed prices and 
market uncertainty from contract growers to dealers, whereas 
independent growers would shoulder the entirety of that risk 
themselves. If feed prices skyrocket during a contract term, or weather 
or disease affect mortality rates among all growers, the contracted-for 
grower base payments would not change.
---------------------------------------------------------------------------
    \3\ C.R. Knoeber & W.N. Thurman, ``Don't Count Your Chickens . . 
.'': Risk and Risk Shifting in the Broiler Industry, 77 Am. J. 
Agricultural Econ. 486, 496 (1995).
---------------------------------------------------------------------------
    Many of the capital-intensive inputs listed above benefit from 
large-scale purchasing. For example, broiler chicks themselves are 
expensive inputs, given the advanced genetics and breeding management 
required to produce them. Dealers operate at scale and are best 
equipped to manage the complicated chick supply chain, including 
hatcheries and grandparent flocks of sufficient size and scale to 
supply all their farms. It would be impossible for an individual farmer 
to source chicks with anywhere near the same consistency and efficiency 
as dealers. The contract structure also protects buyers from needing to 
find a market for the birds once fully raised. The contract terms 
remain in effect for the duration of the agreement, regardless of 
whether demand for chicken meat plummets and affects a dealer's 
profits. A grower will always get paid for the birds he or she raises 
and does not have to face the risk of investing heavily in a flock only 
to have the market crater when it comes time to harvest those birds.
    Another major input dealers supply that presents significant risks 
is feed. Feed is typically the greatest input cost in raising chickens. 
Dealers secure or produce feed at significant scale and volume, and 
they do so with their specific bird breeds or customer specifications 
in mind. In particular, a major ingredient in chicken feed is corn, 
which regularly experiences significant price fluctuations, depicted in 
Figure 1 below. These price fluctuations result from government 
policies like Renewable Fuel Standard mandates, competing end-users, 
geopolitical events, and droughts and other major weather events. These 
price fluctuations could be catastrophic for individual farmers if they 
had to secure feed on the open market. But under the current system, 
dealers have the scale and resources, including access to sophisticated 
hedging strategies, to secure feed at favorable prices and they are 
better positioned to absorb unexpected increased feed costs. Grow-out 
contracts are agnostic to feed prices, and the grower is insulated from 
these potentially devastating input risks.
Figure 1, U.S. Corn Market Prices, January 2008-July 2022 \4\
---------------------------------------------------------------------------
    \4\ Feed Grains Database, USDA Economic Research Service (accessed 
September 1, 2022), https://www.ers.usda.gov/data-products/feed-grains-
database/.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Similarly, dealers are best equipped to secure medication and 
veterinary care for the chickens. Rather than requiring each grower to 
retain a veterinarian, schedule veterinary visits, and obtain 
medication, dealers coordinate veterinary care to ensure birds are well 
cared for. Alleviating growers from arranging veterinary care also 
ensures that a grower's economic incentive is aligned with protecting 
bird health. Whereas an independent grower might have an economic 
incentive to pay for veterinary services only when it is absolutely 
clear that care is necessary, contract growers have every incentive to 
reach for veterinary services whenever they might be needed, better 
protecting bird health overall. Additionally, because a dealer's 
veterinarians cover many growers, they are able to work at a more 
efficient scale and are extremely familiar with the type of birds they 
are caring for.
    This arrangement removes the overwhelming majority of the economic 
risk that growers would otherwise face, allowing contract growers to 
dedicate consistent attention and resources to providing high quality 
care, land, and housing for their birds. This partnership dynamic 
promotes the economic vitality and independence of family farms by 
promoting stable and predictable income. As described in more detail in 
Section II, the benefits of this partnership structure were highlighted 
during the industry's successes during the COVID-19 pandemic, where the 
industry maintained steady profits for growers even in serious economic 
uncertainty and supply chain disruptions.
    The American poultry industry is the most competitive in the world 
in significant part because the poultry grower compensation system 
encourages innovation and investment in the best equipment and 
practices. NCC is proud to represent an industry that consistently and 
continuously produces affordable protein, even in times of soaring 
across-the-board inflation and economic distress that increase prices 
for consumers.
II. Data Show the Current Poultry Grower Contracting System Is 
        Profitable and Works Well for Growers
    NCC commissioned an independent study, published earlier this year 
by Dr. Tom Elam, that captures live chicken production statistics from 
2021 and summarizes key trends in broiler production efficiency, 
returns, and loan quality data (the ``Elam Study'', attached as 
Appendix A).* \5\ The study incorporates the most recent publicly-
available government data and analyzes the results of a recent survey 
of chicken growing contracts. The survey results indicate that current 
poultry grower contracting relationships are mutually beneficial, 
successful, and profitable for both growers and dealers.
---------------------------------------------------------------------------
    * Editor's note: the report entitled Live Chicken Production Trends 
was attached as Appendix A to the previous comment letter submitted as 
Exhibit 2. See page 107.
    \5\ T. Elam, Live Chicken Production Trends, FarmEcon, LLC (Mar. 
2022), https://www.nationalchickencouncil.org/wp-content/uploads/2022/
03/Live-Chicken-Production-FARM
ECON-LLC-2022-revision-FINAL.pdf [hereinafter ``Elam Study''].

    Despite having options to work with different dealers, most growers 
---------------------------------------------------------------------------
have been with their current dealer for over 5 years.

    Most growers are in a position to choose between partnering with 
two or more processors and can readily cut ties with a bad business 
partner. Over 50 percent of growers have been with their current dealer 
for 10 years or more, a statistic unchanged from 2015, with an 
additional 20 percent (for a total of 70 percent) having been with 
their current dealer for over 5 years.\6\ A majority of the contracts 
considered in the study were for 5 years or less, and \1/3\ were for 
flock-to-flock arrangements. This shows that most growers, when 
presented with the opportunity to stay with their dealer or to test the 
market, find it better to stay with their dealer and renew their 
agreement.
---------------------------------------------------------------------------
    \6\ Id. at 3.
---------------------------------------------------------------------------
    In addition, only 6.3 percent of the study respondents' farmers 
left their company in 2021, a statistic that includes retiring 
growers.\7\ A grower may part ways with his or her dealer for a variety 
of reasons, including retirement, financial distress, and declining 
health. Of the 6.3 percent of grower departures, only 0.7 percent was 
from growers leaving the industry due to contract termination by the 
dealer.\8\ These data show that growers and dealers both willingly 
continue doing business after their initial contracts end and that 
exceedingly few growers see their contracts terminated, further showing 
the current partnership contracting system is mutually beneficial.
---------------------------------------------------------------------------
    \7\ Id. at 5.
    \8\ Id. A dealer may terminate a contract for various reasons, but 
most often the reason is tied to poor bird performance or failure to 
adhere to contract standards.
---------------------------------------------------------------------------
Figure 2, Reasons for Farmer Departures, 2021 \9\
---------------------------------------------------------------------------
    \9\ Id.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    The features of the tournament system allow chicken growers to earn 
---------------------------------------------------------------------------
a profitable wage.

    The Elam Study found that USDA data showed, in 2011, the $68,455 
median income for chicken farmers was significantly higher than the 
median income of both U.S. farm households and U.S. households (not 
restricted to farm households). Sixty percent of U.S. chicken farmer 
household incomes exceeded the U.S.-wide median.\10\ In addition, the 
top 20 percent of contract chicken farmers earn on average $142,000, 
significantly higher than the top 20 percent of all farm households 
($118,000) and the top 20 percent of all U.S. households ($101,000), 
according to the same data.\11\ Although USDA has not since updated the 
study reporting this data, there is every reason to believe that these 
trends have continued. For example, a different USDA dataset showed 
that, from 2010-2021, average poultry farm net farm income was $59,800, 
compared to $38,200 for all farms.\12\
---------------------------------------------------------------------------
    \10\ Id. at 9.
    \11\ Id. at 10.
    \12\ Id. This study used different data and is not directly 
comparable to the figures in the study reporting the 2011 income, 
although the same trend bears out--chicken farming generates more 
income than the average farming operation.
---------------------------------------------------------------------------
Figure 3, Income Variations Between Contract Chicken Production, All 
        Farm Households, and All U.S. Households, 2011 \13\
---------------------------------------------------------------------------
    \13\ Id. (referencing 2011 data from a USDA financial survey as 
analyzed by J. MacDonald, Technology, Organization, and Financial 
Performance in U.S. Broiler Production, USDA Economic Information 
Bulletin Number 126 (June 2014)).

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The tournament system's features benefit the health and well-being 
---------------------------------------------------------------------------
of chickens.

    In 2021, the average on-farm livability of a flock of U.S. broiler 
chickens was almost 95 percent, compared to only 82 percent in 
1925.\14\ This improvement in production practices is driven in large 
part by directly incentivizing growers to properly care for their 
birds.
---------------------------------------------------------------------------
    \14\ Id. at 6.

    Interest in entering the broiler growing industry remains high, 
showing that the industry can not only retain its current farmers but 
---------------------------------------------------------------------------
that there is room to grow.

    The Elam Study's findings show interest in entering the broiler 
growing industry remains high. Companies responding to the survey 
reported significant waiting lists for entrepreneurs seeking to enter 
live chicken production or current farmers looking for opportunities to 
expand their operations. There were 1,672 applications from potential 
growers and 335 expansion requests from existing farmers.\15\ These 
applications indicate a steady interest in entering contract chicken 
production and excitement about entering an industry with a reputation 
for profitable arrangements.
---------------------------------------------------------------------------
    \15\ Id. at 4.

---------------------------------------------------------------------------
    Default rates on loans for poultry growers and dealers are low.

    As depicted in Figure 4, the Elam Study found that the deficiency 
percent and charge-off percent for poultry grower loans amount to 
merely \1/3\ of the average agricultural loan, based on Small Business 
Administration loan quality data.\16\ The data overwhelmingly show that 
growers and their lenders can effectively and accurately evaluate 
expected income from poultry growing arrangements. Moreover, these data 
show growers can earn steady incomes from their growing arrangements 
that allow them to adequately service their debt obligations, directly 
dispelling any allegations that growers are somehow saddled with 
unsustainable debt loads.
---------------------------------------------------------------------------
    \16\ Id. at 11.
---------------------------------------------------------------------------
Figure 4, Default Rates for Contract Chicken Producers and All 
        Agricultural Loans, 2015 \17\
---------------------------------------------------------------------------
    \17\ Id. at 11.

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III. AMS's Changes to Poultry Grower Contracting Contemplated in the 
        ANPR Suggest Fundamental Changes That Would Hobble Poultry 
        Producers and Dismantle the Current Successful Compensation 
        System
    NCC is gravely concerned that the policy proposals telegraphed in 
the ANPR would impose substantial costs on the broiler industry and 
would undermine the functioning of the very successful grower 
compensation system. At a time when input costs are soaring and 
inflation continues to be a top concern for American households, AMS 
should avoid imposing regulatory burdens that would increase costs for 
producers and add costs to consumers, and under no circumstances should 
AMS destroy a highly successful economic structure. We highlight the 
following overall concerns and general comments regarding AMS's 
requests for comments in the ANPR:

   AMS poses questions in the ANPR that presuppose the current 
        poultry grower contracting system is unfair or problematic. AMS 
        appears to have made up its mind without even considering 
        comments, and NCC urges AMS to take an unbiased approach to its 
        rulemaking, especially considering the impression presented in 
        the ANPR is far from accurate. Tellingly, no court has ruled 
        that the current grower compensation system violates Section 
        202(a) of the Packers and Stockyards Act, nor has AMS taken 
        enforcement action on this basis despite the tournament system 
        being in use for decades.

   Several of AMS's questions for comment in the ANPR appear to 
        reflect ideas from earlier 2010 and 2015 rulemakings (75 Fed. 
        Reg. 35338 (June 22, 2010); 81 Fed. Reg. 92723 (Dec. 20, 2016)) 
        that were clearly rejected by Congress.\18\ As multiple 
        economic impact studies submitted to those dockets reflect, 
        those proposals would have imposed costs on the industry in 
        excess of $1 billion (numbers that, due to inflation, would be 
        significantly higher in 2022). Those proposals were misguided 
        and costly when introduced and remain so today. To the extent 
        AMS seeks to incorporate ideas from those previous rulemakings 
        into future regulatory action, NCC urges the agency to account 
        for these independent economic analyses and inflation when 
        evaluating the costs on the industry and consumers.
---------------------------------------------------------------------------
    \18\ See Consolidated and Further Continuing Appropriations Act, 
2015, H.R. 83, 113th Cong.  731 (2014); Consolidated Appropriations 
Act, 2014, H.R. 3547, 113th Cong.  744 (2014); Consolidated and 
Further Continuing Appropriations Act, 2013, H.R. 933, 113th Cong.  
742-43 (2013); Consolidated and Further Continuing Appropriations Act, 
2012, H.R. 2112, 112th Cong.  721 (2011).

   Existing market practices address or prevent many of the 
        purported concerns AMS raises. Dealers have every economic and 
        business incentive to promote the optimal growth of birds and 
        maintain productive relationships with their growers. Because 
        chicken processing plants are expensive and only provide 
        sufficient return on investment if they operate at full 
        capacity, dealers are further incentivized to maintain good 
        reputations as a good business partner in order to attract new 
        growers to their operation and maintain a consistent processing 
        schedule. Processors that gain a reputation as bad business 
        partners, including by attempts to manipulate a grower's 
        performance or otherwise drive away growers, would quickly see 
        their plants under-supplied and their grower pool taken by 
        competitors. Lenders serve as an additional check on dealer 
        business practices. Because many growers are financed by 
        experienced lenders, lenders are intimately involved in 
        scrutinizing the revenue expected under a growing arrangement, 
        and they have a sophisticated understanding of the industry. 
        Growers presented with unsustainable contracts would not be 
        able to secure financing, which in turn would mean dealers 
        would not have anyone to raise their birds. This provides a 
        natural market force to reinforce the existing economic 
---------------------------------------------------------------------------
        incentives toward fair and sustainable contracts.

   AMS appears to be to be overly concerned with contract 
        termination. As explained in detail in Section I, dealers have 
        every inventive to help growers raise high quality birds and 
        meet their expectations under the contract. If there is a 
        concern about growers meeting their contracted-for standards, 
        dealers work with the growers and technical experts to address 
        the issue and identify areas of improvement. In reality, and as 
        explained above, less than one percent of contracts are 
        terminated each year. These terminations are most often for 
        animal welfare violations and failure to raise the birds 
        properly.

   AMS should avoid any changes that eliminate the current 
        system's ability to reward the top-performing growers. 
        Eliminating performance-based pay would eliminate any incentive 
        for a grower to put in the hard work and make the necessary 
        investments to raise high-quality flocks. This would harm 
        efficiency, jeopardize bird welfare, make it harder for top 
        performers to stay in the poultry growing business, and 
        ultimately affect consumer prices. The current compensation 
        system structure is an efficient and an effective means of 
        rewarding the best growers for performing above average and 
        incentivizing less-efficient growers to improve their 
        performance.
IV. AMS Should Address All Amendments to PSA Regulations in One 
        Rulemaking Otherwise, All Changes Required of Industry Should 
        Have a Single Implementation Date
    We urge the agency to propose and implement all planned amendments 
to PSA regulations in a single rulemaking, or, if this is not possible, 
provide a single implementation date. NCC is concerned that AMS is 
taking a piecemeal approach to promulgating regulations for industries 
regulated by the PSA. This ANPR and the proposed rule issued on the 
same day as the ANPR signal AMS intends to propose a line of planned 
changes affecting the poultry industry. Imposing constant regulatory 
changes on industry would only foster confusion, increase unnecessary 
costs, and impress uncertainty in an already uncertain economic 
environment. Implementing changes in a single rulemaking would allow 
industry to see the true cost of the proposed changes and allow AMS to 
be transparent with industry about the direction it plans to take. Even 
if AMS chooses to implement regulations in a piecemeal fashion, it 
should implement a uniform effective date for all changes to PSA 
regulations currently identified in the Unified Agenda, including 
``Clarification of Scope of the Packers and Stockyards Act (AMS-FTPP-
21-0046)'' (RIN 0581-AE04) and ``Unfair Practices in Violation of the 
Packers and Stockyards Act (AMS-FTPP-21-0045)'' (RIN 0581-AE05).
          * * * * *
    NCC appreciates the opportunity to comment on the ANPR. Please feel 
free to contact us with any questions. Thank you for your 
consideration.
            Respectfully submitted,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
Mike Brown,
President,
National Chicken Council.
   Exhibit 4: NCC Comments to Docket No. AMS-FTPP-21-0045 Inclusive 
Competition and Market Integrity Under the PSA Proposed Rule (Jan. 17, 
                                 2023)
January 17, 2023

  Submitted electronically via regulations.gov

  Bruce Summers,
  Administrator,
  Agricultural Marketing Service,
  United States Department of Agriculture

  RE: Comments on Inclusive Competition and Market Integrity Under the 
            Packers and Stockyards Act, 87 Fed. Reg. 60010 (Oct. 3, 
            2022), Docket No. AMS-FTPP-21-0045

    Dear Mr. Summers:

    The National Chicken Council (NCC) appreciates the opportunity to 
comment on the proposed rule, ``Inclusive Competition and Market 
Integrity Under the Packers and Stockyards Act'' published in the 
Federal Register on October 3, 2022, (the ``Proposed Rule'') by the 
U.S. Department of Agriculture (USDA) Agricultural Marketing Service 
(``AMS'' or the ``agency''). NCC represents vertically integrated 
companies that produce and process more than 95 percent of the chicken 
marketed in the United States. Our members would be directly affected 
by the proposed regulations.
    The Proposed Rule would fundamentally alter and constrain the 
poultry production market to the detriment of growers, consumers, and 
processors alike. The Proposed Rule suffers numerous legal infirmities 
and would have devastating effects on the poultry contracting process, 
resulting in increased costs to our members making it more difficult to 
fairly reward their contract farmers. For the numerous reasons 
discussed in these comments, we urge AMS to withdraw the Proposed Rule. 
To the extent AMS believes a rulemaking remains necessary, we urge AMS 
to promulgate a single rulemaking addressing all proposed changes to 
livestock and poultry contracting in one consolidated process.
Executive Summary
    NCC urges AMS to withdraw the Proposed Rule because it is legally 
unsound, unworkable for industry, and poses costs that will inflict 
irreparable damage to the U.S. economy. The Proposed Rule exceeds AMS's 
statutory mandate by proposing a rule by which violations would 
seemingly not require a showing of injury to competition, an essential 
component of all violations of Section 202 of the Packers and 
Stockyards Act (PSA). The Proposed Rule further fails to pass 
constitutional muster because of the litany of vague and undefined 
terms used throughout that fail to clearly define what conduct is 
prohibited. The Proposed Rule likewise falls short of Administrative 
Procedure Act (APA) requirements because it is based on an inadequate 
administrative record. Moreover, each provision of the Proposed Rule 
suffers fatal flaws making the proposal fundamentally unworkable. We 
highlight specific concerns below, noting in particular the failure to 
define and protect reasonable business conduct and the broad and 
subjective definition of ``market vulnerable individual.'' Finally, AMS 
drastically underestimates the cost of the Proposed Rule overlooking 
the heavy costs of recordkeeping, contract revisions, and associated 
labor and technology, much less the substantial litigation costs that 
would be necessary to define the contours of the Proposed rule. For the 
many reasons discussed below, AMS should withdraw the Proposed Rule. If 
AMS continues to believe the proposal is necessary, it should conduct a 
single rulemaking addressing all proposed changes to livestock and 
poultry contracting.
I. The Proposed Rule Is Legally Deficient
    The Proposed Rule is legally deficient because it would prohibit 
conduct without regard to injury or likely injury to competition, is 
unconstitutionally vague, exceeds AMS's statutory mandate, and is not 
supported by the administrative record.
A. The Proposed Rule would prohibit conduct without regard to injury to 
        competition
    Well established caselaw--universal among the many circuit courts 
of appeal to have considered the issue--holds that establishing a 
violation of Section 202 of the PSA requires showing injury or likely 
injury to competition. As recently as 2 years ago, AMS tacitly 
recognized this as well.\1\ AMS suggests throughout the preamble, 
however, that it could enforce the Proposed Rule without showing 
competitive injury.\2\ Meanwhile, the plain text of the Proposed Rule 
is silent on the requirement. As a matter of law, all violations of 
Sections 202(a) and (b) of the PSA require a showing of injury, or the 
likelihood of injury, to competition. The Proposed Rule ignores this 
requirement and attempts to reach much more broadly. As such, it would 
exceed AMS's statutory authority.
---------------------------------------------------------------------------
    \1\ Most recently, AMS recognized ``a question'' of competitive 
injury in its 2020 rulemaking addressing criteria for identifying 
violations of the PSA. 85 Fed. Reg. 79779, 79790 (Dec. 11, 2020) 
(``Whether competitive injury is required to establish a violation of 
the Act is a broader question applicable to the full provisions of 
sections 202(a) and 202(b). . . .'').
    \2\ For example, AMS references protecting individual producers 
without addressing the corresponding need to show a broader injury or 
likelihood of injury to competition:

      The proposed prohibitions would protect producers at both 
individual and market-wide lev-
  els from undue prejudices and disadvantages and unjust 
discrimination--both of which AMS 
  has determined violate the PSA. The Secretary is empowered under the 
PSA to address harms 
  in their incipiency.

    87 Fed. Reg. 60017. AMS cites Bowman v. USDA, to support the above 
proposition, quoting ``the Act is designed to `prevent potential injury 
by stopping unlawful practices in their incipiency. Proof of a 
particular injury is not required.'' 363 F.2d 81, 85 (5th Cir. 1966) 
(emphasis added). AMS ignores however that the concerns it identifies 
do not in fact violate the PSA without showing a likelihood of 
competitive injury. If an action, including one it its incipiency, does 
not present a likelihood of injury to competition, it is not unlawful 
under the PSA.
---------------------------------------------------------------------------
1. The agency lacks statutory authority to promulgate any regulation 
        that permits a finding of a violation of Sections 202(a) or (b) 
        of the PSA without a showing of injury to competition
    When Congress passed the PSA, it specifically intended to prohibit 
practices that harmed the competitive process. The language that it 
used in the statute was understood at the time of enactment to address 
those practices that were collusive or monopolistic (or monopsonistic) 
and had a substantial likelihood of reducing output and ultimately 
raising prices to consumers. Congress incorporated terminology from 
other regulatory statutes--most notably, the Interstate Commerce Act 
(ICA) and the Federal Trade Commission Act (FTCA)--that were plainly 
designed to protect the competitive process for the benefit of the 
consuming public. The competitive injury requirement, therefore, is not 
some judicial gloss on Section 202(a)-(b) but an integral part of the 
statutory scheme. By importing language from other enactments with 
well-established legal meaning, Congress necessarily ``adopt[ed] the 
cluster of ideas that were attached to each borrowed word in the body 
of learning from which it was taken and the meaning its use 
convey[ed].'' \3\ Accordingly, it is the statutory language itself that 
imposes the requirement of competitive injury. Indeed, there is no 
other reasonable reading of the statute. The agency has no authority to 
promulgate any regulation that is broader than, or conflicts with, the 
underlying statutory provision on which it is based.\4\ Because 
Sections 202(a) and (b) of the PSA mandate a showing of competitive 
injury, AMS has no power to read out that statutory element through its 
rulemaking authority.
---------------------------------------------------------------------------
    \3\ Morissette v. United States, 342 U.S. 246, 263 (1952).
    \4\ Morrison v. National Australia Bank, Ltd., 130 S. Ct. 2869, 
2881 (2010) (regulation promulgated under a statute `` `does not extend 
beyond conduct encompassed by [the statute's] prohibition' '') (quoting 
United States v. O'Hagan, 521 U.S. 642, 651 (1997)); Ernst & Ernst v. 
Hochfelder, 425 U.S. 185, 214 (1975) (``scope [of a rule] cannot exceed 
the power granted the [agency] by Congress under [the relevant 
statute]'').
---------------------------------------------------------------------------
    The PSA is at its foundation an antitrust law. There is no dispute 
that the purpose of Section 202 of the PSA is the elimination of 
monopolistic or other anticompetitive practices--that is, to protect 
competition for the benefit of consumers. Only a year after the Act's 
passage, the Supreme Court in Stafford v. Wallace recognized that the 
``chief evil'' that Section 202 sought to address was ``the monopoly of 
the packers, enabling them unduly and arbitrarily to lower prices to 
the shipper, who sells, and unduly and arbitrarily to increase the 
price to the consumer, who buys.'' \5\ ``Another evil,'' according to 
the Court, was ``exorbitant charges, duplication of commissions, 
deceptive practices in respect of prices, in the passage of the live 
stock through the stockyards, all made possible by collusion between 
the stockyards management and the commission men, on the one hand, and 
the packers and dealers, on the other.'' \6\
---------------------------------------------------------------------------
    \5\ Stafford v. Wallace, 258 U.S. 495, 514-15 (1922) (emphasis 
added).
    \6\ Id. (emphasis added).
---------------------------------------------------------------------------
    The common thread linking the statutory purposes identified by the 
Supreme Court is the elimination of anticompetitive practices. First, 
as the Stafford Court noted, Congress sought to prohibit the abuse 
``unduly and arbitrarily'' of monopsony power by packers that leads to 
a monopolistic restriction of output with the effect of ``arbitrarily'' 
increasing the price of products purchased by consumers. Second, 
Congress intended to prevent ``exorbitant charges'' and other 
anticompetitive practices resulting from collusion among market 
participants. As the Court noted, because of that collusion, 
``[e]xpenses incurred in the passage through the stockyards necessarily 
reduce the price received by the shipper, and increase the price to be 
paid by the consumer.'' \7\ In other words, every aim of Section 202 
identified in Stafford manifests an intent to protect the competitive 
process for the benefit of consumers.
---------------------------------------------------------------------------
    \7\ Stafford, 258 U.S. at 515.
---------------------------------------------------------------------------
    Nothing in Stafford or in the language of the statute suggests that 
Congress intended the Act to protect individual market participants 
from the stringency of competition. Rather, market participants are 
protected from conduct that itself would have the effect of harming 
competition and consumer interests. In identifying the aims of Section 
202, Stafford explicitly connects any protection of producers to the 
protection of consumers. The Court explained that Congress sought to 
remove ``undue burden[s] on . . . commerce'' \8\ and ``unjust 
obstruction[s] to . . . commerce'' \9\ flowing from any ``unjust or 
deceptive practice or combination,'' confirming that Congress enacted 
the PSA to maximize market output for the benefit of consumers.
---------------------------------------------------------------------------
    \8\ Id.
    \9\ Id.
---------------------------------------------------------------------------
    Courts have long recognized that the PSA is rooted in antitrust 
law.\10\ Antitrust law exists to protect the competitive process so 
that consumers may obtain the highest quality goods and services at the 
lowest possible cost.\11\ In the absence of some likely consumer harm, 
``[e]ven an act of pure malice by one business competitor against 
another does not, without more, state a claim under the Federal 
antitrust laws.'' \12\ In short, the Sherman Act and other antitrust 
statutes have not been construed to protect producers from the rigors 
of competition or to strike against aggressively competitive practices. 
Instead, these laws aim to enhance consumer welfare by ensuring that 
markets operate efficiently and that products are produced and priced 
competitively. Stafford makes clear that the goals of the PSA are 
identical.\13\
---------------------------------------------------------------------------
    \10\ De Jong Packing Co. v. United States Dep't of Agric., 618 F.2d 
1329, 1335 n. 7 (9th Cir.), cert. denied, 449 U.S. 1061 (1980) (PSA 
``incorporates the basic antitrust blueprint of the Sherman Act and 
other pre-existing antitrust legislation''); Armour & Co. v. United 
States, 402 F.2d 712, 722 (7th Cir. 1968) (``Congress gave the 
Secretary no mandate to ignore the general outline of long-time 
antitrust policy by condemning practices which are neither deceptive 
nor injurious to competition nor intended to be so by the party 
charged.'').
    \11\ See, e.g., Brooke Group Ltd. v. Brown & Williamson Tobacco 
Corp., 509 U.S. 209, 225 (1993) (the antitrust laws protect 
``competition, not competitors'') (emphasis in original) (quoting Brown 
Shoe Co. v. United States, 370 U.S. 294, 320 (1962)); Reiter v. 
Sonotone Corp., 442 U.S. 330, 343 (1979) (``Congress designed the 
Sherman Act as a `consumer welfare prescription' '') (quoting R. Bork, 
The Antitrust Paradox 66 (1978)); Sanderson v. Culligan Int'l Co., 415 
F.3d 620, 623 (7th Cir. 2005) (``The antitrust laws protect consumers, 
not producers. They favor competition of all kinds, whether or not some 
other producer thinks the competition `fair.' ''); Freeman v. San Diego 
Ass'n of Realtors, 322 F.3d 1133, 1154 (9th Cir. 2003) (``Inefficiency 
is precisely what the market aims to weed out. The Sherman Act, to put 
it bluntly, contemplates some roadkill on the turnpike to 
Efficiencyville.''); Chicago Prof'l Sports Ltd. P'ship v. National 
Basketball Ass'n, 95 F.3d 593, 597 (7th Cir. 1996) (``The core question 
in antitrust is output. Unless a contract reduces output in some 
market, to the detriment of consumers, there is no antitrust 
problem.'').
    \12\ Brooke Group, 509 U.S. at 225.
    \13\ The PSA may be broader than some antitrust provisions in that 
it prohibits acts that are likely to have a detrimental effect on 
competition rather than only those having an actual anticompetitive 
effect. See, e.g., De Jong, 618 F.2d at 1335 n. 7 (``the courts that 
have considered  202 have consistently looked to decisions under the 
Sherman Act for guidance, although recognizing that  202 in some cases 
proscribes practices which the Sherman Act would permit''); Armour & 
Co., 412 F.2d at 722 (``While Section 202(a) of the Packers and 
Stockyards Act may be broader than antecedent antitrust legislation 
found in the Sherman Act, Clayton Act, FTCA and ICA, there is no 
showing that there was any intent to give the Secretary of Agriculture 
complete and unbridled discretion to regulate the operations of 
packers.''). The point remains, however, that Section 202 does not 
permit either the agency or a private plaintiff to dispense with some 
showing of competitive injury--actual or likely--to prove a violation.
---------------------------------------------------------------------------
2. Every appellate court to have considered the issue has held Section 
        202 of the PSA requires a showing of competitive injury
    In light of Stafford, every appellate court to have construed 
Section 202 of the PSA has held that no violation of subsections (a) or 
(b) occurs without a showing of competitive injury. Eight different 
circuits have addressed the issue, and they have uniformly and 
resoundingly affirmed this understanding.\14\ In several of these 
cases, the agency argued its position directly to the court in 
question; \15\ in others, it filed amicus briefs urging the court to 
adopt its preferred construction.\16\
---------------------------------------------------------------------------
    \14\ Terry v. Tyson Farms, Inc., 604 F.3d 272, 276-79 (6th Cir. 
2010); Wheeler v. Pilgrim's Pride Corp., 591 F.3d 355 (5th Cir. 2009) 
(en banc); Been v. O.K. Indus., Inc., 495 F.3d 1217, 1230 (10th Cir. 
2007); Pickett v. Tyson Fresh Meats, Inc., 420 F.3d 1272, 1280 (11th 
Cir. 2005), cert. denied, 547 U.S. 1040 (2006); London v. Fieldale 
Farms Corp., 410 F.3d 1295, 1303 (11th Cir.), cert. denied, 546 U.S. 
1034 (2005); IBP, Inc. v. Glickman, 187 F.3d 974, 977 (8th Cir. 1999); 
Philson v. Goldsboro Milling Co., 1998 WL 709324 at *4-5 (4th Cir., 
Oct. 5, 1998); Jackson v. Swift Eckrich, Inc., 53 F.3d 1452, 1458 (8th 
Cir. 1995); Farrow v. United States Dep't of Agric., 760 F.2d 211, 215 
(8th Cir. 1985); De Jong, 618 F.2d at 1336-37; Pac. Trading Co. v. 
Wilson & Co., 547 F.2d 367, 369-70 (7th Cir. 1976); see also Armour & 
Co., 402 F.2d 712.
    \15\ IBP, 187 F.3d 974; Farrow, 760 F.2d 211; De Jong, 618 F.2d 
1329; Armour & Co., 402 F.2d 712.
    \16\ Terry, 604 F.3d 272; Wheeler, 591 F.3d 355.
---------------------------------------------------------------------------
    The Sixth Circuit thoroughly summed up the judicial landscape in 
its 2010 Terry decision. The court concluded that, while the question 
of ``whether a plaintiff asserting unfair discriminatory practices or 
undue preferences under  202(a) and (b) of the PSA must allege an 
adverse effect on competition to state a claim'' was new to the Sixth 
Circuit, other courts had addressed the question:

          This issue is not novel to other courts; it has been 
        addressed by seven of our sister circuits, with consonant 
        results. All of these courts of appeals unanimously agree that 
        an anticompetitive effect is necessary for an actionable claim 
        under subsections (a) and (b). For the reasons that follow, we 
        join this legion.\17\
---------------------------------------------------------------------------
    \17\ Terry, 604 F.3d at 276.

    In surveying court precedent, the Sixth Circuit noted the 
``prevailing tide'' of circuit court decisions holding ``that 
subsections (a) and (b) of  192 [PSA  202] require an anticompetitive 
---------------------------------------------------------------------------
effect,'' after which it concluded:

          The tide has now become a tidal wave, with the recent 
        issuance of the Fifth Circuit Court of Appeals' en banc 
        decision in Wheeler v. Pilgrim's Pride Corp., 591 F.3d 355 (5th 
        Cir. 2009) (en banc), in which that court joined the ranks of 
        all other Federal appellate courts that have addressed this 
        precise issue when it held that ``the purpose of the Packers 
        and Stockyards Act of 1921 is to protect competition and, 
        therefore, only those practices that will likely affect 
        competition adversely violate the Act.'' Wheeler, 591 F.3d at 
        357. All told, seven circuits--the Fourth, Fifth, Seventh, 
        Eighth, Ninth, Tenth, and Eleventh Circuits--have now weighed 
        in on this issue, with unanimous results.\18\
---------------------------------------------------------------------------
    \18\ Id. at 277 (lengthy string citation of supporting cases 
omitted).

    Tellingly, USDA participated in the Terry appeal as an amicus 
curiae and advanced the position that a showing of injury is not 
required for a Section 202(a) or (b) violation. The court expressly 
recognized USDA's involvement, noted USDA's argument that the court 
should read Section 202(a) and (b) to not require a showing of injury 
to competition, and pointedly concluded, ``We decline to do so.'' \19\
---------------------------------------------------------------------------
    \19\ Id. at 278.
---------------------------------------------------------------------------
    The agency offers no analysis undermining any of these court 
decisions, nor could it. The agency has participated in some capacity, 
either as a party or an amicus, in six of the ten appellate cases 
holding that competitive injury is an element of a Section 202 
violation. In light of this record of litigation futility, AMS is not 
free to ignore the prevailing judicial authority or seek to undo it 
through the rulemaking process.
3. When the PSA was enacted, the language of Sections 202(a) and (b) 
        was understood to proscribe conduct that harmed competition
    AMS blindly ignores the competitive injury requirement in Section 
202, instead implying the language of the section is malleable and open 
to interpretation. Rather than base this argument on any legal 
authority, AMS dredges up contemporaneous dictionary definitions of the 
terms and then seeks to impress them on the statute's language.\20\ The 
agency cites no authority for this proposed form of statutory 
construction, which borders on frivolous. In exercising its rulemaking 
authority, AMS must follow the canons of statutory interpretation. It 
is neither ``free to pour a vintage that [it] think[s] better suits 
present-day tastes'' \21\ nor otherwise permitted to construe a statute 
in a linguistic vacuum. The APA does not sanction such ``make-it-up-as-
the-agency goes-a-long'' exercises of regulatory power.
---------------------------------------------------------------------------
    \20\ 87 Fed. Reg. 60015-16.
    \21\ United States v. Sisson, 399 U.S. 267, 297 (1970).
---------------------------------------------------------------------------
    The relevant provisions of the Act prohibit ``unfair,'' ``unjustly 
discriminatory,'' and ``deceptive'' practices and devices, as well as 
``undue'' or ``unreasonable'' preferences and advantages and ``undue'' 
or ``unreasonable'' prejudices and disadvantages. All of these terms 
had established statutory and common-law antecedents that were well-
known to Members of Congress when the statute was enacted. Read in 
legal context, these terms concern only business conduct that has an 
actual or likely adverse effect on competition.\22\ Therefore, the 
interpretation given by the courts to Sections 202(a) and (b) is not 
merely the best reading but rather is the only permissible reading of 
the statute.
---------------------------------------------------------------------------
    \22\ Wheeler, 591 F.3d at 364 (Jones, J., concurring). The term 
``unreasonable,'' for example, had a clear antitrust meaning by the 
time of the passage of the PSA. The Supreme Court had used that 
terminology to distinguish between those business practices that 
unlawfully restrained competition from those that were permissible 
under the Sherman Act. See, e.g., Chicago Bd. of Trade v. United 
States, 246 U.S. 231 (1918); Standard Oil Co. v. United States, 221 
U.S. 1 (1911).
---------------------------------------------------------------------------
    The language of Sections 202(a) and (b) is lifted almost verbatim 
from provisions of the ICA and the FTCA.\23\ By the time of the PSA's 
passage in 1921, these statutes had been addressed a number of times by 
the Supreme Court. There was no question at the time that the aims of 
those laws were to preserve or restore competition and prevent 
monopolistic practices either generally, in the case of the FTCA, or in 
specific economic sectors, in the case of the ICA.\24\ The language 
used in those enactments was understood to effectuate those 
Congressional goals.
---------------------------------------------------------------------------
    \23\ 81 Fed. Reg. at 92570.
    \24\ See generally Wheeler, 591 F.3d at 365-70 (Jones, J. 
concurring) (collecting cases).
---------------------------------------------------------------------------
    Words used in a statute that ``have acquired a specialized meaning 
in the legal context must be accorded their legal meaning.'' \25\ When 
Congress transports phrases from one statute to another, there is a 
strong presumption that adoption of such terminology ``carries with it 
the previous judicial interpretations of the wording.'' \26\ Moreover, 
Congress ``presumably knows and adopts the cluster of ideas that were 
attached to each borrowed word in the body of learning from which it 
was taken and the meaning its use will convey to the judicial mind 
unless otherwise instructed.'' \27\ ``[I]f a word is obviously 
transplanted from another legal source, whether the common law or other 
legislation, it brings its soil with it.'' \28\ Here, nothing in 
Sections 202(a) and (b) of the PSA suggests that Congress intended the 
words used in those provisions to have a meaning different from the 
meaning given them in other statutes.\29\ Rather, Congress used terms 
of art to describe the unlawful practices prohibited by Sections 202(a) 
and (b). The ``plain language'' rule requires that those terms of art 
be given their commonly understood meaning at the time of the PSA's 
passage. Accordingly, the statutory language itself requires that 
either the agency or a private plaintiff prove a competitive injury to 
show a violation of Sections 202(a) and (b).
---------------------------------------------------------------------------
    \25\ Buckhannon Bd. & Care Home, Inc. v. West Va. Dep't of Health & 
Human Resources, 532 U.S. 598, 615 (2001) (emphasis in original).
    \26\ Carolene Prods. Co. v. United States, 323 U.S. 18, 26 (1944).
    \27\ Morissette, 342 U.S. at 263.
    \28\ Moskal v. United States, 498 U.S. 103, 121 (1990) (quoting F. 
Frankfurter, Some Reflections on the Reading of Statutes, 47 Colum. 
L.R. 527, 537 (1947)).
    \29\ Although resort to the legislative history of the PSA is 
unnecessary for a proper construction of Sections 202(a) and (b), that 
legislative history also confirms that Congress understood the terms 
used in the statute to address anticompetitive conduct. See H.R. Rep. 
No. 67-77, at 2-10 (1921) (detailed discussion of Supreme Court cases 
construing the language of the ICA and the FTCA).
---------------------------------------------------------------------------
4. The structure of Section 202 of the PSA mandates a competitive 
        injury requirement
    The existence of a competitive injury requirement is also manifest 
from the structure of the statute. Sections 202(a) and (b) do not ban 
all forms of economic discrimination, preference, or advantage. Rather, 
they prohibit only those that are ``unjust,'' ``undue,'' ``unfair'' or 
``unreasonable.'' Therefore, there must be some forms of 
discrimination, preference or advantage that are legitimate and some 
that are not. Both the courts and the agency must have an objective 
standard by which to distinguish lawful conduct from unlawful conduct. 
The explicit requirement of competitive injury in other subsections of 
Sections 202 demonstrate precisely what Congress intended that 
objective standard to be. When examined in context, the only reasonable 
conclusion that can be drawn is that Sections 202(a) and (b) are 
intended to be catch-all provisions that sweep up anticompetitive 
practices not otherwise prohibited by the more narrowly drawn 
subsections of the statute.\30\ Otherwise, Sections 202(a) and (b) 
would prohibit activities specifically exempted from the other Section 
202 subsections, depriving those sections of any meaning and rendering 
them null, contrary to the canons of interpretation.
---------------------------------------------------------------------------
    \30\ Wheeler, 591 F.3d at 371 (Jones, J., concurring).
---------------------------------------------------------------------------
    Without the competitive injury requirement, there is no objective 
standard by which courts, or the agency, can separate prohibited 
practices from lawful ones. Cut loose from their moorings in 
competition law, the terms ``discrimination,'' ``preference'' and 
``advantage'' would have broad meanings that extend well beyond the 
economic realm. Yet, even AMS has not suggested that the PSA applies to 
noncommercial practices. The agency's own understanding of the statute, 
therefore, confirms that Congress intended the PSA to be economic 
legislation governing commercial relationships. Once that fact is 
recognized, it follows that the terms ``unfair,'' ``unjust,'' ``undue'' 
and ``unreasonable'' must also have economic content. The only way to 
give those terms such content is to apply a clear set of objective 
economic principles that allow a court or agency to ferret out those 
practices that are harmful--that is, ``unfair,'' ``unjust,'' ``undue,'' 
or ``unreasonable''--from those that are efficient and beneficial to 
competition overall based on the legal definitions of these terms when 
the PSA was adopted. The competitive injury requirement, in turn, is 
the only way to do so consistent with the structure and purposes of 
Section 202.
    Any other interpretation would make it virtually impossible for a 
business subject to the PSA to order its affairs rationally to comply 
with Section 202(a) or (b). What is ``unfair,'' ``unjust,'' ``undue,'' 
or ``unreasonable'' would depend solely on what an agency adjudicator 
or, in civil litigation, a judge or jury decided that it meant in any 
particular case. To exercise that function, the agency or court would 
have to make value judgments, choosing one set of priorities over 
another without any guidance from the statutory text or any other 
source about which value or set of values is to be preferred in any 
particular case. Such an approach raises significant constitutional 
issues, but in any event, there is no need to address those matters 
because nothing in the statutory text suggests Congress intended to 
empower the agency or the courts to make such standardless value 
judgments.\31\
---------------------------------------------------------------------------
    \31\ Id. at 365 (Jones, J., concurring) (PSA ``certainly did not 
delegate any such free value-choosing role to the courts'') (quoting R. 
Bork, The Antitrust Paradox 53 (1993 ed.)).
---------------------------------------------------------------------------
    In sum, the plain language of Section 202 of the PSA, its aims, and 
its structure reveal that Congress intended that the practices banned 
by subsections (a) and (b) be those that harm competition in some 
fashion. That conclusion has been unanimously confirmed by every 
appellate court to address the issue. Therefore, the competitive injury 
requirement is not merely some gloss on an allegedly ambiguous 
provision but an integral and permanent statutory command.
5. Any effort to omit the PSA's competitive injury requirement exceeds 
        AMS's statutory mandate and raises a major question requiring 
        Congressional direction
    Congress has not authorized AMS to forego the competitive injury 
requirement of Section 202. The Proposed Rule ultimately stems from 
rulemaking driven by the 2008 Farm Bill.\32\ The 2008 Farm Bill granted 
no authority to AMS to promulgate a rule that excuses the competitive 
injury requirement of Section 202(a) or (b). Section 11006 of the 2008 
Farm Bill stated in pertinent part that the ``Secretary of Agriculture 
shall promulgate regulations with respect to the Packers and Stockyards 
Act, 1921 (7 U.S.C.  181 et seq.) to establish criteria that the 
Secretary will consider in determining whether an undue or unreasonable 
preference or advantage has occurred in violation of such Act.'' \33\ 
The farm bill, therefore, authorized only a rule setting forth criteria 
that the agency would use in determining whether a violation of Section 
202(b) of the PSA has occurred. It did not authorize AMS to alter, 
abrogate, or ignore the fundamental elements of the statute.
---------------------------------------------------------------------------
    \32\ Pub. L. 100-246.
    \33\ Id.  11006(1).
---------------------------------------------------------------------------
    Not only did the plain language of the 2008 Farm Bill make that 
clear, but the legislative record unmistakably demonstrates that 
Congress authorized no radical alteration of Sections 202(a) or (b). 
The original draft of the 2008 Farm Bill proposed by Senator Harkin 
contained an express provision eliminating the competitive injury 
requirement under Sections 202(a) and (b). Congress removed that 
language from the final enactment. Accordingly, the 2008 Farm Bill did 
not authorize AMS to forego the competitive injury element of Section 
202 violations.
    When AMS's predecessor agency charged with PSA implementation, the 
Grain Inspection, Packer and Stockyards Administration (GIPSA), 
nonetheless tried to read into the 2008 Farm Bill a mandate to 
circumvent the injury to competition requirement, Congress reacted 
swiftly and clearly by preventing GIPSA from finalizing an overly broad 
rulemaking for several years.\34\ Moreover, the 2014 and 2018 Farm 
Bills did not renew the call for criteria, nor did they make any 
reference to GIPSA's 2010 rulemaking that had started--and then had 
been halted by Congress--in response to the 2008 Farm Bill. And they 
certainly did not indicate Congress supported attempts to read the 
injury to competition requirement out of the PSA. Had Congress intended 
for the agency to reinterpret Sections 202(a) and (b), Congress readily 
could have clarified as much in the 2014 or 2018 Farm Bill, especially 
in light of the considerable controversy caused by GIPSA's 2010 
proposed rule. Instead, the 2014 and 2018 Farm Bills were silent on the 
topic, suggesting, if anything, that Congress felt it was time to move 
on from the issue raised in that rulemaking. When GIPSA ultimately 
promulgated an appropriately tailored rulemaking, resulting in 9 CFR  
201.211, Congress did not object.
---------------------------------------------------------------------------
    \34\ See Consolidated and Further Continuing Appropriations Act, 
2015, H.R. 83, 113th Cong.  731 (2014); Consolidated Appropriations 
Act, 2014, H.R. 3547, 113th Cong.  744 (2014); Consolidated and 
Further Continuing Appropriations Act, 2013, H.R. 933, 113th Cong.  
742-43 (2013); Consolidated and Further Continuing Appropriations Act, 
2012, H.R. 2112, 112th Cong.  721 (2011).
---------------------------------------------------------------------------
    Given this clear direction from Congress, AMS's attempt to read the 
injury to competition requirement out of the PSA and to effectively 
expand the PSA into a general anti-discrimination law raises a major 
question requiring Congressional direction. As such, AMS may not expand 
its regulatory framework to change or undermine the current application 
of Sections 202(a) and (b). As recently stated by the Supreme Court in 
West Virginia v. EPA, in certain cases of ``economic and political 
significance,'' an agency must demonstrate ``clear Congressional 
authorization'' to exercise its powers.\35\ The PSA is a hundred-year-
old law, and at no point in its history has it been applied to broadly 
address the type of conduct encompassed in the Proposed Rule or to 
prohibit conduct that does not result in an injury or the likelihood of 
injury to competition. Congress knows what the PSA does and does not 
do, and only Congress may expand the law's reach to cover new conduct. 
Through the present series of rulemakings, of which this Proposed Rule 
is a part, AMS seeks to completely upend animal production contracting 
in the livestock and poultry industry. These sectors account for more 
than $1 trillion of annual economic impact and touch all fifty states, 
and they would be drastically affected by a change in the injury to 
competition requirement. Any attempt to rewrite by regulation the PSA's 
injury to competition requirement is the very definition of an issue of 
``economic and political significance.'' AMS cannot take it upon itself 
to dramatically expand the scope of such a longstanding statute.
---------------------------------------------------------------------------
    \35\ 142 S. Ct. 2587, 2613-14 (2022) (explaining that in certain 
cases of ``economic and political significance,'' an agency must 
demonstrate ``clear Congressional authorization'' to exercise its 
powers); see also Nat'l Fed'n of Ind. Business v. OSHA, 142 S. Ct. 661 
(2022) (per curiam) (rejecting the Occupational Safety and Health 
Administration's claims of regulatory authority regarding emergency 
temporary standards imposing COVID-19 vaccination and testing 
requirements on a large portion of the national workforce); Ala. Ass'n 
of Realtors v. HHS, 141 S. Ct. 2485 (2021) (per curiam) (rejecting the 
Centers for Disease Control and Prevention's claims of regulatory 
authority regarding a nationwide eviction moratorium).
---------------------------------------------------------------------------
B. The Proposed Rule is unconstitutionally vague
    A regulation having the force of law must give persons and entities 
subject to it fair notice of what is prohibited so that they may comply 
with it. Several portions of the Proposed Rule fail this basic 
constitutional test. Under the due process clause of the Fifth 
Amendment, a rule of law must define a legal violation ``with 
sufficient definiteness that ordinary people can understand what 
conduct is prohibited 
and . . . in a manner that does not encourage arbitrary and 
discriminatory enforcement.'' \36\ Any legal rule failing to meet that 
standard is ``void for vagueness.'' While the vagueness doctrine is 
most often employed in criminal cases, it has also been applied in 
cases in which a party faced civil sanctions as well.\37\
---------------------------------------------------------------------------
    \36\ Skilling v. United States, 130 S. Ct. 2896, 2927-28 (2010).
    \37\ Gentile v. State Bar, 501 U.S. 1030, 1048-50 (1991) 
(invalidating state bar disciplinary rule under the void-for-vagueness 
doctrine).
---------------------------------------------------------------------------
    The Supreme Court has applied the void-for-vagueness doctrine to 
strike down economic regulations that are remarkably similar to the 
Proposed Rule. In Cline v. Frink Dairy Co.,\38\ the Court held 
unconstitutional under the Fourteenth Amendment Due Process Clause a 
Colorado antitrust statute prohibiting certain business combinations 
except those that were necessary to obtain a ``reasonable profit.'' 
Similarly, in United States v. L. Cohen Grocery Co.,\39\ the Court held 
unconstitutional Section 4 of the Lever Act, which made unlawful any 
``unjust or unreasonable rate or charge'' for ``necessities.'' And in 
International Harvester Co. v. Kentucky,\40\ the Court concluded that a 
Kentucky antitrust statute proscribing the fixing of prices at levels 
``greater or less than the real value of the article'' was 
unconstitutionally vague. The fatal flaw in each law was the 
indeterminate liability standard imposed. None of the statutes 
proscribed any specific conduct but rather made illegality turn on 
``elements . . . [that] are uncertain both in nature and degree of 
effect to the acutest commercial mind.'' \41\
---------------------------------------------------------------------------
    \38\ 274 U.S. 445, 453-65 (1927).
    \39\ 255 U.S. 81 (1921).
    \40\ 234 U.S. 216 (1914).
    \41\ Id. at 223.
---------------------------------------------------------------------------
    The Proposed Rule includes many vaguely or even undefined terms, 
but failure to comply with those terms would result in a regulatory 
violation. For example, ``market vulnerable individual'' would be 
defined so broadly as to include potentially anyone. It is unclear how 
to determine whether a contract is ``generally or ordinarily offered,'' 
when ``differential contract performance or enforcement'' would be 
considered to have occurred, or what it means to ``inhibit market 
access,'' ``take an adverse action,'' or use a ``pretext.'' The 
Proposed Rule would prohibit conduct that is deemed to be a ``prejudice 
or disadvantage'' or ``retaliation,'' \42\ but the proposal provides 
only examples, not definitive lists or definitions, making it 
impossible for a company to know whether any given conduct would be 
allowed under the regulation. Because these provisions purport to 
identify conduct that would be violative or specific records that would 
need to be kept to demonstrate compliance, they must be spelled out in 
a definite manner so that regulated entities can understand how to 
comply with the Proposed Rule. The proposal would likewise prohibit 
``pretexts'' without elaborating on what is a pretext and what is a 
legitimate explanation, or even how ``legitimacy'' might be 
determined.\43\ The proposal would impose a strict recordkeeping 
requirement without specifying what records must be kept or, again, 
what conduct would even trigger the recordkeeping requirements.\44\
---------------------------------------------------------------------------
    \42\ Proposed  201.304(a)(2), 201.304(b)(3).
    \43\ Proposed  201.306(b)-(d).
    \44\ Proposed  201.304(c)(2).
---------------------------------------------------------------------------
    These criteria provide virtually no guidance on when conduct would 
be unlawful. Rather, an act could be determined to be unlawful under 
the Proposed Rule only after some event has occurred. A poultry dealer 
or other entity subject to Sections 202(a) and (b) acting in utmost 
good faith and ordering its affairs in the most rational fashion in an 
effort to comply with the Proposed Rule could not reasonably 
anticipate, much less determine with any reasonable degree of 
certainty, what business practices would ultimately be held illegal 
under these and other provisions. The Proposed Rule, therefore, cannot 
withstand constitutional scrutiny. It must be withdrawn.
C. An insufficient administrative record fails to support the Proposed 
        Rule
    The Proposed Rule is a solution in search of a problem, as 
evidenced by an insufficient administrative record. Perpetuating a 
fatal flaw that has plagued rulemaking on this topic for thirteen 
years, AMS fails to identify any actual harmful conduct requiring this 
regulation. Yet it would impose substantial cost and administrative 
burden on the entire poultry production industry with no tangible 
benefit.
    The preamble to the Proposed Rule is littered with vague allusions 
to potentially violative conduct and generalized complaints lacking 
sufficient detail for meaningful evaluation. AMS has certainly shown no 
systemic or endemic problem in poultry contracting requiring such an 
extreme intervention to correct. The agency's rationale repeatedly 
falls back on broad conclusory statements or incomplete market 
analysis. For example, in describing the perceived need for market 
vulnerable individual provisions, AMS can state only that certain 
groups ``arguably'' are exposed to risk of abuse and that 
``undoubtedly'' the type of discrimination contemplated in the Proposed 
Rule exists ``in some form today,'' without citing a single actual 
example of this occurring.\45\ More broadly, the entire rulemaking 
seems to simply presume there are widespread ``market abuses observed 
in the sector today'' without actually identifying any instances in 
which this particular set of regulations would be needed.\46\
---------------------------------------------------------------------------
    \45\ 87 Fed. Reg. at 60013.
    \46\ Id.
---------------------------------------------------------------------------
    The preamble is heavy on economic theory and light on actual facts 
to support the rulemaking. Stripped to its essence, the factual 
administrative record to support this rulemaking consists of references 
to unspecified allegations of unfair treatment by producers, a highly 
selected set of court cases, and similar past rulemakings that never 
came to fruition. None of these are sufficient to establish the need 
for such an untenable set of regulations. The preamble is rife with 
vague references of ``concerns'' that have been ``reported to USDA'' 
but never acted on.\47\ AMS provides no details about these purported 
complaints, including what specifically they alleged happened, when 
they were lodged, whether they were substantiated, how AMS investigated 
or responded to them, what conclusions AMS reached, or even how many 
AMS has received. The long history of rulemaking on this topic has been 
peppered with allusions to thinly described complaints, but never has 
AMS provided any real detail. If the unspecified ``concerns . . . 
reported to USDA'' reflected PSA violations, why did USDA not 
investigate them and take enforcement action under the statute? 
Tellingly, AMS's response to this question in the preamble is 
essentially that AMS did not think it had statutory authority to do so. 
At the least, USDA might have developed a factual record to inform 
policy decisions. Instead, it appears USDA was content to simply assume 
these vague allegations were true. Moreover, many of these vague 
allegations seem to have come from a 2010 listening session,\48\ and 
some even earlier.\49\ They are long out of date and have never been 
verified or subjected to the searching scrutiny warranted to support 
Federal rulemaking. Unsubstantiated complaints lodged in 2010 and 2004 
cannot meaningfully support a 2022 rulemaking under vastly different 
economic conditions.
---------------------------------------------------------------------------
    \47\ Id.
    \48\ Id.
    \49\ Id. at 60013 n. 32.
---------------------------------------------------------------------------
    The only concrete examples of alleged PSA violations in the entire 
proposal come in the form of selected court cases. However, many of 
these cases do not actually stand for the proposition for which they 
are cited, and they appear to have been opportunistically selected and 
used.
    For example, AMS cites Swift & Co. v. United States \50\ for the 
proposition that ``price discrimination in favor of a larger grocery 
store chain, and higher prices to its competitors, are another type of 
unjust discrimination that the Act has prevented.'' \51\ However, AMS 
neglects to mention that in Swift, a prerequisite of the holding was a 
finding that there was substantial evidence of injury to 
competition.\52\ Similarly, AMS's reliance on Denver Union Stock Yard 
Co. is misplaced because in that case, the Supreme Court specifically 
addressed the discrimination at issue in the context of marketplace 
harm, explaining that ``[a]s written [the PSA] is aimed at all monopoly 
practices.'' \53\ AMS cites to the Terry decision described above to 
support AMS's position that discriminatory or retaliatory acts by 
packers or integrators intended to prevent transfer of rents negatively 
affects efficiency, but in Terry, the Sixth Circuit actually held there 
was no PSA violation because the plaintiff could not point to a 
competitive injury.\54\ AMS similarly misconstrues the James case. AMS 
describes the James case as standing for the proposition that ``fifty-
four poultry growers sued the integrator for retaliatory actions and 
were awarded $10 million in damages as a result.'' \55\ But in fact, in 
James, the Supreme Court of Oklahoma reviewed evidentiary proceedings 
from the trial that AMS referenced, overturned the verdict, and granted 
defendants a new trial citing concerns with the conduct of the 
trial.\56\ Similarly, AMS cites Philson v. Cold Creek Farms, Inc. for 
the proposition that skipping placements and terminating contracts with 
turkey growers allegedly in retaliation for growers voicing complaints 
about the integrator.\57\ Yet Philson was a ruling on the defendants' 
motion for summary judgment and thus focused on the sufficiency of the 
factual record. Importantly, in denying defendants' motion to dismiss 
with respect to alleged PSA violations, the court noted Stafford's 
emphasis that the PSA was fundamentally focused on preventing 
monopolistic practices and concluded that ``[c]onsequently, only those 
unfair, discriminatory or deceptive practices adversely affecting 
competition are prohibited by the Act.'' \58\ The Philson court 
expressly rooted its denial of the defendants' motion in findings that 
triable issues of fact remained as to whether the complained-of conduct 
caused injury to competition.\59\
---------------------------------------------------------------------------
    \50\ 317 F.2d 53, 55-56 (7th Cir. 1963).
    \51\ 87 Fed. Reg. at 60016.
    \52\ 317 F.2d at 55.
    \53\ Denver Union Stock Yard Co. v. Producers Livestock Mktg., 356 
U.S. 282, 289-90 (1958).
    \54\ Terry v. Tyson Farms, Inc., 604 F.3d 272 (6th Cir. 2010).
    \55\ 87 Fed. Reg. at 60026.
    \56\ James v. Tyson Foods, Inc., 292 P.3d 10, 18-19 (Okla., 2012).
    \57\ 87 Fed. Reg. at 60028.
    \58\ Philson v. Cold Creek Farms, Inc., 947 F. Supp. 197, 200-02 
(E.D.N.C. 1996).
    \59\ E.g., id. at 201-02 (``In addition, a genuine issue of 
material fact remains as to whether [Defendant's] method of computing 
`head sold' was injurious to competition and unfair, discriminatory or 
deceptive.'').
---------------------------------------------------------------------------
    But even if one were to overlook the actual holdings of these cases 
and take AMS's explanations at face value, these cases suggest that 
actual serious PSA violations are rare--AMS cites only a handful of 
cases over more than half a century--and that when they do occur, the 
PSA provides USDA or harmed individuals with ample statutory authority 
to pursue them. If anything, these cases show that the current 
regulatory approach is working. They certainly do not support 
additional, burdensome rulemaking. Likewise, poultry growing contracts 
are also subject to state contract and tort law, and one would expect 
extensive state-law litigation if integrators were engaging in abusive 
contracting practices. That has not happened, again reinforcing that 
the purported evils AMS is trying to address simply do not exist.
    Finally, AMS recounts some of USDA's past PSA rulemaking efforts, 
seeming to imply that because USDA decided to initiate rulemaking in 
the past, there must a problem that requires solving. But a Federal 
agency cannot simply conjure a problem into existence by saying it 
tried to address that problem in the past, nor does the fact that 
rulemaking occurred legitimize that administrative record. As discussed 
above, Congress specifically objected to many aspects of those past 
rulemakings, and the rules were withdrawn.
    In short, nothing in the record indicates there is pervasive, or 
even occasional, discrimination, retaliation, or deception of the type 
raised in the Proposed Rule, much less that a burdensome series of 
contracting restrictions, compliance hoops to jump through, and 
recordkeeping obligations is justified to address it. This flawed 
administrative record renders the Proposed Rule arbitrary and 
capricious under the APA.\60\
---------------------------------------------------------------------------
    \60\ 5 U.S.C.  706(2)(A).
---------------------------------------------------------------------------
II. The Proposed Rule Is Fundamentally Flawed and Unworkable
    The Proposed Rule would do much harm and little if any good for 
anyone involved. It suffers from several critical overarching flaws, as 
well as flaws specific to each provision.
A. The Proposed Rule fails to expressly protect and define reasonable 
        business conduct
    First, the regulatory text of the Proposed Rule fails to address 
legitimate or reasonable business decisions. The reality of business 
dealings means that in many cases two parties will be treated 
differently simply because of economic conditions or business 
realities. One grower might be offered a contract whereas another was 
not simply because of processing plant capacity. One might be offered 
an opportunity to raise birds to different specifications because that 
grower has established a track record of successfully innovating her 
husbandry practices. A grower might have a contract terminated because 
the grower mistreated birds. Although all of these are reasonable and 
appropriate business justifications for differential treatment, on the 
surface, they could also appear to violate the Proposed Rule. It is 
essential that regulated entities be able to make these and other 
reasonable business decisions with confidence they will not later face 
liability under the Proposed Rule.
    Although AMS recognizes in the preamble its intent to ``leav[e] 
room for differential treatment based on legitimate business 
purposes,'' \61\ that protection is not clearly enshrined in the 
regulatory text itself. Specifically, the Proposed Rule fails to 
recognize that differential treatment based on a reasonable business 
decision does not violate proposed Sections 201.304 or 201.306, 
regardless of any other factors. Although AMS references ``legitimate'' 
business decisions, a more appropriate approach would be to create a 
safe harbor for ``reasonable'' business decisions. Courts and agencies 
are well versed in applying reasonableness standards, whereas 
``legitimacy'' implies value judgments that are far more difficult and, 
in any event, inappropriate for evaluating business decisions. Focusing 
on ``reasonable business decisions'' would also better harmonize the 
Proposed Rule with existing 9 CFR  201.211, creating better 
consistency across AMS's PSA regulations.
---------------------------------------------------------------------------
    \61\ 87 Fed. Reg. at 60016.
---------------------------------------------------------------------------
    Moreover, AMS fails to identify how a company would be expected to 
demonstrate that an action was based on a reasonable business decision. 
Without clear direction, regulated entities would be forever exposed to 
the risk of AMS deciding after the fact that the company lacked 
sufficient documentation to demonstrate its decision was appropriate.
    Equally as important, the emphasis must be on demonstrating the 
existence of a reasonable business decision, as opposed to lack of 
existence of any other explanation. Business decisions must be presumed 
to be reasonable unless proven otherwise. Business relationships, 
especially long-term ones, can be complicated.
    Examples of complicated fact patterns abound. Consider, for 
instance, a poor performing grower who is unsatisfied with his pay and 
initiates a dispute with an integrator and who then grossly mismanages 
a flock and creates serious bird welfare issues. The integrator might 
reasonably decide to terminate the contract with that grower based on 
mistreatment of the birds, regardless of any other considerations, and 
it should be enough for the integrator to demonstrate that basis for 
the adverse action.
    Or consider a grower who is signed to a 1 year contract to make up 
grow-out capacity after part of a large multi-house farm is destroyed 
by a fire. After the year-long contract is up, the larger farm is once 
again operational, the additional grow-out capacity is no longer 
needed, and the integrator elects not to renew the grower's contract. 
If the temporary grower is a market vulnerable individual, how would 
the integrator demonstrate the non-renewal was for appropriate reasons? 
Or consider the same example, but several temporary growers were 
brought on board for the year, some of whom were market vulnerable 
individuals and some of whom were not, and due to demand increase, the 
integrator decides to convert some of these temporary growers to 
longer-term growers by renewing their contracts. How is the integrator 
to evaluate the growers and justify its decisions? Would it have to 
prioritize renewing contracts with the market vulnerable individuals?
    The Proposed Rule fails to provide any guidance on how a regulated 
entity could document its business decisions in these and many other 
complicated scenarios.
B. Issues with proposed Section 201.302--Market Vulnerable Individual
    AMS proposes an extremely broad and subjective definition of 
``market vulnerable individual.'' Under the proposed definition, nearly 
anyone could be a market vulnerable individual in one way or another. 
Individuals are multifaceted and could be considered members of dozens, 
if not hundreds, of groups. So long as a person might be identified 
with even one ``group'' whose members are at a ``heightened risk'' of 
``adverse treatment,'' the person qualifies as a market vulnerable 
individual. This extremely broad definition would in effect require a 
company to assume every grower is a market vulnerable individual. This 
in turn would create tremendous administrative burden and stifle the 
free market contracting that has helped make chicken production so 
efficient for consumers and so rewarding for growers.
    The proposal overlooks the extremely complex nature of individual 
identities. In reality, nearly everybody could identify an aspect of 
his or her personhood that could be associated with a group whose 
members are at heightened risk of adverse treatment. The proposed 
definition goes well beyond concepts of protected classes familiar 
under Equal Protection Clause law and instead encompass every facet of 
a person's appearance, mannerisms, attitudes, actions, beliefs, 
affiliations, lineage, and so on. Any individual is almost certainly a 
member of a group that puts the individual at heightened risk of 
adverse treatment as well as a group that makes favorable treatment 
more likely. The traits that make one a market vulnerable individual 
might vary by community or might change over time. An individual's 
associations with different groups might change over time as well; if a 
person was once part of a group but no longer is, would that person 
still be considered a market vulnerable individual? It is impossible to 
fully disentangle the complex nature of individuals, but AMS's proposal 
would reduce all business decisions to an exercise of identifying every 
way in which an individual might face a disadvantage and then requiring 
the integrator to prove that no such disadvantage occurred, in every 
single interaction with every single grower.\62\
---------------------------------------------------------------------------
    \62\ Notably, the Proposed Rule also appears to overlook 
definitions used in other USDA programs that appear to have similar 
goals, providing no analysis of how its proposed definition would 
differ or be similar to those or whether it considered basing its 
approach on other programs' definitions instead. See, e.g., 7 U.S.C. 
2003(e)(1) (defining ``socially disadvantaged groups'' of farmers or 
ranchers for USDA target participation rates in certain regulatory 
programs as groups ``whose members have been subjected to racial, 
ethnic, or gender prejudice because of their identity as members of a 
group without regard to their individual qualities'').
---------------------------------------------------------------------------
    In fact, read plainly, the proposal would lead to absurd results, 
with market vulnerable individual protection extending to many people 
who ought not receive protection. For example, individuals convicted of 
animal cruelty offenses would almost certainly be part of a group 
(known animal abusers) who are heightened risk of adverse treatment in 
animal production contracting (no integrator would want to entrust its 
birds to a known animal abuser), yet AMS's proposal would appear to 
protect them as market vulnerable individuals. Ironically, as proposed, 
if an integrator perceives a grower to be an animal abuser (a group 
whose members are at heightened risk of adverse treatment in poultry 
contracting), and that grower in fact abuses chickens, it might be 
impossible for the integrator to terminate the grower's contract due to 
the abuse because the contract termination would be an adverse action 
against someone the integrator perceives to be a market vulnerable 
individual on account of that person being a market vulnerable 
individual.
    Many other unsavory traits could also trigger market vulnerable 
individual protection, with the ironic and unfortunate result that 
AMS's proposal could actually make it more difficult to refuse dealings 
with or to take adverse action against such people. Surely AMS does not 
intend such absurd outcomes, but the overly broad and nebulous concept 
of a market vulnerable individual all but invites such problems and the 
accompanying legal expenses to resolve them.
    The Proposed Rule could lead to situations that are less absurd but 
just as difficult. Consider an integrator is approached by someone who 
wants to raise chickens but who does not speak English. This person 
presumably would be a market vulnerable individual. But none of the 
integrator's farm service technicians speak the prospective grower's 
language, and it would be impossible for them to effectively 
communicate with the grower and ensure the grower is able to raise 
birds to the integrator's standards. If the integrator declines to sign 
a contract with this prospective grower for this reason, the proposal 
would appear to treat that as an adverse action based on the 
individual's perceived status as a market vulnerable individual, yet 
doing business would seem to be impossible in this situation.
    Moreover, under the proposal, it is entirely unclear how to 
determine whether a regulated entity ``perceives someone to be a market 
vulnerable individual. For example, which employee's perception is 
relevant--the employee who interacts with the grower, the employee who 
approves the contract, the employee who makes placement decisions, or 
any of the many other employees likely involved in managing the grow-
out process? What if one employee perceives the grower to be a market 
vulnerable individual, but another does not? What if three employees 
are jointly involved in a decision with respect to a grower, and one 
perceives the grower to be a market vulnerable individual while the 
other two do not? What if an employee incorrectly perceives an 
individual to be a market vulnerable individual, or perceives someone 
to be a market vulnerable individual for an incorrect reason? What if 
an employee's perception changes over time or is corrected someone 
else? What if a grower indicates he is not a market vulnerable 
individual?
    The proposal also leaves it unclear how to determine what 
constitutes a ``group,'' how to assess that group's ``risk'' of adverse 
treatment, and what amount of risk differential constitutes a 
``heightened risk,'' again reinforcing that virtually anyone could be a 
market vulnerable individual for a myriad of reasons.
    The result of this proposed definition would be an avalanche of 
paperwork. Integrators would be forced to defensively document every 
interaction and business decision for every actual or prospective 
grower to demonstrate that individual was not treated adversely due to 
his or her status as a market vulnerable individual. The administrative 
cost and hassle would be immense and would impose substantial costs on 
integrators and growers. With significantly greater stakes for making a 
``wrong'' decision, integrators would face a significant disincentive 
to bringing on new growers or taking any actions that could create 
their exposure with regards to market vulnerable individuals.
C. Issues with proposed Section 201.304(a)--Prohibited Bases
    Proposed Section 201.304(a) suffers from numerous issues in 
addition to those mentioned above.
    As discussed above, many critical terms used in this provision are 
vague (e.g., ``inhibit market access,'' ``adverse action,'' ``market 
vulnerable individual''). Without clear and concrete definitions, it is 
impossible to determine what conduct would violate this section and 
thus how to comply. The non-exhaustive list of conduct that constitutes 
prejudices or disadvantages makes it impossible to know in advance what 
is prohibited. It is likewise unclear when conduct is said to 
``inhibit'' market access or how much ``inhibition'' must occur for 
there to be a violation. For example, someone new to farming might be 
considered a market vulnerable individual under the proposal because 
new farmers are riskier business partners than established partners. If 
an integrator asks someone new to farming to take modest additional 
steps to demonstrate her fitness as a farmer, but does not make the 
same request of a longtime farmer, has the integrator ``inhibited mark 
access'' of a market vulnerable individual? These vague terms expose 
companies to arbitrary after-the-fact review and enforcement. All of 
the scenarios described in the sections above illustrate the very real 
challenges and costs regulated entities would face in trying to 
determine what conduct is appropriate.
    It is also unclear how one would determine whether contract terms 
are ``less favorable,'' especially when there are multiple terms 
involved. One farmer might prefer a short-term contract whereas another 
might prefer a longer-term contract. These preferences might also vary 
by geography. Similarly, it is unclear how to evaluate contracts where 
multiple terms differ. If a contract offered a higher guaranteed base 
rate but lower potential overall compensation because of lower bonus 
pay opportunities, would that be a more or less favorable term? It 
might depend on the individual farmer's preferences.
    It is also unclear how contracts entered into at different times, 
in different regions, or in different economic conditions would be 
compared. Regional economic issues, such as land prices, natural 
disaster risk, or fuel prices might require different contracting 
approaches even if the growers ultimately earn the same net profit, but 
it is unclear whether arrangements like this would be allowed under the 
Proposed Rule. If integrators were forced to harmonize all contracts 
across regions or time, it could result in windfalls for some growers 
or arbitrary cuts for others.
    Likewise, it is nearly impossible to determine when differential 
contract performance or enforcement might violate the Proposed Rule. 
Integrators manage hundreds or thousands of grow-out contracts, and by 
necessity, that process requires business judgment. An integrator might 
reasonably excuse a one-time issue with a longtime grower who has a 
proven track record, whereas that same issue might need require 
contract action with a new grower. The same goes with deciding whether 
to enter, terminate, or renew a contract.
    These provisions would significantly deter entering into new 
contracts or new grower relationships, both because the act of entering 
into a new contract or relationship would trigger comparisons with all 
other contracts, and because it would be difficult to exit a 
contractual relationship with a poor performing or inattentive grower. 
A rational integrator would be wary under the Proposed Rule about 
making any changes to contracts, no matter how reasonable or how 
beneficial it would be for a grower, out of fear that the change could 
force the integrator to automatically update all other contracts to 
avoid allegations of disparate treatment, even if the change was based 
on a completely rationale, case-specific issue. Likewise, the Proposed 
Rule imposes substantial difficulties and risk in ending a business 
relationship, which could create a significant disincentive to entering 
into new grower relationships, especially if the prospective grower is 
new to farming or unknown to the integrator. The proposal could have 
the perverse effect of making it more difficult for individuals not 
established in farming, many of whom may be market vulnerable 
individuals in one way or another, to enter the chicken farming market 
in the first place.
    Finally, AMS does not address how to demonstrate compliance. As 
described above, the proposal's vague terms and far reach would cloak 
nearly all grower-integrator dealings in legal jeopardy, and AMS 
provides no direction on how integrators could ensure they comply with 
these provisions.
D. Issues with proposed Section 201.304(b)--Retaliation
    In addition to those issues mentioned above, we have a number of 
concerns with proposed Section 201.304(b).
    The list of activities that constitute retaliation is not 
exhaustive, so there is no way to know what activities are actually 
prohibited. It is impossible for a regulated entity to read the 
regulation and understand specifically what actions it must avoid 
taking to comply. AMS fails to provide any rules for determining 
whether conduct constitutes retaliation, forcing regulated entities to 
guess and creating great risk of arbitrary enforcement of what is 
essentially a ``you know it when you see it'' standard.
    Moreover, it is unclear how it would be established whether a live 
poultry dealer, and the specific employees involved in grower 
contracting, knew that a grower had engaged in one of the protected 
activities. Most of those activities are activities that a live poultry 
dealer would not necessarily be aware of, or that only some employees 
might know about. As with the above discussion about ``perception'' and 
market vulnerable individuals, the Proposed Rule provides no direction 
on how to determine what the company knows.
    Further, the provision seems to create a presumption that all 
protected actions by growers are legitimate. This risks exposing live 
poultry dealers to strategically planned actions to trigger retaliation 
protections, especially by poor performing growers facing potential 
contract termination. This poses especially significant risks in the 
event a grower commits animal welfare violations.
    The information sharing contemplated in proposed Sections 
201.304(b)(2)(iv) and (v) provides no exception for confidential or 
proprietary information. The unauthorized release of confidential 
business information can inflict substantial and irreparable harm on 
businesses. Confidential and proprietary information must be governed 
by any contractual protections controlling its dissemination, and it 
cannot be considered retaliation if a company exercises its contractual 
rights to protect any confidential information. AMS makes no allowance 
for this.
    It is also unclear how AMS views details related to co-op activity. 
For example, regardless of whether growers were to form co-ops, live 
poultry dealers would still need to be able to select which specific 
growers to contract with, to choose where to place birds, and to 
evaluate and approve housing and other grow-out specifications. The 
Proposed Rule is silent on whether exercising these basic logistical 
and business prerogatives could be considered retaliation.
E. Issues with proposed Section 201.304(c)--Recordkeeping
    The recordkeeping provision in proposed Section 201.304(c) raises 
several issues in addition to those discussed above.
    The proposal fails to identify specific records that would need to 
be kept, or what records would need to be generated to show compliance 
with proposed Section 201.304(a) and (b). As proposed, companies will 
not know which records are actually subject to the regulation's 
recordkeeping provision until after the fact. There is simply no way 
for a regulated entity to know what records AMS might consider, years 
after the fact, to have been ``relevant to its compliance'' with 
proposed Section 201.304. This exposes companies to arbitrary 
enforcement, including arbitrary allegations of record destruction.
    The proposed recordkeeping provision is as broad as it is vague. 
Potentially every document related to grower interactions--every email, 
every record from a farm visit, every correspondence with farm 
technical support staff, and every note taken during a call or meeting 
could in theory be ``relevant to . . . compliance'' with proposed 
Section 201.304, triggering the proposed 5 year record-retention 
period. This would create an overwhelming administrative burden on 
regulated entities and would impose exorbitant compliance costs. AMS 
fails to explain why such a broad recordkeeping provision is necessary 
or provide specificity about what records must be kept to demonstrate 
compliance.
    Moreover, it is inappropriate to include Board of Director 
materials and other corporate governance materials as routine PSA 
compliance records, as suggested in the Proposed Rule. These materials 
are not routine compliance records and would not speak to whether any 
particular act violated the Proposed Rule. Instead, this appears to be 
a transparent attempt to create executive- or Board-level liability for 
everyday regulatory compliance matters.
    Finally, the record retention period is excessively long. Most 
other PSA recordkeeping provisions require retention for 2 years. Five 
years is needlessly long and imposes substantial administrative costs 
and complexity. There is simply no reason to require such voluminous 
records maintenance.
F. Issues with proposed Section 201.306--Deceptive Practices
    In addition to those discussed above, proposed Section 201.306 
raises several significant issues.
    As discussed earlier, AMS does not define what a ``pretext'' is in 
this context, nor how a company would demonstrate that an explanation 
is not pretextual. Without knowing what would make a statement 
pretextual, companies may become reluctant to provide detailed 
explanations to growers, stifling rather than promoting clear 
communication. And without a clear definition, companies would have no 
idea how to ensure they comply or demonstrate they are in compliance 
after the fact. The Proposed Rule seems to invite second-guessing of a 
regulated entity's motives. Without knowing how to demonstrate 
compliance, regulated entities are at great risk of not having the 
necessary records to refute allegations.
    In many cases, there are multiple reasons for a contract action. 
The proposal does not address a situation where multiple reasonable 
business reasons support an action and could be read as requiring that 
every single reason be included in an explanation to avoid an omission 
of material fact in violation of the Proposed Rule, even if one factor 
drove the decision or any one factor would have formed a sufficient 
basis for the action.
    The proposed provisions also risk making it more difficult and more 
costly to terminate relationships with poorly performing growers or a 
grower who neglects or abuses birds. Facing the fear of making a 
misstep in communicating a grower's termination, regulated entities may 
be incentivized to keep poor-performing growers on contract to avoid 
costly lawsuits about pretextual explanations and whether a particular 
fact was material. This would drain efficiency out of the system, to 
the detriment of consumers.
    Fundamentally, the proposed provisions will impair efficient 
contracting by deterring legitimate adverse actions. If each adverse 
action creates the risk of litigation and large liabilities, regulated 
entities will face disincentives to terminating dealings with poor-
performing growers or engaging in discussions with new growers. This is 
doubly harmful for individuals wishing to enter chicken farming, as it 
means poor-performing growers will occupy more of the grow-out supply, 
and they will face a harder time getting started. This will only harm 
rural communities long-term as younger farmers see fewer financial 
opportunities in their communities.
III. The Proposed Rule Would Impose Significant Costs on Society
    AMS appears to have given no thought to its economic impact 
analysis, drastically underestimating the costs of the Proposed Rule at 
every possible opportunity. To prepare for the Proposed Rule, regulated 
entities would need to re-assess contracts and develop communications 
with their growers, evaluate and implement extensive recordkeeping 
programs and record-retention systems, develop and implement new 
compliance policies, and implement an administratively complicated 
oversight and compliance system. These programs would require highly 
paid professionals and substantial attorney time. Moreover, the 
proposal would make contracting more difficult, and it could deter 
companies from entering into new grower relationships, reducing overall 
economic efficiency in the poultry production market, driving up 
consumer costs, harming processors, and harming growers. The proposal 
would also drive costly, frivolous litigation. In fact, owing to its 
vagueness, the Proposed Rule almost seems premised on the need for 
years of litigation to define and refine the ambiguous terms AMS has 
proposed. The litigation costs necessary to define the requirements in 
the proposal alone would amount to many millions of dollars per year, 
on top of the likely frivolous litigation that will be brought based on 
a misunderstanding of, or perhaps to take advantage of, the proposal's 
vagueness.
    AMS predicts the Proposed Rule would impose costs of only $504 per 
live poultry dealer in the first year, and costs of about half that 
amount in subsequent years. This simply defies belief. It seems to 
assume that regulated entities would devote no effort and no resources 
to complying with the proposal. The cost of the actual filing cabinets 
needed to hold the voluminous paper records that would be required by 
the Proposal would exceed that much, not to mention the extensive 
recordkeeping programs and computer systems and hardware that would be 
necessary to properly manage digital materials. AMS likewise completely 
overlooks the labor that would be necessary to comply with the proposal 
and dramatically understates the extent and cost of the professional 
services, including legal services, that would be necessary to 
implement the proposal. Moreover, AMS completely fails to consider the 
cost of the litigation that will undoubtedly result from the vague 
terms and unclear scope rife throughout the Proposed Rule.
    AMS also fails to consider costs to growers, who as part of the 
same economic system would inevitably bear some of the compliance 
costs. New growers would face fewer opportunities for new entrants, and 
it would be more difficult to reward top-performing growers. Consumers, 
too, would suffer costs in the form of a less efficient chicken 
production system, leading to higher costs at the supermarket and 
restaurants. AMS fails to even acknowledge these costs.
    In reality, the cost of compliance together with anticipated 
litigation will undoubtedly result in costs of over $100 million, 
orders of magnitude greater than AMS predicts. By comparison, 
independent economic analyses of previous AMS rulemakings on similar 
topics have indicated economic impact costs in excess of $1 
billion,\63\ and these were prepared 13 years ago, before unprecedented 
inflation. It is simply not credible for AMS to conclude the Proposed 
Rule would impose such paltry costs.
---------------------------------------------------------------------------
    \63\ Scope of Sections 202(a) and (b) of the Packers and Stockyards 
Act, 81 Fed. Reg. 92566, 92576 (discussing cost estimates prepared by 
Thomas Elam and Informa Economics).
---------------------------------------------------------------------------
IV. Conclusion
    NCC appreciates the opportunity to comment on the Proposed Rule. We 
are deeply concerned that the Proposed Rule would impose substantial 
costs, expose live poultry dealers to significant legal and compliance 
risks, and undermine the successful and mutually profitable grower 
contracting system. We urge AMS to withdraw the proposal. If AMS were 
to continue to pursue this rulemaking, it should repropose this and all 
other similar PSA proposals together in a single consolidated 
rulemaking process.
            Sincerely,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
Mike Brown,
President,
National Chicken Council.
     Exhibit 5: NCC Comments to Docket No. FSIS-2022-0029 Proposed 
                  Salmonella Framework (Dec. 16, 2022)
December 16, 2022

  Submitted electronically via regulations.gov

  Docket Clerk,
  Food Safety and Inspection Service,
  U.S. Department of Agriculture,
  Washington, DC

  Sandra Eskin,
  Deputy Under Secretary for Food Safety,
  Food Safety and Inspection Service,
  United States Department of Agriculture
  Washington, DC

  Re: Docket No. FSIS-2022-0029: Proposed Framework for Controlling 
            Salmonella in Poultry

    Dear Ms. Eskin:

    The National Chicken Council (NCC) appreciates the opportunity to 
provide comments regarding the United States Department of Agriculture 
(USDA), Food Safety and Inspection Service (FSIS or the Agency) 
Proposed Framework for controlling Salmonella in poultry. NCC is the 
national, nonprofit trade association that represents vertically 
integrated companies that produce and process more than 95 percent of 
the chicken marketed in the United States.
    The Agency's Proposed Salmonella Framework raises several questions 
about numerous complex topics, including risk assessment and public 
health modeling, pathogenicity data, current and future laboratory 
testing technologies, detailed applications of highly technical Hazard 
Analysis and Critical Control Point (HACCP) systems, and legal and 
technical considerations, to name but a few. NCC member companies would 
be significantly impacted by the Agency's Proposed Framework, and NCC 
encourages the Agency to take a science-based, data-driven approach to 
impacting public health. However, as the Proposed Framework is not 
based on science, data, or the results of a risk assessment(s), it is 
challenging for the regulated industry to provide meaningful comments. 
Instead, we encourage the Agency to take a more measured approach and 
use robust data demonstrating true impact on public health when 
proposing sweeping regulatory changes.
    The concerted efforts by both the broiler chicken industry and FSIS 
to drive down Salmonella rates have been enormously successful. Based 
off the most recent FSIS testing results,\1\ Salmonella prevalence on 
young chicken carcasses is 3.1% and Salmonella prevalence on chicken 
parts is 7.1% across all broiler processing establishments. These 
testing results are well below the Salmonella performance standard for 
both young chicken carcasses and chicken parts. Coupled with 
performance standards, currently over 90% of the industry is meeting or 
exceeding the performance standard for both young chicken carcasses and 
chicken parts.\2\ In just the past few years, FSIS has significantly 
tightened existing Salmonella standards; introduced new performance 
standards for chicken parts; rolled out a new, scientifically driven, 
modernized poultry inspection system that allows for greater testing 
and analysis; released detailed guidance on controlling Salmonella 
through processing controls; and approved numerous new interventions; 
among many other endeavors. FSIS has taken or is in the process of 
rolling out similar programs for other species. These actions are 
consistent with the science-based, data-driven actions NCC believes are 
beneficial to public health.
---------------------------------------------------------------------------
    \1\ FSIS, Sampling Results for FSIS Regulated Products, USDA.gov 
(2022), https://www.fsis.usda.gov/science-data/sampling-program/
sampling-results-fsis-regulated-products.
    \2\ Salmonella Verification Testing: October 31, 2021 through 
October 29, 2022, FSIS (2022), https://www.fsis.usda.gov/news-events/
publications/salmonella-verification-testing-october-31-2021-through-
october-29-2022.
---------------------------------------------------------------------------
    As with FSIS, food safety is a top priority for the broiler chicken 
industry, and we support changes in food safety regulations that are 
based on sound science, robust data, and are demonstrated to positively 
impact public health. For years the industry has implemented a multi-
hurdle approach focused on the continual reduction of Salmonella from 
farm to fork--implementing robust vaccination, biosecurity, sanitation, 
and other effective measures.
    In 1996, the CDC created FoodNet Fast to display data for select 
pathogens transmitted through food, including Salmonella.\3\ While the 
incidence of salmonellosis in humans has remained relatively unchanged 
since 1996, Americans eat significantly more chicken and chicken 
products today than in 1996. In 1996, chicken consumption in the U.S. 
was 69.7 pounds per person. In 2022, USDA estimates that Americans will 
consume 99.0 pounds of chicken per person.\4\ This reflects a 42% 
increase in chicken consumption over the past 26 years. Neither FoodNet 
Fast nor Interagency Food Safety Analytics Collaboration (IFSAC) \5\ 
takes into account consumption patterns of various food sources, 
including chicken. When the data from both FoodNet Fast and IFSAC are 
analyzed based on per-pound consumption of chicken, the rate of 
salmonellosis associated with chicken is shown to have decreased over 
the past 10+ years. This data demonstrates that the robust public-
health measures implemented by FSIS and the chicken industry over the 
past decade have been working.
---------------------------------------------------------------------------
    \3\ FoodNet Fast, Center for Disease Control (2022), https://
wwwn.cdc.gov/foodnetfast/.
    \4\ USDA, World Agricultural Supply and Demand Estimates (Dec. 9, 
2022), https://www.usda.gov/oce/commodity/wasde/wasde1222.pdf.
    \5\ Center for Disease Control, Interagency Food Safety Analytics 
Collaboration (IFSAC), CDC.gov (2022), https://www.cdc.gov/foodsafety/
ifsac/publications.html.
---------------------------------------------------------------------------
    In short, FSIS's existing framework for approaching Salmonella 
control has been working, and NCC encourages FSIS to continue using the 
latest science and industry-Agency collaborations to drive improvements 
in this framework. For example, as discussed in these comments, 
science-based changes such as transitioning to an enumeration-based 
performance standard would apply new technological and scientific 
developments to FSIS's proven approach and would drive continued food 
safety improvements.
    The Proposed Framework would abandon these approaches for legally 
infirm and technologically infeasible strategies with no clear 
supporting data. While NCC appreciates FSIS's interest in thinking 
creatively about food safety, the Proposed Framework is not the right 
approach. First, the Proposed Framework appears premised on legally 
infirm conclusions that Salmonella may be considered an adulterant in 
raw poultry and that FSIS can mandate on-farm activities. Second, the 
Proposed Framework is presented nearly devoid of data, and it lacks 
specificity as to how the Agency plans to implement and enforce the 
proposed changes. Additionally, there appears to be a significant 
misunderstanding about how the broiler industry operates, the 
industry's supply chain structure, and current industry practices 
regarding the control of Salmonella. As written, the Proposed Framework 
threatens the economic viability of the entire poultry sector and 
threatens negative impacts on family farmers, company employees, and 
consumers. The Proposed Framework would have negative impacts on both 
the availability of chicken and the cost of chicken to consumers of 
U.S. chicken around the world. Overall, the Proposed Framework appears 
to be moving away from long-standing HACCP-based principals that focus 
on identifying and controlling risk to a command and control, once-
size-fits-all approach that could have significant negative public 
health outcomes.
    These comments address overarching concerns regarding FSIS's 
statutory authority under the Poultry Products Inspection Act (PPIA) 
and the lack of supporting data presented with the Proposed Framework, 
provide feedback on each of the three Components, and finally address 
several cross-cutting issues raised in the Proposed Framework.
Salmonella Is Not an Adulterant Under the Poultry Products Inspection 
        Act
Fundamentally, the Proposed Framework is legally infirm because 
        Salmonella is not an adulterant in raw chicken under the PPIA.
    Under the PPIA, a product is adulterated if it ``bears or contains 
any poisonous or deleterious substance which may render it injurious to 
health; but in case the substance is not an added substance, such 
article shall not be considered adulterated under this clause if the 
quantity of such substance in or on such article does not ordinarily 
render it injurious to health.'' \6\ Thus, whether a pathogen renders a 
product adulterated depends on whether the substance is added to the 
product or occurs naturally in the product. For added substances, the 
pathogen is an adulterant only if the substance is present in 
quantities that ``ordinarily'' render the product injurious to health. 
As FSIS has consistently recognized, Salmonella is not an adulterant in 
raw poultry because (i) Salmonella is not an added substance in raw 
poultry and (ii) Salmonella is not present in levels that render 
chicken injurious to health because customary cooking practices destroy 
any Salmonella that may be present. FSIS has offered nothing to change 
this interpretation.
---------------------------------------------------------------------------
    \6\ 21 U.S.C.  453(g)(1).
---------------------------------------------------------------------------
    First, Salmonella is not an added substance because it occurs 
naturally within the chicken biome. Salmonella is not an avian 
pathogen, and it exists naturally as part of the microflora in and on 
chicken. Salmonella can exist in a chicken's skin, muscle tissue, and 
gut. Peer-reviewed literature establishes that healthy, asymptomatic 
birds are known to carry Salmonella.\7\ Researchers have also 
identified Salmonella in chicken neck skin, on the outer layer of skin, 
on feather follicles, connective tissue, and in drumstick muscle.\8\ 
Moreover, literature shows correlations between Salmonella loads on the 
farm or in birds and at various processing steps, reinforcing that 
Salmonella enters the process via the chickens themselves.\9\
---------------------------------------------------------------------------
    \7\ See, e.g., Rigney, C.P., Salamone, B.P., Anandaraman, N., Rose, 
B.E., Umholtz, R.L., Ferris, K.E., et al. (2004). Salmonella serotypes 
in selected classes of food animal carcasses and raw ground products, 
January 1998 through December 2000. J. Am. Vet. Med. Assoc. 224, 524-
530. doi: 10.2460/javma.2004.224.524; Nde, C.W., Mcevoy, J.M., 
Sherwood, J.S., and Logue, C.M. (2007). Cross contamination of turkey 
carcasses by Salmonella species during defeathering. Poult. Sci. 86, 
162-167. doi: 10.1093/ps/86.1.162; Erol, I., Goncuoglu, M., Ayaz, N.D., 
Ellerbroek, L., Ormanci, F.S., and Kangal, O.I. (2013). Serotype 
distribution of Salmonella isolates from turkey ground meat and meat 
parts. Biomed Res. Int. 2013, 281591. doi: 10.1155/2013/2 81591.
    \8\ See Rimet C.-S., Maurer J.J., Pickler L., Stabler L., Johnson 
K.K., Berghaus R.D., Villegas A.M., Lee M. and Franca M. (2019) 
Salmonella Harborage Sites in Infected Poultry That May Contribute to 
Contamination of Ground Meat. Front. Sustain. Food Syst. 3:2. doi: 
10.3389/fsufs.2019.00002.
    \9\ See, e.g., Berghaus, R.D., Thayer, S.G., Law, B. F., Mild, 
R.M., Hofacre, C.L., and Singer, R.S. 2013. Enumeration of Salmonella 
and Campylobacter spp. in Environmental Farm Samples and Processing 
Plant Carcass Rinses from Commercial Broiler Chicken Flocks. Applied 
and Environmental Microbiology. 79: 4106-4114; Volkova V.V., Bailey 
R.H., Rybolt M.L., Dazo-Galarneau K., Hubbard S.A., Magee D., Byrd 
J.A., Wills R.W. 2010. Inter-relationships of Salmonella status of 
flock and grow-out environment at sequential segments in broiler 
production and processing. Zoonoses Public Health 57: 463-475; Fluckey, 
W.M., Sanchez M.X., McKee S.R., Smith D., Pendleton E., Brashears M.M. 
2003. Establishment of a microbiological profile for an air-chilling 
poultry operation in the United States. J. Food Prot. 66: 272-279.
---------------------------------------------------------------------------
    The fact that Salmonella may be present in greater expected 
concentrations in some parts of a chicken than others is irrelevant to 
this analysis, as is the fact that Salmonella, as with any microbe, can 
be spread through cross-contact during processing. The PPIA asks only 
whether the organism is an added substance when determining if it is an 
adulterant. To view all pathogens that can be somehow spread among or 
within products as ``added substances'' would read out of existence the 
second prong of  453(g)(1) and is simply inconsistent with the normal 
meaning of the term. Moreover, courts have been clear that an ``added 
substance'' refers to a substance not otherwise present in the food and 
added by man.\10\ As established, Salmonella occurs naturally within 
chickens. Salmonella is not an added substance in raw poultry, and thus 
it is an adulterant only if it ``ordinarily'' renders the product 
injurious to health.\11\ It does not.
---------------------------------------------------------------------------
    \10\ See United States v. Coca Cola, 241 U.S. 265 (1915); United 
States v. Anderson Seafoods, Inc. 622 F.2d 157, 160 (5th Cir. 1980).
    \11\ FSIS recognized that Salmonella is not an added substance in 
its recent 2022 denial of a petition requesting Salmonella be declared 
as an adulterant, noting that ``FSIS has traditionally viewed 
Salmonella as `naturally occurring' in food animals.'' Letter from 
Rachel Edelstein to William D. Marler, Esq., at 3 (May 31, 2022). 
Although FSIS in that petition response noted it was considering 
reassessing its long-held view, the Agency still has provided no 
information to explain why Salmonella--which comes into plants on 
chicken skin and inside chickens, including in the muscle tissue--is 
not a substance naturally occurring in chickens. More established 
agency precedent reinforces that Salmonella is naturally occurring in 
raw chicken. See, e.g., Letter from Carmen Rottenberg, Acting Deputy 
Undersecretary, Office of Food Safety, to Laura MacCleery, Director, 
Center for Science in the Public Interest, at 1-2 (Feb. 07, 2018) (``We 
also disagree with your assertion that ABR Salmonella is an `added 
substance' within the meaning of the adulteration provisions of the 
FMIA and PPIA.'').
---------------------------------------------------------------------------
    Salmonella does not ``ordinarily'' render raw chicken injurious to 
health. The PPIA establishes a very high standard to support a 
conclusion that a naturally occurring pathogen ``ordinarily'' renders a 
raw product adulterated. First, in the PPIA, Congress created a strong 
presumption against viewing a naturally occurring substance as an 
adulterant in raw products. Congress's choice of language is striking: 
under the PPIA, added substances adulterate food if they ``may render 
it injurious to health,'' whereas a product with naturally present 
pathogens ``shall not be considered adulterated'' if the substance 
``does not ordinarily render it injurious.'' \12\ The statute thus sets 
up two very different standards. ``May'' could imply FSIS has a measure 
of discretion in evaluating added substances, but the statute sets a 
significantly higher bar for naturally occurring substances. FSIS is 
prohibited from considering a naturally occurring substance a pathogen 
(``shall not be considered adulterated'') unless it can meet the very 
high bar of proving that the substance would ``ordinarily'' render the 
product injurious to health. Reinforcing this high bar, in its 
statement of policy codified into the PPIA, Congress commanded that 
decisions such as product condemnation ``shall be supported by 
scientific fact, information, or criteria.'' \13\ By default, naturally 
occurring substances are not pathogens, and FSIS must go to great 
scientific lengths to establish otherwise.
---------------------------------------------------------------------------
    \12\ 21 U.S.C.  453(g)(1).
    \13\ 21 U.S.C.  452.
---------------------------------------------------------------------------
    Second, the plain meaning of ``ordinarily'' sets a very high bar. 
When a statute does not define a term--and the PPIA does not define 
``ordinarily injurious''--courts will consider its plain meaning with 
reference to its reasonable use, dictionary definitions, and its use in 
context.\14\ Multiple dictionary definitions contemporaneous with the 
passage of the PPIA show us what Congress meant when it used 
``ordinarily.'' Webster's 1953 edition defines ``ordinarily'' as 
``according to established rules or settled method.'' \15\ Black's Law 
Dictionary, 1951 edition, defines the adverb by reference to 
``ordinary,'' stating it means ``regular'' or ``normal.'' \16\ And 
Oxford English Dictionary, which examines the historical development of 
the term, defines it as ``[b]elonging to the regular or usual order or 
course'' or occurring in ``regular custom or practice.'' \17\ The term 
retains its meaning in modern parlance and as defined ``usually; as a 
rule.'' \18\ Thus, under the plain language of the PPIA, a naturally 
occurring substance can be considered an adulterant only if the 
substance ``regularly'' or ``normally,'' or through ``regular or usual 
. . . course'' or ``regular custom or practice,'' or ``usually'' or 
``as a rule'' renders the product injurious to health.\19\ This simply 
is not the case.
---------------------------------------------------------------------------
    \14\ Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).
    \15\ Webster's New Twentieth Century Dictionary 1177 (1953).
    \16\ Ordinary, Black's Law Dictionary (4th ed. 1951).
    \17\ Ordinary, Oxford English Dictionary (2d ed., 1989).
    \18\ Ordinarily, Webster's New World College Dictionary (4th ed., 
2010).
    \19\ The legislative history behind comparable language in the 
Federal Food, Drug, and Cosmetic Act reinforces this interpretation. In 
one debate, members stated ``ordinarily injurious'' meant ``that 
people--substantial numbers of people--must actually be harmed by the 
product before it can be restricted in any way. This provision . . . 
puts the burden of proof on the FDA.'' 120 Cong. Rec. 36007 (1974) 
(Statement of Rep. Peter Kyros).
---------------------------------------------------------------------------
    As is well established, thorough cooking destroys Salmonella. 
Specifically, cooking raw chicken to an internal temperature of 165 F 
achieves a 7-log reduction in Salmonella.\20\ In fact, even a slightly 
lower temperature still achieves instant lethality (162 F or 163 F, 
depending on the fat content), as can reaching yet-lower-still 
temperatures with sufficient dwell time, often of just a few 
seconds.\21\ Even in the event raw chicken were cooked at yet lower 
temperatures, there would be a substantial log-reduction in Salmonella.
---------------------------------------------------------------------------
    \20\ FSIS, FSIS Cooking Guidelines for Meat and Poultry Products 
(Revised Appendix A), Table 3, USDA.gov (2021), https://
www.fsis.usda.gov/sites/default/files/media_file/2021-12/Appendix-
A.pdf.
    \21\ FSIS, FSIS Cooking Guidelines for Meat and Poultry Products 
(Revised Appendix A), Table 3, USDA.gov (2021), https://
www.fsis.usda.gov/sites/default/files/media_file/2021-12/Appendix-
A.pdf.
---------------------------------------------------------------------------
    Consumers customarily cook chicken in a manner that achieves 
thorough cooking and destroys Salmonella. Chicken is customarily cooked 
through. Consumers are regularly reminded to use a meat thermometer to 
cook chicken to an internal temperature of 165 F--including on the 
package itself--which achieves lethality. While NCC's strong 
recommendation is that consumers use a meat thermometer, other less 
analytical ways to gauge ``doneness'', such as cutting into the meat to 
see if it is visibly white and firm, are also highly likely to achieve 
lethality and certainly cannot be said to ``usually'' or ``normally'' 
result in the product being injurious to health. Chicken is not 
customarily cooked ``rare'' or ``medium,'' and waitstaff at restaurants 
do not ask patrons how they would like their chicken cooked because the 
default approach is to cook chicken all the way through. Certainly, it 
is not the case that due to handling and cooking practices, Salmonella 
in ``regular custom or practices'' causes the chicken to be injurious 
to health.
    In this manner, Salmonella in raw chicken is fundamentally 
different than Shiga toxin producing E. coli (STECs) in raw non-intact 
beef. FSIS attempts to draw parallels between these product-pathogen 
pairs, but the analysis misses the key distinctions. In the Proposed 
Framework, FSIS attempts to reduce its 1994 decision declaring E. coli 
O157:H7 an adulterant in raw ground beef (and subsequent extension to 
STECs in raw non-intact beef) to a set of ``criteria,'' all of which 
appear equally weighted: association with human illness, low infectious 
dose, severity of human illness, and typical consumer cooking 
practices.\22\ However, that is not actually the approach FSIS took, 
nor is it the analysis courts performed when evaluating FSIS's E. coli 
policy.
---------------------------------------------------------------------------
    \22\ Proposed Salmonella Framework at 10.
---------------------------------------------------------------------------
    In fact, FSIS's analysis turned primarily on whether E. coli was 
likely to be destroyed under customary cooking practices for raw ground 
beef. In explaining its policy on E. coli O157:H7, FSIS provided 
background on the risks of E. coli O157:H7 but then expressly tied E. 
coli O157:H7's status as an adulterant to cooking practices: ``Raw 
ground beef products present a significant public health risk because 
they are frequently consumed after preparation (e.g., cooking hamburger 
to a rare or medium rate state) that does not destroy E. coli O157:H7 
organisms that have been introduced below the product's surface.'' \23\ 
If that were not clear enough, FSIS continued, ``the Agency believes 
that the status under the FMIA of beef products contaminated with E. 
coli O157:H7 must depend on whether there is adequate assurance that 
subsequent handling of the product will result in food that is not 
contaminated when consumed.'' \24\ Cooking practices were expressly the 
dispositive factor. This is reinforced by the fact that FSIS determined 
that intact cuts of beef, when contaminated with the exact same E. coli 
O157:H7, were not adulterated because ``[i]ntact steaks and roasts and 
other intact cuts of muscle with surface contamination are customarily 
cooked in a manner than ensures that these products are not 
contaminated with E. coli O157:H7.'' \25\ FSIS again cited to customary 
cooking practices as the dispositive point in its 2011 Federal Register 
notice declaring several other STECs to similarly be adulterants in raw 
non-intact beef.\26\ Thus, rather than being a four-factor analysis as 
presented in the Proposed Framework, there is only question: whether 
the customary cooking practices would ordinarily render the product 
injurious to health.
---------------------------------------------------------------------------
    \23\ FSIS, Beef Products Contaminated with Escherichia Coli 
O157:H7, 64 Fed. Reg. 2803, 2803 (Jan. 19, 1999) (emphasis added).
    \24\ Id. (emphasis added).
    \25\ Id. at 2804 (emphasis added).
    \26\ FSIS, Siga Toxin-Producing Escherichia coli in Certain Raw 
Beef Products, 76 Fed. Reg. 58157, 58158 (Sept. 20, 2011).
---------------------------------------------------------------------------
    Courts recognize this distinction as pivotal. In upholding FSIS's 
E. coli O157:H7 sampling program, and in a case that fundamentally 
turned on whether E. coli O157:H7 could properly be considered an 
adulterant in raw ground beef, the District Court for the Western 
District of Texas focused on whether the cooking practices that most 
Americans considered ``proper'' for ground beef were sufficiently 
``thorough'' as to destroy E. coli O157:H7:

          However, unlike other pathogens, it is not ``proper'' cooking 
        but ``thorough'' cooking that is necessary to protect consumers 
        from E. coli. The evidence submitted by Defendants indicates 
        that many Americans consider ground beef to be properly cooked 
        rare, medium rare, or medium. The evidence also indicated that 
        E. Coli contaminated ground beef cooked in such a manner may 
        cause serious physical problems, including death. Therefore, E. 
        Coli is a substance that renders ``injurious to health'' what 
        many Americans believe to be properly cooked ground beef.\27\
---------------------------------------------------------------------------
    \27\ Texas Food Industry Ass'n v. Espy, 870 F. Supp. 143, 149 (W.D. 
Tex., 1994).

    In Texas Food Industry Association, just as in FSIS's explanation, 
the entire analysis turned on whether customary consumer cooking 
practices were sufficient. Under the court's reasoning, had what 
consumers understood to be ``proper'' cooking been adequate to destroy 
E. coli O157:H7 in hamburgers, then the substance would not have been 
an adulterant (just as it is still not an adulterant on raw intact 
beef).
    But raw chicken is handled very differently than ground beef. 
Consumers do not customarily consider it ``proper'' to cook a medium 
rare chicken breast. Even ground chicken products such as chicken 
burgers or meatballs are customarily cooked through, not served rare. 
What consumers consider to be the ``proper'' or ``customary'' method is 
also a method that cooks chicken ``thoroughly.'' \28\
---------------------------------------------------------------------------
    \28\ Other critical distinctions exist between STECs in raw non-
intact beef and Salmonella in raw poultry. For example, E. coli 
typically enters the cattle slaughter process through cross 
contamination with fecal matter on the outside of the hide, which can 
get transferred to the meat if sanitary practices are not observed. By 
contract, Salmonella actually enters in the chicken, including in 
edible parts of the chicken. No amount of process control or sanitary 
dressing can prevent its being in the product because it starts out in 
the product.
---------------------------------------------------------------------------
    Courts have likewise recognized this distinction. The Fifth Circuit 
recognized that ``Salmonella [is] present in a substantial proportion 
of meat and poultry products'' and ``is not an adulterant per se'' 
because ``normal cooking practices for meat and poultry destroy the 
Salmonella organism.'' \29\ The D.C. Circuit reached a similar 
conclusion in American Public Health Ass'n v. Butz, holding ``the 
presence of salmonellae on meat does not constitute adulteration'' and 
that ``American housewives and cooks are not ignorant or stupid and 
their methods of preparing and cooking of food do not ordinarily result 
in salmonellosis.'' \30\ In other words, existing circuit precedent 
indicates the mere ``presence of Salmonella in meat products,'' without 
more, does not support USDA regulation under  453(g)(1).\31\
---------------------------------------------------------------------------
    \29\ Supreme Beef Processors, Inc. v. U.S. Dep't of Agric., 275 
F.3d 432, 438-39 (5th Cir. 2001).
    \30\ American Public Health Ass'n v. Butz, 511 F.2d 331, 334 
(D.C.Cir.1974).
    \31\ See also, e.g., Starr Surplus Lines Ins. Co. v. Mountaire 
Farms Inc., 920 F.3d 111, 117 (1st Cir. 2019) (``[T]he mere fact of the 
FSIS-orchestrated recall does not give rise to the plausible inference 
that the type of Salmonella found . . . could not be eliminated by 
proper cooking.''); Craten v. Foster Poultry Farms Inc., 305 F. Supp. 
3d 1051, 1058 (D. Ariz. 2018) (observing that existing case law 
``suggests Salmonella is not an adulterant'' and rejecting several 
state law tort claims because Salmonella ``is killed through proper 
cooking, which is how raw chicken products are intended to be used'').
---------------------------------------------------------------------------
    FSIS, too, has long and consistently recognized that Salmonella is 
not an adulterant in raw poultry. For example, as recently as this 
year, FSIS denied a petition requesting FSIS declare certain Salmonella 
strains to be adulterants in raw poultry. In 2018, FSIS denied a 
different petition making a similar request to declare certain 
Salmonella strains as an adulterant in raw meat and poultry. In its 
2016 Federal Register notice announcing new Salmonella performance 
standards for poultry, FSIS clearly explained, ``Salmonella is not an 
adulterant in NRTE poultry products.'' \32\ In 2014, FSIS rejected a 
petition to declare antibiotic resistant Salmonella an adulterant, 
stating ``we are not aware of any data to suggest that consumers 
consider ground poultry . . . to be properly cooked when rare, medium 
rare, or medium.'' \33\ Crucially, USDA has never argued that 
Salmonella is an adulterant under  453(g)(1). Instead, it has argued 
the opposite in litigation and policy documents. For example, in the 
Supreme Beef case on the enforceability of Salmonella performance 
standards, the court noted, ``The USDA agrees in this case that 
Salmonella is not a[n] . . . adulterant.'' \34\
---------------------------------------------------------------------------
    \32\ FSIS, New Performance Standards for Salmonella and 
Campylobacter in Not-Ready-to-Eat Comminuted Chicken and Turkey 
Products and Raw Chicken Parts and Changes to Related Agency 
Verification Procedures: Response to Comments and Announcement of 
Implementation Schedule, 81 Fed. Reg. 7285, 7297 (Feb. 11, 2016).
    \33\ Letter from Daniel Engeljohn, Assistant Adm'r, Off. of Pol'y & 
Program Dev., USDA, to Sarah Klein, Food Safety Program (July 31, 
2014).
    \34\ Supreme Beef, 275 F.3d at 439 n. 21.
---------------------------------------------------------------------------
    In light of this long and consistent history, and even if the PPIA 
were to permit such an interpretation, FSIS would be hard-pressed to 
provide a rationale that its change in policy was not arbitrary and 
capricious or that an abrupt change in position was warranted by the 
record.\35\ As it stands, FSIS has presented no data to support a 
conclusion that Salmonella in raw chicken ``ordinarily'' or ``usually'' 
renders chicken injurious to healthy under customary cooking practices.
---------------------------------------------------------------------------
    \35\ See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. 
Co., 463 U.S. 29, 34 (1983).
---------------------------------------------------------------------------
    Finally, the Proposed Framework would entail creating new 
substantive requirements affecting the rights of NCC member companies, 
which would make it a legislative rule, and would require amending or 
creating multiple regulations. If FSIS were to pursue the Proposed 
Framework, the Administrative Procedure Act would require FSIS to 
engage in a substantial amount of notice-and-comment rulemaking, which 
would require FSIS to develop and make available for public comment a 
record comprehensively addressing the numerous factual and scientific 
issues raised by the Proposed Framework.
    Fundamentally, FSIS has provided no explanation for making an 
abrupt change in its approach to Salmonella in raw poultry, as it would 
be required to do. Under the plain language of the PPIA and long-
standing case law, FSIS cannot compile a scientific basis for declaring 
Salmonella an adulterant in raw poultry. Accordingly, the Proposed 
Framework stands on infirm legal footing. We urge FSIS to instead 
pursue alternative approaches for which it has authority, such as 
revamped Salmonella performance standards, as explained elsewhere in 
these comments.
The Proposed Framework Lacks Adequate Supporting Data
    As a public health agency, FSIS has long promoted the use of sound 
science-based decision-making, which by definition must be based on, 
and driven by, scientific data. FSIS has presented no data to suggest a 
change in policy is needed or to the support the proposals or 
assumptions in the Proposed Framework. This is regrettable, as without 
supporting data, the Proposed Framework appears almost entirely 
speculative. The complete lack of data makes it impossible to provide 
meaningful feedback on key areas, such as whether the data calls for a 
change in policy, whether the Proposed Framework is supported by the 
data, and whether the specific elements of the Proposed Framework were 
developed appropriately in light of that data. NCC firmly believes that 
it is imperative that public health decisions and policy follow the 
data, not the other way around.
Data Issues Related to the Proposed Framework
    FSIS must first develop data and conduct risk assessments and use 
that data to determine what, if any, policy changes are called for. 
There are a number of key missing data elements. For example:

   There is no data to support the idea that Salmonella levels 
        on incoming flocks overwhelm food safety systems or would need 
        to be monitored.

   There is not data to demonstrate that setting a finished 
        product standard would have public health impacts, or what 
        standard to even set.

   There is no data to suggest that additional testing during 
        the process beyond what is already done would be impactful.

   We understand that FSIS has not even begun the two risk 
        assessments, which would presumably provide useful insight to 
        use in developing policy proposals.

    In effect, the Proposed Framework seems to reflect a presumption 
that the proposed changes would be effective and has asked stakeholders 
to rebut that presumption. This applies the policy development process 
backwards.
    Moreover, without data or details, it is impossible to provide 
meaningful feedback on the proposal. For example, stakeholders have no 
ability to assess whether the data supports the proposed actions or 
whether the actions are appropriate in light of the data. The Proposed 
Framework is devoid of virtually all key details, raising many 
questions and leaving just as many unanswered. To take but one example, 
FSIS has not explained why it has contemplated proposing a 1 CFU/g 
finished product standard, especially given that FSIS testing has a 
limit of detection (LOD) at 10 CFU/g and cannot accurately enumerate at 
the 1 CFU/g level and that FSIS has not begun two risk assessments 
seemingly designed to address this exact question.
    What little data FSIS has referenced contains significant flaws:

   CDC's National Outbreak Reporting System, or NORs, is a web-
        based platform that launched in 2009.\36\ It is used by local, 
        state, and territorial health departments in the United States 
        to report all waterborne and foodborne disease outbreaks and 
        enteric disease outbreaks transmitted by contact with 
        environmental sources, infected persons or animals, or unknown 
        modes of transmission to CDC. From 2009 to 2020, NORs reported 
        15,344 poultry-related Salmonella illnesses, which represents 
        29.3% of all Salmonella illnesses (there were 52,374 total 
        Salmonella illnesses reported from 2009 to 2020). Critically, 
        however, that figure lumps together illness from both live 
        poultry (e.g., handling a backyard flock) and consumption of 
        poultry. Separating out the live-poultry exposures yields a 
        very different result. 8,475 of the 15,344 poultry-related 
        illnesses were attributed to live poultry--for example, 
        handling chicks or interacting with backyard flocks--and not 
        related to chicken consumption at all. Chicken consumption 
        accounts for 5,076 cases in the NORS data, which represent 9.7% 
        of all salmonellosis cases in the U.S. from 2009 to 2020. While 
        the industry is committed to driving this number down further, 
        failing to properly distinguish foodborne illness and the more-
        prevalent live-bird exposures significantly overstates the 
        effect of chicken consumption on illness burden in the NORs 
        data.
---------------------------------------------------------------------------
    \36\ Center for Disease Control, National Outbreak Reporting 
System, Center for Disease Control, CDC.gov (2019), https://
www.cdc.gov/nors/index.html.

   The IFSAC report makes clear several important limitations: 
        The illness estimates ``should not be interpreted as suggesting 
        that all foods in a category are equally likely to transmit 
        pathogens.'' The authors also urge ``caution'' in ``comparing 
        estimates across years'' as the percentages reflect a relative 
        contribution to illness burden, which means a category could 
        see its actual illness contribution decrease yet its relative 
        percentage increase if other categories dropped even further. 
        The authors expressly ``advise using these results with other 
        scientific data for decision-making.'' \37\ The IFSAC report 
        alone cannot drive scientifically based policy. Further, the 
        illness contribution attributed to chicken is statistically 
        indistinguishable from that of fruits, seeded vegetables, and 
        pork and is followed very closely by ``other produce.'' \38\ 
        This statistical parity between product categories suggests 
        that a coordinated approach applying measured strategies 
        against all of these categories would have a much greater 
        public health impact than merely singling out one category 
        without addressing the other.
---------------------------------------------------------------------------
    \37\ The Interagency Food Safety Analytics Collaboration, Foodborne 
illness source attribution estimates from 2020 for Salmonella, 
Escherichia coli O157, and Listeria monocytogenes using multi-year 
outbreak surveillance data, United States, at 12 (Nov. 2022), https://
www.cdc.gov/foodsafety/ifsac/pdf/P19-2020-report-TriAgency-508.pdf.
    \38\ The Interagency Food Safety Analytics Collaboration, Foodborne 
illness source attribution estimates from 2020 for Salmonella, 
Escherichia coli O157, and Listeria monocytogenes using multi-year 
outbreak surveillance data, United States, at 8 (Nov. 2022), https://
www.cdc.gov/foodsafety/ifsac/pdf/P19-2020-report-TriAgency-508.pdf.

   As previously mentioned, salmonellosis incident rates 
        attributed to chicken have decreased over the last decade when 
        per-capita chicken consumption patterns are considered. Changes 
        in consumption patterns are critical for assessing foodborne 
        illness and must be considered to properly evaluate changes in 
---------------------------------------------------------------------------
        illness rates or the significance of source attribution.

   If FoodNet Fast, NORS, and IFSAC data were reflective of 
        consumption patterns of chicken over time, the overall burden 
        of illness attributed to chicken would actually have decreased.

   FSIS has also left unaddressed whether the Proposed 
        Framework would make an impact on the Healthy People 2030 
        goals, and if so, what impact would be anticipated and how it 
        would be determined.

    In light of these substantial data gaps, it is essential that FSIS 
prioritize generating and making publicly-available key data before 
continuing further in this process. The Agency is currently working 
towards the development of two quantitative risk assessments--one 
focused on Salmonella in chicken and the other focused on Salmonella in 
turkey. In the July 1, 2022, Constituent Update, FSIS announced that it 
has signed a cooperative agreement with the University of Maryland's 
Joint Institute for Food Safety and Applied Nutrition (JIFSAN) in 
partnership with EpiX Analytics to help in the Agency's data collection 
effort for these risk assessments. NCC has engaged with JIFSAN 
routinely since July 2022 to understand this group's approach to data 
collection, the specific data needs, and how NCC and our member 
companies can aid in this process. Unfortunately, FSIS only provided 
the JIFSAN team 3 months to work with trade associations like NCC to 
understand data needs, develop a platform by which data could be 
shared, and fully understand the goals of the Agency. This timeline has 
proven to be insufficient as we are approaching the end of 2022 and 
this group, in conjunction with several trade associations, industry 
representatives, and FSIS, has still not been able to execute the 
intended data collection effort.
    Although the process has not progressed as quickly as FSIS seemed 
to expect, NCC believes that the approach to formalize two risk 
assessments is appropriate. Moreover, we support the risk management 
questions that the risk assessments intend to address including:

  1.  What public health impact (change in illnesses, hospitalizations, 
            and deaths) is achieved by eliminating a proportion of 
            chicken (or turkey) at receiving contaminated with specific 
            levels of Salmonella and/or specific Salmonella subtypes?

  2.  What is the public health impact (change in illnesses, 
            hospitalizations, and deaths) achieved by eliminating final 
            product contaminated with specific levels of Salmonella 
            and/or specific Salmonella subtypes?

  3.  What is the public health impact of monitoring/enforcing process 
            control from re-hang to post-chill? Monitoring could 
            include analytes such as Enterobacteriaceae, Aerobic Plate 
            Count, or other indicator organisms, analysis could include 
            presence/absence or levels and the monitoring could also 
            include variability of actual result versus expected 
            result, log reduction, absolute sample result, or other 
            individual establishment specific criteria.

  4.  What is the public health impact of implementing combinations of 
            the risk management options listed above?

    As stated in the July 1, 2022, Constituent Update, ``These risk 
management questions reflect the information needed to evaluate and 
compare the public health benefits of policy options for controlling 
Salmonella in poultry.'' The Agency went on to state that the risk 
assessments would undergo an independent peer review and be released 
publicly once completed. To reiterate, NCC fully supports the 
completion of and the independent peer review of both risk assessments. 
NCC believes that it is imperative that any policy changes rely on the 
results of the risk assessments and without that information, it is 
impossible to understand what regulatory changes, if any, would impact 
public health. It also makes it very challenging for the regulated 
industry to provide meaningful comments with this information lacking, 
and the Agency has not disclosed their sources of data used to develop 
the Proposed Framework. Without the completion, peer review, and 
publication of the two risk assessments, the Agency risks operating 
without the benefit of a robust record, undermining informed decision 
making.
    Finally, there are two national advisory committees whose 
recommendations may influence the content of the Proposed Framework: 
the National Advisory Committee on the Microbiological Criteria for 
Foods (NACMCF) and the National Advisory Committee on Meat and Poultry 
Inspection (NACMPI). Charges of both advisory committees include a 
focus on Salmonella in poultry among other topics. We encourage FSIS to 
update its thinking on the Proposed Framework in light of many of the 
recommendations by these advisory committees.
Data Recommendations
    Given the critical role data plays in public health decisions, NCC 
provides the following data recommendations:

  1.  Complete the two risk assessment studies, submit them for peer 
            review, and release them for public review once complete.

  2.  Use the risk assessment results to inform further development of 
            the Proposed Framework.

  3.  Provide the public a detailed report with the data, information, 
            and scientific analysis supporting the key elements of the 
            Proposed Framework and provide an opportunity for public 
            comment on the Proposed Framework based on the report.

  4.  Consider key NACMCF and NACMPI recommendations as they may apply 
            to the Proposed Framework.

  5.  Hold technical meetings with stakeholders to discuss in detail 
            the changes and complications that would be raised by any 
            aspect of the Proposed Framework being contemplated. These 
            should be made part of the administrative record in any 
            subsequent rulemaking, and they should be held before any 
            rulemaking is initiated to facilitate open dialogue.
Feedback on Component 1--Incoming Flock Testing
    NCC has significant concerns that Component 1 of the Proposed 
Framework exceeds FSIS's authorities, is not supported by data, would 
be impractical, and is unnecessary. We suggest alternative approaches 
that will better achieve FSIS's objectives within the confines of law 
and reality.
    Component 1 would have FSIS mandate on-farm testing, impose an 
incoming flock Salmonella standard, seemingly provide FSIS inspectors 
with the ability to dictate which flocks may or may not enter an 
establishment, and force establishments to view Salmonella as a hazard 
reasonably likely to occur (RLTO) at receiving. None of these actions 
are appropriate, and they risk significantly undermining existing 
policy and systems.
FSIS Lacks Authority to Regulate Farms
    First, FSIS lacks jurisdiction to mandate on-farm testing, although 
Component 1 would do just that. The PPIA is clear that FSIS's authority 
begins at the official establishment. FSIS's primary slaughter-related 
inspectional authorities are expressly limited to operations in 
official establishments:

   Ante mortem inspection: ``[T]he Secretary shall, where and 
        to the extent considered by him necessary, cause to be made by 
        inspectors ante mortem inspection of poultry in each official 
        establishment processing poultry or poultry products. . . .'' 
        \39\
---------------------------------------------------------------------------
    \39\ 21 U.S.C.  455(a).

   Post-mortem inspection: ``The Secretary, whenever processing 
        operations are being conducted, shall cause to be made by 
        inspectors post mortem inspection of the carcass of each bird 
        processed . . . in each official establishment processing such 
        poultry or poultry products . . . .'' \40\
---------------------------------------------------------------------------
    \40\ 21 U.S.C.  455(b).

   Sanitary practices: ``Each official establishment 
        slaughtering poultry or processing poultry products . . . or 
        otherwise subject to inspection under this chapter shall have 
        such premises, facilities, and equipment, and be operated in 
        accordance with such sanitary practices, as are required by 
        regulations promulgated by the Secretary for the purposes of 
        preventing the entry into . . . commerce, of poultry products 
        which are adulterated.'' \41\
---------------------------------------------------------------------------
    \41\ 21 U.S.C.  456(a).

   General compliance: ``No establishment processing poultry or 
        poultry products for commerce otherwise subject to this chapter 
        shall process any poultry or poultry product except in 
        compliance with the requirements of this chapter.'' \42\
---------------------------------------------------------------------------
    \42\ 21 U.S.C.  459(a).

    It is telling that even ante mortem inspection, which is inspection 
of live birds, must occur at the official establishment. Had Congress 
wished for FSIS to be able to oversee farms, Congress could have given 
that authority to FSIS. Instead, Congress specifically limited FSIS's 
inspectional and oversight activities to official establishments, even 
for the inspection of live birds. FSIS has long agreed with this 
limitation. For example, in the final rule implementing HACCP, FSIS 
expressly recognized that ``FSIS does not intend nor is FSIS 
authorized, to mandate production practices on the farm.'' \43\ Thus, 
not only does the statute specifically limit FSIS's authority to 
official establishments (and further distribution therefrom), but FSIS 
also expressly recognizes this limitation in its foundational 
rulemaking for the very HACCP framework that FSIS proposes using to 
regulate activity on farms.
---------------------------------------------------------------------------
    \43\ 61 Fed. Reg. 38806, 38810 (July 25, 1996).
---------------------------------------------------------------------------
    By establishing Salmonella thresholds for incoming flocks, FSIS 
would require that farms take actions to prevent Salmonella levels on 
flocks from exceeding the incoming threshold level. Farms would have to 
figure out how to monitor Salmonella levels and would be required to 
take actions to bring levels to within FSIS's target, otherwise the 
flocks are of essentially no economic value. FSIS is very clear about 
its intent. Component 1 is entitled, ``Requiring incoming flocks be 
tested for Salmonella before entering an establishment.'' \44\ This 
testing would have to occur on farms, and by the plain language of the 
Proposed Framework would happen before reaching the establishment. In 
other words, FSIS would be ``mandating production practices on the 
farms,'' which FSIS has long recognized it may not do.
---------------------------------------------------------------------------
    \44\ Salmonella Framework at 5 (emphasis added).
---------------------------------------------------------------------------
    Positioning the threshold merely as a receiving criteria that 
applies to the official establishment does not help because the only 
way to ensure a flock meets the incoming criteria is to require a farm 
to take various actions to ensure the threshold is met. No matter how 
FSIS phrases the threshold, the application of a threshold would 
require farms take actions, which FSIS may not do. FSIS cannot achieve 
through an indirect regulation what it lacks authority to do directly.
    Further, setting a Salmonella threshold for incoming flocks 
necessarily implies that Salmonella above the threshold (1) renders the 
incoming birds adulterated and (2) that the purported adulteration 
cannot be corrected through processing. The only explanation for 
prohibiting entry of flocks that test above a certain Salmonella 
threshold is that the flocks would somehow irreparably adulterate any 
finished product that would be produced from them. FSIS would have no 
basis to arbitrarily restrict the use of flocks otherwise. But as 
explained above, Salmonella does not render raw poultry adulterated, 
and FSIS has presented no evidence to change this longstanding 
conclusion. Moreover, by categorically prohibiting entry, FSIS is 
indicating there is no means for an establishment to correct the 
purported adulteration, otherwise under HACCP principles the 
establishment could accept and process the product to correct the 
issue. FSIS has presented no evidence to indicate that flocks with 
Salmonella above a certain threshold are per se adulterated, much less 
somehow irreparably so.
Additional Issues Pertaining to Component 1
    Even setting aside FSIS's lack of authority to regulate on-farm 
activities, Component 1 suffers from numerous other issues. First, FSIS 
has presented no data to demonstrate that an incoming threshold is 
necessary for an establishment to maintain process control and 
sufficiently reduce Salmonella during processing; no information to 
explain how a threshold would be determined or what data FSIS or an 
establishment would use to do so; no data to establish that on-farm 
Salmonella sampling several weeks before a flock is processed 
correlates in a reliable way to actual incoming Salmonella loads at the 
beginning of processing; no data to demonstrate that reducing incoming 
loads would achieve any particular public health impact; and no data to 
demonstrate that incoming loads require measuring for HACCP systems to 
operate as designed. Without data to support such a substantial policy 
shift, the Agency cannot justify its approach, nor can stakeholders 
meaningfully provide informed feedback on whether the approach is 
justified by or consistent with the data. Science-based policymaking 
must start with data.
    Second, a mandatory receiving threshold would be fundamentally 
inconsistent with HACCP principles. Under HACCP, establishments, not 
inspectors, make decisions about how to execute their food safety 
systems. FSIS's role is to verify that the HACCP system is designed and 
scientifically supported in accordance with FSIS regulations and that 
the establishment is implementing the HACCP plan as intended. FSIS's 
role decidedly is not to tell an establishment which flocks may be 
processed, and which may not. Component 1 would wind back the food 
safety clock a quarter century and reimpose a long-abandoned command 
and control approach to poultry processing.
    Third, Component 1's proposed requirement that establishments 
declare Salmonella as a hazard RLTO at receiving is inconsistent with 
HACCP principles. Under HACCP, the establishment--not FSIS--is required 
to conduct its own hazard analysis, identify those hazards that are 
RLTO in the process, and implement Critical Control Points (CCPs) 
accordingly. If Salmonella were a hazard RLTO at receiving, it is 
unclear what step would be the CCP and how an establishment would be 
expected to validate that CCP.
    Fourth, Component 1 is likewise inconsistent with established FSIS 
inspectional approaches because FSIS cannot verify the testing. FSIS 
typically must be able to verify the data used by an establishment to 
support its food safety system, but it is unclear how FSIS would verify 
incoming flock testing that occurred on a farm several weeks before a 
flock arrived at the establishment. FSIS's proposal to conduct 
verification testing at rehang is not appropriate for verifying on-farm 
testing. Several weeks would have passed from the time an on-farm 
sample was collected and FSIS's rehang sampling, and the microflora 
would be expected to change during this time. On-farm data would likely 
be collected by drag or boot swabs, which is a very different sampling 
process than taking a rehang sample. More importantly, however, is that 
fact that there is inconclusive evidence as to what method of on-farm 
testing actually yields repeatable and defensible results. 
Additionally, different enumeration technologies could yield different 
results and different confidence intervals. Moreover, between the time 
of on-farm testing and rehang sampling, the birds or carcasses will 
have undergone multiple interventions and processing interventions that 
affect Salmonella load. Even the Agency's own instructions in the Raw 
Chicken Parts Sampling Program require IPP to sample eligible chicken 
parts after the last intervention is applied.\45\ Simply put, rehang 
samples would not correlate with on-farm samples, nor has FSIS provided 
any data to demonstrate otherwise.
---------------------------------------------------------------------------
    \45\ FSIS, Raw Chicken Parts Sampling Program, USDA.gov (2021), 
https://www.fsis.usda.gov/sites/default/files/media_file/2020-08/
10250.1-Raw-Chicken-Parts-Sampling-Program.pdf.
---------------------------------------------------------------------------
    Fifth, pre-harvest sampling would impose significant burden across 
the entire industry. NCC estimates that between 260,000 and 300,000 
flocks were required to reach USDA's estimate for chickens processed in 
2021. That would require collecting and testing between 260,000 and 
300,000 samples annually, in rural locations, to comply with the 
proposal, and that is assuming each flock requires only one test. This 
would impose a substantial cost, pose unnecessary biosecurity risks, 
and overwhelm existing laboratory capacity and supply availability.
    Sixth, challenges would also complicate FSIS verification sampling. 
For example, FSIS would have to collect a large number of samples to 
obtain a statistically reliable measure of the Salmonella level of a 
flock--one hot rehang sample would not suffice. It is doubtful FSIS has 
the sampling or laboratory capacity for this. It is also not clear how 
FSIS would handle outliers. For example, would the flock be evaluated 
by the average load or by the highest result, and how would FSIS obtain 
enough samples to have a sufficiently narrow confidence interval around 
the result? And even if FSIS could obtain this information, how would 
FSIS be able to meaningfully compare it to on-farm sampling conducted 
weeks earlier, using different sampling and possibly test methods, and 
reflecting birds before they had undergone various processing steps?
    Seventh, it is unclear how FSIS would handle the inherent delay in 
receiving results for its verification testing, which, especially for 
enumeration, could take a significant amount of time until results are 
obtained. The flock would likely have been processed, the resulting 
products shipped, and perhaps even consumed well before FSIS received 
its verification results. But if the purpose of rehang sampling is to 
verify the establishment is properly conducing on-farm sampling and 
meeting the Agency's pre-determined threshold at live receiving, 
several serious logistical and practical problems arise. If FSIS is 
framing the proposed live receiving threshold as an acceptance 
criterion, with the implication being that a flock whose verification 
sampling exceeds the threshold should be rejected, then typically the 
establishment would be expected to hold the flock pending the results 
of FSIS's verification sampling. But holding an entire flock's worth of 
production every time FSIS conducted verification sampling would be 
extraordinarily burdensome and in effect impossible for most 
establishments. But if the establishment were allowed to ship the 
product before FSIS received the rehang verification results, it is 
unclear how the establishment would be able to implement corrective 
action. And it is entirely unclear how FSIS would view a situation in 
which the FSIS rehang verification sample was above the live receiving 
``threshold'' yet the product from that flock met an enforceable 
finished product standard.
    Additional logistical and practical problems abound. For example:

   It is unclear at what time period a flock would be required 
        to be tested, how that would be determined, whether it would 
        vary for different bird types, housing conditions, farm 
        location, and market weight of the flock, among many other 
        compounding factors.

   It is unclear what test method should be used for on-farm 
        testing, as different methods might yield different types of 
        results.

   Mandating such a high volume of on-farm testing could pose 
        significant logistical difficulties in getting supplies and 
        samples, especially to and from remote rural areas.

   It is entirely unclear what on-farm testing strategies would 
        best reflect the load (or, if used, serotypes) actually 
        entering the plant. Substantial industry testing has shown this 
        is very difficult to do, and FSIS has provided no data on this 
        point.

   How would issues such as testing delays, lost samples, 
        equivocal results, or lab error resulting in a flock not having 
        an on-farm test result be handled? A flock cannot be held past 
        its target catch date without risking serious bird welfare 
        issues.

    FSIS has not addressed what would happen to a flock that tested 
above threshold. FSIS's contemplated policy could have catastrophic 
bird welfare outcomes and could result in flocks being needlessly held, 
delayed, diverted, or euthanized. Likewise, the proposal risks imposing 
substantial financial losses on the family farmers who raise the 
majority of broiler chickens and now might be left with flocks that 
cannot be brought to market and processed.
    At bottom, FSIS's contemplated proposal would introduce a 
tremendous number of challenges and would be inconsistent with 
established HACCP principles. The reality is that the industry already 
implements numerous preharvest intervention strategies to reduce 
Salmonella loads coming into establishments, and they have done so even 
though they are not required to. For example, robust preharvest 
Salmonella control strategies are widely implemented across the 
industry to include programs in the hatchery, feed mill, breeder house, 
and broiler house. These programs include, but are not limited to:

   Biosecurity programs

   Equipment sanitation

   Feed treatment

   Litter treatment

   Water sanitation programs

   Feeding of prebiotics and probiotics

   Rodent/insect control

   Cleanout programs

   Vaccinations

    The industry is already taking significant steps to address 
Salmonella in preharvest. Component 1 would contribute nothing but 
would impose considerable cost and complication. If FSIS's objective is 
to enhance process control and drive down finished product Salmonella 
levels, a much more direct and efficient approach would be to consider 
an enumerated performance standard for finished products and allow 
establishments to innovate and design their systems as appropriate to 
meet that target.
Component 1 Recommendations
    In light of the substantial legal, scientific, and practical 
considerations associated with Component 1, NCC recommends the 
following:

  1.  FSIS should not establish incoming flock thresholds.

  2.  If FSIS wants to better understand process control throughout the 
            process, from live receiving to pack-out, FSIS should 
            engage in more extensive exploratory rehang sampling 
            programs and use that data, along with FSIS data from other 
            sampling points, to analyze process control throughout 
            processing and to inform risk assessment modeling.

  3.  As discussed further below, FSIS should instead consider an 
            enumerative performance standard after a baseline and 
            qualitative risk assessment is performed. Establishments 
            should be provided the flexibility to design science-based 
            systems specific to their operations to meet that standard.
Feedback on Component 2--In-Process Testing
    NCC is concerned that Component 2 would be too prescriptive and 
could stifle food safety innovation. Component 2 would require 
establishments to conduct in-process testing at specified points using 
certain indicator organisms. Establishments already conduct extensive 
in-process testing, and a command-and-control-style approach dictating 
testing at certain points would be counterproductive.
    As with other elements of the Proposed Framework, FSIS has provided 
no data to explain why Component 2 is needed, what benefits Component 2 
would have on food safety outcomes, or how the testing locations, 
frequencies, or target organisms would be selected, among others. 
Without this information, it is impossible to thoroughly evaluate 
options, offer meaningful feedback, or understand whether the Agency's 
proposal is a reasonable response to the data. As with the other 
Components, it is critical that FSIS first develop and make available 
its data and then make decisions based on that data in a transparent 
manner.
    As discussed above, HACCP principles dictate that establishments, 
not FSIS, are to develop and implement their food safety plans, 
including any process control monitoring strategies. Chicken processors 
do this, and processors collect substantial volumes of data throughout 
their processes. It is inappropriate to dictate specifically where an 
establishment must sample, how frequently it must sample, and what it 
must sample for. Doing so risks stifling innovation. An overly rigid 
sampling framework will hinder innovation and technology development by 
creating outsized focus on specific points and specific target 
organisms. Instead, plants should be encouraged to innovate by testing 
at the appropriate point for their systems, which in turn will provide 
more data and more impetus to drive technological improvements. A rigid 
framework also risks punishing companies whose food safety systems are 
better monitored using different testing protocols than called for 
under FSIS's one-size-fits-all approach. Such a company would be forced 
to choose between incurring the cost of additional sampling or 
implementing FSIS's less-effective approach. Similarly, a rigid 
framework risks diverting limited company resources away from the most 
effective sampling points to meet the regulatory sampling requirements. 
None of these outcomes promote food safety.
    Moreover, FSIS seems to contemplate requiring all establishments to 
follow the same process control methodologies, or perhaps requiring all 
establishments to meet the same process control standard. This would be 
inappropriate. Each establishment must be free to monitor process 
control as appropriate for their systems. FSIS has provided no data to 
show that it is appropriate or even feasible to evaluate all 
establishments using the same standard, especially if establishments 
have different line configurations or intervention strategies relative 
to FSIS-mandated sampling points. Without more information about what 
FSIS means by ``requiring establishments to use the same statistical 
process-control method,'' it is difficult to provide specific feedback, 
but establishments need the ability to design their testing programs to 
reflect their processes, and they should be evaluated on their ability 
to implement their plans successfully, not against a rigid benchmark 
that might not reflect their operations.
    FSIS's science-based changes implemented through the New Poultry 
Inspection System created the opportunity for greater science-based 
decision-making by enhancing establishments' flexibility and promoting 
more science-based verification activities by FSIS. Mandating that 
establishments follow fixed sampling plans would be a step backward 
from this more modernized approach. Instead, FSIS should be encouraging 
establishments to innovate and implement tailored food safety systems.
Component 2 Recommendations
    In light of these concerns, NCC makes the following 
recommendations:

  1.  Consider specifying where, when, and how FSIS will collect 
            process control verification samples, and let 
            establishments develop their own individual sampling plans 
            as appropriate for their operations. This approach would 
            provide FSIS a consistent frame of reference but leave 
            establishments free to design their processes as they 
            determine will best promote food safety.

  2.  Use FSIS verification sampling results to feed into risk 
            assessment modeling to better understand process control 
            considerations.

  3.  Encourage individualized sampling plans and strategies for 
            establishments.

  4.  Encourage plants to utilize Statistical Process Control (SPC) by 
            providing detailed guidance on options for application and 
            key locations. This could be particularly helpful for small 
            and very small establishments and could be developed in 
            conjunction with the appropriate academic institution.
Feedback on Component 3--Enforceable Final Product Standard
    NCC strongly opposes setting an enforceable finished product 
standard for raw chicken. Such a standard would be legally infirm since 
FSIS has provided no data to demonstrate why any standard, much less 
the contemplated 1 CFU/g threshold, is scientifically appropriate. 
Regardless of how implemented, an enforceable finished product standard 
would impose substantial logistical and technical challenges on the 
industry.
FSIS Lacks Legal Authority to Implement a Finished Product Standard for 
        Raw Chicken
    FSIS lacks statutory authority to establish an enforceable finished 
product standard for Salmonella. For a threshold-based finished product 
standard to be legally enforceable, FSIS would have to determine, 
through scientific data, that the substance is not an added substance, 
and that the substance would ``ordinarily render [the product] 
injurious to health'' at levels above the threshold. Otherwise, the 
product would not be adulterated and there would be no legal mechanism 
FSIS could use to enforce the standard. As explained above, Salmonella 
is not an adulterant in raw chicken, a position consistently reflected 
in decades of Agency policy and court decisions.
    Such a cavalier proposed change to Agency policy is especially 
alarming because FSIS has provided absolutely no data to support its 
proposal. FSIS has provided no data, in the context of the Proposed 
Framework or otherwise, to support a conclusion that Salmonella above 
any threshold level would ``ordinarily render'' raw chicken injurious 
to health, much less the 1 CFU/g threshold contemplated in the Proposed 
Framework. Nor is NCC aware of any.
    NCC is gravely concerned that FSIS has abandoned science-based 
decision-making in Component 3. Sound science-based policymaking 
requires first developing data and then developing policies in light of 
that data. In the Proposed Framework, FSIS has gone about its decision-
making backwards. FSIS appears to have a desired outcome in mind and 
has asked for data to support it. The 1 CFU/g threshold previewed in 
the Proposed Framework appears entirely arbitrary. If anything, it 
appears simply to be set as close to zero as possible without actually 
creating a zero-tolerance standard.
    FSIS has not explained why an enforceable product standard is 
appropriate, why it should be set at 1 CFU/g, or why it should apply 
uniformly to all raw poultry regardless of differing commercial and 
consumer applications and known differences in Salmonella levels in 
different types of poultry.
    Just as troubling, the Proposed Framework suggests FSIS is not 
interested in developing data to test its proposed threshold. For 
example, FSIS has indicated it does not intend to conduct a baseline 
enumeration survey, which would make it impossible to assess the 
current level of Salmonella present on raw poultry and to determine the 
public impacts of this or any other change. We question how FSIS can be 
confident that 1 CFU/g is an appropriate threshold for a finished 
product standard when FSIS does not even know what levels are actually 
present on finished products today. Moreover, FSIS has indicated it is 
conducting two risk assessments, but we understand the data collection 
analysis to begin those risk assessments has not even begun. We fail to 
understand why FSIS would, knowing that it is conducting risk 
assessments to provide information addressing this very point, 
nonetheless move forward and propose a specific finished product 
threshold at this point. The appropriate approach would be to conduct 
the risk assessments, conduct a baseline, gather and analyze any 
additional data needed, and only then determine whether a finished 
product standard might be appropriate and, if so, how to develop such a 
standard.
    Moreover, while a risk assessment is essential for projecting the 
likely effect of different proposed standards on public health and 
product risks, for a risk assessment to provide value, the risk must be 
accurately identified, analyzed, and evaluated. A risk assessment is 
but one component of the broader science-based decision-making process. 
To determine the level of risk mitigation that would have a meaningful 
impact on public health, the Agency must implement a comprehensive risk 
analysis strategy, which must include three components: the risk 
assessment itself, risk communication, and risk management. Moreover, a 
risk assessment cannot itself determine whether a product is 
adulterated. That standard is established in the PPIA, which as 
discussed above requires demonstrating that a naturally occurring 
substance renders the product ``ordinarily'' injurious to health.
    Finally, we understand that FSIS may be considering applying a 
potential finished product standard differently depending on the size 
of the establishment. If the finished product standard is an 
adulteration standard--which is the only way it could be enforceable--
the PPIA provides no such flexibility. Under the PPIA, if a product is 
adulterated, the product is adulterated regardless of the size of the 
establishment involved.
    At bottom, the PPIA's adulteration standard for naturally occurring 
substances requires a very clear scientific analysis: the substance has 
to ``ordinarily'' render the product injurious to health at the 
threshold level. Otherwise, by law, the product is not adulterated. 
FSIS has not provided any information to support such a determination. 
And without such information, it is impossible to meaningfully critique 
the contemplated approach.
Component 3 Raises Myriad Unresolved Issues
    Beyond the grave legal concerns, Component 3 raises numerous other 
complex issues that remain unaddressed. For example, the necessary 
testing technology simply does not exist. FSIS's assumption that 
testing technology with sufficient throughput, sensitivity, and speed 
will materialize simply because FSIS wills it is arbitrary. In fact, 
FSIS's own newly approved testing technology has a LOD of Salmonella at 
10 CFU/g, so it is unclear how FSIS would even evaluate compliance with 
the contemplated 1 CFU/g standard. Moreover, the fact that FSIS is 
unable to accurately quantify Salmonella at 1 CFU/g with its method 
casts considerable doubt on how FSIS developed this proposed standard.
    Moreover, raw chicken is a highly perishable product with a short 
shelf life, and supply chains are not set up to hold substantial 
quantities of raw chicken. But an enforceable finished product standard 
would require testing and holding of enormous quantities of raw chicken 
until results are received. There simply is not enough cold storage in 
the country to accomplish this, and a widescale test and hold program 
would significantly degrade product shelf life and quality. Companies 
may be forced to destroy product or divert it to the cooking market, 
which accounts for only a modest amount of chicken production and would 
quickly find both demand and processing capacity outstripped. FSIS's 
policy threatens to constrict the supply of raw chicken, which in turn 
risks driving up food inflation and heightening food insecurity for 
America's most vulnerable families.
    Likewise, an ``enforceable'' final product standard implies that 
FSIS would request a recall if a product were found to exceed the 
standard, and it is entirely unclear how lotting would be determined 
when establishing the scope of a recall. For example: Would lots be 
defined on a flock-by-flock basis? What about other flocks processed 
earlier or later that day? Would all chicken that contacted the same 
chiller water be included in recall? How would rework and hang-backs be 
handled? If parts of a day's production were sent to a different use, 
would all products from that day or flock be implicated? If a specific 
part, such as thighs, exceeded the standard, would that also affect 
other parts made from that flock, such as breasts? What if some types 
of parts exceed the standard but others do not? All of these questions, 
and many more, would require careful, considered analysis. NCC is 
extremely concerned that under the Proposed Framework, a single test 
result could cause the recall of an extremely large amount of product. 
There are much better ways to focus efforts on driving down levels of 
Salmonella without raising these extremely complicated issues.
    FSIS has also provided no information on how it would expect 
establishments to test entire production lots of raw chicken in a 
statistically meaningful way. Raw chicken is not like raw non-intact 
beef, where lots can be limited to specific source materials and tested 
individually. Raw chicken production lots are very large, and 
Salmonella is unlikely to be uniformly distributed in a lot. As a 
result, it would be necessary to collect a tremendous number of samples 
to have confidence that the result is representative of the entire 
production lot. A single sample would be wholly inadequate. It is 
unclear if FSIS has the laboratory resources to adequately sample and 
analyze finished products lots, and it would impose considerable costs 
on establishments to do so. Moreover, raw poultry cannot be lotted in a 
way to limit lot size for finished product testing, and there would be 
no way to form lots conducive to a finished product test and hold 
program. We are also concerned about establishments that implement a 
less than daily (LTD) sanitation program and how those establishments 
would be expected to lot product. For example, due to time and 
difficulty involved, some establishments do not completely empty their 
chiller systems daily and instead have validated LTD sanitation 
programs in conjunction with FSIS. This facilitates efficient 
operations and protects the environment by reducing water and chemical 
use. The environmental impact and resources associated with losing a 
LTD sanitation program would be significant and must be considered.
    Further, to the extent the Agency were considering applying a 
finished product standard differently based on establishment size or 
conducting sampling for small or very small establishments, it is 
unclear how the Agency would take the necessary number of samples and 
still have remaining lab capacity to complete any verification 
sampling.
    In practice, a standard like that contemplated in Component 3 would 
impose substantial cost on the industry, would divert tremendous 
amounts of raw chicken to less-demanded cooking applications (and would 
overwhelm the already saturated market for cooked chicken as well as 
capacity to cook it), and ultimately would mean less chicken at higher 
costs for consumers.
Component 3 Recommendations
    NCC strongly opposed Component 3. FSIS lacks statutory authority to 
implement it, and the proposal raises numerous insurmountable technical 
issues. Instead, NCC recommends the following for enhancing Salmonella 
control in raw poultry finished products:

  1.  Conduct an enumerative baseline for Salmonella in raw poultry, 
            focusing on different parts and perhaps different end-use 
            applications or differences between slaughter and further 
            processing facilities. Develop robust enumeration data for 
            different parts.

  2.  Use enumerative baseline data to inform a risk assessment model.

  3.  Develop an enumerative performance standard to replace the 
            current presence-based performance standard that is focused 
            on specific parts.

  4.  Enhance labeling and consumer education. NCC has petitioned FSIS 
            multiple times for more robust and modern labeling for 
            certain types of raw poultry, which FSIS has yet to act on.

    In particular, NCC believes that an enumerative performance 
standard would advance FSIS's public health goals in a much simpler and 
easier-to-implement manner. History has shown that chicken processors 
will make changes to meet voluntary performance standards. A properly 
constructed enumerative performance standard would achieve the same 
objective of driving down levels of Salmonella on finished product raw 
poultry, but with a number of benefits over the proposed Component 3. 
An enumerative performance standard provides the Agency and 
establishments with greater flexibility; can be implemented quickly 
without the need to rely on a novel application of the adulteration 
standard; is more responsive to existing supply chains and distribution 
practices; would not require new rapid testing technologies or complex 
test and hold programs (but the existence of the program would provide 
demand to spur testing innovation anyway); and would generate valuable 
long-term data about Salmonella levels on finished product. We strongly 
encourage FSIS to explore this pathway instead of the proposed 
Component 3, and NCC stands ready to collaborate with FSIS on this 
approach.
Cross-Cutting Considerations
    NCC has feedback on several cross-cutting considerations related to 
the Proposed Framework.
Developing a Robust Data-Sharing Mechanism is a Critical Prerequisite 
        Step
    Throughout our comments, we have expressed concern about the lack 
of data and scientific analysis supporting the Proposed Framework. 
Chicken processors collected substantial quantities of data, dwarfing 
that collected by FSIS through verification and exploratory sampling. 
For more than a decade, NCC has sought a mechanism to facilitate 
aggregate data sharing with FSIS. NCC members are interested in 
developing an appropriate data-sharing process. In particular, NCC 
urges FSIS to develop a data-sharing framework that is consistent with 
the Freedom of Information Act exemption (b)(3), either with FSIS or a 
sister agency within USDA.\46\ This data would provide FSIS with 
substantially more insight into food safety systems throughout the 
industry and would facilitate policy development and risk assessment 
modeling.
---------------------------------------------------------------------------
    \46\ 5 U.S.C.  552(b)(3).
---------------------------------------------------------------------------
Serotype and Virulence-Based Testing is Not Practical with Current 
        Technology
    NCC supports efforts to enhance cutting-edge technologies to better 
understand Salmonella risks. Advanced testing technologies such as 
serotype-specific testing and virulence-based testing show great 
promise but, as FSIS recognized in the Proposed Framework, will require 
additional development before they can be used widely and effectively 
in everyday food processing operations. We encourage FSIS to support 
the continued development of and innovation with these technologies, 
but they are not quick, affordable, or available enough to be used 
widely in food processing operations. Moreover, we encourage FSIS to 
support further research on virulence factors and how they may impact 
public health.
The Proposal Risks Significant Disruption to the Industry and Threatens 
        Food Prices for Consumers
    Many aspects of the Proposed Framework threaten to drive up costs 
and cut availability of chicken. This would be an extremely unfortunate 
outcome, especially in light of recent record across-the-board 
inflation and the continuing food insecurity afflicting millions of 
American families. Chicken is American's most affordable and most 
consumed protein. It is nutritious and versatile, and it is a staple 
protein for many, and critically for those families trying to make the 
most out of every food dollar. Moreover, chicken makes up a significant 
portion of food bank donations and purchases for Federal and state 
nutrition assistance programs. Aspects of the Proposed Framework 
threaten to undermine chicken availability.
    For example, Component 1 would seem to contemplate entire flocks 
being turned away from plants before they are even processed. This 
would have devastating animal welfare implications, and it would reduce 
the supply of chicken in the market, in turn driving up costs. 
Likewise, a finished product standard would likely cause substantial 
amounts of product to be diverted to cooking operations. However, there 
is limited use and demand for precooked chicken, and that demand is 
largely saturated. Moreover, there is limited capacity to actually 
produce cooked chicken. Combined, these factors mean that much of the 
chicken that FSIS likely anticipates would be diverted to cooking 
operations would simply be destroyed, again reducing the supply of 
chicken and driving up costs. It would be most unfortunate for FSIS to 
choose this moment to worsen food insecurity and to drive up consumer 
food prices.
    Further, the family farmers who raise most of the broiler chickens 
processed in the United States would be put at great financial risk if 
FSIS were to subject the marketability of the flocks they raise to a 
live receiving threshold. It is entirely unclear how FSIS anticipates 
the threshold affecting farmers, and this change could inject 
tremendous uncertainty into what has long been a prosperous way to 
deploy farming capital.
Conclusion
    NCC appreciates the opportunity to provide comment on FSIS's 
Proposed Salmonella Framework. NCC member companies share FSIS's goal 
of reducing Salmonella levels on raw chicken and, ultimately, driving 
down salmonellosis cases. The chicken industry has made tremendous 
advances in reducing Salmonella presence, and the industry continues to 
drive down Salmonella. However, NCC has serious concerns about many 
aspects of the Proposed Framework. The Proposed Framework contemplates 
actions that exceed FSIS's statutory authority, that would be extremely 
difficult and perhaps impossible to implement, and that are not 
consistent with modern food safety approaches. Moreover, the lack of 
supporting information and data makes it extremely difficult to 
meaningfully evaluate and provide feedback on the Proposed Framework. 
NCC is concerned that policy appears to be getting ahead of the 
science.
    NCC urges FSIS to instead pursue the recommendations made in these 
comments. The Agency should continue to work closely with all 
stakeholders through hosting technical meetings prior to the issuance 
of a proposed rule to ensure the ability for two-way dialogue and the 
development of the best approach forward based. These recommendations--
in particular, conducting additional data gathering and analysis, 
developing an appropriate industry-agency data sharing protocol, and 
developing an enumerated performance standard--would significantly 
advance public health objectives while avoiding many of the 
complications, uncertainties, and costs raised by the Proposed 
Framework.
    Please feel free to contact us with any questions regarding the 
above request. Thank you for your consideration.
            Respectfully submitted,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
Ashley B. Peterson, Ph.D.,
Senior Vice President, Scientific and Regulatory Affairs,
National Chicken Council.
Exhibit 6: NCC Petition Regarding NRTE Stuffed Chicken Breast Products 
                            (Feb. 25, 2022)
February 25, 2022

  Submitted electronically via regulations.gov

  FSIS Docket Clerk,
  Food Safety and Inspection Service,
  U.S. Department of Agriculture,
  Washington, DC

  Re: Petition to Establish Regulations for the Labeling and Validated 
            Cooking Instructions for Not-Ready-to-Eat Stuffed Chicken 
            Breast Products That Appear Ready-to-Eat

    Dear Docket Clerk:

    The National Chicken Council (NCC) respectfully submits this 
supplement updating our 2016 petition requesting that the Food Safety 
and Inspection Service (FSIS) adopt regulations establishing labeling 
requirements for not-ready-to-eat (NRTE) stuffed chicken breast 
products that may appear ready-to-eat (RTE) and to issue a Compliance 
Guideline for developing and communicating validated cooking 
instructions for such products. NCC first filed this petition on May 
24, 2016 (Attachment 1). This supplement updates the 2016 petition to 
reflect updates in [] collective understanding of these products. 
Information presented in this supplement should be read cumulatively 
with our 2016 petition, except that the requested language amending 
FSIS's regulations identified in our 2016 petition should be replaced 
with the language provided in this supplemental letter.
    NCC remains is aware that some consumers may be uncertain of the 
proper handling and cooking methods for NRTE stuffed chicken breast 
products that may appear RTE, and the proposed measures are necessary 
to ensure proper handling and cooking of these products. FSIS has 
demonstrated that adding information to labels, such as warning 
statements and validated cooking instructions, is the appropriate way 
to address products when the Agency believes that consumers may need 
additional information to ensure they are consuming the product safely. 
We agree with this approach.
    NCC has long advocated for additional labeling to address consumer 
confusion related to these products and has worked with its members to 
develop guidelines for such labels. This labeling would clearly inform 
consumers that these products are raw and require proper cooking while 
providing specific and uniform instructions on how to cook the 
products. NCC has drafted proposed regulatory text establishing the 
language and prominence requirements that have been shown to be 
effective in increasing consumer perception and understanding of 
warning statements. NCC is confident that these proposed labeling 
regulations would inform consumers are appropriately informed that NRTE 
stuffed chicken breast products that may appear RTE are raw and must be 
handled properly and cooked for safety. An FSIS Compliance Guideline on 
validating cooking instructions for these products also would reinforce 
these efforts by ensuring that these products are safe to consume when 
cooked in accordance with the instructions provided and that cooking 
instructions can be easily replicated by consumers.
    Further, FSIS conducted a Food Safety Consumer Research Project 
titled ``Meal Preparation Experiment on Raw Stuffed Chicken Breasts,'' 
which was published in September of 2020.
    According to the results, consumers often do not pay attention to 
safe handling instructions required by regulations, yet they are more 
likely to look at the manufacturer's cooking instructions. Nearly all 
participants in this study reported reading the instructions on the 
package and the majority of participants believed that the product was 
raw or partially cooked. Given these findings, it is of [utmost] 
importance that labels are clear and provide appropriate information 
and instructions on how to properly cook these products.
    The National Advisory Committee on Meat and Poultry Inspection 
(NACMPI) held a public meeting in September 2021 and specifically 
discussed these NRTE stuffed chicken breast products that may appear 
RTE. The subcommittee was charged with the following questions:

  1.  Given FSIS' consumer research findings and an open multi-state 
            Salmonella Enteritidis illness outbreak, should FSIS re-
            verify that companies continue to voluntarily label these 
            products as raw in several places on the label and include 
            validated cooking instructions?

  2.  What, if any, actions can FSIS take to prevent and reduce 
            illnesses associated with the handling or consumption of 
            these NRTE products? For example, should FSIS:

      a.  Conduct exploratory sampling for pathogens and/or indicator 
            organisms in 
                these and other similar raw, stuffed or non-stuffed 
            partially processed 
                products?

      b.  Require establishments to apply a lethality treatment to 
            ensure that all 
                products are RTE?

      c.  Sample these products for Salmonella because consumers 
            customarily 
                undercook them?

      d.  Require establishments that produce these products to 
            reassess their 
                HACCP plans, in light of outbreak data?

      e.  Conduct targeted consumer outreach? If so, please provide 
            some ideas on 
                the best approaches.

    The NACMPI subcommittee concluded, in summary, that FSIS should 
reverify the labeling and validated cooking instructions for these 
products. In addition, it was recommended that labels should include 
language warning consumers not to use microwaves or air fryers if 
validated cooking instructions are not provided for these methods and 
cooking the product to a minimum of 165 F as measured using a meat 
thermometer. Moreover, the subcommittee discussed the NCC petition 
submitted in 2016 and recommended adoption of mandatory labeling 
requirements for this product category and that FSIS publish a 
compliance guide on validated cooking instructions for these products.
    For these reasons, NCC maintains and requests that the Agency take 
the following actions:

  1.  Conduct a rulemaking to adopt a regulation requiring that NRTE 
            stuffed chicken breast products that appear RTE be labeled 
            to clearly inform consumers that the products are raw and 
            how to properly handle and cook them, as proposed below; 
            and

  2.  Publish a Compliance Guideline explaining how to validate cooking 
            instructions for NRTE stuffed chicken breast products that 
            appear RTE, which incorporates NCC's ``Best Practices for 
            Cooking Instruction Validation for Frozen NRTE Stuffed 
            Chicken Breast Products.'' (Attachment 2--NCC Best 
            Practices.) *
---------------------------------------------------------------------------
    * Editor's note: the document referred to follows as Attachment 1 
to the May 24, 2016 letter, located on p. 165.

    Specifically, NCC requests that FSIS amend Part 381 of Title 9 of 
the Code of Federal Regulations to add a new subsection (c) to Section 
---------------------------------------------------------------------------
381.125, to read as follows:

          (c)(1) Definition. For purposes of this section, the term 
        ``not-ready-to-eat (NRTE) stuffed chicken breast product that 
        appears ready-to-eat (RTE)'' means a non-homogenous product 
        that contains raw, comminuted chicken breast meat, which has 
        been heat-treated only to set the batter or breading but has 
        not received a full lethality treatment; which has an RTE 
        appearance such as a set or hardened breaded crust or grill 
        marks; and which has an inner cavity filled with ingredients, 
        including, but not limited to, raw vegetables, butter, cheese, 
        or meat. NRTE stuffed chicken breast products that appear RTE 
        do not include the following products, among others: par-fried 
        products such as chicken nuggets or chicken tenders unless they 
        have been stuffed; or stuffed products such as whole stuffed 
        chickens, or chicken thighs stuffed with stuffing and almonds, 
        which do not appear RTE.
          (2) Product Name. Unless the product is destined to be fully 
        cooked or to receive a full lethality treatment at an official 
        establishment or at a foreign establishment certified by a 
        foreign government found equivalent under Section 196 of this 
        Part, the product name for a NRTE stuffed chicken breast 
        product that appears RTE must contain:

                  (i) the term ``raw'' as a descriptive designation; 
                and
                  (ii) an accurate description of the poultry component 
                (e.g., ``Raw Stuffed Chicken Breast'' or ``Raw Chicken 
                with Broccoli and Cheese'').

          (3) Required labeling to signal the product is raw. The 
        principal display panel of NRTE stuffed chicken breast product 
        that appears RTE and is destined for household consumers (not 
        for hotels, restaurants, or similar institutions) must bear:

                  (i) the following safety statement:

                          ``RAW PRODUCT. For food safety, cook to a 
                        minimum internal temperature of 165 F measured 
                        by a meat thermometer.''

                                  (A) Such that the word ``RAW'' may be 
                                used in lieu of the term ``RAW 
                                PRODUCT'';
                                  (B) With the words ``RAW'' or ``RAW 
                                PRODUCT'' capitalized and in a minimum 
                                type height of \1/4\"; and
                                  (C) With the statement ``For food 
                                safety, cook to a minimum internal 
                                temperature of 165 F measured by a 
                                meat thermometer'' capitalized or in a 
                                combination of upper and lowercase 
                                letters, with the letter height of the 
                                capitalized letters at least \1/2\ the 
                                height of the words ``RAW'' or ``RAW 
                                PRODUCT''; and
                                  (D) With the statement appearing on a 
                                solid color background that contrasts 
                                with the text and the portion of the 
                                label on which it appears. Either the 
                                text color or the background color must 
                                be red in color, but not both.

                  (ii) a ``raw chicken'' icon, which must be prominent, 
                conspicuous, and legible; comprise at least 5% of the 
                principal display panel in area; contain the statement 
                ``RAW CHICKEN'' in all capital letters; and include:

                          (A) The statement ``Do Not Microwave'' 
                        accompanied by an illustration of a microwave 
                        enclosed in a red circle, square, or rectangle 
                        with a red line across it; and
                          (B) The statement ``Oven Bake Only'' which 
                        should appear written across the door of an 
                        illustration of an oven enclosed in a green 
                        circle, square, or rectangle; and
                          (C) The statement ``Do Not Air Fry'' with an 
                        illustration of an air fryer enclosed in a red 
                        circle, square, or rectangle with a red line 
                        across it.

                  (iii) a serving suggestion notice explaining that the 
                label illustrates the suggested serving of the product 
                after baking, if the label contains an illustration of 
                the cooked product (e.g., ``serving suggestion after 
                oven baking'' or ``serving suggestion: photo shows 
                product after oven baking''). The serving suggestion 
                notice, if used, must:

                          (A) Appear in red, bold text with at least 
                        \1/8\" size font height; and
                          (B) Appear on a solid color contrasting 
                        background.

          (4) Validated cooking instructions. The labels on NRTE 
        stuffed chicken breast products that appear RTE destined for 
        household consumers must contain validated cooking 
        instructions. The validated cooking instructions may appear 
        anywhere on the label and must contain all information 
        necessary to instruct consumers how to cook the product safely. 
        Such information shall include, at a minimum:

                  (i) The proper cooking method;
                  (ii) The endpoint temperature;
                  (iii) Instructions to measure the internal 
                temperature using a meat thermometer;
                  (iv) The ``Do Not Microwave'' icon with an 
                illustration of a microwave enclosed in a red circle, 
                square, or rectangle with a red line across it;
                  (v) The ``Oven Bake Only'' icon with an illustration 
                of an oven enclosed in a green circle, square, or 
                rectangle;
                  (vi) The ``Do Not Air Fry'' icon with an illustration 
                of an air fryer enclosed in a red circle, square, or 
                rectangle with a red line across it;
                  (vii) A website URL, QR code, or similar mechanism 
                that takes the consumer to a webpage or similar openly 
                accessible platform that includes a video demonstrating 
                proper cooking methods, which shall be placed near the 
                written cooking instructions;
                  (viii) The statement ``Raw Chicken--Do Not 
                Microwave'' in at least \3/16\" font followed by the 
                explanation ``to help prevent foodborne illness caused 
                by eating raw poultry'' in at least \1/16\" font; and
                  (ix) Any additional statements or illustrations, as 
                appropriate, to inform the consumer that the product is 
                raw and must be cooked in an oven to ensure product 
                safety.
                  (x) The cooking instructions and icons identified in 
                subparagraphs (i) through (ix) must be placed on a 
                solid color background in a contrasting color to the 
                text.

          (5) Additional Validated Cooking Methods. The elements 
        identified in paragraphs (3)(ii)(A)-(C) and (4)(iv)-(vi) and 
        (4)(viii) may be modified to reflect any additional validated 
        cooking instructions provided on the label. For example, if a 
        label for an NRTE stuffed chicken breast product that appears 
        RTE destined for household consumers contains validated cooking 
        instructions for air frying, the ``Do Not Air Fry'' elements 
        otherwise required in paragraphs (3)(ii)(C) and (4)(vi) may be 
        omitted, and the element required in paragraphs (3)(ii)(B) and 
        (4)(v) may be modified to say ``Oven Bake or Air Fry Only.''

    In conclusion, NCC believes it is necessary that the Agency adopt 
these proposed regulations to require that the labels of NRTE stuffed 
chicken breast products that may appear RTE adequately indicate to 
consumers that these products are raw and must be prepared according to 
the validated cooking instructions provided to ensure the product 
safety. A corresponding FSIS Compliance Guideline incorporating NCC's 
Best Practices for validating cooking instructions will also provide 
industry with the guidance needed to ensure its instructions are 
effective and consistent with typical consumer use. NCC believes these 
requests complement the FSIS consumer research published in September 
2020 and the recommendations set forth by the NACMPI Subcommittee in 
September 2021.
    Thank you for your consideration of this updated petition. Please 
do not hesitate to contact me if I can provide any additional 
information.
            Respectfully submitted,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
Ashley B. Peterson, Ph.D.,
Senior Vice President, Scientific and Regulatory Affairs.
National Chicken Council.

cc:

Sandra Eskin, Deputy Under Secretary for Food Safety
Paul Kiecker, FSIS Administrator
Rachel Edelstein, Assistant Administrator, Office of Policy and Program 
Development
Rosalyn Murphy-Jenkins, Director, Labeling and Program Delivery 
Division
                    attachment 1--ncc 2016 petition
May 24, 2016

  Submitted electronically via regulations.gov

  FSIS Docket Clerk,
  Food Safety and Inspection Service,
  U.S. Department of Agriculture,
  Washington, DC

  Re: Petition to Establish Regulations for the Labeling and Validated 
            Cooking Instructions for Not-Ready-to-Eat Stuffed Chicken 
            Breast Products That Appear Ready-to-Eat

    Dear Docket Clerk:

    The National Chicken Council (NCC) respectfully submits this 
petition requesting that the Food Safety and Inspection Service (FSIS) 
adopt regulations establishing labeling requirements for not-ready-to-
eat (NRTE) stuffed chicken breast products that may appear ready-to-eat 
(RTE) and to issue a Compliance Guideline for developing and 
communicating validated cooking instructions for such products. NCC 
increasingly is aware that some consumers may be uncertain of the 
proper handling and cooking methods for NRTE stuffed chicken breast 
products that may appear RTE, and the proposed measures are necessary 
to ensure proper handling and cooking of these products. As evidenced 
in FSIS's recent rule requiring labeling of mechanically tenderized 
beef products, FSIS takes the view that adding to labels warning 
statements and validated cooking instructions is the appropriate way to 
address products when the Agency believes that consumers may need 
additional information to ensure they are consuming the product safely. 
Our request is consistent with--and indeed extends beyond--FSIS's 
policy toward labeling of mechanically tenderized beef.
    NCC has long advocated for additional labeling to address consumer 
confusion related to these products and has worked with its members to 
develop guidelines for such labels. This labeling would clearly inform 
consumers that these products are raw and require proper cooking while 
providing specific and uniform instructions on how to cook the 
products. Drawing upon our members' insights and consumer perception 
testing, we have drafted proposed regulations establishing the language 
and prominence requirements that have been shown to be effective in 
increasing consumer perception and understanding of warning statements. 
NCC is confident that these proposed labeling regulations would make 
certain that consumers are appropriately informed that NRTE stuffed 
chicken breast products that may appear RTE are raw and must be handled 
properly and cooked for safety. An FSIS Compliance Guideline on 
validating cooking instructions for these products also will ensure 
that these products are safe to consume when cooked in accordance with 
the instructions provided and that cooking instructions can be easily 
replicated by consumers.
I. Requested Actions
    NCC requests that the Agency take the following actions:

  1.  Conduct a rulemaking to adopt a regulation requiring that NRTE 
            stuffed chicken breast products that appear RTE be labeled 
            to clearly inform consumers that the products are raw and 
            how to properly handle and cook them, as proposed below; 
            and

  2.  Publish a Compliance Guideline explaining how to validate cooking 
            instructions for NRTE stuffed chicken breast products that 
            appear RTE, which incorporates NCC's ``Best Practices for 
            Cooking Instruction Validation for Frozen NRTE Stuffed 
            Chicken Breast Products.'' (Attachment 1--NCC Best 
            Practices.)

    The requested regulations and Compliance Guideline would work in 
tandem. The regulations would require that the products bear validated 
cooking instructions and establish required uniform label statements 
necessary to inform consumers that the products are raw and must be 
prepared according to the cooking instructions provided to ensure food 
safety. The Compliance Guideline would assist industry in validating 
cooking instructions to comply with the regulation and identify any 
additional statements that should accompany the validated cooking 
instructions to reinforce for consumers that they must cook the product 
in an oven, not a microwave, to prevent foodborne illness.
    Specifically, we request that FSIS amend Part 381 of Title 9 of the 
Code of Federal Regulations to add a new subsection (c) to Section 
381.125, to read as follows:

          (c)(1) Definition. For purposes of this section, the term 
        ``not-ready-to-eat (NRTE) stuffed chicken breast product that 
        appears ready-to-eat (RTE)'' means a non-homogenous product 
        that contains raw, comminuted chicken breast meat, which has 
        been heat-treated only to set the batter or breading but has 
        not received a full lethality treatment; which has an RTE 
        appearance such as a set or hardened breaded crust or grill 
        marks; and which has an inner cavity filled with ingredients, 
        including, but not limited to, raw vegetables, butter, cheese, 
        or meat. NRTE stuffed chicken breast products that appear RTE 
        do not include the following products, among others: par-fried 
        products such as chicken nuggets or chicken tenders unless they 
        have been stuffed; or stuffed products such as whole stuffed 
        chickens, or chicken thighs stuffed with stuffing and almonds, 
        which do not appear RTE.
          (2) Product Name. Unless the product is destined to be fully 
        cooked or to receive a full lethality treatment at an official 
        establishment or at a foreign establishment certified by a 
        foreign government found equivalent under Section 196 of this 
        Part, the product name for a NRTE stuffed chicken breast 
        product that appears RTE must contain:

                  (i) the term ``raw'' as a descriptive designation; 
                and
                  (ii) an accurate description of the poultry component 
                (e.g., ``Raw Stuffed Chicken Breast'' or ``Raw Chicken 
                with Broccoli and Cheese'').

          (3) Required labeling to signal product is raw. The principal 
        display panel of NRTE stuffed chicken breast product that 
        appears RTE and is destined for household consumers (not for 
        hotels, restaurants, or similar institutions) must bear:

                  (i) the following safety statement:

                          ``RAW PRODUCT. For food safety, cook to a 
                        minimum internal temperature of 165 F measured 
                        by a meat thermometer.''

                                  (A) such that the word ``RAW'' may be 
                                used in lieu of the term ``RAW 
                                PRODUCT'';
                                  (B) with the words ``RAW'' or ``RAW 
                                PRODUCT'' capitalized and in a minimum 
                                type height of \1/4\"; and
                                  (C) with the statement ``For food 
                                safety, cook to a minimum internal 
                                temperature of 165 F measured by a 
                                meat thermometer'' capitalized or in a 
                                combination of upper and lowercase 
                                letters, with the letter height of the 
                                capitalized letters at least \1/2\ the 
                                height of the words ``RAW'' or ``RAW 
                                PRODUCT'';

                  (ii) a ``raw chicken'' icon, which must be prominent, 
                conspicuous, and legible; contain the statement ``RAW 
                CHICKEN'' in all capital letters; and include:

                          (A) the statement ``Do Not Microwave'' above 
                        an illustration of a microwave enclosed in a 
                        circle with a line across it; and
                          (B) the statement ``Oven Bake Only'', which 
                        should appear written across the door of an 
                        illustration of an oven; and

                  (iii) a serving suggestion notice explaining that the 
                label illustrates the suggested serving of the product 
                after baking, if the label contains an illustration of 
                the cooked product (e.g., ``serving suggestion after 
                baking'' or ``serving suggestion: photo shows product 
                after oven baking'').

          (4) Validated cooking instructions. The labels on NRTE 
        stuffed chicken breast products that appear RTE destined for 
        household consumers must contain validated cooking 
        instructions. The validated cooking instructions may appear 
        anywhere on the label and must contain all information 
        necessary to instruct consumers how to cook the product safely. 
        Such information shall include, at a minimum:

                  (i) the proper cooking method;
                  (ii) the endpoint temperature;
                  (iii) instructions to measure the internal 
                temperature using a meat thermometer;
                  (iv) the ``Do Not Microwave'' icon;
                  (v) the ``Oven Bake Only'' icon;
                  (vi) the statement ``Raw--Do Not Microwave'' in at 
                least \3/16\" font followed by the explanation ``to 
                help prevent foodborne illness caused by eating raw 
                poultry'' in at least \1/16\" font; and
                  (vii) any additional statements or illustrations, as 
                appropriate, to inform the consumer that the product is 
                raw and must be cooked in an oven to ensure product 
                safety.
II. Support for Requested Actions
    We are becoming increasingly aware that some consumers may not know 
how to properly recognize and prepare NRTE stuffed chicken breast 
products that may appear RTE. NCC's proposed regulations and 
corresponding Compliance Guideline would draw consumers' attention to 
the fact that these products are raw and must be handled accordingly 
while ensuring that cooking instructions are properly validated to 
achieve lethality for food safety.
A. Need for Increased Consumer Awareness Regarding NRTE Foods that 
        Appear RTE
    NCC member companies strive to produce safe, wholesome products for 
their consumers to enjoy. As with any raw product, though, consumers 
are the last line of defense in food safety. No matter how safe a 
product is, improper handling or cooking may nevertheless render the 
product unsafe for consumption. Ensuring consumer understanding of 
proper handling and preparation methods therefore is a vital component 
of preventing foodborne illness. In the ongoing endeavor to maintain 
consumer awareness of food safety procedures, NRTE stuffed chicken 
breast products that may appear RTE present a unique challenge.
    NCC understands that some consumers currently may be uncertain of 
the correct handling and cooking methods for NRTE stuffed chicken 
breast products that may appear RTE, and further efforts are necessary 
to ensure that all consumers appreciate the raw nature of these 
products and the need to cook them for food safety. NCC understands 
that the labeling, cooked appearance, and often frozen state of these 
products can sometimes be confusing to consumers, who may believe that 
the products are fully cooked. As a result, some consumers may only 
reheat the product for aesthetics or palatability instead of cooking 
the product to the internal temperature needed to destroy pathogenic 
bacteria, even when the cooking instructions tell them to do so.
    FSIS also is aware of this issue and, following recalls associated 
with similar products, has advised manufacturers of NRTE breaded 
chicken breast products that may appear RTE of the need to emphasize to 
consumers that these products are not cooked.
    Thus, there is consensus that clear and uniform labeling is 
required to ensure consumers understand the proper handling and cooking 
procedures for NRTE breaded chicken breast products that may appear 
RTE.
B. Label Warnings, Statements, and Validated Cooking Instructions to 
        Inform Consumers and Ensure Product Safety
    NCC believes that mandatory labeling and the use of validated 
cooking instructions are the best options for equipping consumers to 
handle and prepare these products safely. In a report to FSIS, the 
National Advisory Committee on Microbiological Criteria for Foods 
(NACMCF) similarly recommended that products that contain uncooked 
poultry but appear cooked should explicitly state on the label that the 
product contains raw poultry and must be cooked thoroughly.\1\ The 
National Advisory Committee on Meat and Poultry Inspection (NACMPI) 
also recently concluded that there should be mandatory label statements 
for NRTE products that appear RTE and that FSIS should require these 
products to bear validated cooking instructions.\2\ NACMPI also 
suggested that a standard of identity for these products may be 
appropriate.
---------------------------------------------------------------------------
    \1\ NACMCF also recommended that such statements related to safety 
information should appear on the principal display panel. NACMCF, 
Response to the Questions Posed by the Food Safety and Inspection 
Service Regarding Consumer Guidelines for the Safe Cooking of Poultry 
Products (Mar. 2006), available at http://www.fsis.usda.gov/shared/PDF/
NACMCF_Re
port_Safe_Cooking_Poultry_032406.pdf?redirecthtt p=true.
    \2\ NACMPI, Subcommittee #2 Consideration of Mandatory Labeling 
Features for Certain Processed Not Ready to Eat Meat and Poultry 
Products (Apr. 2016) (hereinafter ``NACMPI Report''), available at 
http://www.fsis.usda.gov/wps/wcm/connect/076f154b-6744-41ef-bc27-
7282bee0d
fce/NRTELabeling.pdf?MOD=AJPERES.
---------------------------------------------------------------------------
    A Federal regulation defining this category of products and 
prescribing appropriate and uniform warning statements will ensure that 
label statements are consistent, so as to avoid further consumer 
confusion, and effective at alerting consumers to the raw nature of 
these products. In addition, a mandate that these products bear 
validated cooking instructions will ensure that the preparation 
instructions provided on the label can achieve the necessary level of 
lethality in a manner that can be replicated by consumers.
III. Explanation of Proposed Regulations and Compliance Guideline
    NCC proposes to amend FSIS's existing regulation for special 
handling labeling requirements at 9 CFR  381.125 to include labeling 
requirements for NRTE stuffed chicken breast products that may appear 
RTE. Below we describe the components of the proposed regulation and 
explain how each provision will increase consumer awareness and improve 
product safety. We also discuss how NCC's proposed Compliance Guideline 
will elaborate upon the regulation while allowing for the flexibility 
needed for this type of product category.
A. Definition of NRTE Stuffed Chicken Breast Product That Appears RTE
    As noted above, the challenge of consumer awareness is limited to a 
narrow category of products--NRTE stuffed chicken breast products that 
may appear RTE. It therefore is necessary to define this term carefully 
to ensure that it covers all products for which additional warning 
statements and validated cooking instructions are needed to address 
consumer confusion, but does not capture products for which this unique 
safety issue does not exist.
    NCC's proposed definition of ``NRTE stuffed chicken breast products 
that appear RTE'' is based upon FSIS's description of these products in 
Notice 15-16.\3\ This category of products contains raw, comminuted 
chicken breast meat, which has been heat-treated only to set the batter 
or breading, which has an RTE appearance, and which is stuffed with 
ingredients such as raw vegetables, butter, cheese, meat, or other 
fillings. The proposed definition is limited exclusively to retail 
products because we understand that the awareness issues related to 
these products do not extend to hotels, restaurants, and institutional 
users, who recognize these products as being raw and are able to handle 
them properly.
---------------------------------------------------------------------------
    \3\ FSIS Notice 15-16, Profile Update in Establishments that 
Produce Not-Read-to-Eat Stuffed Chicken Breast Products that Appear 
Ready-to-Eat (Feb. 18, 2016).
---------------------------------------------------------------------------
    The term ``stuffed chicken breast product'' means a product 
consisting of comminuted chicken breast with an inner cavity that has 
been filled with additional ingredients, thereby creating two, non-
homogenous layers with different densities. The different densities 
affect thermal transfer, which may contribute to consumer challenges in 
understanding how to cook these products. It does not refer to 
homogenous blends or mixtures of comminuted chicken breast and other 
ingredients. Thus, a comminuted chicken breast product that contains an 
inner pocket filled with broccoli and cheese would fall under the 
proposed definition, whereas a mixture of comminuted chicken breast, 
broccoli, and cheese would not. A product ``appears RTE'' if it has not 
undergone a validated lethality step, but has been battered or breaded 
and then par-fried to set the crust; contains grill marks; or has been 
colored to create the appearance that the product has been cooked.
    NCC agrees with FSIS that this category of products includes items 
such as breaded, pre-browned chicken cordon bleu, chicken Kiev, and 
chicken stuffed with broccoli and cheese. NCC also agrees with FSIS's 
determination that this category does not include par-fried products 
such as chicken nuggets or chicken tenders unless they have been 
stuffed or other types of stuffed products such as turducken, whole 
stuffed chickens, or chicken thighs stuffed with stuffing and almonds, 
which do not appear RTE. More generally, the term does not refer to 
stuffed whole muscle cuts.
B. Required Product Name, Warnings, and Statements
    The proposed regulations mandating label warning statements for 
NRTE breaded chicken breast products that appear RTE will increase 
consumer awareness by providing clear statements conveying that the 
product is raw and must be cooked and by ensuring that this information 
is sufficiently prominent for consumers to read it. NCC research 
confirms that use of the proposed label statements, along with the 
prescribed prominence requirements, will increase consumer 
understanding that these products are raw. (Attachment 2--NCC Consumer 
Perception Research.) NCC's proposal also is consistent with the 
principles FSIS has identified for effective product warnings, and in 
many aspects goes beyond the measures FSIS has recommended.\4\
---------------------------------------------------------------------------
    \4\ E.g., FSIS, Labeling Policy Guidance: Uncooked, Breaded 
Boneless Poultry Products (Jan. 2007), available at http://
www.fsis.usda.gov/wps/wcm/connect/6d7b7f70-e11b-4861-adc86f3269c3eeec/
Labeling_Policy_Guidance_Uncooked_Breaded_Boneless_Poultry_Products.pdf?

MOD=AJPERES.
---------------------------------------------------------------------------
    The proposed regulations would require labels for these products to 
bear the statement ``RAW PRODUCT. For food safety, cook to a minimum 
internal temperature of 165 F measured by a meat thermometer.'' This 
proposed statement includes the three elements FSIS has identified as 
necessary to communicate effectively the proper handling and cooking 
procedures for these products: (1) the term ``RAW PRODUCT'' (or 
``RAW''), which reflects that the product is NRTE; (2) the specific 
endpoint internal temperature of 165 F; and (3) a direction to measure 
the endpoint temperature using a meat thermometer.\5\ This statement, 
which must appear in all capital letters at least \1/4\" in height on 
the principal display panel (PDP), will help consumers understand that 
it is important for them to follow the cooking instructions provided.
---------------------------------------------------------------------------
    \5\ See id.
---------------------------------------------------------------------------
    The proposed regulations also would require several other 
components to appear on the PDP, which NCC research has found will 
reinforce the raw state of these products. First, the word ``raw'' 
would be required to be included as a descriptive designation in the 
product name. Second, a ``raw chicken'' icon would be required to 
appear on the label with corresponding ``do not microwave'' and ``oven 
bake only'' illustrations. Repeating the word ``raw'' on the label, as 
these requirements would achieve, is important because NCC's research 
concluded that multiple placements of the word ``raw'' nearly doubles 
the percentage of individuals who notice the term. The oven symbol also 
reinforces the raw state of the product and how it should be cooked. 
Third, the PDP must include a serving suggestion notice explaining that 
the label illustrates the suggested serving of the product after baking 
if the label contains an illustration of the cooked product. This 
statement will prevent consumers from assuming based on the 
illustration of the cooked product on the label that the product is 
RTE.
    In addition, the regulations would prescribe the warnings and 
statements that must be included as part of the validated cooking 
instructions. These required warnings and statements--a statement that 
the product is raw, the minimum internal temperature, instructions to 
measure the temperature using a thermometer, a warning not to microwave 
the product to help prevent foodborne illness, and the ``do not 
microwave'' and ``oven bake only'' illustrations--are the same or 
similar to those required to appear on the PDP. This repetition of key 
words and statements will help reinforce the key messages that the 
product is raw and must be cooked for food safety.
    Requiring that these warnings statements accompany validated 
cooking instructions would be consistent with NACMPI's recommendations, 
which suggested that validated cooking instructions should include a 
disclaimer not to use a microwave and should make clear which steps 
should be followed for safety.\6\ NCC also envisions that FSIS, through 
its Compliance Guideline on validating cooking instructions, or an 
establishment based on its experience, may identify additional warnings 
or statements that would be appropriate to include in the validated 
cooking instructions. NCC accounted for these additional statements by 
requiring that the instructions include ``any additional statements or 
illustrations, as appropriate, to inform the consumer that the product 
is raw and must be cooked in an oven to ensure product safety.''
---------------------------------------------------------------------------
    \6\ See NACMPI Report, supra note 2.
---------------------------------------------------------------------------
    NCC research demonstrates that the proposed label regulations would 
be successful in increasing consumer awareness that these products 
contain raw poultry and must be cooked for safety. It is necessary for 
FSIS to adopt these proposals via mandatory regulation, both to ensure 
that products bear consistent and uniform language and display methods 
that have been proven effective and to avoid inconsistent messaging 
that may cause further consumer confusion.
C. Validated Cooking Instructions and Corresponding Compliance 
        Guideline
    NCC agrees with FSIS that the cooking instructions for NRTE stuffed 
chicken breast products that appear RTE must be validated, and the 
proposed regulations include a requirement that the products bear 
validated cooking instructions. This requirement will ensure that 
labeled cooking instructions will achieve lethality.
    To accompany the regulation, we request FSIS issue a Compliance 
Guideline instructing industry on how to validate cooking instructions 
for NRTE stuffed chicken breast products that may appear RTE, 
consistent with the regulation. A corresponding Compliance Guideline 
would be appropriate because it would provide establishments with firm, 
clear guidance to follow to ensure cooking instructions are accurate 
and consumers can replicate them effectively. Based on the Agency's 
approach toward cooking instructions in other contexts, NCC proposes 
that FSIS include in the regulations a general requirement to provide 
validated cooking instructions while also maintaining more detailed 
recommendations for validation through a Compliance Guideline. This 
method has been effective in analogous situations that warranted 
providing flexible general parameters for validation that could be 
adapted to specific products,\7\ and NCC believes it would be 
appropriate in this instance as well.
---------------------------------------------------------------------------
    \7\ For example, FSIS requires that mechanically tenderized beef 
bear validated cooking instructions, 9 CFR 317.2(e)(3), and the Agency 
issued a separate Compliance Guideline for the validation of the 
instructions. FSIS, Compliance Guideline for Validating Cooking 
Instructions for Mechanically Tenderized Beef Products (2015). 
Similarly, FSIS requires inspected establishments to prepare validated 
Hazard Analysis and Critical Control Points (HACCP) plans, 9 CFR 417.2, 
417.4, and maintains a Compliance Guideline to assist establishments in 
validating their HACCP plans in compliance with the regulation. FSIS, 
Compliance Guideline HACCP Systems Validation (April 2015).
---------------------------------------------------------------------------
    FSIS's Compliance Guideline should incorporate NCC's Best Practices 
for Cooking Instruction Validation for Frozen NRTE Stuffed Chicken 
Products (``Best Practices''), which are consistent with and expand 
upon FSIS's recommendations for validation.\8\ NCC agrees with FSIS 
that microwave cooking may result in inconsistencies and, as described 
above, supports label statements that discourage consumers from 
microwaving these products.\9\ Because NCC discourages microwave 
preparation, our Best Practices are limited to validating cooking 
instructions for oven preparation, and are further limited to gas and 
electric-style ovens for retail portions. Like FSIS's recommendations, 
the Best Practices also state that validated cooking instructions must 
result in all product sizes and varieties reaching an internal 
temperature of 165 F and must be consistent with consumer use.
---------------------------------------------------------------------------
    \8\ FSIS, Information on Validation of Labeled Cooking Instructions 
for Products Containing Raw orPartially Cooked Poultry, available at 
http://1.usa.gov/23JFeIe.
    \9\ NCC would encourage FSIS to revisit this issue should a new 
cooking technology become available that allows consumers to safely 
cook these products using an appliance other than an oven.
---------------------------------------------------------------------------
    NCC's Best Practices include a number of other suggestions beyond 
FSIS's recommendations that will improve the specificity of cooking 
instructions and increase the ease in which consumers can replicate the 
preparation methods. In particular, the Best Practices advise that 
cooking instructions for each product should include guidance for the 
appropriate metal cooking utensil to support consistent cooking 
results, appropriate product spacing to support even heating of the 
product, and the standard placement of the product in the oven, all of 
which should be validated accordingly. To maximize the efficacy and 
repeatability of the validation process, NCC also recommends that 
product and testing ovens be prepared for cooking and validation in a 
manner that is consistent with consumer use.
    NCC's request that FSIS issue a Compliance Guideline incorporating 
NCC's Best Practices for cooking instruction validation goes hand-in-
hand with our proposed label regulations for NRTE stuffed chicken 
breast products that appear RTE. Industry must alert consumers to the 
raw state of these products and instruct consumers on the proper method 
for preparing the products to achieve lethality. An FSIS Compliance 
Guideline adopting NCC's Best Practices will not only ensure that the 
cooking instructions provided achieve the necessary level of lethality, 
but also that they are understandable and easily replicable by 
consumers.
Conclusion
    For these reasons, NCC believes it is necessary that the Agency 
adopt these proposed regulations to require that the labels of NRTE 
stuffed chicken breast products that may appear RTE adequately indicate 
to consumers that these products are raw and must be prepared according 
to the validated cooking instructions provided to ensure the product 
safety. A corresponding FSIS Compliance Guideline incorporating NCC's 
Best Practices for validating cooking instructions also will provide 
industry with the guidance needed to ensure its instructions are 
effective and consistent with typical consumer use. If adopted, NCC's 
proposals will reinforce the safety of these popular consumer products.
    Thank you for your consideration of this petition. Please do not 
hesitate to contact me if I can provide any additional information.
            Respectfully submitted,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
Michael J. Brown,
President.

cc:

Mr. Alfred Almanza, Deputy Under Secretary for Food Safety
Daniel L. Engeljohn, Ph.D., Assistant Administrator, Office of Policy 
and Program Development
Rosalyn Murphy-Jenkins, Director, Labeling and Program Delivery 
Division
  attachment 1--best practices for cooking instruction validation for 
                  frozen nrte stuffed chicken products
Introduction:
    An industry group was formed to identify and develop a document of 
recommended Best Practices for the validation of cooking instructions 
and labeling for products that are classified as ``frozen not-ready-to-
eat (NRTE) stuffed poultry that appears ready-to-eat (RTE)''.
    This Best Practices document is meant to serve as a set of 
voluntary guidelines which may be used by industry to develop company-
specific cooking validation programs. These guidelines were developed 
to include procedures that companies can consider adopting to ensure 
product safety and quality. The following recommended Best Practices 
apply exclusively to frozen NRTE stuffed chicken products.
Cooking Validation Protocols:
    Manufacturers of frozen NRTE stuffed chicken products design a 
variety of entrees to appeal to the varying tastes of their consumers, 
and, as a result, there may be differences in how to properly cook 
these products. The manufacturers of these products believe that it is 
in the best interest of the industry to develop some general parameters 
for developing cooking validation protocols for each product to ensure 
high food safety and quality.
    The following voluntary guidelines are intended to be used to 
develop thorough cooking validation measures exclusively for frozen 
NRTE stuffed chicken products.
General Parameters:

  1.  Cooking instructions should be developed for each size and 
            variety of stuffed entree product. Each variety and size 
            should be validated in portion sets consistent with or 
            greater than package labeling for the tested product (e.g., 
            2, 4, 6, etc. portions).

  2.  Cooking validations should be done with sufficient replication to 
            account for variability of cooking and to ensure 
            consistency of product temperature and quality.

  3.  Retail portions should be cooked in a retail gas or electric 
            style oven, as these appliances will be used by the 
            consumers.

  4.  Each portion must reach an internal temperature of 165 F at each 
            point measured on the product to be considered effectively 
            cooked.

      a.  Product mapping should be carried out to identify the 
            location(s) of the 
                lowest product temperature after being cooked (e.g., 
            top center, middle 
                center, or bottom center).

  5.  During the validation procedure, the average operating 
            temperature of the oven used should be at or below target 
            temperature indicated on cooking instructions for the 
            replica set to allow for the safest development of cooking 
            instructions for the consumer.

  6.  Cooking instructions for each product should include, but is not 
            limited to, guidance for:

      a.  The appropriate metal cooking utensil (e.g., metal baking 
            pan, tray, or 
                sheet) for the given product to support consistent 
            cooking results. The 
                cooking utensil used should be the specified utensil on 
            the packaging in-
                structions for the product, and should be validated 
            accordingly.

      b.  The appropriate product spacing on the specified cooking 
            utensil to sup-
                port even heating of the product. Information on 
            spacing must be on the 
                packaging instructions for the product and that spacing 
            should be vali-
                dated accordingly.

      c.  The standard placement of the product in the oven is on the 
            center rack. 
                Products should be validated following this standard.
Equipment/Utensils:
    The use of the following cooking equipment and utensils is 
recommended for optimal product cooking validation and consistency:

  1.  Two thermometers: one thermometer will measure the internal 
            temperature of the testing oven, and one will measure 
            predetermined points on each product portion. These should 
            be calibrated on the same day as the cooking validation 
            testing.

  2.  Data loggers, if used, can track temperature measurements taken 
            throughout cooking validation testing. These should be 
            calibrated and certified based on National Institute of 
            Standards and Technology (NIST) standards within 1 year of 
            testing.

  3.  Scales for weighing each product portion. These should be 
            calibrated on the same day as cooking validation testing.

  4.  The metal cooking utensil (e.g., metal baking pan, tray, or 
            sheet) recommended on the package cooking instructions for 
            each product should be used during the validation process 
            to ensure optimal product cooking consistency and 
            completeness.
Oven Preparation:
    Testing ovens should be prepared for cooking validation in a manner 
that is consistent with consumer use and which will maximize the 
efficacy and repeatability of the validation process:

  1.  Personnel should ensure that the rack intended to be used for 
            cooking validation is positioned in the middle of the 
            testing oven. The center rack of the oven has been 
            determined to be the easiest location for the consumer to 
            use while providing the maximum available heat distribution 
            for the product.

  2.  The testing oven should be pre-heated to the set point specified 
            by the product cooking instructions, which will be based on 
            the size, quantity, and variety of product to be tested.

  3.  The testing oven should be pre-heated using a calibrated 
            thermometer or using a data logger to observe that the oven 
            has reached the specific set point indicated in the package 
            cooking instructions prior to cooking validation.
Product Preparation:
    It is important to prepare the product in a way that will be 
consistent with consumer use and which will maximize the efficacy and 
repeatability of the cooking validation process. The following 
guidelines are suggested to ensure accurate cooking validation results:

  1.  Each product portion must be 55 F prior to cooking to ensure 
            consistency of cooking validation results and testing 
            parameters. This should be verified prior to cooking 
            validation testing by measuring the temperature of each 
            product portion or confirming a documented correlation of 
            product portion temperature to the freezer storage 
            temperature.

  2.  Product must be verified to be within design specifications at 
            the production plant. If a company determines a product to 
            be out of design specification in the production plant, the 
            company will take appropriate steps to apply alternative 
            validated cooking instructions to the product that is out 
            of design specification.

  3.  Each portion should be placed on a metal cooking utensil (e.g., 
            metal baking pan, tray, or sheet) with predetermined 
            spacing provided between each portion consistent with 
            packaging instructions for the product.

  4.  The product portions should be placed in the preheated oven as 
            soon as possible after the product has been removed from 
            the freezer and the metrics have been documented to prevent 
            tempering during the preparation process.
Product Cooking:
    It is important that product cooking during testing reflects the 
instructions that are supplied to the consumer for use. The following 
are general Best Practices for cooking NRTE products:

  1.  The minimum required cooking time and temperature should be 
            determined for each labeled portion size.

  2.  The product portions should be placed on the center rack in the 
            middle of the oven to allow for adequate and even heating 
            of each product portion. This is the location that is 
            recommended to consumers when cooking frozen NRTE stuffed 
            chicken products.

  3.  The product portions will be appropriately spaced on the metal 
            cooking utensil in accordance with the cooking instructions 
            provided with the NRTE product.
Oven Monitoring:
    The internal temperatures of retail gas and electric ovens may 
fluctuate during a typical cooking test, and this can impact the 
consistency of cooking validation results and the quality of the 
product that the customer obtains when following cooking instructions 
provided with a given product. It is, therefore, important to recognize 
and account for this variation by following the basic suggestions 
below:

  1.  The internal temperatures of the testing oven should be monitored 
            and recorded during the cooking cycle utilizing a 
            calibrated thermometer and/or a calibrated data logger at 
            the following suggested time points:

      a.  At the start of each cooking cycle after the product is 
            loaded and timer 
                is started

      b.  At least every 5 minutes during the cooking cycle

      c.  At the end of the cooking cycle, immediately before removing 
            product

  2.  Once preheated, data points from the oven should be assessed and 
            compared to set temperature points to determine:

      a.  Minimum oven operating temperature

      b.  Maximum oven operating temperature

      c.  Average oven operating temperature

  3.  Across the chosen number of replication sets per cooking 
            validation, the average set point of theoven must not 
            exceed the set point temperature in the package cooking 
            instructions.
Product Validation:
    Validation of the recommended cooking process is an important step 
to ensure food quality and safety, and also ensure that the 
instructions supplied with the product will provide a consistently 
positive result. Steps to validate the efficacy of the cooking process 
must include, but are not limited to, the following:

  1.  The product portion should be temperature mapped to identify the 
            coldest temperature point on the product.

  2.  The internal temperature of each product portion should be 
            measured as soon as possible after removing the products 
            from the testing oven.

  3.  The temperature of each product portion should be measured at the 
            coldest spot(s) of each portion, as determined by product 
            temperature mapping, to ensure that the portion temperature 
            is greater than or equal to 165 F.

  4.  The internal minimum, maximum, and average temperatures of the 
            oven should be measured and recorded for each cooking 
            validation replicate.
             attachment 2--ncc consumer perception research
NCC Packaging Consumer Comprehension of NRTE Stuffed Breasts
    Objectives:

   Consumer Safety

   Comprehension of ``raw'' product state

   Proper handling and cooking

    Background:

   December 2008 present recommended standard to USDA

   May 2009 present next round continuous improvements
Research of Consumer Comprehension of NRTE Stuffed Breasts Product 
        State and Proper Handling/Cooking
    On-line Omnibus 1,000 interviews

   50% of sample viewed ``generic old copy'' March 2008 
        packaging

   50% of sample viewed ``generic new'' proposed standard
Appendix: Product Tested--Old Copy

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Appendix: Product Tested--New Copy

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Package research Executive Summary
    The new package communicates the raw product state significantly 
better

   Recall of the word ``raw'' nearly doubles (42% w/old pack to 
        82% w/new pack)

   Understanding of the raw product state increases from 55% to 
        76% overall

     Among females who indicate they are the primary meal 
            preparer, it goes from 54% to 82%

    The oven symbol does a good job in reinforcing the raw state of the 
product and how it should be cooked

    In both the new and old versions the vast majority of consumers 
plan to cook the product in the oven (75% for old copy vs. 79% for new 
copy)

   Open end playback of packaging likes are consistent with the 
        other findings--more mention raw and must be cooked in oven/not 
        microwavable with the new package

      Recall of a meat thermometer increases significantly overall 
        (from 53% to 70%)

     The open ends suggest meat thermometer communicates 
            that the product must reach a certain temperature/be cooked 
            well or thoroughly--but not necessarily that the product is 
            raw
Product State--Did you notice the word ``Raw?''
   Multiple placements of the word ``raw'' nearly double the 
        percentage of consumers who notice the word

   The percentage is higher among females compared to males

----------------------------------------------------------------------------------------------------------------
                             Total          Total Females      Total Males     Total Females +   Total Females +
                     --------------------------------------------------------    Involved In     Involved + Buy
                                                                                Purchase/Prep    Chicken Breasts
                        Old A     New B    Old C    New D    Old E    New F  -----------------------------------
                        (499)     (501)    (257)    (263)    (243)    (237)    Old G    New H    Old I    New J
                                                                               (237)    (247)    (157)    (167)
----------------------------------------------------------------------------------------------------------------
               Yes         42    882 A0        40   885 C0       44   878 E0       40   885 G0       45   887 I0
                No       58 B        18      60 D       15     56 F       22     60 H       15     55 J       13
----------------------------------------------------------------------------------------------------------------
Q 10: ``When you first saw the package, did you notice the word `Raw' to describe the product?''
CAPITAL LETTER indicates 95% confidence level vs. other column
Lower case indicates 90% confidence level vs. other column

Product State--What is the product state?
   New packaging copy has significant impact on the percentage 
        of all consumers who believe the chicken is raw, especially 
        among females and females involved in the category

----------------------------------------------------------------------------------------------------------------
                             Total          Total Females      Total Males     Total Females +   Total Females +
                     --------------------------------------------------------    Involved In     Involved + Buy
                                                                                Purchase/Prep    Chicken Breasts
                        Old A     New B    Old C    New D    Old E    New F  -----------------------------------
                        (499)     (501)    (257)    (263)    (243)    (237)    Old G    New H    Old I    New J
                                                                               (237)    (247)    (157)    (167)
----------------------------------------------------------------------------------------------------------------
    The chicken is       33 B        16      31 D       12     35 F       21     32 H       12     36 J       12
      already fully
            cooked
The chicken is raw         55    876 A0        54   882 C0       56   870 E0       54   882 G0       55   883 I0
I am not sure if the       12         8      15 D        6        9       10     15 H        6       10       4
            chicken
   is raw or fully
             cooked
----------------------------------------------------------------------------------------------------------------
Q4: ``Based on what you noticed from the packaging, please select one statement below that describes the chicken
  in this product''
CAPITAL LETTER indicates 95% confidence level vs. other column
Lower case indicates 90% confidence level vs. other column

Product State--Did anything call your attention to raw state and what 
        appliance should be used?
   The oven symbol does a good job in reinforcing the raw state 
        of the product and how it should be cooked, increasing 
        recognition by over 30 points

----------------------------------------------------------------------------------------------------------------
                             Total          Total Females      Total Males     Total Females +   Total Females +
                     --------------------------------------------------------    Involved In     Involved + Buy
                                                                                Purchase/Prep    Chicken Breasts
                        Old A     New B    Old C    New D    Old E    New F  -----------------------------------
                        (499)     (501)    (257)    (263)    (243)    (237)    Old G    New H    Old I    New J
                                                                               (237)    (247)    (157)    (167)
----------------------------------------------------------------------------------------------------------------
               Yes         44    876 A0        46   880 C0       42   873 E0       46   880 G0       48   885 I0
                No       56 B        24      55 D       21     58 F       28     54 H       20     52 J       15
----------------------------------------------------------------------------------------------------------------
Q 11: ``When you first saw the front of the package, did you see anything calling your attention to the raw
  state of the product and what appliances [should] be used to cook the product?''
CAPITAL LETTER indicates 95% confidence level vs. other column
Lower case indicates 90% confidence level vs. other column

Cooking Method--Proper preparation method
   The vast majority of consumers will bake the product in the 
        oven

----------------------------------------------------------------------------------------------------------------
                             Total          Total Females      Total Males     Total Females +   Total Females +
                     --------------------------------------------------------    Involved In     Involved + Buy
                                                                                Purchase/Prep    Chicken Breasts
                        Old A     New B    Old C    New D    Old E    New F  -----------------------------------
                        (499)     (501)    (257)    (263)    (243)    (237)    Old G    New H    Old I    New J
                                                                               (237)    (247)    (157)    (167)
----------------------------------------------------------------------------------------------------------------
      Cook in oven         75        79        79       83       72       74       79       83       81       86
 Heat in microwave         10         7       8 d        4       13       11      8 h        4        8        4
Cook in oven or heat       15        14        14       13       16       16       13       13       12       10
                 in
         microwave
----------------------------------------------------------------------------------------------------------------
Q 5: ``Which statement best describes the proper preparation method(s) for this product?'' (Please select one)
CAPITAL LETTER indicates 95% confidence level vs. other column
Lower case indicates 90% confidence level vs. other column

Meat Thermometer--Notice mention of a meat thermometer?
   Women are significantly more likely to notice the mention of 
        a meat thermometer on the new package than males

----------------------------------------------------------------------------------------------------------------
                             Total          Total Females      Total Males     Total Females +   Total Females +
                     --------------------------------------------------------    Involved In     Involved + Buy
                                                                                Purchase/Prep    Chicken Breasts
                        Old A     New B    Old C    New D    Old E    New F  -----------------------------------
                        (499)     (501)    (257)    (263)    (243)    (237)    Old G    New H    Old I    New J
                                                                               (237)    (247)    (157)    (167)
----------------------------------------------------------------------------------------------------------------
               Yes         53    870 A0        41   876 C0       55       62       52   877 G0       53   881 I0
                No       47 B        31      49 D       24       45       38     49 H       23     48 J       19
----------------------------------------------------------------------------------------------------------------
Q 13: ``Did you notice anywhere on the packaging the mention of a meat thermometer?''
CAPITAL LETTER indicates 95% confidence level vs. other column
Lower case indicates 90% confidence level vs. other column

Thermometer--Open End Responses
   A meat thermometer suggests consumers must cook the product 
        well and/or to a certain temperature for safety reasons

   It is not necessarily telegraphic that a meat thermometer 
        means raw

   Note: We believe more respondents say they a meat 
        thermometer means ``raw'' for the old copy because fewer 
        consumers noticed a mention of the meat thermometer for that 
        concept (see previous page) or thought it was raw originally

----------------------------------------------------------------------------------------------------------------
                                                                    Total                    Total Females
                                                       ---------------------------------------------------------
                                                         Old A (499)    New B (501)    Old C (257)   New D (263)
----------------------------------------------------------------------------------------------------------------
                                   Preparation (NET)              54             50             59            55
  Cook right/well/thoroughly..........................            18             13             22            13
  Cook to certain/proper temperature..................            14             15             13            16
  Cook to certain temperature for safe consumption....            10              8             12            10
  165 degrees/cook to 165 degrees.....................             8             10              7            10
  Cook properly/thoroughly for safe consumption.......             4              3              4             3
                            Product Attributes (NET)              17             12             20            14
  Raw food/meat.......................................          15 A              8           17 D             8
                                    Need/Usage (NET)              13           19 A             13            19
  Used to check temperature...........................             5              6              4             7
  Check for doneness/safety...........................             3              4              6             5
  Don't like/use it...................................             3              4              4             3
                                   Convenience (NET)               6              7              6             5
----------------------------------------------------------------------------------------------------------------
Q 14: ``What does the mention of a meat thermometer mean to you about the product and its preparation? Please be
  as specific as possible.''
CAPITAL LETTER indicates 95% confidence level vs. other column
Lower case indicates 90% confidence level vs. other column

Recommended Raw Packaging Guidelines
    Consensus guidelines of top 4 Stuffed Breast manufacturers
    Need USDA FSIS input on guidelines & how to [standardize]    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    The Chairman. Mr. Brown, thank you so much for both your 
written and your oral testimony.
    And now I am pleased to recognize Mr. Larew. Please begin 
when you are ready.

   STATEMENT OF ROBERT L. LAREW, PRESIDENT, NATIONAL FARMERS 
                    UNION, WASHINGTON, D.C.

    Mr. Larew. Thank you. Chairman Thompson, Ranking Member 
Scott, and Members of the Committee, I appreciate the 
opportunity to testify today.
    National Farmers Union is the nation's second-largest 
general farm organization, and we advocate for the economic 
prosperity of family farmers, ranchers, and their communities 
through education, cooperation, and legislation. As we approach 
the 2023 Farm Bill, we should all work together to resolve 
flawed regulations, mounting uncertainty, and inflationary 
pressures.
    Family farmers and ranchers are particularly vulnerable to 
the effects of inflation. Supply chain disruptions due to 
Russia's invasion of Ukraine, rapid shifts in demand and supply 
backlogs from the pandemic, and the lingering effects of trade 
disputes with China have all set the stage for rising costs for 
farmers and ranchers. These inflationary pressures are 
intensified by a lack of market competition in the food system. 
We have few buyers and sellers to choose from. As of 2019, the 
top four companies in the cattle trade controlled 85 percent of 
the market. For pork, that was 67 percent, and for broiler 
chickens, 53 percent. There is also heavy concentration of 
markets for corn and soybean seeds, herbicides and pesticides. 
For tractors and other farm machinery, just three companies 
dominate the market.
    With such little competition, the opportunity for market 
manipulation and unfairness is greatly intensified, and this 
adds to inflationary pressure. For example, we have seen price-
fixing by meat packers and poultry integrators in recent years, 
with settlements totaling nearly $1 billion, and a lawsuit 
alleges the big four meat packers are manipulating the market. 
Major farm equipment manufacturers continue to refuse to 
provide us with access to the software tools to make repairs, 
and a mega-merger between Kroger and Albertson's is expected to 
drive consolidation among processors, wholesalers, and 
distributors. We must create fairer and more competitive 
markets that drive innovation, increase choice, and decrease 
input costs and boost prices for crops and livestock.
    NFU believes family farmers and ranchers should be allowed 
to do what we do best: sustainably produce food, feed, fiber, 
and fuel. Regulations, when needed, should be science-based, 
size and risk appropriate, clear, and only implemented after 
thorough feedback. Unfortunately, this doesn't always happen. 
For example, confusing regulations and court decisions 
regarding the definitions of Waters of the U.S. have made it 
difficult to comply with the Clean Water Act. Clean, safe water 
is an essential natural resource we work hard to protect, and 
regulators shouldn't make it so difficult for farmers to 
accomplish this.
    NFU is also concerned by a potential change in the 
longstanding policy on labeling of crop protection products. 
The change, based on a position taken by the U.S. Solicitor 
General in a brief to the Supreme Court could open up the door 
to an impractical patchwork of labeling requirements that 
aren't science-based.
    One of the greatest sources of uncertainty farmers face is 
climate change. We are on the frontlines of climate change with 
shifting weather patterns and increasingly severe weather 
events, making farming more unpredictable and difficult. Now 
more than ever leadership on climate change is essential, which 
is why NFU is a proud founding member and co-chair of the Food 
and Agriculture Climate Alliance. Last week, FACA released farm 
bill recommendations aimed at helping us mitigate climate 
change and to make the entire farm and food system more 
resilient through a voluntary science- and incentive-based 
approach. To address climate change, we should build on recent 
investments in farm bill conservation programs and renewable 
energy, the creation of USDA's partnerships for climate-smart 
commodities, and passage of the Growing Climate Solutions Act 
and the SUSTAINS Act.
    By working together, we can overcome the challenges 
presented by faulty regulations, mounting uncertainty, and 
inflationary pressures. NFU recently launched the Fairness for 
Farmers Campaign to shed light on the devastating impact that 
monopolies and near monopolies have on family farmers, 
ranchers, and their communities. That is why we are calling for 
a competition title in the farm bill, which should include 
provisions that improve transparency and price discovery in 
cattle markets, strengthen the Packers and Stockyards Act, 
ensure farmers' right to repair, reinstate mandatory country-
of-origin labeling, and ease regulatory burdens for diversified 
food processing. By building fair and competitive markets, we 
address inflation, improve regulations, and reduce uncertainty. 
I look forward to working with you to address these challenges. 
Thank you for the opportunity to be here.
    [The prepared statement of Mr. Larew follows:]

  Prepared Statement of Robert L. Larew, President, National Farmers 
                        Union, Washington, D.C.
    Good morning, Chairman Thompson, Ranking Member Scott, and Members 
of the Committee. It is an honor to be invited as a witness before the 
House Committee on Agriculture and to provide testimony on behalf of 
the more than 220,000 members of National Farmers Union (NFU). Founded 
in 1902, NFU is a grassroots organization that advocates on behalf of 
family farmers, ranchers, and their communities, and represents members 
across the country whose operations range in size, type, and production 
method.
    As this Committee considers the 2023 Farm Bill, hearings like this 
will serve the important purpose of identifying commonalities and 
points of agreement that can be brought forward in the legislative 
process. This hearing can also make clear the positions of family 
farmers and ranchers and other stakeholders in agriculture. The hearing 
title, ``Uncertainty, Inflation, Regulations: Challenges for American 
Agriculture'' sheds light on many concerns held by Farmers Union 
members. I commend Chairman Thompson for bringing these topics to the 
forefront at the first hearing of the House Agriculture Committee in 
the 118th Congress.
    Family farmers and ranchers are particularly vulnerable to the 
effects of inflation, and we have felt this throughout history and 
especially in the last few years. Normal trade flows were interrupted 
in 2018 and 2019 because of policy disputes with our trading partners, 
and those trade flows were further disrupted due to the upheaval 
resulting from the COVID-19 pandemic. These seismic changes led to 
diminished supplies and rapid shifts in demand as stay-at-home 
directives changes our daily routines. These inflationary conditions 
were compounded by macroeconomic factors, but the inflation felt today 
is amplified because market power throughout the economy is 
increasingly concentrated among very few firms.\1\
---------------------------------------------------------------------------
    \1\ Brauning, Falk, Jose L. Fillat, and Gustavo Joaquim. 2022. 
``Cost-Price Relationships in a Concentrated Economy.'' Federal Reserve 
Bank of Boston Current Policy Perspectives. May 23, 2022.
---------------------------------------------------------------------------
    This hearing is also timely and topical because the House 
Agriculture Committee has a great opportunity in the year ahead to make 
meaningful and lasting reforms through the farm bill. Family farmers 
and ranchers should be allowed and empowered to do what we do best: 
produce a safe and nutritious food supply for our communities. Laws, 
rules, and regulations should help us do that, not hinder us. Farmers 
Union members also face many emerging challenges--like climate change, 
a food system that lacks resilience, and a volatile market--that need 
to be directly confronted by policymakers to provide greater certainty.
Inflation
    Inflation is exacerbated by consolidation and lack of competition 
in the food system. Very few firms control the market for farm inputs 
(such as seeds, crop protection, fertilizer, and equipment 
manufacturing), processing (including livestock slaughter and 
processing), food manufacturing, wholesale distribution, food service, 
and grocery retail. Farmers and consumers are on either end of this 
consolidated supply chain and are comparatively numerous and 
decentralized. The small set of large, consolidated firms in the middle 
of the supply chain wield immense market power over farmers and 
consumers.\2\
---------------------------------------------------------------------------
    \2\ Jonathan B. Baker, ``Market power in the U.S. economy today,'' 
Washington Center for Equitable Growth, March 2017. https://
equitablegrowth.org/market-power-in-the-u-s-economy-to
day/.
---------------------------------------------------------------------------
    The trend toward greater consolidation of the farm and food system 
has been ongoing. The four-firm concentration ratio (CR4), which 
specifies the market share for the top four firms in an industry and is 
a commonly used metric for illustrating market concentration, has risen 
precipitously among meatpackers and poultry processors. From 1977 to 
2019, the CR4 for beef packers that slaughter steers and heifers rose 
from 25 to 85 percent.3, 4 For pork, the increase in CR4 
from 1976 to 2019 was 33 to 67 percent.\5\ For broiler chickens, the 
CR4 increase from 34 percent in 1986 to 53 percent in 2019,\6\ and as 
the level of national-level industry consolidation may be lower for 
broilers, concentration is often higher in localized markets.\7\
---------------------------------------------------------------------------
    \3\ Cai, X., K.W. Stiegert, and S.R. Koontz, ``Oligopsony Fed 
Cattle Pricing: Did Mandatory Price Reporting Increase Meatpacker 
Market Power?'' Proceedings of the NCCC-134 Conference on Applied 
Commodity Price Analysis, Forecasting and Market Risk Management. St. 
Louis, MO. https://legacy.farmdoc.illinois.edu/nccc134/conf_2011/pdf/
confp24-11.pdf.
    \4\ USDA, Agricultural Marketing Service (AMS), Packers and 
Stockyards Division, ``Annual Report 2020.'' https://www.ams.usda.gov/
sites/default/files/media/PackersandStockyards
AnnualReport2020.pdf.
    \5\ Clement E. Ward, ``Economics of Competition in the U.S. 
Livestock Industry,'' January 2010. https://www.justice.gov/sites/
default/files/atr/legacy/2011/09/09/AGW-15639-a.pdf.
    \6\ Joel Greene, ``USDA's `GIPSA Rule' on Livestock and Poultry 
Marketing Practices.'' (Washington: Congressional Research Service, 
2016), https://www.everycrsreport.com/files/
20160107_R41673_e1d67b445c928f46a6b23a04c38d116fdb819c93.pdf.
    \7\ James M. MacDonald, ``Technology, Organization, and Financial 
Performance in U.S. Broiler Production'' (USDA, Economic Research 
Service, 2014), https://www.ers.usda.gov/webdocs/publications/43869/
48159_eib126.pdf?v=0.
---------------------------------------------------------------------------
    Increasing consolidation and declining competition pervades other 
sectors as well. As of 2015, the top four firms for corn and soybean 
seeds controlled 85 percent and 76 percent of the market, respectively; 
this compares to 59 percent for corn seed in 1975, and 42 percent for 
soybean seed in 1988.8, 9 Four firms account for 
approximately 84 percent of the global herbicide and pesticide 
market,\10\ and just two companies manufacture about half of the 
tractors and other essential farm machinery used by farmers.\11\ Market 
share in retail grocery is also heavily consolidated, with the top four 
retailers controlling approximately 65 percent of sales in 2018.\12\ As 
corporate consolidation in our food system has marched steadily 
forward, farmers have watched their choices decline and their market 
power continue to falter.
---------------------------------------------------------------------------
    \8\ Jorge Fernandez-Cornejo, ``The Seed Industry in U.S. 
Agriculture: An exploration of data and information on crop seed 
markets, regulation, industry structure, and research and 
development,'' USDA Economic Research Service, https://
www.ers.usda.gov/webdocs/publications/42517/
13616_aib786_1_.pdf?v=3857.1.
    \9\ James MacDonald, ``Mergers and Competition in Seed and 
Agricultural Chemical Markets,'' USDA Economic Research Service, 2017, 
https://www.ers.usda.gov/amber-waves/2017/april/mergers-and-
competition-in-seed-and-agricultural-chemical-markets/.
    \10\ Claire Kelloway and Sarah Miller, ``Food and Power: Addressing 
Monopolization in America's Food System,'' Open Markets Institute, May 
13, 2019. https://www.openmarketsinstitute.org/publications/food-power-
addressing-monopolization-americas-food-system.
    \11\ Ibid.
    \12\ CBRE, ``2019 U.S. Food In Demand Series: Grocery,'' May 2019.
---------------------------------------------------------------------------
Grocery Retail
    Concentration of market power among grocery retailers places 
pressure throughout the rest of the food supply chain, driving further 
consolidation among processors, wholesalers, and at the producer level. 
It is contributing to higher prices for consumers, results in less 
innovation, and fewer marketing options for family farmers and 
ranchers. A proposed merger of two of the largest grocery chains, 
Kroger and Albertson's, would greatly harm competition in the grocery 
retail sector. The rise of national supermarket chains over the last 
thirty years has decimated independent grocery stores, and between 1994 
and 2019, the total number of grocery stores across the U.S. declined 
by 30 percent.\13\ In December 2022, NFU joined with a coalition of 
farm and consumer advocate groups to send a letter to the Federal Trade 
Commission (FTC) to block this proposed merger.\14\
---------------------------------------------------------------------------
    \13\ Food and Water Watch, ``The Economic Cost of Food Monopolies: 
The Grocery Cartels,'' November 2021. https://
www.foodandwaterwatch.org/wp-content/uploads/2021/11/IB_2111_
FoodMonoSeries1-SUPERMARKETS.pdf.
    \14\ Open Markets Institute, ``Farm, Consumer, and Antimonopoly 
Groups All Urge the FTC to Oppose Kroger-Albertsons Merger,'' December 
1, 2022. https://www.openmarketsinstitute.org/publications/farm-
consumer-antimonopoly-groups-all-urge-the-ftc-to-oppose-kroger-
albertsons-merger.
---------------------------------------------------------------------------
Meatpacking
    Increased concentration in many sectors of agriculture, with food 
processing as the most egregious example, has contributed to 
bottlenecks in America's food supply chain. Just a few meatpackers, 
with a few large processing facilities, process most of the livestock 
that farmers and ranchers raise into the meat that we buy. Workers in 
these facilities are impacted as well. In the last month, the 
Department of Labor penalized one of the nation's largest food 
processing contractor providers for having employed more than 100 
children in highly dangerous jobs.\15\
---------------------------------------------------------------------------
    \15\ U.S. Department of Labor, ``More than 100 Children Illegally 
Employed in Hazardous Jobs, Federal Investigation Finds; Food 
Sanitation Contractor Pays $1.5M in Penalties,'' February 17, 2023. 
https://www.dol.gov/newsroom/releases/whd/whd20230217-1.
---------------------------------------------------------------------------
    There have been approximately 20 settlements for price fixing by 
meatpackers and poultry integrators since 2018, totaling nearly $900 
million in penalties.\16\ A pending lawsuit against the big four 
meatpackers, which alleges that the corporate giants have been working 
together since 2015 to suppress the volume of cattle slaughtered, 
continues to work its way through the courts, with settlements already 
totaling tens of millions of dollars.\17\ During 2020 and 2021--when 
most pandemic-related supply chain issues occurred--the largest meat 
processing companies saw their net profit margins increase more than 
300 percent.\18\
---------------------------------------------------------------------------
    \16\ Data compiled by NFU--various news reports and sources.
    \17\ ``Beef giant JBS to pay $52.5 million to settle price-fixing 
lawsuit,'' Des Moines Register, February 4, 2022. https://
www.desmoinesregister.com/story/news/2022/02/04/jbs-settles-lawsuit-
millions-price-fixing-beef-processors-meatpacking/6664089001/.
    \18\ Andrea Shalal, ``Meat packers' profit margins jumped 300% 
during pandemic--White House economics team,'' Reuters, December 10, 
2021. https://www.reuters.com/business/meat-packers-profit-margins-
jumped-300-during-pandemic-white-house-economics-2021-12-10.
---------------------------------------------------------------------------
Inputs
    Another troubling aspect of the farm economy recently has been 
input costs, particularly for fertilizers such as nitrogen, potash, and 
phosphorus. Price spikes, notably in late 2021 and early 2022, were 
severe and prolonged, and the threat of similar input price volatility 
adds uncertainty to the farm economy.\19\ Supply chain disruptions, due 
to the Russian invasion of Ukraine and lingering supply interruptions 
from the pandemic, have contributed greatly to this problem.\20\
---------------------------------------------------------------------------
    \19\ Kent Thiesse, ``2022 farm input costs rapidly rising,'' Farm 
Progress, November 30, 2021. https://www.farmprogress.com/crop-
protection/2022-farm-input-costs-rapidly-rising.
    \20\ Suzanne Jenkins, ``How the Russia-Ukraine War Helped Fuel 
Record Fertilizer Prices.'' Federal Reserve Bank of St. Louis, October 
4, 2022. https://www.stlouisfed.org/publications/regional-economist/
2022/oct/russia-ukraine-war-record-fertilizer-prices.
---------------------------------------------------------------------------
    There are structural challenges to building a diverse and 
competitive market in the fertilizer industry, as natural resources are 
constrained to just a few locations. However, actions by monopolies 
further reduce competition in the fertilizer market and leads to 
additional price pressures and volatility. The global market for 
fertilizer is dominated by just a few major players, and those 
producers have abused their market power to raise prices over the 
decades, which harms farmers as well as consumers.\21\ USDA has 
undertaken an initiative to bring more domestic and diversified 
production to the fertilizer industry, which NFU welcomes. Further 
efforts should be pursued in the regulatory area to allow for greater 
production of fertilizer in the U.S. to help build a stronger food 
system and a more equitable marketplace.
---------------------------------------------------------------------------
    \21\ C. Robert Taylor and Diana L. Moss, ``The Fertilizer 
Oligopoly: The Case for Global Antitrust Enforcement,'' The American 
Antitrust Institute, October 4, 2013. https://
www.antitrustinstitute.org/work-product/the-fertilizer-oligopoly-the-
case-for-global-antitrust/.
---------------------------------------------------------------------------
    The market for crop protection products has also been susceptible 
to inflationary pressures due to a lack of competition among the major 
providers. In 2022, the FTC and ten state attorneys general filed a 
complaint in Federal court against two major agricultural crop 
protection manufacturers for using a ``pay-to-block'' scheme that 
raised input prices for farmers and unfairly shut out competitors, 
which stifles innovation and harms the marketplace.\22\ Furthermore, 
the case holds that these companies sought to maintain their near-
monopolies over certain fungicides, herbicides, and insecticides by 
paying distributors to carry fewer competing generic products. Markets 
ought to be competitive and fair, so that new companies can enter the 
input marketplace and drive innovation, improve service, and decrease 
input prices for family farmers and ranchers.
---------------------------------------------------------------------------
    \22\ Federal Trade Commission, ``FTC and State Partners Sue 
Pesticide Giants Syngenta and Corteva for Using Illegal Pay-to-Block 
Scheme to Inflate Prices for Farmers,'' September 29, 2022. https://
www.ftc.gov/newsevents/news/press-releases/2022/09/ftc-state-partners-
sue-pesticide-giants-syngenta-corteva-using-illegal-pay-block-scheme-
inflate.
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Product Labeling
    NFU supports mandatory, uniform labeling for food products 
throughout the processing chain and supports the reauthorization and 
full implementation of mandatory country-of-origin labeling (COOL) for 
meat, poultry, and aquaculture products. Clear and accurate food labels 
enable consumers to make informed purchasing decisions and allow 
farmers and ranchers to differentiate their products. Importing cheaper 
products from other countries and passing off premiums to local 
products is depressing prices for local ranchers and undermining 
consumer confidence in labels. A consolidated and uncompetitive beef 
packing industry is exploiting consumers, workers, and ranchers alike. 
American consumers deserve the right to choose, American cattle farmers 
and ranchers deserve the right to compete for the consumers' favor in 
their domestic market, and meat processing workers deserve quality 
jobs.
    President Biden's July 2021 Executive Order on competition included 
a directive to the U.S. Department of Agriculture (USDA) to clarify 
that meat may be labeled ``Product of USA'' only if the animal spent 
its entire life within the U.S. Under current voluntary labeling rules, 
meat can be designated a ``Product of USA'' if it is processed 
domestically, but born, raised, and/or slaughtered in another country. 
This misleading claim puts domestic producers at a competitive 
disadvantage and prevents consumers from making fully informed 
decisions about the products they buy. Truthful and accurate voluntary 
labels are important to producers and helpful for consumers, but they 
are not a replacement or substitute for mandatory COOL.
Right to Repair
    Right to Repair is a major issue across many industries but has a 
profound impact on farmers and ranchers. With only three companies 
dominating the market for large farm machinery, farmers have few 
choices in the marketplace. The major equipment manufacturers have long 
refused to make critical repair tools fully available to farmers and 
independent mechanics, leaving them no choice but to take broken 
equipment to a licensed dealership. These restrictions, paired with 
dramatic consolidation among dealerships across the country, lead to 
inflated service prices and lengthy delays during planting and harvest 
windows.
    There are few alternatives for farmers who want to buy equipment 
they can fix themselves. Some farmers have resorted to buying older 
tractors that can be repaired without software tools.\23\ This leads to 
inflated prices for older equipment and is not a long-term solution. 
Family farmers are put at a great disadvantage if they are forced to 
choose between the ability to independently fix their own tractor or to 
reap the benefits of the technological advancements of modern 
equipment.
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    \23\ Adam Belz, ``For tech-weary Midwest farmers, 40-year-old 
tractors now a hot commodity,'' Star Tribune, January 5, 2020. https://
www.startribune.com/for-tech-weary-midwest-farmers-40-year-old-
tractors-now-a-hot-commodity/566737082/.
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    Federal legislation, like the Agricultural Right to Repair Act 
introduced by Sen. Jon Tester (D-MT), would ensure that farm equipment 
owners and independent mechanics have access to all the documentation, 
parts, and software tools required to diagnose, repair, and maintain 
modern equipment. On the state level, Right to Repair bills have been 
introduced in 20 states already in 2023. On February 21, 2023, the 
Colorado House of Representatives approved the Consumer Right to Repair 
Agricultural Equipment Act (HB23-1011) which would require manufactures 
to provide parts, software, documentation, and other tools to 
independent repair providers or equipment owners and would deem failure 
by manufacturers to provide such resources to be a deceptive trade 
practice.\24\
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    \24\ Todd Neeley, ``Colorado House Advances Repair Bill,'' DTN/
Progressive Farmer, February 21, 2023. https://www.dtnpf.com/
agriculture/web/ag/equipment/article/2023/02/21/colorados-house-passes-
bill-giving.
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    Among Federal agencies, the FTC unanimously adopted a policy in 
2021 to ramp up law enforcement against illegal repair restrictions. In 
2022, NFU and allies filed a complaint with the FTC against John Deere 
for restricting repair options. On February 13, 2023, the Department of 
Justice (DOJ) filed a statement of interest in a Right to Repair 
lawsuit filed against John Deere in the U.S. District Court for 
Northern Illinois. The filing by DOJ urges to the court to find in 
favor of the farmer-plaintiffs who allege that John Deere has 
monopolized the repair service market by withholding access to the 
software tools necessary to repair equipment. Also in February, NFU 
supported a petition to the Environmental Protection Agency (EPA) to 
enforce provisions in the Clean Air Act (CAA) that allow farmers and 
ranchers to repair their own equipment.\25\ The petition, filed by 
Right to Repair advocate Willie Cade, asks the court to issue a writ of 
mandamus compelling the EPA to require John Deere to comply with the 
CAA.\26\
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    \25\ National Farmers Union, ``NFU Supports Writ of Mandamus, 
Implores EPA to Enforce Right to Repair Provisions in Clean Air Act,'' 
February 16, 2023. https://nfu.org/2023/02/16/nfu-supports-writ-of-
mandamus-implores-epa-to-enforce-right-to-repair-provisions-in-clean-
air-act/.
    \26\ Todd Neeley, ``Deere Seeks End to Right-to-Repair Case,'' DTN/
Progressive Farmer, January 24, 2023. https://www.dtnpf.com/
agriculture/web/ag/equipment/article/2023/01/24/john-deere-asks-court-
issue-ruling.
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Regulations
    Family farmers and ranchers are poorly served by overly burdensome 
regulations and regulatory uncertainty that can make it difficult for 
them to do what they do best: to sustainably produce ample food, feed, 
fiber, and fuel. Regulation, when needed, should be science-based, 
size- and risk-appropriate, and should be instituted after thorough and 
ample feedback from the regulated community.
Waters of the United States (WOTUS)
    Clean, safe water is an essential resource that family farmers, 
ranchers, and their communities depend on. Farmers and ranchers strive 
to be good stewards of our nation's natural resources, including by 
protecting water quality through sound land management practices. 
Ambiguous or confusing regulations regarding the definition of Waters 
of the United States (WOTUS) under the Clean Water Act (CWA) have made 
compliance difficult and unduly burdensome.
    The regulatory uncertainty created by frequently changing 
definitions of WOTUS have troubled farmers for many years. NFU has 
repeatedly provided input to the EPA and the Army Corps of Engineers on 
their rulemakings, and we have asked the agencies to promulgate rules 
that will provide a clear definition of WOTUS. NFU has also urged the 
agencies to consult farmers and ranchers regularly, extensively, and 
equitably and consider the legitimate concerns of family farmers and 
ranchers and others who will be regulated under updated and new CWA 
rules.\27\
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    \27\ National Farmers Union, Re: Docket ID No. EPA-HQ-OW-2021-0602; 
``Revised Definition of `Waters of the United States','' February 7, 
2022. https://nfu.org/wp-content/uploads/2022/02/02-07-22-NFU-
Comments_WOTUS_EPA-HQ-OW-2021-0602.pdf.
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    NFU appreciates the agencies' stated efforts to establish durable 
rules that define the scope of waters protected under the CWA. Despite 
a recent final rule from the agencies, an ongoing Supreme Court case on 
WOTUS continues to add uncertainty to the WOTUS statutory and 
regulatory regime. Ultimately, Farmers Union members wish for the 
courts and agencies to balance the important goal of protecting water 
quality with rules that are clear, simple, and not unduly burdensome 
for farmers and ranchers.
Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)
    The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)--
the primary Federal statute governing pesticides--is key to our 
science-based regulatory approach to crop protection products and helps 
ensure farmers can continue using these products prudently on their 
farms. Thus, NFU was concerned by a recent change in long-standing 
policy regarding the regulation and labeling of crop protection 
products based on a position taken by the U.S. Solicitor General in a 
brief to the U.S. Supreme Court.
    The brief, submitted in May 2022 by Solicitor General Elizabeth 
Prelogar, argues that Federal pesticide registration and labeling 
requirements do not preclude states from imposing additional labeling 
requirements, even if those requirements run counter to Federal 
findings. The Solicitor General's brief, while focused on glyphosate, 
adopts a position that could apply to any crop protection product. 
Thus, the decision taken in the brief may undermine the FIFRA--and open 
the door to an impractical patchwork of state pesticide labeling 
requirements. We are concerned that the decision taken in the brief 
could threaten producers' access to crop protection products through 
state regulations that are not science-based.
Growing Climate Solutions Act
    Sometimes, an unregulated marketplace without any guardrails can 
hinder the growth and development of market opportunities--including 
for farmers and ranchers. Insufficient access to reliable, vetted 
information about carbon and other environmental credit markets for 
agriculture has limited farmer participation in these markets. 
Consequently, farmers may be missing out on an opportunity to generate 
revenue while implementing practices that can make their farms more 
resilient and mitigate climate change.
    The recently enacted bipartisan, bicameral Growing Climate 
Solutions Act is meant to address this problem by creating a 
registration program at USDA for these environmental credit markets. By 
improving transparency of these markets through USDA oversight and 
reducing technical barriers to entry, farmers have a better chance of 
being able to participate, and for these markets to develop to benefit 
all.
Packers and Stockyards
    The Packers and Stockyards Act (PSA) protects livestock and poultry 
producers from unfair, deceptive, and monopolistic practices in the 
marketplace. These important protections for family farmers and 
ranchers have not been adequately enforced for the last few decades, 
which has led to rampant consolidation in the livestock industry, 
reduced transparency in the marketplace, the rise of unfair contract 
terms, and depressed prices paid to farmers.
    President Biden's July 2021 Executive Order on competition directed 
USDA to write new rules under the PSA. Thus far, rulemakings would 
require poultry companies to be more transparent with the growers with 
whom they contract, and would prohibit certain prejudices, 
disadvantages, discrimination, retaliation, and deceptive practices, in 
livestock markets. USDA has taken further steps to bring more 
transparency to the livestock market with a cattle contract library and 
reporting more details about market activity. Additional rulemakings 
are expected regarding the barriers farmers face to file legal 
challenges under the PSA and the unfairness of poultry grower 
tournament systems.
    The proposed rules from USDA are sorely needed. Without strong 
enforcement of the PSA, farmers and ranchers will continue to face an 
unfair marketplace. NFU supports expanded and emphasized enforcement of 
these and related rules, with the establishment of an independent 
office focused on preventing abuses of power by corporate monopolies. 
Such an office would be made possible through the enactment of the Meat 
and Poultry Special Investigator Act.
    The Executive Branch has taken steps to ensure that farmers who 
have been harmed by abuses of market power have a voice. One example of 
how this is the USDA Agricultural Marketing Service partnership with 
DOJ to create the Farmer Fairness portal.\28\ This online tool makes it 
easier for farmers, ranchers, and others to report potential violations 
of competition laws including, but not limited to, the PSA.
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    \28\ Farmer Fairness. https://www.usda.gov/farmerfairness.
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Renewable Fuel Standard
    Reasoned legislative and regulatory actions can create economic 
development opportunities for rural communities and family farmers and 
ranchers. A prime example of this is the Renewable Fuel Standard (RFS) 
program, authorized in 2005 and expanded in 2007, which is intended to 
reduce greenhouse gas emissions and expand the biofuels sector.\29\ It 
has been the most successful clean fuels policy in the U.S. and makes 
fuel more affordable for millions of Americans, helps to generate jobs, 
revives rural economies and communities, reduces oil imports, and 
protects the environment by reducing air pollution. Future regulatory 
actions related to the RFS should be geared towards its continued 
growth and success. Higher blends of ethanol, such as E30, should be 
brought into the RFS also with the use of farm-based crops for 
sustainable aviation fuel. Additionally, USDA is providing $100 million 
in biofuels infrastructure grants through the Higher Blends 
Infrastructure Incentive Program. NFU urges Committee Members to 
support the RFS and the continued growth of renewable energy in rural 
America.
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    \29\ Renewable Fuel Standard Program. https://www.epa.gov/
renewable-fuel-standard-program.
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Uncertainty
Climate Change
    Climate change is one of the greatest challenges--and sources of 
uncertainty--facing family farmers, ranchers, our communities, and 
global food security. Farmers and ranchers have been feeling the 
effects of climate change for many years through shifting precipitation 
patterns, historic droughts, and extreme weather events. While farming 
is by nature unpredictable, climate change is increasing uncertainty 
and making a difficult job even harder. Farmers Union members have long 
recognized that the climate is changing; that those changes are 
affecting all aspects of their operations; and that if they are 
provided the right tools and adequate resources, they can be a key part 
of the solution by sequestering carbon in the soil, reducing greenhouse 
gas emissions, and by building a more resilient and sustainable 
agriculture. For decades, NFU has been a leader on the issue of climate 
change and agriculture. Farmers Union has focused on raising awareness 
about the effects of climate change on farmers and ranchers, while 
advocating for opportunities for farmers and ranchers to be part of the 
solution. We have also made sure we are regularly listening to our 
members on the topic through NFU's Climate Change Policy Advisory Panel 
(CCPAP).\30\
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    \30\ National Farmers Union, ``Farmers Union Announces Climate 
Change Policy Advisory Panel,'' December 9, 2020. https://nfu.org/2020/
12/09/farmers-union-announces-new-climate-change-policy-advisory-panel/
 
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    Now more than ever, leadership on climate change and agriculture is 
essential, which is why NFU is a proud founding member and co-chair--
along with Farm Bureau, the National Council of Farmer Cooperatives, 
and the Environmental Defense Fund--of the Food and Agriculture Climate 
Alliance (FACA).\31\ FACA members represent farmers, ranchers, forest 
owners, manufacturers, the food industry, state governments, higher 
education associations, sportsmen and sportswomen, and environmental 
organizations. These organizations are dedicated to advancing climate 
solutions across food and agriculture supply chains. Since formally 
launching in 2020 as a group of eight organizations, FACA has grown to 
a coalition of over 80 members. To address the uncertainty associated 
with climate change, FACA released its initial policy recommendations 
in late 2020.\32\ Several of these recommendations have become law and 
others have been implemented by the Administration. Looking ahead, FACA 
recently extended its consensus-based coalition work by releasing its 
2023 Farm Bill recommendations.\33\
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    \31\ Food and Agriculture Climate Alliance. https://
agclimatealliance.com/.
    \32\ Food and Agriculture Climate Alliance, ``Food and Agriculture 
Climate Alliance Joint Policy Recommendations,'' November 2020. https:/
/agclimatealliance.com/files/2020/11/faca_recom
mendations.pdf.
    \33\ National Farmers Union, ``FACA Releases Farm Bill Policy 
Recommendations to Support Economic Opportunities and Address Climate 
Change,'' February 22, 2023. https://nfu.org/2023/02/22/faca-releases-
farm-bill-policy-recommendations-to-support-economic-opportunities-and-
address-climate-change/.
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    NFU is heartened by the dedicated action taken by Congress and the 
Administration in recent years. This includes the recent enactment of 
significant additional funding for farm bill conservation programs, the 
creation of USDA's Partnerships for Climate-Smart Commodities, and 
passage of the Growing Climate Solutions Act and the SUSTAINS Act. All 
these resources and actions, along with the ingenuity and commitment of 
farmers and ranchers, are helping us face the uncertainty presented by 
climate change.
Supply Chains
    The COVID-19 pandemic exposed vulnerabilities in the agricultural 
food supply chain, including bottlenecks from an outdated and aging 
transportation system, ongoing labor shortages, cybersecurity threats, 
and lack of competition. These vulnerabilities affect all Americans by 
threatening the food system. Resolute action on climate change is also 
needed to secure our supply chains.
    The Biden Administration, through Executive Order 14017: America's 
Supply Chains, has softened the impact of supply chain disruptions. By 
lifting transportation regulatory burdens and facilitating trade of 
essential agricultural food products, the uncertainty of the last few 
tumultuous years has been reduced. Recent undertakings at USDA to 
increase capacity at the Port of Oakland, California, eased port 
congestion, increased capacity, and is improving services for shippers 
of U.S. grown agricultural commodities. The supply chain Executive 
Order also directed USDA to conduct a 1 year assessment of risks and 
resilience of food supply chains and to identify potential solutions to 
address supply chain vulnerabilities. Within that assessment, USDA's 
recommendations included an objective to ``support a level playing 
field to enable competition'' and ``to assure transparency and fair 
competition in commodity markets and product safety in meat products.'' 
\34\ These regulatory actions reduce uncertainty in the supply chain 
while bolstering a more competitive and resilient marketplace.
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    \34\ USDA, Agricultural Marketing Service (AMS), ``Agricultural 
Competition: A Plan in Support of Fair and Competitive Markets,'' May 
26, 2022. https://www.ams.usda.gov/reports/agricultural-competition-
plan-support-fair-and-competitive-markets.
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    Similarly, the implementation of the bipartisan Infrastructure 
Investment and Jobs Act (IIJA) helps to address the pinch points in the 
supply chain. Through IIJA, agriculture and livestock haulers were 
given the flexibility to safely get their products to market by easing 
some of the regulatory burdens of hours-of-service requirements.
Agricultural Workforce
    An ongoing shortage of skilled farmworkers creates uncertainty for 
family farmers, contributes to food price inflation, and makes the 
entire food supply chain less secure and resilient. We must address 
this workforce crisis threatening farms across the United States so our 
producers can continue to feed, clothe, and fuel our nation. We need 
sensible, compassionate immigration reform, including reform of the H-
2A visa program, to provide farmers and farmworkers with certainty, 
lower food prices for American families, and secure our nation's food 
supply.
Conclusion
    Farmers Union members are committed to addressing the challenges 
that this hearing is exploring. In 2021, NFU launched the Fairness for 
Farmers campaign, an effort to shed light upon the devastating impact 
that monopolies and near-monopolies have on family farmers and 
ranchers. The campaign calls for legislative action including 
diversifying marketing opportunities, improving price discovery and 
transparency, antitrust enforcement, and reforming the PSA. Many of 
these priorities could be addressed through the inclusion of a 
competition title in the 2023 Farm Bill.
    Later this week, NFU members will meet at our national convention 
to set the organization's policy priorities for the coming year through 
a grassroots, democratic process. The spirit by which we do our work at 
Farmers Union meetings is similar to the way this Committee can work on 
the farm bill. As NFU policy states, ``our spirit of cooperation must 
continue to grow and not have limits. Our challenge is to take this 
knowledge and spirit and incorporate it into meaningful policy through 
legislation on local, state, and national levels.'' \35\ By working 
together, we can ensure that family farmers and ranchers can overcome 
the challenges presented by faulty regulations, mounting uncertainty, 
and inflationary pressures.
---------------------------------------------------------------------------
    \35\ National Farmers Union, Policy of the National Farmers Union, 
March 2022. https://nfu.org/wp-content/uploads/2022/03/2022-NFU-Policy-
Book_FINAL.pdf.
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    Thank you for the opportunity to provide this testimony. NFU stands 
ready to continue to work with the Committee to address these issues 
and would be happy to answer any questions.

    The Chairman. Mr. Larew, thank you so much for your 
testimony. We have also received written testimony from the 
National Rural Lenders Association and the J.R. Simplot 
Company, and without objection, it will be inserted into the 
record.
    [The statements referred to are located on p. 245.]
    The Chairman. And thank you all for your important 
testimony today.
    At this time, Members will be recognized for questions in 
order of seniority, alternating between the Majority and 
Minority Members and in order of arrival for those who joined 
us after the hearing convened. You will be recognized for 5 
minutes each in order to allow us to get to as many questions 
as possible.
    And I recognize myself for 5 minutes.
    I am very proud of the production advancements our farmers, 
ranchers, and foresters have made, thanks to science, 
technology, and innovation. And to put this in a global 
perspective, China and Brazil, both countries with comparable 
agricultural production levels to the United States, have 
increased their agriculture emissions by 86 percent over the 
last 30 years, but the United States has achieved a net 
decrease in agriculture emissions during that same time. 
However, we have seen this Administration attack American 
production agriculture and make it harder for American 
producers to deliver feed, fuel, and fiber to consumers across 
the globe.
    Now, President Duvall, would you agree with me that true 
climate-smart agriculture policies would be ones that increase 
agricultural production and displace the market share of 
countries like China and Brazil, countries with far less 
attractive emission profiles than the United States who have 
not made the same efficiency and productivity strides as we 
have?
    Mr. Duvall. I would 100 percent. You can't have 
sustainability without having efficiencies, and doing one helps 
the other. We as farmers, if you look over the last 3 decades, 
have done a tremendous job in the sustainability area. And we 
are doing more with less. Matter of fact, to produce the same 
crop we produced last year, we would have had to have 100 
million more acres cropped than 30 years ago. So that is how 
efficient we have become, and that is how well we have been 
sustainable.
    The Chairman. One of the leadership skills that I don't 
think we have--actually, I never recognized as a leadership 
skill until a couple years ago, and that is storytelling. And 
American agriculture has a great story to tell. So how can U.S. 
agriculture do a better job of telling this story?
    Mr. Duvall. Well, I think we do that every day in our 
organizations. Mr. Larew, Rob down at the end, he has a great 
organization. We do, too. We do that storytelling. But the best 
way for our farmers to do that is open up their farm and let 
your staff, you, come in and visit with them to actually let 
them tell their story how the farm bill has helped them through 
a disaster or through bad pricing times or whatever that might 
be and through conservation. There are 140 million acres that 
farmers have voluntarily signed up for conservation programs. 
And if you put that in context, that is the size of California 
and New York. They put their own land up voluntarily for 
conservation, and they are continuing to do that for 
conservation and climate-smart farming.
    The Chairman. Sticking with a theme of science, technology, 
and innovation, when it comes to meat and poultry processing 
line speeds, it seems USDA had the same approach until 
recently. Unfortunately, following a couple of lawsuits from 
activist labor groups, I am afraid the Department has halted 
all progress and is even considering reversing course. Mr. 
Brown, do you share these concerns? And if so, is there 
anything that can be done to help the Department get on track?
    Mr. Brown. Well, Mr. Chairman, as you have said, science, 
innovation, and technology should lead all policy decisions. 
And unfortunately, on this issue, it appears USDA may have lost 
its way. We have over 25 years of experience with the increased 
line speeds that was begun under the HIMP (HACCP-Based 
Inspection Models Project) Program. Over the duration of that 
time, food safety and labor, worker safety figures have all 
decreased, but the performance has increased. The food safety 
profile in a line speed plant operating at the higher line 
speed versus the 140 line speed is equal or better than the 
other plants.
    Our concern is that we have 25 years of history, 25 years 
of data, 25 years of experience with industry and government 
working together. You have all the statistics at hand. Do the 
math. Add it up USDA, and let's move forward. But no, we bring 
in a new study, a group of folks not necessarily friendly to 
the industry from an institution in California. And now we are 
going to go through all those statistics again. I don't know 
what to expect, but I do know we have a long history of 
success.
    And finally, I would like to add the rest of the world 
operates up to at least 30 percent higher than us. My Chairman 
was in Germany last week, 220 birds a minute. Okay? How does 
that stack up against 140 and 175? Canada, as was mentioned 
earlier, much higher speeds. So we would like to work with the 
Committee to break through this, do the math, and move forward.
    The Chairman. Well, thank you very much. That is my time. I 
am now pleased to recognize the gentleman from Georgia, my good 
friend and Ranking Member for 5 minutes, Congressman Scott.
    Mr. David Scott of Georgia. Thank you very much, Mr. 
Chairman.
    My first question is to my good friends Mr. Zippy Duvall 
and Mr. Rob Larew. Now, during our last Congress, we worked 
hard to alleviate many of the problems we are still addressing 
today. In the Lower Food and Fuel Costs Act (H.R. 7606, 117th 
Congress), we expanded producers' access to precision ag, 
nutrient management tools. We improved the meat processing 
capacity, expanded domestic biofuels production, we reduced 
supply chain bottlenecks, and the Inflation Reduction Act. We 
injected $20 billion into farm bill conservation programs, $5 
billion into forestry, over $13 billion into rural development.
    So Mr. Duvall, Mr. Larew, how can we build on this work? 
What must we do to improve marketing opportunities and increase 
the profitability of our farmers? What must we do? Mr. Duvall, 
you are first.
    Mr. Duvall. I think we have to continue the work that 
Secretary Vilsack has done through his commodity climate-smart 
projects and get that information and data back in from his 
pilot programs to see what leads us into the future. We also 
have to make sure that we continue to fund research and 
development dollars. You got to understand, research and 
development dollars makes us more sustainable by keeping us 
more efficient and more competitive. And without those dollars, 
with other countries outspending us in that area, we could get 
behind. So those are two areas.
    But we have to make sure that we focused--and Mr. Larew 
mentioned that they were a proud member of FACA, Food and 
Agriculture Climate Alliance. We are also a member of that. He 
and I serve on that committee together. And we need to make 
sure that anything that goes forward is voluntary, market-
based, and science-driven. And if that is true, then our 
farmers will voluntarily step up and do the right thing like 
they always have done.
    Mr. David Scott of Georgia. Good point there. And now, Mr. 
Larew, your thoughts?
    Mr. Larew. Yes, I would echo a lot of what has already been 
said but then would add that really a lot of the investments 
that have been made are all about market diversification and 
making sure that there are greater market opportunities for 
farmers out there. And while we talk a lot about the pressures 
that consolidation has brought to agriculture and to farmers 
and ranchers specifically and the impact that it ultimately has 
on consumers, you can't just change that overnight. You have to 
develop new markets. You have to create that opportunity for 
new. So investment in biofuels infrastructure is a huge thing 
for those rural communities and for farmers out there for 
finding other markets. The investment in more local and 
regional processing is critical to make sure that that 
infrastructure is there.
    And so, in addition to that there are climate benefits from 
each of those, and along with the climate-smart partnership 
efforts that the USDA is taking right now, I think that this 
will go a long way in building up that diversification that we 
need, both family farmers, and ultimately, consumers.
    Mr. David Scott of Georgia. Now, Mr. Larew, in your 
testimony, you made an interesting point. You talked about the 
tiny share of what consumers pay for food that actually goes to 
the farmer. Build on that. We have to get more profitability to 
our farmers. And the tiny bit of money that they are getting 
after their products are sold is minuscule.
    Mr. Larew. Yes. So the farmer's share of the food dollar is 
something that National Farmers Union has tracked for a very 
long time using USDA data. And what we have seen is an erosion 
of that share of the food dollar really substantially over the 
last several decades from really a period of about 50 percent 
of the food dollar to now more in the neighborhood of 12 to 
13 depending on the product of course. But that trend 
continues across all food.
    What we are seeing then in the larger trend is that farmers 
are receiving less of that food share dollar. Consumers 
ultimately are paying more for their product out there, and so 
this is an education tool.
    Mr. David Scott of Georgia. What can we do about this tiny 
share?
    Mr. Larew. I think part of it is this diversified market 
that we are talking about doing, making sure that farmers have 
more options in which to sell into. Those places where farmers 
have been able to find local and regional markets, they get a 
higher share of that food dollar.
    Mr. David Scott of Georgia. Thank you very much.
    Mr. Austin Scott of Georgia [presiding.] I now recognize 
Chairman Lucas for 5 minutes.
    Mr. Lucas. Mr. Chairman, I would be remiss if I didn't note 
that this is my first hearing on the Committee in 4 years. It 
is good to be home. It is just good to be home.
    And with that, in March of 2022, the U.S. Securities 
Exchange Commission proposed a rule that expanded the scope of 
what climate-related information publicly traded companies must 
disclose to the SEC and to their investors. One part of the 
deeply flawed rule required companies to disclose various types 
of emission information. First, its own direct greenhouse gas 
emissions, otherwise known as Scope 1. Second, the companies 
were obligated to disclose the indirect emissions from all 
purchased electricity or other forms of energy, Scope 2. And 
finally, serving as a catchall, it would compel the public 
company to disclose the greenhouse gas emissions from all 
upstream and downstream activities in its entire value chain, 
so-called Scope 3 emissions.
    Now, I am greatly concerned about the impact this rule will 
have on farmers and ranchers who serve as the starting point 
for many of these value chains. President Duvall, could you 
please speak to the potential impact and cost this rule would 
place on farmers and ranchers who find themselves ensnared in 
this broad reporting scheme?
    Mr. Duvall. It can be tremendous. I have spoken to Chairman 
Gensler once and I am going to speak to him again this week 
about this issue. Scope 3 would put a heavy bookkeeping burden 
on our farmers. And yes, if you are a larger farmer, which is 
two percent of the farming group, you may have the office space 
and the specialists to be able to make that documentation. But 
you take a middle-sized, small farmer like myself, that becomes 
a huge burden and you have to hire someone to do it and have 
consultants help you through it, so it is tremendous.
    But I will tell you this. As a farmer that sells my cattle 
on the free market and choose where I want to sell it to be in 
a contract grower for large, vertically integrated company, 
knowing that when things come down on that company, they have 
to deliver it. And when they have to deliver it, they turn to 
me to do it. And there is no one to help record it, there is no 
one to help to pay for it. And the farmer carries that burden, 
whether it be cattle or whether it be rain or whether it be 
poultry. And so it is a tremendous burden, and it is something 
that we need to stop before it gets started.
    Mr. Lucas. Thank you, Zippy.
    Mr. Rosenbusch, I will start with you, but I welcome any 
insights the rest of the panel may have. Can you speak to the 
impact this rule would have on publicly traded companies who 
are members of your organizations?
    Mr. Rosenbusch. Yes, thank you, Chairman Lucas. The impact 
on publicly traded companies is one thing because a lot of them 
are already reporting a lot of their ESG metrics. As a matter 
of fact, we just released our sustainability report and we have 
captured an increase of over 300 percent, our emissions, from 
fertilizer manufacturing. So great strides have been made 
there, and I will tell you that most of those manufacturers are 
committed and are doing a lot of that reporting. So I think 
regulatory certainty, as I mentioned, is what is critical here, 
but I think a lot of the small- to medium-sized companies that 
are also involved in the fertilizer supply chain are the ones 
that we would be most concerned about. And then ultimately, any 
of the Scope 3 emissions that Zippy referenced I think is going 
to be really difficult when it comes to these fertilizer 
companies that would have to report any of that up and 
downstream.
    Mr. Lucas. Anyone else care to comment on that? Mr. Brown?
    Mr. Brown. Mr. Lucas, while I don't have a policy on that, 
I will address that under the banner of regulation. In the 
chicken industry alone on sustainability over the last 10 
years, we have reduced land use by 13 percent, greenhouse gas 
emissions by 18 percent, fossil fuel-based resources by 22 
percent, and particulate-forming emissions by 22 percent, all 
done without the hand of a government mandate.
    Mr. Lucas. You are saying, Mr. Brown----
    Mr. Brown. Knowing that and our sustainability, I would 
just finish by saying eat responsibly, choose chicken.
    Mr. Lucas. Clearly, it shows the industry responds. You 
don't have to have an economic baseball bat. With that, I yield 
back, Mr. Chairman.
    Mr. Austin Scott of Georgia. The chair now recognizes Mr. 
McGovern for 5 minutes.
    Mr. McGovern. Well, thank you very much, and thank you all 
for your testimony for being here today.
    And Mr. Duvall and Mr. Larew, it is great to see you again. 
Thank you very much.
    So I represent a district that has over 2,000 farms in it. 
Most of them are small family farms. And a lot of what I heard 
here today seems to reflect kind of the desires of bigger 
farmers, more kind of corporate-oriented farms than the ones I 
represent. I mean, from the testimony that I have heard here 
and what I have read, I mean, there is calls to kind of weaken 
the Endangered Species Act to kind of go after some of the 
Administration's proposed climate actions, weakening of 
pesticide regulations by using industry science, and we heard 
about the need to increase truck size and truck weights. And by 
the way, with all due respect, I think it is a bad idea. We 
live in the country right now with the highest road fatalities 
of any developed nation in the world. And the Department of 
Transportation has studied this and found that even a ten 
percent increase in truck size and truck weights leads to less 
control and potentially more crashes. And by the way, the 
drivers of trucks don't want to see that. So I get it.
    But a lot of what I hear from my farmers is related to 
concerns about corporate consolidation, climate risk, climate 
crisis. I do farm tours every year in my district, and farmers, 
small- and medium-sized farmers, talk a lot about the impact 
that the climate crisis has had on their ability to grow and 
produce things. I hear a lot about food security. These are all 
serious topics. And I hope that this Committee will focus on 
them, similar to the way we did under Chairman Scott's 
leadership.
    But this hearing is about uncertainty, inflation, 
regulations, challenges for American agriculture. And as we 
meet some of the pandemic-related assistance in terms of food 
for struggling families is about to expire. And it is going to 
be more and more difficult for families to be able to get food 
to put on the table. I guess, they tell me that SNAP is not 
only for the neighbors in need, but it is also good for these 
farmers and for their businesses. And so they get it. Farmers 
grow food that people eat.
    So, Mr. Larew, can you please discuss the importance of 
SNAP to farming communities?
    Mr. Larew. Yes, thanks for the question. And first of all, 
I would just say, Farmers Union develops its grassroots policy 
positions directly from our farmer members. And they renew that 
each year and consistently have very strong support for making 
sure that even as we are producing food, that we are doing 
everything we can to fight food insecurity. And part of the 
reason for that is because we know that the nutrition programs, 
SNAP being the largest, have a huge impact not only on making 
sure that we are fighting food insecurity, but also driving 
support and market opportunities for farmers, whether it is 
through fresh fruits and vegetables at farmers' markets. It is 
also an economic driver in some of these rural communities. In 
rural America, there is a food insecurity issue as well, and so 
I believe the statistic is that for every dollar spent on SNAP, 
you get $1.75 in economic return and activity. That goes into 
those local grocers, and ultimately, throughout the community.
    Mr. McGovern. And, I have heard criticism from some of my 
colleagues about nutrition programs taking up too large a 
portion of the farm bill, so given your expertise on these 
programs, can you explain how production agriculture titles 
work together with the nutrition title to help those in need 
and support a robust farm economy?
    Mr. Larew. Well, certainly the farm bill, of course, is a 
food security bill, first of all, and so part of that bill is 
designed to provide a safety net for those of us that are 
working the land and producing food, whether it is through 
helping support conservation practices and sustainability or 
making sure that we have a safety net on the market itself.
    On the food side, making sure that there is availability 
and access for those who, through economic conditions or 
whatever, are in need of additional assistance. Too often, I 
sometimes hear the farm bill described as a pie chart that 
somehow doesn't move and that as a percentage of one program 
increases, that it might impact or decrease others. And that 
relative comparison just isn't the way our kind of cyclical 
programs work, right? One can increase or decrease without a 
direct impact on any of the budget.
    Mr. McGovern. Well, thank you. Mr. Duvall, thank you for 
mentioning the need for a strong nutrition title in the farm 
bill. I appreciate it. I think I am out of time.
    Mr. Austin Scott of Georgia. Thank you. I now recognize 
myself for 5 minutes.
    And, Mr. Duvall, we are both from Georgia, and if you are 
from Georgia, you not only hear about diesel prices and fuel 
prices, but you hear about H-2A a lot, especially with our 
specialty crop growers. And I have heard consistently from 
farmers in my district as they are trying to navigate all of 
the changes and the uncertainty about the 14 percent wage rate 
increase that has occurred with regard to H-2A. Can you speak 
to Farm Bureau's position on all of the changes to H-2A, 
including the wage rate and additional transparency and how 
that rate is actually calculated?
    Mr. Duvall. Sure, Congressman. The AEWR, the wage rate that 
is handed down to farmers that have to pay migrant workers that 
are coming to you through the H-2A program is done by a survey, 
and we think that that wage rate formula is flawed. And we 
think we need to go back to the drawing board, look at how that 
wage rate is set. I mean, if you ask any farmer, how did they 
set that wage? They say you do it off some kind of survey. 
Well, did you get that survey? No, I didn't. So we don't know 
what the survey is, who gets and who fills it out, but we think 
that it is very flawed. And if you look at a wage rate that 
climbs faster than the inflation rate does, there is something 
wrong with that. And if you go to most of these places, most of 
these farms, especially small-, medium-sized farms, those 
people that work there, whether they are migrant workers or 
whether they are other workers, they are part of the family, 
and they are taking care of those people, and they are paying a 
very, very fair wage and expecting work out of them like we do 
our own families.
    So it is important that we find a way that we have a stable 
workforce, that we can bring people from other countries here, 
not be feared, not fear the Federal Government, and be able to 
contribute to our society and work and have regulations that 
farmers and ranchers can actually abide by. The regulation 
piece of that is so burdensome that a small-, medium-sized 
farmer has a very difficult time being part of that where a 
large farm, which is very small percentage, might have an H.R. 
department to deal with all that. But my farm with two 
employees, I couldn't do that. So we need to find that way to 
do that. And we need year-round workers, and we don't need to 
cap it because we don't know how big the problem is.
    Mr. Austin Scott of Georgia. Most of the farmers that I 
know is, as you said, unless they are extremely large farmers, 
use a third party, which is an additional expense, and it is 
very complex. But the wage rate, it moved from $11.99 to $13.67 
if I am not mistaken. But housing, food, there are a lot of 
other things that are paid for on top of that $13.67 an hour, 
is that correct?
    Mr. Duvall. That is correct. You got to give them a place 
to live. That place to live is inspected, all kinds of 
regulations that goes around that. You got to give them 
transportation, everything almost that you would do for a child 
you have to do for H-2A worker.
    Mr. Austin Scott of Georgia. One other thing I want to ask 
you about, the current reference prices with regard to the 
commodities, it seems to me that they weren't set when diesel 
prices were as high as they are and fertilizer as high as it 
is. Could you speak to the need to increase the reference 
prices to reduce the risk to those that are actually out there 
planting crops?
    Mr. Duvall. I will. Actually, if you look at our 
organization, we are looked at as a very conservative 
organization. Our voting delegates in Puerto Rico at our annual 
convention this year debated heavily whether or not to ask you 
all to broaden the baseline. And of course they came down to 
say, yes, it is time to broaden baseline because those targets 
that we use in the commodity programs and the cost that we have 
to go to of growing a crop is nowhere near what it was when 
those targets were set, Mr. Congressman, and it needs to be 
modernized, and it needs to be a true safety net based on the 
cost of production today.
    Mr. Austin Scott of Georgia. Thank you. I am extremely 
concerned about the increased risk with commodity prices where 
they are and having the potential to fall. Once you have paid 
for those inputs, they are not going down.
    And so I do want to mention since this was brought up 
earlier, with regard to the ratios on the farm bill, my 
understanding with the CBO numbers is approximately 82 percent 
is now scheduled to go to nutrition, according to CBO. And that 
leaves 18 percent, which gets split between conservation, crop 
insurance, commodities, and a couple of other things. So those 
ratios have changed, and they have changed significantly over 
the course of time.
    My time has expired. And with that, I now recognize Ms. 
Adams.
    Ms. Adams. Thank you. Thank you very much. And thank you to 
our witnesses today for being here. Thank you for your service.
    Mr. Larew, in your testimony, you address the trend of 
market consolidation in farm and food systems as harming both 
farmers and consumers. And you share that grocery store numbers 
in the U.S. have dropped from 30 percent and large mergers like 
the proposed merger between Kroger and Albertson's contribute 
to higher consumer prices and fewer market options for farmers 
and ranchers. So can you elaborate on the impact of grocery 
retail consolidation on the farmers and ranchers that you 
represent?
    Mr. Larew. Yes, I appreciate the question. It really comes 
down to market choice and options, and the fewer there are and 
the more pressure there is further down the stream, that puts 
even greater pressure on farmers and ranchers out there. So as 
we watch the consolidation going on right now in the retail 
grocery space, it is not just fewer choices and options within 
the grocers, but then those few who have so much share then put 
pressure down on processors and suppliers, and that then goes 
further down to farmers and ranchers out there. This has an 
ongoing impact also on the availability of grocery stores and 
independent grocers out there. And certainly from the rural 
Americans' perspective, it makes it even more increasingly 
difficult to have independent grocers in our communities.
    Ms. Adams. Thank you. The consolidation of meatpacking 
plants has resulted in price fixing, poor returns for farmers 
and ranchers, and dangerous working conditions for facility 
employees. So can you share some of the factors that have led 
to this problem, as well as what legislation you would like to 
see us address issues in terms of competition and fairness?
    Mr. Larew. Yes, well, I just say certainly Farmers Union 
was founded in 1902 at a time when we had outrageous 
consolidation and monopolies in banking and in the meat 
industry and everywhere. And really, the impetus for creating 
the original antitrust laws, which still remain on the books, 
was to tackle that problem. And it worked for a number of 
years. Then, changes in the 1980s led to an ever-increasing, 
rapid consolidation and mergers throughout agriculture and food 
into the situation that we have today where we have even less 
competition than we did that led to the creation of the 
antitrust laws. And so, right now, we don't see anything 
stopping that. We need greater enforcement for antitrust, 
greater oversight of the marketplace right now, and so we look 
forward to working with you.
    Ms. Adams. Thank you.
    Mr. Brown, one of my top priorities is ensuring that Black 
farmers, ranchers, and producers are treated equitably. So how 
do you respond to allegations of racial discrimination against 
minority poultry growers? And is the NCC doing anything to 
support Black farmers and to ensure that they are treated 
equitably?
    Mr. Brown. I would say a couple of things on that front. 
First, I am not aware of any discrimination against Black 
farmers or any other farmers. I know in the State of Georgia 
where Mr. Scott is we have a very diverse, very diverse growing 
population that involves Black growers, Hispanic growers, Asian 
growers. I know where I live in Delaware I have three plants 
around me. I can't throw a baseball without hitting one of 
them, and I have seen the diversity of the growers where I am.
    Ms. Adams. Well, thank you, sir.
    Mr. Brown. With respect to concentration if I could just 
add to your question of Mr. Larew, I hear this concentration 
discussion all the time. I can't speak for the other meat 
industries, but for chicken, we have a vested interest in our 
growers succeeding. We hatch the eggs, we take the birds to the 
farms. In many instances, it keeps farmers, particularly 
diversified farmers, on the farm by having additional----
    Ms. Adams. Thank you, sir. I just want to get one more 
point in here as I follow up in terms of Black farmers. So the 
USDA investigators determined that Koch Foods, a poultry 
company in Mississippi, violated USDA rules and actively 
discriminated against Black farmers. And so the original 
complaints were filed between 2010 and 2015, but we still have 
not seen justice for the affected farmers. I just wanted to put 
that out there. And if anybody has any suggestions about how we 
can support a fair system that works for all growers, we would 
like to hear. But I am going to share some information from my 
office that I have about this discrimination as it relates to 
Black farmers.
    Thank you, Mr. Chairman. I yield back.
    The Chairman [presiding.] I thank the gentlelady. I now 
recognize Mr. Kelly for 5 minutes.
    Mr. Kelly. Thank you, Mr. Chairman.
    The current Administration continues to tout the importance 
of increasing meat and poultry processing capacity across the 
nation. However, their policies online tell another story. Mr. 
Brown, if all of the poultry processing plants currently 
operating at higher speeds under waivers were suddenly forced 
to slow down their operations, what effect would it have on 
slaughter capacity, the supply chain, and food security? And, 
Mr. Duvall, after he answers, I would like for you to answer 
also.
    Mr. Brown. Thank you, Congressman, it would have an 
extraordinary impact on our industry, take out over 30 percent 
of production. Today, when you visit the meat case, the lowest-
cost protein and the most purchased protein is chicken. Take 30 
percent out of production--when you come up with government 
regulations like this, some people pay twice. The taxpayer is 
going to pay for expanding government, and the same taxpayer in 
the grocery store is going to pay more for groceries.
    The other group of people that hurt if we cut back down on 
production are the people that I know we are all concerned with 
in this room, and I am too, growers, fewer chickens, fewer 
birds placed, and the growers are put in a difficult position. 
So I hope we can work together. I think we all have our heart 
in the same spot.
    Mr. Kelly. Mr. Duvall?
    Mr. Duvall. I would agree with Mr. Brown. I just recently 
went and toured a facility where they were harvesting poultry. 
And everyone ought to go. It was mind-boggling how clean and 
how fast and how safe it was. I was blown away by the quality 
of work and the quality of the birds and how they did it and 
how safe it was and how clean it was. I come away with a whole 
different feeling about the processing end. But he is exactly 
right. You slow that down, it slows down on my farm and it 
costs me money. They are not going to pay me because it is late 
leaving. They are not going to pay me if it sets on before it 
gets to scales and loses weight before--they are not going to 
pay me. It is going to cost farmers themselves money. And if we 
have the data and they say they do--I don't have the data--the 
safety and the speeds and how it works together, I think we all 
go by that data and sound science.
    Mr. Kelly. Thank you, Mr. Duvall. And, Mr. Chairman, I will 
yield the balance of my time to Mr. Bacon.
    Mr. Bacon. Thank you, Mr. Kelly.
    My first question is Mr. Duvall if I may. I hear a lot of 
feedback from our farmers and ranchers in Nebraska on the 
Waters of the U.S. Can you give your position and the negative 
impacts of Waters of the U.S. through the farmers and our 
ranchers?
    Mr. Duvall. Yes, sir. The Waters of the U.S. rule is the 
largest land grab of the Federal Government in history. And if 
you look at how that rule has moved from Administration to 
Administration, our farmers feel like a ping pong ball going 
back and forth from one side of the table to the other, not 
being able to make long-term decisions based on what evidence 
we have. This new rule that came out in December, it took it 
from a rule that was clear, that we can understand, to make it 
just muddy as muddy water. Right now, we don't know what an 
ephemeral stream is, whether or not it is a navigable water or 
whether it is a significant nexus. So we are waiting on the 
Supreme Court rule on the Sackett case, hoping it gives us 
clarity so that we can get a rule that is clear, so that we can 
provide clean water like we always do because water is a 
resource that goes on farms and some have been there for 
generations. And the last thing we want to do is hurt the 
natural resources on our farm because our families live on it 
and drink the water and we want to have a clear rule to make 
sure we know how to abide by it.
    Mr. Bacon. Thank you for your perspective. A follow-up 
question on trade with you, Mr. Duvall. Is China meeting its 
trade requirements or agreements that were stated under the 
previous Administration? Are we holding their feet to the fire?
    Mr. Duvall. Could you repeat that again?
    Mr. Bacon. Is China meeting its trade agreements that they 
made with the previous Administration? Do we need to be doing 
more to hold their feet to the fire?
    Mr. Duvall. Phase one trade agreement was huge for 
agriculture. And did they meet it totally? No, and they didn't 
meet it in the second year of it. But that trade agreement was 
really helpful to our farmers and ranchers and put us in that 
market to be able to sell to them. And we need more trade 
agreements like that, but we need to hold their feet to the 
fire just like we need to hold Mexico's feet to the fire when 
it comes to biotech and their discussion around not taking our 
corn.
    Mr. Bacon. Mr. Rosenbusch, the herbicides, pesticides, or 
fertilizers that have tripled or quadrupled in cost, has it 
become better for our farmers right now in this area, and what 
can we do to do better?
    Mr. Rosenbusch. Yes, so thank you for that Congressman 
Bacon. And, as I mentioned in the testimony, we have seen a 
softening in the market recently, so prices have come down, in 
some cases, half the cost of what they were last year. Several 
reasons for that: One, I think farmers are waiting, a wait-and-
see approach, and so that softened the market a little. But 
some of the global markets, as I referenced, have also opened 
back up, so you see a lot more product moving that impacts that 
supply and demand all over the world, whether it is India or 
Brazil.
    So I think, going into the spring, that wait-and-see 
approach has impacted where we are today. But I think long-term 
we also have to just look at what that global stock-to-use 
ratio is and the fact that we still need to be planting acres 
and crop prices are still going to be high, and so that is 
going to lead to more demand. So that volatility has been what 
has been most impactful.
    Mr. Bacon. Thank you. And, Mr. Chairman, I yield back. 
Thanks.
    Mr. Duvall. Can I make a quick statement to that? We may 
wait around, but when it comes time, you got to put that 
fertilizer out? If you don't, you miss the window and you are 
less productive.
    The Chairman. Good point. The time has expired.
    Now, I am pleased to recognize the gentleman who really 
helped us host a great listening session in the Central Valley 
in California.
    Mr. Costa. California.
    The Chairman. Mr. Costa, for 5 minutes.
    Mr. Costa. Well, thank you very much, Mr. Chairman and 
Ranking Member. And it was a good listening session that we had 
with the Committee. And those Members that were able to attend, 
I think we were able to pick up a great deal of information.
    I think when we look at today's topic on uncertainty, 
regulations, and inflation impacting the farm country, I am 
reminded of the fact of a third-generation farmer that, they 
ebb and flow over decades. Certainly, uncertainty is always a 
question and change is constant in farming for sure. The 
regulatory structure continues to be challenging, and it varies 
from region to region, state to state, as well as on the 
Federal level. But it is important that we raise these issues 
and we hear from leading agricultural organizations about the 
impacts on farm country because representing a very significant 
farm area in California and a third-generation farmer, I 
understand and hear these every day.
    And I remind people two things: One, food is a national 
security issue. It is a national security issue. And I think 
maybe with the impact, sadly, of the pandemic, people, when 
they saw shortages on shelves, maybe began to understand that 
the food that they enjoy every night may come from a grocery 
store or from their favorite restaurant, but that is where they 
get it. That is not where it comes from. It is hardworking 
farmers, ranchers, dairymen and -women, and farmworkers that 
frankly put that food on America's dinner table every night.
    The second thing I think is important for the purpose of 
this hearing is--and I say this all the time going back to my 
years in Sacramento--farmers are price-takers, not price-
makers. And people think, well, what do you mean by that? Well, 
I mean, you put all those input costs throughout a year into 
your crop, and so at the end of the year, you may have X 
invested in that crop but the price that you are getting is Y. 
And you can say, well, I can't make it with Y because I lose 
money. I need something else. Well, the fact of the matter is 
you are a price-taker. You don't have the ability to set the 
price for your inputs. And that is important to note when we 
think about the farm bill this year and the safety net that it 
provides for American farmers and ranchers and also for the 
nutrition programs as well. And I am thankful that many of you 
have mentioned the importance of the nutrition programs.
    One of the things we haven't talked about in terms of the 
security and the impacts we have seen under the regulatory and 
supply chain effort is the impacts that we have seen when our 
food supply chain was turned upside down. It resulted in a 
bipartisan effort on the Ocean Shipping and Reform Act, which 
Congressman Johnson, Garamendi, and I moved forward. It was 
signed into law and implemented now, and we are looking at this 
critical piece of legislation.
    Mr. Friedmann, I would like to thank you for your 
participation in this. Can you explain the impacts of holding 
global shippers accountable so that we can stabilize the input 
for prices, getting back to price-takers and price-makers? One 
of the key things is in California, 44 percent of our 
agriculture is exported, and so this had a real havoc in terms 
of our ability to export and our prices. Could you please 
comment?
    Mr. Friedmann. Thank you, Congressman Costa. I began my 
testimony by thanking our heroes here, Congressman Johnson and 
yourself----
    Mr. Costa. God bless you.
    Mr. Friedmann.--on this Committee for accomplishing 
probably the greatest benefit for U.S. agriculture in foreign 
markets that has been accomplished in at least 2\1/2\ decades 
here with the Ocean Shipping Reform Act last year. It kept the 
U.S. and it will keep the U.S. exporters in the foreign 
markets.
    And if I could say this, I have heard from many members 
that, well, I represent small farmers and they don't export or 
they sell to producers or brokers. How does this impact them? 
Guess what? During the pandemic, as you know, because some of 
your constituents were unable to get the products exported to 
the foreign market, they couldn't get it on the ships. What 
happens to that product? It just gets dumped onto the U.S. 
market, and that is the market that the smaller companies that 
don't export----
    Mr. Costa. Right. And we had markets, but we couldn't get a 
consignment to put the product on the ship to get it to market.
    Quickly, we are looking at reintroducing the Ocean Shipping 
Antitrust Enforcement Act (H.R. 6864, 117th Congress). How do 
you think that could help out?
    Mr. Friedmann. I think it can help out by recognizing the 
consolidation that has been spoken about today in ocean 
shipping. There are now ten ocean carriers left in the world, 
and they are consolidating further into those three alliances. 
And, if we don't have an ability in the U.S. Government, which 
we do not now under current law have the ability to review 
those proposed consolidations before they happen, they are 
going to just continue, and pretty soon, we are going to be 
down to no competition for the U.S. export commerce.
    Mr. Costa. Yes. Well, thank you. My time has expired. Mr. 
Chairman, this is something that I think we need to work on, in 
addition to the farm bill this year, and I look forward to our 
continued effort.
    The Chairman. Well, I thank the gentleman, it is all part 
of the agriculture supply chain.
    I am pleased to recognize the gentleman from Kansas, Mr. 
Mann, for 5 minutes.
    Mr. Mann. Great. Thank you, Chairman Thompson, for having 
this important hearing and to all of our witnesses that are 
here today.
    I represent the big First District of Kansas. Last week, I 
had 15 town halls all over western Kansas where farmers, 
ranchers, and ag producers told me, like they have been saying 
for the last 2 years, that their businesses and livelihoods had 
been very impacted by increased input cost and overburdensome 
regulations. On top of all this, we are in a major drought 
throughout western Kansas and really throughout the Great 
Plains in this country.
    From 2000 to 2020, the average annual rate of inflation was 
2.1 percent, which economists consider a normal rate of 
inflation that helps drive overall economic growth. In 2022, 
input prices skyrocketed, and we saw the largest December-to-
December percentage change since 1981 when everyone in this 
room knows full well the farm economy then crashed due in part 
to surging inflation. Unfortunately, 2023 does not look much 
more promising on the input side of the equation. USDA 
anticipates that production costs will increase this year to a 
record $500 billion.
    My question is for you, President Duvall. Does the current 
farm safety net provide adequate risk management to cover these 
expenses and reflect the risks that our ag producers truly have 
in modern-day production agriculture?
    Mr. Duvall. No, it doesn't. It needs to be modernized. It 
needs to be studied and reflect the true cost of production as 
of today.
    Mr. Mann. I wholeheartedly agree, which is why farm bills 
are 5 year bills to be updated with the times, incredibly 
important.
    Mr. Duvall. And that is why, painfully, our members asked 
for the baseline to be broadened.
    Mr. Mann. Yes. Yes. At a time when inflation is at a 40 
year high, Congress should be working to eliminate barriers for 
the ag sector, not hamstringing our hardworking Americans with 
government overreach. Given all of this, I am concerned 
especially with the Biden Administration's rulemaking under the 
Packers and Stockyards Act, including their proposed rules on 
transparency, inclusive competition, and market integrity. USDA 
has stated that it is its intent to clarify that parties do not 
need to demonstrate harm to competition in order to bring an 
action under Section 202(a) and 202(b) of the Packers and 
Stockyards Act.
    These rules, if finalized, would profoundly alter the 
operation of American protein markets and have devastating 
impacts on the quality, efficiency, and innovation of American 
animal agriculture. Producers would lose the ability to reap 
the financial rewards of their superior performance and 
product, and consumers will be saddled with higher costs for 
lower-quality products. These rules, in my view, are an 
egregious example of regulatory overreach, which will harm 
producers and consumers.
    Mr. Brown, if finalized, what effect do you see that these 
rules will have on the quality of animal protein available to 
consumers at restaurants and grocery stores across the country?
    Mr. Brown. Thank you for your question. I think I could sum 
it up in one sentence. Basically, what these rules would do is 
turn any interaction between a processor and a grower into a 
litigation flashpoint. It is going to add cost, and, at the end 
of the day, it is not going to help our growers.
    Mr. Mann. Yes, I agree. And at the end of the day, the 
consumer is going to lose as well because they are going to be 
paying more for a lower-quality product.
    Mr. Brown. And back to a point I made earlier, you expand 
the government, taxpayer has got to pay for it, and then they 
get to pay for it again when they go down to the grocery store.
    Mr. Mann. Yes. Yes. I am also concerned with the EPA's 
recent proposed revisions to the interim decisions for 
Atrazine, an important herbicide that corn and sorghum growers 
in my district and across America rely on to increase yields 
and implement conservation practices. The decision included a 
picklist of mitigation measures that EPA developed without 
feedback from USDA that producers would be required to 
implement when using Atrazine. While I understand that the USDA 
does not have final say in the regulation of crop protection 
tools, I believe that EPA can benefit from the ag expertise of 
scientists and staff at the USDA.
    Question for Mr. Twining. How can the EPA and USDA work 
together to ensure producers continue to have access to the 
tools that they rely on in modern-day production agriculture?
    Mr. Twining. Thank you, Congressman Mann. I would say just 
in general everybody has opinions. I like to live in a world of 
facts. And the USDA has several subject matter experts that 
understand the practical implications of regulation and 
pesticide management. Currently, my understanding is there is 
no direct requirement for EPA to coordinate with USDA when it 
comes to developing things like mitigation matters. So we would 
support that requirement and a formal connection between the 
USDA Office of Pest Management and EPA to make better logical 
rules.
    Mr. Mann. I see my time has expired. Thank you, Mr. 
Chairman. With that, I yield back.
    The Chairman. Well, I thank the gentleman.
    I am now pleased to recognize the gentlewoman from 
Virginia, Ms. Spanberger, for 5 minutes.
    Ms. Spanberger. Thank you very much, Mr. Chairman.
    I was just with the Farm Bureau in Virginia in Madison 
County, where I held a roundtable with many of the producers 
from our district. And so I just want to thank all of the 
organizations here present for the work that they do in 
advocating. I also want to thank Mr. Brown because among the 
things that we talked about was the Highly Pathogenic Avian 
Influenza, the impact that that has had on the poultry 
producers in my district, certainly, we know in the grocery 
store on the cost of eggs, the death of birds, and frankly, the 
dire issue it creates for producers and families, and 
importantly, for the veterinarians who are trying to deal with 
this outbreak. There were discussions related to the shortage 
of penicillin, and I would love to follow up on that topic in 
the future so that we can make sure that we are strengthening 
our ability to fight back against any type of illness that 
might be impacting our animals in the future.
    Mr. Duvall, I really want to thank you for your discussion 
and in your opening remarks talking about the national security 
implications of a country that can't feed itself. As a former 
intelligence officer, certainly, that is central to my view of 
our work in supporting Virginia's agriculture but certainly 
agriculture across the country.
    And, Mr. Friedmann, your discussion about the 
transportation impacts of the Ocean Shipping Reform Act, which 
I was proud to support, and also the challenges that we are 
facing because of changes in the trucking industry and aging 
workforce. These are all issues that I continue to focus on 
because the producers in my district say that it matters to 
them. And certainly, we see that trend nationwide.
    I am grateful to my colleague Ms. Adams and Mr. Larew for 
talking about consolidation within the meatpacking industry and 
the enforcement of antitrust laws that exist on the books. And 
I am also really proud that we have seen localized processors--
and Mr. Johnson has been a partner with me working to make sure 
that we can have local processing facilities. Certainly, we 
have one getting built out in my district that is really going 
to matter to our growers.
    But my next question, well, my first question, actually, is 
aimed at Mr. Larew. So I really want to thank you for 
highlighting an issue that I know impacts many of the producers 
I represent, and that is senseless restrictions and barriers 
that prevent them from repairing their own equipment. I have 
been working closely with Senator Tester on this issue and hope 
to be introducing legislation in the House that would ensure 
that farmers have the tools necessary to repair their own 
equipment. Farmers should not be held ransom by big 
corporations when it comes to the literal tools of their trade. 
So could you just talk about some of the current legal barriers 
and liabilities that face farmers who try to fix their own 
equipment that they own or that have to rely on a third party 
to do so?
    Mr. Larew. Yes, I think it is a pretty shocking issue for a 
lot of folks who aren't familiar with it that, if for some 
reason you went to take your car, your pickup, and you weren't 
allowed to take it to the shop there in town but you had to 
take it to the dealer if you weren't allowed to work on it 
yourself. And so the auto industry actually took care of this a 
number of years ago, but in farm equipment, certainly, with the 
adoption of additional technology, farmers are currently--or 
any producers are not allowed to touch--to access the codes to 
fix their own equipment or to get any independent. This drives 
up cost of that. It impacts harvest, for example, if you have 
harvesters broken down and you can't get your miles from 
anybody to get that repair, so----
    Ms. Spanberger. Because you have to wait for somebody to 
come who is allowed to come and fix it. You have to wait for 
that----
    Mr. Larew. Absolutely. For somebody to actually have the 
sensor to be able to show what is actually wrong with this. 
This barrier, we have had promises in the past from the 
equipment manufacturers that they will allow access to this 
information and allow some independent repair. That, however, 
did not come through, so we need to see laws on the books to 
enforce that right to repair.
    Ms. Spanberger. Thank you very much.
    And, Mr. Duvall, in the limited time I have left can you 
just speak to the importance of maintaining the high funding 
levels for the conservation title in the farm bill? How do you 
see continued access from year to year to voluntary--and I 
stress that point, voluntary--conservation programs that help 
farmers and producers certainly like they do in my district? 
How does that provide them with certainty for their bottom 
line?
    Mr. Duvall. Sure. As our society moves more and more toward 
discussion around climate, there is going to be more asked of 
farmers and ranchers, and to do that, we have to have voluntary 
programs that we can volunteer for and have participation from 
everyone to help us put that on the ground, so it is important. 
And if you look at the history of the programs that are there 
in conservation, they have been sorely under-funded and 
highly--the applications for are out the ceiling. And 
hopefully, we will have the funding to be able to put those 
practices on the ground. And then the next problem is the 
technical support in USDA to help our farmers put it on the 
ground. That is a very interesting thing that everybody needs 
to be aware of.
    Ms. Spanberger. A huge issue. And with that, Mr. Chairman, 
thank you for your indulgence, and I yield back.
    The Chairman. I thank the gentlelady.
    And now I am pleased to recognize the gentleman from the 
rice and duck capital of the world, Mr. Crawford, for 5 
minutes.
    Mr. Crawford. Thank you. I wish you had had better luck 
when you were there.
    The Chairman. Me, too.
    Mr. Crawford. First and foremost, I am concerned about the 
Administration's rulemakings under the Packers and Stockyards 
Act, and I think it would have negative effects on the cost and 
quality of protein products for U.S. consumers and that USDA is 
in fact overstepping their authority in making these rules. 
Congress last spoke to this issue in the 2008 Farm Bill and 
again blocked USDA from making similar rules from 2012 to 2015. 
In its latest attempt to circumvent the will of Congress, USDA 
has taken the unusual step of breaking their proposals up into 
four distinct parts, which will obscure the true economic 
impact of their proposal and make it difficult for affected 
stakeholders to accurately assess the full implications of 
their proposed changes.
    Last September, my Republican colleagues and I on this 
Committee sent a letter to Secretary Vilsack warning him that 
these rulemakings likely violate the major questions doctrine. 
And despite the Secretary's outlined response, my concerns 
remain today and will going forward.
    Switching gears a little bit, Mr. Twining, in your 
testimony, you mentioned free and fair trade among ag producers 
and customers, and I would argue that free and fair trade are 
not necessarily the same thing. But for the purposes of our 
conversation, can you help us identify any duties and tariffs 
that have impacted the price of fertilizer?
    Mr. Twining. Well, yes, Congressman. Most recently--and it 
is important to understand our particular business operates on 
the coast. The supply chains for the coastal regions of the 
U.S. are very different than for the central parts of the 
country. We are much more dependent upon ocean trade and 
imported products to support our farmers, and a lot of the 
domestic production cannot reach us. And most recently, there 
was a proposed tariff on UAN solution, which is the nitrogen 
source our growers use. Fortunately, it was not approved. But 
that type of tariff would have been very detrimental to the 
competitiveness both of American agriculture in general, as 
well as the viability of producers on both coasts of the 
country.
    Mr. Crawford. So there was a tariff proposed, and who 
proposed that tariff?
    Mr. Twining. CF Industries, I believe, proposed that 
tariff.
    Mr. Crawford. Okay. We have seen this Administration impose 
and release tariffs on fertilizer from both Morocco and 
Trinidad and Tobago. I think we need to look at farmers' input 
costs from the fair trade perspective to give producers the 
lowest possible input costs available.
    Mr. Rosenbusch, in light of your industry's record profits, 
what are the intentions of the industry to address the critical 
needs that the U.S. producers have dealing with record-high 
input costs for domestic producers?
    Mr. Rosenbusch. Yes, thank you, Congressman Crawford, and 
your expertise on fertilizer is always appreciated. I would say 
that we live in a globally traded commodity--we are a globally 
traded commodity that relies a lot on supply and demand. And so 
as we think about what is going on geopolitically with Russia, 
with Belarus, with China, all of those, as you mentioned, and 
trade restrictions that China has put on some of their exports 
have an impact on the farmer right here in the United States. 
So, from a free markets perspective, you are going to see price 
setters such as Europe, which is the marginal producer right 
now with high natural gas costs that is going to drive up that 
cost of fertilizer right here for United States farmers.
    And furthermore, I would say that, if you think about it, 
it is hard to put fertilizer all in one category, but, 
generally speaking, the American farmer actually has fertilizer 
available at a discount compared to a lot of the competitive 
farmers in Brazil or Africa or other places. So, I think 
ultimately looking at opportunities to expand production and 
capacity is definitely on the agenda. I think that some of the 
regulations and the permitting challenges that we face, 
restrict some of that. And so whatever this Administration and 
Congress can do to help bolster that supply would be terrific.
    We had one member that runs a phosphate mine spent 10 years 
already and $32 million to expand phosphate production. So that 
kinds of assistance would help ensure we have more nutrients 
available.
    Mr. Crawford. Thank you. And real quick, switching gears, 
this farm bill, Mr. Duvall, it is becoming abundantly clear 
that we will need to make a push to increase PLC reference 
prices. Give me a good reason why it is food security, it is 
national security, why do you believe it is so important that 
we address that PLC reference price?
    Mr. Duvall. Well, just like a nutrition project program is 
a safety net for people in this country that need help at that 
point in time, when farmers go through a disaster of some kind, 
whether it be weather, whether it be prices, or whatever it 
might be, that safety net needs to be strong, and it does not 
reflect today's cost of production.
    Mr. Crawford. I appreciate that.
    Mr. Chairman, I yield back.
    The Chairman. Well, I thank the gentleman. Now I am pleased 
to recognize the gentleman from Iowa, Mr. Feenstra, for 5 
minutes.
    Mr. Feenstra. Thank you, Mr. Chairman. This is a really 
important----
    The Chairman. Oh, I am sorry, I messed up my order, My 
apologies. I am now pleased to recognize--we will get back to 
you, Randy, I promise you, and we will let you start from the 
very beginning, too. You will get the full 5 minutes.
    I am pleased to recognize the gentlelady from Ohio, Ms. 
Brown, for 5 minutes.
    Ms. Brown of Ohio. Thank you, Chairman Thompson and Ranking 
Member Scott, for holding this hearing today. And thank you to 
our expert panel for being here. Your perspectives are helpful 
as we look ahead to the next farm bill.
    Over the past few years, our nation has faced a once-in-a-
lifetime pandemic, historic weather disasters, exasperated by 
the climate crisis and challenging trade wars, all of which 
have contributed to rising costs throughout our food chain 
supply. On the front end of the supply chain, farmers are 
facing record-high input costs and production expenses only to 
face a market that is increasingly volatile and uncertain.
    So this question, gentlemen, is for Mr. Larew. In your 
opinion, what are the biggest contributing factors to the 
instability farmers are facing in the market today?
    Mr. Larew. Well, that is a great question. And I am trying 
to quickly think about how to sum it up because there are 
enormous challenges that face farmers. And, as farmers, we are 
used to volatility. We are used to uncertainty in a lot of 
ways. But as you well point out, right now, that is being 
exasperated by climate change. It is being exasperated by 
pandemic and supply chain disruptions.
    I might just say that one of the biggest challenges that we 
are facing that we are having to come to bear with right now is 
that the pandemic in particular showed that while we have a 
very efficient food system, the envy of the world in many ways, 
and certainly the safest, what we don't have is a resilient 
food system, and that ultimately impacts farmers very directly 
and consumers because the more that we can spread out, process, 
and create market opportunities, that is much better for 
farmers, it is better for those rural communities, and then 
that ultimately feeds all the way back up to better 
opportunities for consumers on the other end.
    Ms. Brown of Ohio. Thank you for that. And furthermore, 
underserved producers, including Black farmers and other 
producers of color, have been particularly hard hit by the 
impacts of inflation on input and other costs. So to Mr. Larew 
and any other witness who would like to jump in, can you 
describe actions taken by this Administration to aid 
underserved producers and whether you have any suggestions of 
things we should explore in terms of risk management to enhance 
the availability and accessibility of programs for underserved 
producers?
    Mr. Larew. Yes, it is important, and certainly this 
Administration has taken a hard look at it. I think time will 
tell what the impacts of that are. But they certainly have 
tried to, through some of the programs and funding that they 
have issued, really taken a focus on making sure that those who 
are underserved, those who have had historically lack of 
access, whether it is capital or any access to any of the 
programs. So I think that this ongoing focus, whether it is as 
we look ahead to the next farm bill or any proposals that we 
are looking to add, this question of equity and inclusion is 
going to be an important one. It is one that we made reference 
earlier. Mr. Duvall down there at the Farm Bureau, along with 
many other organizations through the Food and Agriculture 
Climate Alliance, those recommendations had the very important 
input of the Federation of Southern Co-ops, making sure that 
equity and access to capital and access to these climate-smart 
programs are available to everyone.
    Ms. Brown of Ohio. Thank you. Anyone else?
    Mr. Duvall?
    Mr. Duvall. Yes, ma'am. The things of the past, they should 
not ever happen again. And we need to make sure that USDA, our 
organizations, and everyone, our outreach needs to be better. 
We have recently in last 3 or 4 years, reached out to MANRRS 
(Minorities in Agriculture, Natural Resources, and Related 
Sciences), AFA, and other youth organizations to make all youth 
from all parts of life to be aware of what they can participate 
in our organization, give them information as to what 
agriculture holds for them, where their place could be, and 
give them an opportunity to know what the programs are out 
there, whether it be through USDA or some other places that 
they could take advantage of to be more involved in 
agriculture. There are more jobs in agriculture than there are 
graduates wanting them, and there is no reason for anybody to 
be discriminated against because we need all those brilliant 
minds, regardless of where they come from, and we need them now 
because looking at the future of our food production and 
talking about it being national security, it is at an emergency 
level that we find out how we make agriculture attractive to 
young, intelligent minds.
    Ms. Brown of Ohio. Thank you so much.
    Mr. Chairman, while we talk about inflation, uncertainty, 
and the rising costs on the front end of the supply chain, I 
would be remiss not to mention the same inflation and 
uncertainty is hitting families on the opposite end of the food 
supply chain in the form of high prices at the grocery store. 
So while we are discussing mitigating ways to alleviate the 
farmers' pain, we must also discuss how to assist families, 
particularly those who have fallen on hard times in the form of 
protecting and strengthening our SNAP program.
    And with that, Mr. Chairman, I yield back.
    The Chairman. I thank the gentlelady. And inflation 
definitely doesn't discriminate. There is no doubt about it. It 
is a heavy weight on everyone.
    Now, I am pleased once again to recognize the gentleman 
from Iowa, Mr. Feenstra, for 5 minutes.
    Mr. Feenstra. Thank you, Chairman Thompson and Ranking 
Member Scott. I want to thank our panel of witnesses. It was 
impressive to not only hear your testimony, to read your 
testimony. This is serious times, and I am excited to be on the 
Agriculture Committee to work on the farm bill with the 
Chairman and with the colleagues on this Committee. We have an 
important task to do. But we also have other tasks related to 
the topic of the day, of the situations of inflation and 
regulations and uncertainty that is really affecting our 
farmers, our producers, and our families and small businesses. 
Because of inflation, because of the high costs of inputs, that 
obviously is raising commodity costs, that obviously raises 
food costs. It all goes together.
    Traveling my 36 counties, I have the second-largest ag-
producing district in the country, and I have heard from my 
farmers and local leaders about the hardships they are facing 
when it comes to accessing capital and dealing with the 
burdensome regulations.
    So, Mr. Duvall, I want to talk to you about one of the 
biggest challenges that I have heard is farmers facing 
affordable access to capital, meaning that over the last year 
and a half, we have seen interest rates dramatically climb, 
doubled, more than doubled. And we see the Fed now saying, 
``Hey, we are not tamping down inflation,'' that inflation is 
still rising at an alarming rate, obviously highest in 4 
decades. This really affects farmers because now they are 
trying to get a credit line either to buy livestock or to put 
in their crop this spring, and yet banks are going, wait a 
minute, this is your interest rate. I mean, this is a real 
problem. I was wondering if you could address that and how it 
stifles production, and then also how it stifles new precision 
ag technologies for getting on the market to create more 
efficiency.
    Mr. Duvall. Yes, of course, and thank you for the question. 
Availability of credit is crucial to agriculture, not just when 
you get into the business; but, we have a medium-sized farm 
that might borrow $1 million to put a crop in the ground. Who 
in the world does that knowing that we have to depend on rain 
and all the elements and what might happen to do that. And of 
course the banks are trying to be protective of the assets that 
they--capital that they loan us, but that is why the programs 
are so important. It gives a foundation and a safety net not 
just for farmers, but for lending institutions, the people that 
buy the food at the grocery store, and everyone. That is why it 
is so important. It does stifle technology. And technology is 
what keeps us efficient, sustainable, and on the cutting edge 
and competitive to the world.
    Mr. Feenstra. Well, thank you for those comments, and you 
nailed it. And this is why when we have inflation and we have 
interest rates growing at a fast rate, it is just crushing our 
farming community. And how we want to create more efficiencies 
and more effectiveness, we can't because of the cost of 
interest.
    Mr. Duvall. I farmed during the 1980s, and I remember going 
in when we didn't have 24 hour news and there was some farmer 
that was upside down on the news that had hurt himself or 
someone because of the stress he was under.
    Mr. Feenstra. Yes. That is right.
    Mr. Duvall. Interest rates are crushing, and our young 
farmers, whoever they might be, are going to feel the brunt of 
that worse than they have ever seen before if it continues to 
rise.
    Mr. Feenstra. Yes. I agree 100 percent, and there is no end 
in sight right now. And the Fed has said this, that they don't 
know when these rate increases are going to end.
    Mr. Twining, I got a quick question for you. The other 
thing that I am hearing from my 36 counties and ag people is 
obviously the Waters of the U.S. and the unprecedented ruling 
that came down from the EPA where they doubled down on 
expanding the significant nexus test on navigable waters. And 
you think through what this actually does, I mean, I think 
about being a farmer and all of a sudden you have water in your 
creek or your pond or coming out of one of your tiles and now 
all sudden is regulated by the EPA. I mean, frankly, whether it 
be plowing, moving a fence, putting in a fence, it is all now 
under the jurisdiction of the EPA, which in essence could fine 
them if not done correctly or if they didn't get a permit. 
Again, not even thinking about it, the farmers would have to 
get a permit if this is actually the case. Can you explain 
further to me how this is truly detrimental to our farming 
community and how our farmers probably know best?
    Mr. Twining. Yes, sir. We deal with growers from 20 acres 
to 12,000 acres as an ag retailer, and we are on their 
operations every day. And you did not have the certainty that 
you can perform any type of operation, whether that is an 
application of a pest control product or a plant nutrition 
product or to do something as simple as plant or harvest a crop 
based on whether or not we got a big rain the night before.
    Mr. Feenstra. That is right.
    Mr. Twining. And to not have that clear definition creates 
tremendous uncertainty that really just paralyzes our ability 
to do business and to produce food in an efficient manner.
    Mr. Feenstra. Yes, I appreciate your comments, and thank 
you. I am out of time. I yield back.
    The Chairman. I thank the gentleman. And now I am pleased 
recognize the gentlelady from Colorado, Congresswoman Caraveo.
    Ms. Caraveo. Thank you, Mr. Chairman. And thank you to you 
and to Ranking Member Scott for hosting this hearing today and 
to the witnesses, thank you so much for being here. I am very 
excited to be participating in my first Agriculture Committee 
hearing, and I am glad that it is on this very important topic 
on the challenges of our agriculture producers and what they 
are facing.
    I represent three of the largest ag-producing counties in 
Colorado, including Weld County, which is actually the largest 
ag-producing county outside of California. My ongoing 
conversations with farmers and ranchers reflect the real 
concern heard here today on high costs, weather, and climate 
uncertainties. Colorado farmers actually recently saw the State 
House approve a Consumer Right to Repair Equipment Act (HB23-
1011). So thank you to Mr. Larew for your comments earlier. 
What the law there in Colorado would do is require 
manufacturers to provide parts, software, and tools to 
independent repair providers and equipment owners. And so I 
think that this is also a very important topic that we need to 
take on at the Federal level.
    I know that in my family when we are talking about 
repairing things, what my niece always tells my dad as he is 
fixing his truck or something around the house is ``Abuelo, 
just Google it.'' And that requires broadband access, something 
that I know in parts of Colorado is very difficult, especially 
for beginning and small family farmers and ranchers. They have 
to take on the cost of broadband on top of inflation.
    So, Mr. Larew and Mr. Duvall, I would love to hear you talk 
about the importance of affordable broadband being available to 
rural communities, especially for our farmers and ranchers.
    Mr. Larew. It is critical. You have heard one of the themes 
that has been mentioned several times here about farmers' 
ability to innovate, right, and to get creative, whether it is 
googling or a new repair or something. But that requires access 
to that technology. It requires the ability to communicate. And 
whether it is high-end equipment out there that is connected or 
whether it is your family trying to make sure that you can have 
an on-farm job if you will in order to cover health insurance. 
We haven't even talked about this issue today, but so many farm 
families have someone that works off the farm because of the 
challenges that we are talking about, because of those thin 
margins that are out there, and because of the lack of 
affordable health insurance in some cases. So on-farm income or 
kids coming back to the farm is made much more accessible when 
there is high-speed internet.
    Personally, when I am at the farm in very rural West 
Virginia, just across the Allegheny Mountains and south of 
here, if I want to be able to have a Zoom call, just a simple 
Zoom call with somebody, I have to drive 25 minutes to the 
truck stop, sit in the parking lot, and have that conversation, 
and then get back to the farm. That is not efficient, and that 
is not a way to move things forward.
    Ms. Caraveo. Mr. Duvall?
    Mr. Duvall. He is telling the truth. I have seen him 
sitting in there because we have a lot of Zooms together. You 
are exactly right. And as we talk about society thinking more 
about climate, all that new technology is going to require us 
to have broadband. And without that broadband, small-, medium-
sized, regardless what size you are, what is not going to be 
available to you, you are not going to be able to use it.
    Collecting data, data is--who knows what it is going to be 
worth to the farmer because he owns all that data on his crops 
and his tractors and everything that--and what that is going to 
be worth to him someday, we don't have a clue what that is. But 
without broadband, we can't collect all that and be able to 
store it and do the right things. And just as important is cell 
phone service. Farmers live a lonely life, a lot of times miles 
and miles and miles from anyone. And just to have the security 
of having something, you can contact somebody in case something 
happens. And our business is only second to mining being the 
most dangerous business in the country.
    So there are a lot, a lot of reasons, but this is the one I 
don't want everybody to forget. Our rural communities are 
drying up and going away, and our young people go to college 
where they have great internet and they learn all these 
wonderful things. We are moving toward a society that more 
people are working from home. We want those young people to go 
home and work from home, but they are not going to be able to 
do it without good broadband service.
    Ms. Caraveo. Thank you, gentlemen. I yield back my time.
    The Chairman. I thank the gentlelady. Now, I am pleased to 
recognize the gentleman from Minnesota, Mr. Finstad for 5 
minutes.
    Mr. Finstad. Thank you, Mr. Chairman. And thank you for 
having this important hearing today. And to each and every one 
of you up there, thank you so much for being here and the work 
that you do for the greatest population of folks in this 
country, and that is our farmers.
    I am a proud fourth-generation farmer myself. I like to 
tell people I grow corn, soybeans, and kids. So I am raising 
the fifth generation.
    And, President Duvall, you hit the nail on the head in 
regards to just engaging and bringing back youth to the farm. 
And I joke quite often about technology and how we have to 
embrace it. And in the conversation that we just had here in 
regards to the broadband and connectivity in rural America, my 
dad said he was going to retire from farming when the tractor 
drove itself. We got auto steer. Sure enough, he retired. My 
son plants corn with an iPad. So that technology and that 
ability to connect is so important to strengthening rural 
America. So thank you for your comments on that.
    But make no mistake, farm country is facing several 
challenges, including increased input costs, the supply chain 
challenges, interest rates, and burdensome regulations passed 
down by bureaucrats in D.C. And farm and food security is 
national security. We have heard that said ten times here 
already. And so we must do everything that we can to tackle 
these challenges while supporting our farmers as we continue to 
work to feed and fuel the world.
    So with that being said, maybe digging in a little bit here 
in regards to the regulations, and I have always said that we 
need to make sure that regulations are based on science, not 
political science. And so in regards to that, in August 2021, 
the Biden Administration published a final rule that revoked 
all tolerances for chlorpyrifos--in farm country, Lorsban--
effectively banning the use of this important crop protection 
tool for growers, including those sugarbeet and soybean growers 
in Minnesota.
    Administrator Regan publicly claimed that the courts tied 
their hands. However, the Ninth Circuit gave the EPA the option 
to revoke or modify those tolerances. Instead of following the 
science outlined by both EPA and USDA scientists that allowed 
for 11 safe uses, the Biden Administration chose to ban this.
    So, Mr. Twining, can you talk about the dangerous precedent 
that this Administration has set by choosing to use political 
science in making this decision versus the science that both 
EPA and USDA has led us with, and then really just the 
uncertainty that this causes producers like myself?
    Mr. Twining. Sir, I always like to try to relate this back 
to experiences all of us have every day in life. So when was 
the last time any Committee Member had a headache? What did 
they do? They went to the grocery store probably and bought a 
bottle of ibuprofen and took two pills and got better in the 
morning. Now, was there risk associated with doing that? 
Absolutely. If you drank that whole bottle all at once, you 
would probably be in the hospital having your stomach pumped 
and you might die. But we as a society say ibuprofen, the risk 
is worth the reward because it is closely studied, it is 
labeled by a Federal agency, and we all understand and follow 
the directions.
    It is no different with pesticides. It is no different with 
a product like Lorsban. Safe, effective use of these products 
in accordance with label by pesticide applicators who are 
trained and licensed--and to use that product, you have to 
complete extensive training and obtain a license to use it. 
When we take those tools away from our producers, we deny not 
only our producers an option to better manage and more 
efficiently produce food, we raise the cost for every American. 
We cannot allow political science, opinions, and social media 
to influence science. It is incumbent upon the Members of this 
Committee to stand firm for science and to push back against 
emotion and popular opinion and educate people on the use of 
these tools.
    Mr. Finstad. Yes, thank you for that. I couldn't agree with 
you more.
    Changing the subject here a little bit in the couple 
seconds I have left here. Mr. Chairman, I want to say thank 
you, and I really appreciate you bringing up the whole line 
speed issue. And I would just comment that I am sending a 
letter today to Secretary Vilsack urging the USDA to provide 
certainty specifically for the pork processing plants by 
issuing an extension of the NSIS time limited trial.\1\ I have 
heard it loud and clear from producers in our state that it is 
very important. And, Mr. Brown, thank you for bringing up this 
issue today also.
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    \1\ Editor's note: the letter referred to is located on p. 252.
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    I would just close with this comment. I appreciate your 
work here and you testifying. I hear loud and clear every day 
that crop insurance is the number one tool that producers in 
Minnesota really count on for that security and that risk 
management. I heard it brought up here again today, and I will 
tell you as a farmer, maybe on the hair younger side, and 
especially watching my seven children coming into the farm 
community, crop insurance is the number one tool for risk 
management on our farm. And so I appreciate your willingness to 
be here today and to really commit to that. And I would just 
tell fellow Members here that I stand ready to help work on 
ensuring that we have a safe and strong crop insurance 
component to the farm bill. Thank you.
    Mr. Brown. Mr. Chairman, if I could just thank Mr. Finstad 
for sending that letter today. We greatly appreciate it. Our 
growers appreciate it. And it will help us be competitive in 
the international market, so thank you.
    The Chairman. Very good. I thank the gentleman. I am now 
pleased to recognize the gentlelady from Oregon, Congresswoman 
Salinas, for 5 minutes.
    Ms. Salinas. Thank you, Mr. Chairman, and thank you to our 
panel.
    So I heard from many of you today that weather irregularity 
as the result of climate change is having a direct impact on 
our ag sector. And in Oregon's 6th District, which I represent, 
some of those impacts are from new problems and challenges like 
extreme heat and smoke damage from wildfires and not just 
increased frequency or severity of the natural disasters we 
have previously had to endure.
    Unfortunately, despite the value and size of our 
agriculture sector--and I am definitely hearing this from a lot 
of our growers; I just came back from my district work period 
and met with a lot of them--were often left out of the 
conversation because a lot of these products we produce are 
less common. They are the specialty crops. And so Oregon is the 
nation's leader in the production of hazelnuts, grass seed, 
Christmas trees, and blueberries. And not only that, in Oregon, 
a dozen commodities each have a production value of more than 
$100 million. But as I mentioned, a lot of our growers really 
can't take advantage of some of these protection programs.
    So to Mr. Larew and Mr. Duvall, my question is for both of 
you regarding margin protection insurance coverage. Would there 
be value in expanding it to more commodities and more regions 
of the country? Specifically, would it be possible to use this 
coverage for specialty crops like those in Oregon?
    Mr. Duvall. In our organization, our policy supports 
updating and broadening the safety net for farmers to use. If 
you are out there farming, regardless of what you are farming, 
you deserve to have the same safety net as the others do.
    Mr. Larew. Absolutely. I would just echo that. We strongly 
support that as well and would just also add that I keep making 
reference back to the work of the Food and Ag Climate Alliance 
in the fact that specialty crop growers in particular who 
sometimes don't always have easy ways to access conservation 
programs, et cetera, that that be an issue that the Committee 
consider as well.
    Ms. Salinas. Thank you. And just to follow up on that a 
little bit, as we try some of these new programs, I feel like 
there should be some way to really assess and learn from the 
start of the programs and try to figure out what can be 
improved upon. So how have any of these programs that you have 
just mentioned been received by your members, and what sort of 
enhancements could we make to the margin protection to make it 
more attractive to producers?
    Mr. Duvall. I think what we talked to earlier is to make 
sure that we update the cost of production and targets in it to 
make sure it represents today's modern-day agriculture and the 
cost.
    Ms. Salinas. Thank you.
    Mr. Larew. And I would just add that, whether we are 
talking about the margin protection or whether we are talking 
about whole farm type of--too often, access and entry into that 
kind of protection requires--if you are a very diversified 
producer, it can create additional burdens to even be able to 
have the paperwork, and the coverage isn't ultimately worth it. 
So ways to kind of streamline it, in addition to making sure 
that it is tied to cost of production I think is important.
    Ms. Salinas. Thank you. And that is exactly what I am 
hearing from my growers.
    So just shifting gears very quickly, I would like to touch 
on the importance of SNAP. And I think we have heard from other 
Members today. I think it is often overlooked that some of our 
most food-insecure areas of the country and certainly in Oregon 
are rural. And analysis from the USDA shows that eligible 
Americans living in rural areas participate in SNAP at higher 
rates than those living in some of the urban areas. And I 
represent a particular rural area. Three, actually, of my five 
counties in my district are rural, and about 29 percent of the 
population are SNAP eligible. And so given that the economic 
impacts of SNAP tend to be stronger in rural communities than 
urban areas and employment, can you elaborate on how important 
SNAP is to--and I think you have touched on this a little bit--
but how important SNAP is to rural communities and why the 
economic impact is so great?
    Mr. Duvall. Yes, ma'am. We come to you all and say we don't 
really know what the needs are in the SNAP area. That is 
something that you all have the resource to decide that, but we 
fully support it. Our farmers and ranchers give thousands and 
thousands of hours, hundreds of thousands of dollars of product 
to food banks to help people all across this country, so we 
believe in helping people in a time of need. So it is just 
important to make sure that that safety net there is for the 
people that are in that time in life where they need it, and 
the safety net is there for us to assure that we would be able 
to plant a crop next year, not to make a living, but plant a 
crop. It is a safety net. And like I said earlier, crop 
insurance is the cornerstone. And if it can be updated, 
modernized, and broadened, it could be the cornerstone of every 
farm out there.
    Ms. Salinas. Thank you.
    Mr. Larew. We know that our rural communities have a higher 
percentage of senior citizens and families who too often maybe 
in entrenched poverty for either lack of access to jobs, et 
cetera. So food insecurity is definitely an issue that, much 
like inflation, it doesn't discriminate. As someone from 
Appalachia, I mean, we have long entrenched challenges there in 
addition to great people and great resources. And so making 
sure that that safety net is there available for all Americans 
in need is important.
    Ms. Salinas. Thank you. I yield back.
    The Chairman. I thank the gentlelady. I now recognize the 
gentleman from Tennessee, Congressman Rose, for 5 minutes.
    Mr. Rose. Thank you, Chairman Thompson and Ranking Member 
Scott, for holding this important hearing.
    As a lifelong farmer and former Tennessee Commissioner of 
agriculture and a new Member of the Agriculture Committee, I am 
looking forward to working with my colleagues on both sides of 
the aisle to develop solutions to the challenges that American 
agriculture currently faces.
    I want to go ahead and dive right in. I want to talk a 
little bit more about the SEC's, Securities and Exchange 
Commission's, proposed rule entitled, Enhancement and 
Standardization of Climate-Related Disclosures for Investors, 
that my colleagues have previously touched on today. In my 
view, if this proposed rulemaking is allowed to be finalized, 
it will have a devastating impact on farmers across the 
country. Under the proposed rulemaking, farms would be required 
to disclose considerable amounts of climate-related information 
in order to do business with public companies. In May of last 
year, I was proud to lead a bipartisan letter signed by well 
over 100 Members of Congress to the Securities and Exchange 
Commission, pushing back on this foolhardy proposed rulemaking.
    Mr. Chairman, I ask unanimous consent to have the text of 
my letter entered into the record.
    The Chairman. Without objection.
    [The letter referred to is located on p. 253.]
    Mr. Rose. President Duvall, if this proposed rulemaking is 
finalized, certainly you think that public companies, by and 
large, will be willing to pay farmers more to account for the 
increased compliance costs calculating their emissions, or do 
you think that perhaps increased costs of this rulemaking will 
simply be passed on to farmers?
    Mr. Duvall. It will be passed on to farmers. And I can 
promise you that because we have seen regulations before end up 
in our laps that we had to pay for because some regulation from 
Federal Government was handed to somebody above us in the 
marketplace.
    Mr. Rose. Sure. As farmers know, we are price-takers, not 
price-setters, and I think you are right about that.
    Economist Shelby Myers in a Market Intel report posted to 
the American Farm Bureau website last year stated that the, 
``SEC rule as proposed has the potential to require very 
detailed information from each farm that is not captured 
anywhere else, down to how many gallons of fuel are put in each 
piece of machinery and each machine's emissions.''
    President Duvall, as you are keenly aware, we face a huge 
challenge attracting and keeping future farmers as more and 
more young people choose not to or are unable to follow in 
their parents' footsteps and leave the profession. Do you feel 
that the burdensome and tedious prospect of potentially 
requiring farmers to calculate each and every gallon of fuel 
used on farms, as well as trying to decipher the emissions 
output of a wide range of farm equipment from tractors to weed 
eaters and even animals, might dampen the prospects of future 
generations joining the farming profession?
    Mr. Duvall. It most certainly will. And it will also force 
smaller- to medium-sized farmers to going out of business where 
larger farms might have the ability to do some of that or buy 
the machinery that will collect the data for them. I mean, the 
tentacles to this can be long and extensive into many areas of 
rural America.
    Mr. Rose. And in fact, amazingly, the rulemaking from the 
SEC contemplates exactly forcing out providers or suppliers 
that can't meet the obligations imposed by the rule.
    Mr. Duvall, President Duvall, I would like to expand on 
this issue a little bit and ask you if you could talk about the 
efforts that American Farm Bureau is taking to spur interest in 
the profession of farming for the next generation.
    Mr. Duvall. Yes, we play an active role in all our youth 
organizations. I mentioned earlier that we now participate in 
4-H, FFA, AFA, and MANRRS and looking for others, and we 
won't--like I am a product of the Leadership Development 
Program. We want them to all know that when they come out of 
those organizations, they can come to our organizations, we 
will help them fine tune their God-given talent and let them be 
a leader in this great industry that we know and love.
    Mr. Rose. Thank you. Mr. Rosenbusch, one of the major 
takeaways from your written testimony is that you highlighted 
that the U.S. only accounts for about seven percent of global 
fertilizer production. This is obviously a troubling statistic. 
In The Fertilizer Institute's roadmap of solutions for Congress 
to consider in your written testimony, you mentioned that 
permit reform is essential for mining, construction of new 
production facilities, and our infrastructure. Can you expand 
on how permitting reform can help in these areas, especially as 
it relates to the construction of new production facilities?
    Mr. Rosenbusch. Yes, thank you, Congressman Rose. We are 
exposed as a country to the global supply and demand for 
fertilizer, and so anything we can do to help bolster domestic 
production would be positive. But permitting is one of the big 
challenges. So I referenced the example earlier of a phosphate 
mine that a smaller business, small to medium business is 
trying to open. Ten years they have been working at this and 
$32 million for that mining operation to begin. The phosphate 
is there. These resources are where God put them on Earth, and 
so we can't go in and deposit potash today, but we do have 
those phosphate reserves. And we just need to equip industry 
with the ability to do it, with accountability for review, 
timelines for review of these permitting, and ensure that we 
can go into production as quickly as possible.
    Mr. Rose. Thank you, Mr. Chairman. I yield back.
    The Chairman. I thank the gentleman.
    Now, I am pleased to recognize the son of a North Carolina 
farmer, Mr. Davis, for 5 minutes.
    Mr. Davis of North Carolina. Thank you so much, Chairman 
Thompson, and to the Ranking Member for bringing us together 
today and to the witnesses who are here today.
    So I would like to start over the course of the last few 
weeks in particular have gone way beyond to just have 
conversations with farmers in my district. North Carolina 
agriculture is still the leading industry and is extremely a 
huge part of eastern North Carolina's economy and community. 
Listening to the farmers in particular, I heard about 
fertilizer, regulations, pesticides in particular, fuel costs, 
so, I mean we hit on many of the things of that. I would like 
to zoom in just a little bit more.
    In particular, Mr. Rosenbusch, you highlight the importance 
of onshore fertilizer production and national security and 
agriculture economy, as we know and you have talked about 
China, as gaining more and more market share, potentially 
leaving the U.S. vulnerable in the event of the global 
conflict. Among the roadmap, those legislative priorities, what 
I am really trying to get a grasp of--and I want to be clear. 
We realize there are things beyond control, our control. You 
hit on it, the wait and see, the global markets. But my 
question is within those things that are within our control, 
what would you say is the greatest priority that could be most 
impactful? Because this is something that I have heard so many 
raise concerns about.
    Mr. Rosenbusch. Yes, I will name a couple that come to 
mind, in addition to what I have already mentioned. First of 
all, unfortunately, potash and phosphate are not on our 
critical minerals list. We have to do everything we can to make 
sure those two are added back to the critical minerals list for 
the United States. Second, I would say that our energy policy 
is going to have a huge impact on fertilizer production. When 
we think back to the pre-shale revolution, we had in the early 
2000s 27 nitrogen plants that shut down because of the high 
cost of natural gas. So affecting policies that deliver sound 
energy solutions because that is the feedstock would be my 
second.
    And then I would just say, third is just anything that is, 
as I think about an ag retail, any of the PSM and the RMP rules 
and those just incremental regulations that add to the 
complexity of doing business would be a third category of 
things that we could focus on.
    Mr. Davis of North Carolina. Any idea in terms of moving in 
that direction, you talked about some decrease, and moreover 
stabilizing things. Do you think we could really continue to 
see decrease or at least stabilization?
    Mr. Rosenbusch. You are talking about fertilizer prices?
    Mr. Davis of North Carolina. Yes, prices.
    Mr. Rosenbusch. Yes. So I am not allowed to talk about 
prices----
    Mr. Davis of North Carolina. Got you.
    Mr. Rosenbusch.--but I will just generally say, as Zippy 
mentioned, farmers have to put nitrogen down going into the 
spring planting season, so I think some of the softening that 
we have seen over the winter will begin to pick back up as 
demand increases and we get closer to that planting season. I 
think that approach to, well, let's see if we can get it at the 
lowest possible prices is kind of what is out there in the 
marketplace now. But when you just think about the fundamental 
supply and demand, where we are with crop prices, I think you 
will actually see things evolve as we go into spring and the 
rest of the year. And at the end of the day, farmers at these 
commodity prices have to maximize yield, and the way to do that 
is with fertilizer.
    Mr. Davis of North Carolina. Okay. Moving on, another 
question going across the district--and this topic continues to 
come up in terms of young people. I have traveled across the 
district. I am hearing from constituents the lack of 
opportunities to pursue careers that is vital to our local, 
state, and national economy here, including we were talking 
about transportation, trucking, agriculture, manufacturing. As 
you know, the agriculture industry cannot function without 
reliable transportation.
    My question, Mr. Friedmann, would be can you give any sense 
of what you think the Committee can do, the work to engage 
either working with Transportation, T&I, to increase 
opportunities for young people? And I heard Mr. Duvall--and 
maybe I will just leave this as a comment at this point as we 
run out of time. How do we really make this nexus disconnection 
when there are so many job opportunities with the lack of our 
students engaging? There is some disconnect here that is going 
on.\2\ And I would leave it as a comment more, Mr. Chairman, 
and I yield back.
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    \2\ Editor's note: supplementary information submitted by Mr. 
Friedman is located on p. 260.
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    The Chairman. I thank the gentleman.
    Now, I am pleased to recognize the gentleman from 
California, Mr. LaMalfa, for 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman. My apologies for 
being in dueling committees here today so I have missed some of 
the testimony and such, so I hope I am not redundant in my 
questions. I wanted to throw this to Mr. Rosenbusch on 
fertilizer, of course, being a globally traded product that is 
of extreme importance to American ag, as we know, and in the 
yields that we have made over the years. We have had, of course 
the Ukraine situation, Russia, China, the whole works. And on 
my own farm, we enjoyed at least triple the prices of 
fertilizer of what we had been used to previously. Can you 
discuss a little bit on the current Administration's actions 
that are helping or harming the production and procurement of 
the fertilizer we need, because we know how heavy an influence 
energy has on the production of fertilizer, as well as just 
getting it here. And what more could we be doing to have our 
domestic production of it be a much higher percentage instead 
of relying on imports?
    Mr. Rosenbusch. Yes, thank you Congressman LaMalfa. And, of 
course, your district with rice producers didn't quite enjoy 
some of those same commodity prices. So it is especially 
painful when you look at what is going on with inputs. So I 
would say that, just repeating----
    Mr. LaMalfa. Half my district didn't grow anything last 
year because of the water supply, which is a whole other issue 
we might get to cover, but go ahead.
    Mr. Rosenbusch. Yes, well, water absolutely in California 
is a big issue. Again, I think just looking at the restrictions 
around permitting, critical minerals of potash and phosphate on 
that critical mineral list, and anything related to energy that 
I have already mentioned, are, of course, top of mind. I want 
to maybe spend a second talking a little bit about some of the 
U.S. Department of Agriculture's efforts here, and I would say, 
generally speaking, their message is correct, and that is how 
do we bolster more supply of fertilizer for the farmer? And I 
think many of our small- to medium-size enterprises and 
companies that were able to take advantage of some of those 
grants appreciated those, and it does spur on innovation.
    At the end of the day, however, $500 million does not 
necessarily open up a nitrogen plant that may cost $2-$4 
billion to build. What will really increase that capacity is 
looking at that permitting reform, looking at NEPA, looking at 
the energy policies that will ensure we have a safe and 
abundant supply of natural gas as that feedstock. That is where 
the numbers come from.
    Mr. LaMalfa. Do you believe that in this country, in this 
North American continent, that we have all the reserves of 
materials that we need to more than take care of our own needs 
in this country without imports? And could we competitively--if 
we could streamline a little bit some of this permitting or to 
flat out freeze and ban, would we be able to take ourselves 
with very little import need?
    Mr. Rosenbusch. So I----
    Mr. LaMalfa. Fairly competitively, on cost, as well 
availability? Sorry.
    Mr. Rosenbusch. Yes, no, great question. I mean, on the 
nitrogen phosphate side, yes. With the proper policies in 
place, I think we can definitely take advantage of providing 
those nutrients to the farmers. Potash, unfortunately, is a 
little bit of a different story. Those are all resource-
dependent of where it has been placed on this planet. And while 
we do have some potash reserves, we don't have nearly the 
supply that we would need----
    Mr. LaMalfa. Remind me where most of the potash is, sir?
    Mr. Rosenbusch. Canada is where the largest supply of 
potash is. And then, unfortunately, Belarus and Russia are two 
and three, over----
    Mr. LaMalfa. Yes.
    Mr. Rosenbusch. Nearly 50 percent of the global potash 
supply is in Belarus and Russia. And so we know why those 
potash prices are being impacted when you think about the 
restrictions around that.
    Mr. LaMalfa. Well, we ought to be able to get along with 
Canada, you would think. Yes. Thank you. Mr. Duvall?
    Mr. Rosenbusch. But I will say, though, that that then 
requires good transportation policy, rail, cross-border 
transportation, et cetera.
    Mr. LaMalfa. Yes, the railroads, we got to keep them 
working, and they have had their issues lately.
    So, Mr. Duvall, I just came from the Transportation and 
Infrastructure hearing where we talked heavily about the Waters 
of the United States regulation where we are working on a CRA 
to put it back in its place here instead of it regulating every 
ditch, every drop of water that falls from the sky seems to 
somehow belong to the government and in their jurisdiction. Do 
you think are we right to try and do the CRA right now or wait 
for the Supreme Court? Because where I see it, this WOTUS is 
extremely harmful right now. We only got a little time.
    Mr. Duvall. Yes, we are. We urged the EPA not to turn this 
new rule loose until the second case was ruled on, but they had 
made a commitment and had to come out with that rule. Are we 
wise to do it now or wait until the ruling comes out? I am not 
qualified to answer that question. All I know is we are hoping 
there is going to be a ruling out of Supreme Court that might 
help us and that we can change that ruling to where it would 
give us some clear rules so our farmers won't be burdened by 
the regulation.
    Mr. LaMalfa. Yes. Well, the hypocrisy of it--and I will 
yield here in a second, Mr. Chairman--is that we have a rule in 
place. EPA is trying to change it real quick and make it really 
worse for ag and for production to little good effect, and then 
wait for the Supreme Court. It seems to me if we just freeze 
everything to what it was without them put the new rule in and 
then gets a Supreme Court ruling on it, that might be pretty 
good. That is more or less what we are trying to do. So thank 
you for that. I yield back, Mr. Chairman.
    The Chairman. I thank the gentleman. I am now pleased to 
recognize the gentlelady from Illinois, Congresswoman 
Budzinski.
    Ms. Budzinski. Thank you, Mr. Chairman, and thank you to 
the panelists for being here today.
    My question is for Mr. Larew. I represent central and 
southern Illinois. We are lead producers of corn and soybean. 
So my question is really about biofuels, and if you can kind of 
further elaborate on what you have testified to and the impact 
on the development of biofuels that support rural communities. 
Like so many of the communities that I have the opportunity to 
represent, I often say that biofuels is kind of a three-prong 
winner: One, it can reduce the price of gas for consumers; two, 
it can reduce our carbon footprint; but also third, and really 
importantly, it supports our family farmers in central and 
southern Illinois.
    And so I was really excited about the recent announcement 
by United Airlines and the airline industry about how they are 
looking at utilizing biofuels in jet fuel. And so I was just 
hoping, Mr. Larew, if you could explain more about how these 
types of investments and support for biofuels can support our 
rural communities, create jobs, and other positives I think 
that it can get at for our agricultural communities.
    Mr. Larew. No, you are absolutely right. I think you said 
it best, actually, that biofuels in general are a win-win-win. 
It is great for our rural communities, again, talking a lot 
about those diversified markets and making sure that farmers 
have options. It returns that economic value back to the 
community. It also does reduce cost to consumers at the pump, 
which is obviously of great concern right now with inflation. 
And then on top of that, it is also a win for the climate and 
climate mitigation. If you want to look for ways to pull carbon 
out of the process right now, and particularly in the fuel 
space, replacing petroleum products with ethanol and biofuels 
in general is the most immediate way to do that. And so I think 
that this combination if you will, this triple win for 
consumers and the public, for those communities and those 
farmers and for sustainability and climate, I think puts 
biofuels in a great spot. And this diversification is going to 
continue. You made reference to sustainable aviation fuel. We 
certainly want to make sure that, as we do look at that, that 
our farmers are able to produce the feedstocks to go into that 
and that we don't have restrictions that limit that 
availability. So certainly, we are hopeful and we want to keep 
making that move, but there continues to be a bright spot on 
the horizon for biofuels in general. Thank you.
    Ms. Budzinski. Thank you. And since I have a little bit 
more time, maybe if I can ask an additional question. In my 
district, I get the opportunity to represent the University of 
Illinois. Archer-Daniels-Midland is in Decatur. We often talk 
about how the Decatur-to-Champaign corridor is kind of the ag 
tech corridor. And so one of my questions is really around 
agricultural research, and this is for really anyone on the 
panel. But, how can more investments in agricultural research 
in the programs that the University of Illinois looking at in 
precision farming, also further development in looking into 
carbon capture sequestration as an important technology, how 
can ag research and investment in that actually help then save 
money for our family farmers through that technological 
investment?
    Mr. Duvall. Yes, those research dollars that are spent in 
our land-grant colleges are so important to agriculture. It not 
only keeps us on the cutting edge and makes our farmers 
sustainable, it also discovers some of the basic discoveries 
that industry picks up and refines and brings on to the farm to 
help us do an even better job. So research and development 
dollars are crucially important.
    But I don't want to stop there. I want to talk about what 
extension does. Since my grandfather, the extension agent has 
been and still is the person that a small-, medium-sized farm 
depends on to get that knowledge from the land-grant college to 
the farm itself and that farm family.
    Mr. Larew. I would just add, quite frankly, that while the 
land-grant universities are an important spot for a lot of that 
research and making sure that we are keeping that research 
well-funded so that the innovation can be driven, I think that, 
as we look ahead to the next farm bill, looking for also ways 
that Congress can best spur that innovation as well, even with 
big projects, whether it is the DARPA kind of ag version of 
that, I think that there are opportunities in the farm bill to 
make sure that we are looking big picture as well as the more 
applied research.
    Ms. Budzinski. Thank you, Mr. Chairman. I yield back my 
time.
    The Chairman. I thank the gentlelady.
    Now, I am pleased to recognize the gentleman from South 
Dakota, Mr. Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman.
    Mr. Friedmann, you mentioned in your testimony the 
rulemaking proceeding before the FMC, which is flowing from 
OSRA, which passed last year, you alluded to the fact that rule 
promulgation proceedings are kind of always an opportunity for 
the stakeholders to relitigate areas that maybe weren't fully 
fleshed out by the legislation. Give us a sense on whether or 
not you think the rulemaking proceeding is going well, whether 
or not it is adhering to Congressional intent.
    Mr. Friedmann. Depends on which rulemaking. The rulemaking 
on what is the centerpiece is the detention demurrage, these 
extra charges that the ocean carriers are imposing on U.S. 
exporters, actually started off with a bang and was terrific. I 
mean, instead of waiting till they did the rulemaking to 
implement, they made it effective on the date you got that 
thing passed and signed by the President, which is 
unprecedented. So they made it effective right away.
    They are moving forward, and in fact, they have added to 
the very good criteria that you added to make sure the ocean 
carrier has the decency to tell the exporter what they are 
charging for those information elements. There were 12. There 
are now 21. In other words, they went further, which is great. 
There are some problems because maybe backsliding, they may 
decide that you can impose detention demurrage charges on 
truckers rather than exporters, so that needs to be watched. 
But that is one that is very good.
    On another critical element of your legislation where the 
carriers were refusing to carry U.S. exports, U.S. agriculture 
exports particularly and they would prefer to go back to Asia, 
which is our biggest market, empty with a lot of empty 
containers so they can pick up more of the stuff that we are 
wearing, all the import stuff, and bring it back faster, that 
left a lot of our agriculture stranded, and not just stranded 
at the port, stranded all the way back in the middle of the 
country, all throughout the center of the country.
    They went through a rulemaking pretty quickly on that. And 
we were pretty unhappy actually how quickly they moved through 
that without any intention, it didn't appear, to actually 
implement any limitations on the carrier's ability to refuse to 
carry exports. And now they are coming back and doing it again. 
To the extent you had a role in encouraging them to do that, we 
appreciate that, but we do need to have that continued 
oversight.
    Mr. Johnson. And I do think it illustrates the fact that 
there may yet be room, legislative space here, for another 
bipartisan victory as we look at maybe an Ocean Shipping Reform 
Act 2.0 to put some finer points on areas where maybe the FMC 
didn't quite hit the target.
    Mr. Friedmann. Correct. And, right now when we are not in 
this pandemic environment where there is not this huge volume 
of cargo coming in and overwhelming the ocean carriers, the 
ports, the railroads, the trucks, there is plenty of 
competition by the ocean carriers to carry U.S. agriculture 
exports and forest products right now. But, things will change 
and things will happen again where we are going to have to 
assure there is competition, and we need to make sure that 
there is a mechanism by the government to review ocean carrier 
plans to this consolidation so that we don't wake up in a 
couple of years when the economy turns again and there is more 
demand and there are even fewer ocean carriers around. Right 
now, as I said, not a problem, plenty of competition. All your 
folks in South Dakota and all through the country are loving 
the ocean carriers traveling from all over the world asking for 
their cargo. But that is the opposite of what you were 
addressing a year ago, right?
    Mr. Johnson. Well, a free market is many buyers and many 
sellers. Mr. Larew earlier was talking about kind of the 
robustness of the market and how that can have an impact on 
price certainly.
    Mr. Friedmann. Yes.
    Mr. Johnson. And there is no question about that.
    Moving to Mr. Larew, I had seen that the Biden 
Administration pivoted a little bit on FIFRA. They said new 
Administration, kind of a new approach on Federal preemption of 
pesticide labeling. I have some concerns about that. Where am I 
wrong?
    Mr. Larew. Yes, I don't know that you are wrong. We 
certainly share those concerns, and we are watching it very 
carefully. Really seeing the U.S. Solicitor General weighing in 
on questions of labeling, too, is I think giving a lot of 
questions about this Administration and how they are 
approaching pesticide access and how we might see a patchwork 
of regulations across the country. And I think in terms of from 
the farmers' point of view, this is of great concern and should 
be something that the Committee is looking at.
    Mr. Johnson. I am out of time, which is tragic because I 
have good stuff for Mr. Duvall and Mr. Brown, but I yield back, 
sir.
    The Chairman. I thank the gentleman for yielding back.
    Now, I am pleased to recognize the gentleman from Illinois, 
Mr. Sorensen, for 5 minutes.
    Mr. Sorensen. Thank you, Mr. Chairman. And thank you all 
for being here this afternoon. My name is Eric Sorensen, and I 
represent the farm families and the communities in Illinois' 
17th Congressional District. I was born in this district where 
farming is much more than growing crops and raising livestock. 
It puts food on the table, fuel in our cars, and clothes on our 
backs. As my fellow Illinois colleague Ms. Budzinski mentioned, 
our state, Illinois, is the leading soybean producer and the 
second largest corn producer in our country. That is why it is 
imperative that the upcoming farm bill preserves crop insurance 
programs and fortifies the supply chains that we saw break.
    It also must include robust investment in agricultural 
research that focuses on improving farm and community 
resilience so that we can address the challenges of resource 
quality and enrich productivity by growing more on less land 
with fewer inputs. Securing these provisions in the upcoming 
farm bill and ensuring that the $43.8 billion in the Inflation 
Reduction Act reaches our farmers and ranchers, this allows us 
to be responsible stewards of our land, our water, our 
livestock, while we foster a thriving agricultural economy.
    Located in my district, the Jakobs Brothers Farms have been 
in operation for three generations. They raise beef cattle, 
corn, wheat, soybeans, and rye. Sourcing parts for their farm 
equipment has been a challenge. And also the rising costs of 
pesticides and fertilizer are a great concern to them.
    Mr. Rosenbusch and Mr. Larew, what can Congress do today to 
strengthen our supply chains, to keep costs manageable and 
equipment parts accessible for farmers like the Jakobs?
    Mr. Larew. Again, it is a great question, and we could 
probably spend the better part of the day talking about that. 
But just to summarize very quickly, I would just again stress 
for the challenges that you presented, it is much about making 
sure that there is fair competition and access out there in the 
markets. When you have a fully functioning and competitive 
market, that makes sure that these laws of supply and demand 
that we talked about a lot here are actually working and that 
we have true competition. And in the absence of that, we run 
into all sorts of challenges. That is on top of any kind of 
supply chain disruptions that we have.
    So as far as actions that Congress can take right now, it 
is ensuring that we are doing everything possible to create 
that fair playing field out there, and then I would say on top 
of that, many of the things that Mr. Rosenbusch talked about in 
terms of creating access for even more domestic access.
    Mr. Rosenbusch. So for the sake of not repeating some of 
the things I have said, I would just point out that there is a 
piece of legislation in the Senate side that Senator Marshall 
has introduced to address this exact topic called the SUSTAINS 
Act. So if there is one thing Congress could do is I would love 
for someone here in the House to pick up the companion bill 
here and push that forward. That would make a huge impact.
    Mr. Sorensen. My background is being the local 
meteorologist. I talked about climate change on television such 
that I didn't realize that our farm families were the ones that 
were watching me. They couldn't believe anybody out there, but 
they couldn't believe Eric Sorensen for this, and they have 
come to me, and they have said, ``Eric, we trust that you are 
going to listen because so many people in Washington don't 
listen to us because we know things are changing, and we want 
to stop the politicization of climate.'' How can we all come 
together?
    Mr. Larew. I would take this opportunity to again make 
reference to the Food and Agriculture Climate Alliance. This is 
an alliance that really is unique in many ways. We have talked 
about the fact that Farmers Union is joined by Farm Bureau at 
that table, but also with the environmental community, with the 
food manufacturers community and forestry, as well as many in 
the conservation community have all come together. Many of the 
recommendations that we have made forward for the upcoming farm 
bill were all consensus. They were all focused on making sure 
that they were science-based, incentive-based, and really, 
where possible, create new market opportunities here. So if we 
are approaching climate with that kind of consensus and keeping 
a focus on the science, I think we would go a long way.
    Mr. Sorensen. Thank you, Mr. Chairman. I yield back.
    The Chairman. I thank the gentleman.
    Now, I am pleased to recognize the gentleman from Iowa, Mr. 
Nunn, for 5 minutes.
    Mr. Nunn. Thank you, Mr. Chairman. And good afternoon, 
team. I appreciate you being out here in Washington for this. I 
know we all like to be looking at getting back into the field 
as soon as it thaws here.
    President Duvall, I am going to be coming to you first, my 
friend. As a Member of Iowa's Third Congressional District and 
part of a family of century farmers in our home state, I have 
heard from countless farmers on the impact of inflation that 
has been highlighted here today. Iowa's producers and their 
ability to both feed and fuel, the supply chain disruptions, 
the labor shortages, Russia's recent invasion of Ukraine and 
the impact on fertilizer have all contributed to a significant 
hike in the price of crucial farm inputs like fuel. In just 2 
years, the average price of a gallon of diesel fuel has 
increased by 95 percent, making it hard for everybody to not 
only get to that field but also to be able to harvest and feed 
our families. And I have six kids, so that is a big impact.
    Additionally, in 2022, the average price of gasoline 
reached its highest level on record ever. As input costs 
continue to rise, farmers' abilities to ensure the continuation 
of abundant food supply decreases. Iowa is the number one 
producer of biofuels, providing a homegrown solution that 
positively impacts our environment, our economy, and American 
producers. However, the nation enters the summer of 2023 still 
having a ban on year-round ethanol blends that constrict our 
biofuel producers.
    So, Zippy, one of the things I want to ask you about is how 
would a year-round E15 relieve the current pressure on 
inflation and place our farmers and consumers in a better 
position?
    Mr. Duvall. Well, it would lower the cost to consumers.
    Mr. Nunn. Yes, sir.
    Mr. Duvall. It would bolster the rural communities where 
they are growing those soybeans and corn. And that is a simple 
fact. There is a--I call it--I am wearing my cotton tie today. 
There is an infrastructure around ethanol, and there is a big 
infrastructure around cotton. And it affects those rural 
communities extremely. And when you hold that back, it limits 
their ability to thrive and be better.
    Mr. Nunn. We are going to get you a corn tie to go with 
that cotton tie. Thanks, Mr. President.
    Mr. Brown, I would like to chat with you a little bit as 
well here. My home state gets the privilege of leading in egg 
production. But with a spike in egg prices, Highly Pathogenic 
Avian Influenza has received a great deal of attention in news 
reports across the country recently. I would like to talk about 
how that disease has affected specifically the chicken 
industry. Is there anything the industry, Congress, or USDA 
needs to be considering to best address that problem today?
    Mr. Brown. Thank you for your question. Between the egg 
layer industry, the turkey industry, and the chicken industry, 
we have been the least affected. A lot of that has to do with 
our biosecurity procedures, our housing, and our market, the 
way we move our birds to market more quickly. But what we can 
do is continue to support APHIS, who I will give high marks to 
for what they have been out there and doing and working with 
industry.
    Another thing that I would like to raise while we are here 
is that the chicken meat industry moves about 380 million eggs 
a year into rendering because up until 2009 those eggs were 
allowed to be used in commerce for egg hatching and 
pasteurization, so they are totally safe. But FDA came up with 
a rule in 2009 knocked us out. Well, 380 million birds a year, 
if they could go to pasteurization, can help you respond to 
your constituents when they are talking about the price of eggs 
being too high, that is a very high volume. And if we go back 
to 2009 when that rule was implemented to today, that is five 
billion birds. I think my staff tells me 5.3 billion eggs. So 
that is one thing this Committee could consider.
    Mr. Nunn. Mr. Brown, thank you very much. I will just end 
by saying to all the farmers, the ranchers, the growers, that 
you represent collectively on both sides of the aisle. Thank 
you much for your service and your advocacy for them out here. 
I hope that this Committee can do right by them. I wish you all 
a good growing season coming up.
    With that, Mr. Chairman, I yield back my time.
    The Chairman. All right. I thank the gentleman.
    Now, I am pleased to recognize the gentleman from New 
Mexico, Mr. Vasquez, for 5 minutes.
    Mr. Vasquez. Thank you, Mr. Chairman. My name is Gabe 
Vasquez, and I represent the Second District of New Mexico. We 
are storied dryland farmers that grow the prized Hatch chili 
that many of us put on our enchiladas across the country to go 
with some of that delicious chicken and livestock and beef, as 
well as onion, cotton, corn, alfalfa, pecans, and more.
    Today's hearing focuses on issues incredibly important to 
the farmers and ranchers in my district, and that is the rising 
cost of everything. New Mexico is a vital part of the American 
agricultural landscape, but our farmers in our rural areas are 
hit harder by inflation and uncertainty than in other parts of 
the country.
    I just recently met with dairy farmers in Dona Ana and in 
Luna Counties. And one of the most common problems I heard was 
their inability to access Federal programs or qualify for 
Federal programs and how expensive it was to keep their 
operations viable. The farms and ranches in my district are 
more than just farms and ranches. They are part of the fabric 
of our culture and our identity, and that includes our dairies. 
And so when they suffer, our entire district and community 
suffer.
    Now, specific to dairies, my question is here for Mr. 
Larew. Mr. Larew, in your opinion, when it comes to the Federal 
Milk Marketing Orders, do those needs to be reformed or 
reworked? And if so, what are some suggestions to rework them 
to make that program more viable for our existing dairy 
farmers?
    Mr. Larew. Well, I appreciate the question, and I would 
just--first, I am smiling a little bit only because I never 
anticipated being on this side of this table taking a question 
on Federal Milk Marketing Orders when I was in a past life have 
been on the back side there.
    But the question is, is that we do have a lot of work to do 
on Federal Milk Marketing Orders, and you talk about the 
dairymen and dairy producers in New Mexico, the challenges 
exist all across the country. I think much of the work that is 
also being done by other farm organizations in this space I 
think will help lead the way.
    The bottom line, though, for dairy producers, right, is 
making sure that they can cover their cost and actually be able 
to return a little bit of money there. So whether it is 
questions around improving Federal Order hearings and the way 
that voting currently actually limits individual farmer's input 
into that, as well as Order reform itself, I think that is 
something that we are very, very much looking forward to 
engaging this Committee on.
    Mr. Vasquez. Thank you, Mr. Larew. In a recent study 
conducted by New Mexico State University showed about 15 
percent loss of dairy farms over the 2 few years in New Mexico. 
A large part of that from what I have heard from producers is 
the increased feed and fertilizer costs, as well as supply 
chain disruptions. Under the Dairy Margin Coverage Program, 
very-small farms are eligible for assistance, but many farms 
are just large enough to not qualify for coverage, contributing 
to the decline in dairy farms in New Mexico and in my district.
    My next question is for Mr. Duvall. Mr. Duvall, does the 
Farm Bureau have an opinion of how the DMC program could be 
changed to include dairy farms in this coverage gap?
    Mr. Duvall. Well, first off, go back to my original 
statement, we want it to be modernized and upgraded, and in 
doing that, we think that would take care of that problem. And 
also, we a couple of years ago went to Federal crop and asked 
if we could create a product for dairy farmers that is out 
there right now that can be purchased for farmers to help them, 
and it took several years to get it done, but there is 
something over and above that.
    Mr. Vasquez. Thank you so much. Now, when the government 
calculates inflation, it only takes into account the prices 
that urban Americans pay into account. This means that 46 
million Americans living in districts like mine are invisible 
when we talk about the challenges of rising costs and 
inflation. To any one of our panelists, how can we address the 
disparity of rural versus urban inflation and provide relief 
and make good policy that helps support rural Americans that 
live outside of major cities?
    Mr. Larew. It is a good question. I am not sure I have--I 
would love to follow up as well.\3\ But, I appreciate you 
raising this question about the way that they measure inflation 
and that it typically certainly underrepresents, at best, the 
impact on our rural communities. In recent conversation with 
the Federal Reserve out of Kansas City, they were highlighting 
this question and are looking internally about ways to do that. 
But whatever we can do to make sure that the true picture and 
the true impact and cost in rural communities is able to be 
seen more clearly I think would certainly be something we 
support.
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    \3\ Editor's note: the information referred to is located on p. 
268.
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    Mr. Vasquez. Thank you so much, Mr. Larew. Thank you so 
much, gentlemen, for your advocacy and your support for our 
farmers and ranchers in New Mexico's Second District, I greatly 
appreciate it.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. I thank the gentleman. I now recognize the 
gentleman from Missouri, Mr. Alford, for 5 minutes.
    Mr. Alford. Thank you, Mr. Chairman. I am honored to be 
here today representing Missouri's farmers' and ranchers' 
95,000 farms in the great State of Missouri, number two in the 
nation. We recently introduced our first piece of legislation, 
the Amplifying Processing of Livestock in the United States 
Act, called the A-PLUS Act (H.R. 530). Our bill works to fix 
regulatory roadblocks, increasing meat processing capacity, and 
really allow livestock auction market owners to invest in 
smaller regional packing facilities.
    President Duvall, I would like to start with you today. In 
your testimony, you talked about several regulations that 
burden our farmers and ranchers instead of really helping them. 
In your estimation, how would the A-PLUS Act modernize some of 
these outdated rules and regulations?
    Mr. Duvall. Well, one, I am a cow-calf producer, and they 
are the last ones to get talked about. But I promise you that 
feeder and that packer can't do it without us because we are 
producing the calves for him. We need transparency to be able 
to see what the market is doing so that we can better market 
our animals out there.
    But to get to your question, that Act allowing those 
livestock markets to be able to participate in, we encourage 
that growth of that middle- to small-size processor. And we 
think it would tremendously help our local cow-calf guys and 
our local, small family feeders to be able to utilize that. And 
I guess the regulation around that would be whether or not 
there are enough Federal inspectors to go around to doing that, 
and are we really using technology to its fullest in that 
location? So I think there is a big question around that.
    Mr. Alford. Thank you. Very good, sir.
    Mr. Twining, in your written testimony, you mentioned that 
county-level bans on crop protection tools are ineffective, 
inefficient, and overly broad measures. It is something that 
farmers in our district are facing each and every day. Just 
this past year, there was a county-level ban on the use of 
Enlist One and Enlist Duo in 200 counties in America, including 
five in our district due to the presence of the American 
burying beetle. The EPA did decide to lift the ban in 134 of 
those counties in March of 2022. The problem was there was a 
lot of confusion and uncertainty in that among the producers 
right before the start of the growing season. So can you talk 
more about why county-level bans are a bad idea to begin with?
    Mr. Twining. This is something that, unfortunately, we face 
frequently, and it is very disruptive to business. You can't 
operate in an environment where you go from one county to the 
next and the rules are different. And there is not transparency 
on some of these and why it is important that the EPA's 
Endangered Species Act process include the end-users and be 
flexible for local conditions and specific cropping systems. 
The best analogy I could give you if you were trying to teach a 
high school class of drivers how to drive and every county had 
a different set of rules and regulations of the road, you would 
never be successful. We can't run a business in an environment 
like that, and neither can growers or producers.
    Mr. Alford. Very good point. My last question goes to Mr. 
Friedmann. You had talked about earlier--and I am sorry we are 
in and out as Congresspeople because we are in three different 
committees at one time. We are trying to spin some plates here, 
but these are all very important issues. You mentioned earlier 
in your testimony there are ten ocean carriers in existence, 
right? None of those are U.S.-owned. Is that what you said? How 
many are owned or controlled by the Communist Chinese 
Government?
    Mr. Friedmann. There are two major [inaudible].
    Mr. Alford. So 20 percent. We are also blessed to be on the 
House Armed Services Committee, and this information that has 
come out--really, it is been around for several years now--that 
China is the number one threat to our national security. If we 
were to have a conflict with China in the next decade or so, it 
is largely going to be a sea war. What impact would that have 
on the distributions of goods coming in and out of America on 
these transport ships?
    Mr. Friedmann. I think we have adequate carriage, the rest 
of the world does, because all these other ocean carriers are 
owned by European countries and Taiwan as well and Japan, 
Singapore. So, I think there is adequate coverage because, in 
fact, I don't think between COSCO and OCL that they have quite 
20 percent because one of those--COSCO is big. OCL is much 
smaller. So I think there is adequate coverage if we needed to 
with the other carriers. And there is some additional capacity, 
as we learned during the pandemic, that will come in to service 
if there is a demand for it.
    Mr. Alford. Thank you. Thank you to all our witnesses. 
Thank you for being here today. Mr. Chairman, I yield back.
    The Chairman. I thank the gentleman.
    I am now pleased to recognize gentleman from Illinois, Mr. 
Jackson, for 5 minutes.
    Mr. Jackson of Illinois. Thank you, Chairman Thompson, 
honored to be on the Committee, and Ranking Member Scott. This, 
too, is my first Agriculture Committee hearing, serving 
Illinois' First Congressional District in a district that is 
seeing an expansion of a food desert that we have borne the 
brunt of the consolidation efforts in the food industry. Mr. 
Larew, could you please speak to that and how we can turn this 
trend around?
    Mr. Larew. Yes, well, food deserts wherever they occur, 
remain an enormous challenge. We know that in rural America in 
lots of places where farmer communities have so far to drive to 
get access to any sort of food grocery store of any size. The 
larger question here from our perspective is, again, it is a 
theme that we are striking. But this question of a focus on 
consolidation and efficiency at the expense of making sure that 
there is a diversified access, in its case, access to food in 
these food deserts, remains an important challenge. National 
Farmers Union is a proud member of the Alliance to End Hunger 
where we work closely with a number of private companies, 
public companies, faith-based organizations to support, again, 
on these big challenges. As we look ahead to the next farm 
bill, we are certainly willing to work with you and others to 
find ways to alleviate the challenge and the problem.
    Mr. Jackson of Illinois. Thank you. A question to the 
general panel, are any of you concerned in your industry with 
foreign investment in our agricultural industry?
    Mr. Larew. We have 50 percent of our beef in the country 
being processed by Brazilians. We have a large percentage of 
much of the rest of our protein being sourced by either 
Chinese-owned companies, et cetera. The question around 
consolidation in agriculture is not just one about monopolies 
or near monopolies and the impact that that has on the free 
market in competition, but it is also--we keep throwing around 
this national security and food security, which absolutely this 
is about. And so to have so much of that processing and that 
much control in the hands of others I think raises big 
questions.
    Mr. Jackson of Illinois. Last question, do foreign 
investors have a cost and a competitive advantage structurally 
against our small local farmers in the United States? And if 
so, what can we do to level the playing field? Well, for 
example, I have seen in catfish prices and other things that 
are shipped in from China and other places, that how are they 
able to ship food back into the United States? That is a 
scavenger fish. We are importing food from so many other 
countries. Is there a structural competitive advantage that 
they share over American farmers?
    Mr. Duvall. So I would say that, yes, sir, there is in 
certain areas of the world where we have to abide by certain 
regulations as put out by the Federal Government. Those 
countries may or may not have and whether or not we have the 
capability to really inspect to make sure they are abiding by 
the same rules that we are, and I would doubt that very 
seriously. I don't have any proven statistics to prove that, 
but there are a lot of regulations we have to deal with, 
especially when it comes to fruits and vegetables and what they 
have to do to send it on to the market. And there are a lot of 
competitive fruits and vegetables coming in here and being 
dumped on our market and causing real harm to our farmers.
    Mr. Brown. Sir, and I would add that a lot of the 
competitive disadvantages that we face against foreign 
competitors are caused by our own government. I mentioned to 
you earlier or to the Committee about the line speed issue. We 
got our hands tied behind our back while other nations can 
operate at 30 percent more.
    And, Mr. Chairman, I am not looking to pick a scab or start 
another war at this table or in this Committee room, but talk 
about regulations, and everybody loves the biofuels and it all 
sounds great and dandy, but when that was put forward in 2007 
in Bush 43's Administration and put into effect in 2008, one of 
the largest drivers of concentration in the chicken industry 
was the ethanol rule. Thirteen companies in 2 years, gone. That 
is all I have to say about it.
    Mr. Jackson of Illinois. Thank you. I yield my time back. 
Thank you, Chairman Thompson.
    The Chairman. I thank the gentleman. Now I am pleased to 
recognize the gentleman from Wisconsin, Mr. Van Orden for 5 
minutes.
    Mr. Van Orden. Thank you, Mr. Chairman, and thank all of 
you for coming today. You guys are absolute rock stars. I 
appreciate it greatly.
    I want you to indulge me for a second so that I can frame 
this problem set from a slightly different perspective. I 
firmly believe that food security is national security and that 
the Biden Administration is jeopardizing our national security 
with their war on energy that is making it more difficult for 
our farmers to feed the world, our nation, and that includes 
our military. Napoleon Bonaparte famously said that an army 
marches on its stomach, and that is a true statement.
    Mr. Rosenbusch, I would like to address this to you and 
would like your thoughts. The fertilizer market appears to have 
stabilized, but with the current international environment and 
taking in mind your quote, fertilizer is a globally traded 
commodity subject to international pressures and geopolitical 
events, I do not have confidence that this market will stay 
stable. In your written testimony, you presented several 
different charts demonstrating that China and Russia and in 
your verbal statement, you said Belarus, with the production of 
potash holds a strategic advantage over the United States of 
America with their fertilizer production and distribution 
around the world. You point out that 90 percent of the 
fertilizer is used outside of the United States of America. And 
my concern is that through foreign aid the United States is 
providing food products--beans, rice, and corn--to the world 
where China and Russia are following the adage of give a man a 
fish, you feed him for a day, teach them how to fish and you 
feed them for a lifetime.
    So my question to you is this. Do you believe if we were to 
onshore our fertilizer industry and production capacity, 
understanding that the majority of potash will have to come 
from Canada, who are our friends, do you believe that we could 
potentially remove a strategic advantage of China and Russia on 
the world stage and increase our strategic advantage globally? 
And if so, how would you propose doing so?
    Mr. Rosenbusch. Yes, great question. I will just point out, 
it has been interesting to watch the China decisions around 
their export restrictions and a lot of speculation as to why 
they did that. Obviously, the line is to ensure that their 
farmers have the fertilizers that they need.
    Mr. Van Orden. Right.
    Mr. Rosenbusch. So if you apply that to our thinking, I 
will say that we are a net importer of fertilizer, and we do 
need that supply in order to give farmers the nutrients that 
they need, while also facilitating expansion of our own self-
reliance in fertilizer. We talk about the capital-intensive 
nature of these investments, and the markets are cyclical. I 
mean, we went through a period of years before where we 
currently are where a lot of fertilizer companies--and I am 
sure Mike can comment to this, too--were losing a lot of money 
and were not profitable. So I think that cyclical nature of the 
industry is common. And of course, we are at a different swing 
for it right now. But the key is we have to have that 
regulatory certainty so that we can make those investments in 
these capital-intensive facilities so that we can increase our 
own direct domestic capacity.
    Mr. Van Orden. Yes, sir. I understand that we need 
regulatory certainty. But would you potentially propose a large 
capital investment in the domestic fertilizer industry?
    Mr. Rosenbusch. By the government?
    Mr. Van Orden. Yes.
    Mr. Rosenbusch. Well, I think our companies are adequately 
equipped to make those investments. I don't know that we need 
to nationalize fertilizer manufacturing and keep that as a free 
market, free enterprise system. I think you can just look at 
India and see the challenges when you nationalize a fertilizer 
system. So they procure all of their nutrients as a central 
government, then subsidize it and provide it to the farmer. 
They particularly had a really difficult time because China 
locked them out of the market, and then they had to go source 
all of that on a global basis, in addition to what they do.
    Mr. Van Orden. That is correct.
    Mr. Rosenbusch. So I----
    Mr. Van Orden. So you have confidence that the private 
industry would be able to produce enough capital in order to 
onshore our fertilizer industry in case of a national emergency 
or in order to give us a strategic advantage over China and 
Russia globally. Is that correct?
    Mr. Rosenbusch. I believe that they can make those 
investments if the permitting and the things that they need to 
reach those investments can be facilitated with the caveat that 
they are resource-dependent. We don't have potash reserves 
here, and we will continue to rely on our friends from the 
North.
    Mr. Van Orden. Right. Well, as a conservative Republican, I 
appreciate your point of view. I yield back.
    The Chairman. I thank gentleman for yielding back.
    I think, as most folks are aware, votes are to be called. 
There will be two votes called at 1:30. The first one will be 
15 minutes or so. So even calculating that it is not always 
just 15 minutes, I apologize. I want to get everybody an 
opportunity to ask questions, but we are going to reduce the 
time to 4 minutes. And I apologize for that, but that is the 
result of an outstanding and great participation today, which 
is much appreciated.
    And so I am pleased to recognize the gentleman from Texas, 
Mr. Casar, for 4 minutes.
    Mr. Casar. Thank you, Mr. Chairman. And thank you to the 
witnesses for being here today. And I want to keep working off 
the question that my friend Congressman Jackson brought up. I 
represent Texas Congressional District 35, which stretches from 
east Austin down to the west side of San Antonio. And my 
district includes several food deserts that have made it 
difficult for people in my community to access high-quality 
food. We also have a lot of folks that are working class and 
low-income in some of the most expensive areas of my state. One 
example is Del Valle community, an area of thousands of people 
that does not have a single major grocery store in it.
    So, Mr. Larew, in your written testimony, you warn about 
the increasing impact of consolidation, declining competition, 
and how that is having impact on food deserts, food prices, and 
food access, impacting communities like those that I represent. 
Can you talk us through what Congress can do and what this 
Committee can do to reduce consolidation, promote food access, 
lower costs, and support communities like Del Valle where it is 
real expensive to live there, food costs going up has a real 
impact, and they don't even have a major grocery store.
    Mr. Larew. Yes, thank you for raising the issue again here. 
I think that this Committee plays an important role in making 
sure that there is open and fair competition, even within this 
Committee's jurisdiction, whether that is everything from 
making sure that there are fair rules and fair treatment within 
the livestock sector, for example, through the Packers and 
Stockyards Act, making sure that we are investing in additional 
processing and food distribution chains out there. All have 
these chains, whether we are talking about the groceries or the 
suppliers, to the groceries down to the processors, producers, 
ultimately finding ways to increase the investment in building 
out that infrastructure is going to be critical.
    Ultimately, the big questions are going to be beyond this 
Committee's scope in the case of the antitrust laws that, 
again, have been on the books for well over 100 years. But it 
needs some enforcement review that we haven't seen for several 
decades. So it is a big question, but I think that there are 
clear things that this Committee can be doing to be effective.
    Mr. Casar. Thank you. Mr. Chairman, I yield back.
    The Chairman. I thank the gentleman and now pleased to 
recognize the gentleman from Ohio, Mr. Miller, for 4 minutes.
    Mr. Miller of Ohio. Thank you. Thank you, Mr. Chairman. And 
thank you to the Ranking Member, and thank you for all the 
panel today and your honesty.
    Farming provides one out of seven jobs in Ohio and is the 
number one contributor to our state's economy. However, Ohio 
and U.S. farmers continue to face economic uncertainty due to 
unprecedented inflationary input costs, diminishing trade 
opportunities, and ever-increasing regulatory framework at a 
time when our nation's agricultural producers are called to 
meet global food insecurities.
    Mr. Duvall, you also raised challenges for the American 
agriculture in your testimony detailing beginning with losses 
experienced from the trade war with China, pandemic lockdown, 
supply chain disruptions, and record input costs. Farmers and 
ranchers have been facing unprecedented volatility in recent 
years. I note that USDA has recently projected total U.S. 
exports to decrease eight percent over the next 10 years, 
causing more uncertainty. Also, United States dairy farmers are 
being impacted by unfair trade practices as Canada, which is 
our friend to the North but sometimes not so much, is not 
living up to its own obligations under the USMCA despite a 
negative ruling in a dispute resolution process concerning 
dairy market access. Exports are critical to the economic 
viability of us dairy farmers today with \1/6\ of all U.S. milk 
is sold commercially around the world and dairy products. When 
exports increase, the entire supply chain benefits.
    Ohio State University has correlated that inflation and 
high food costs can have an impact on the United States' 
agricultural trade as when commodity input costs rise and food 
prices increase, trading partners pull back purchasing, 
therefore reducing U.S. trading opportunities for United States 
farmers.
    So in conclusion, can you share what the loss of trading 
opportunities may mean for the American agricultural sector and 
every American and individual across this world?
    Mr. Duvall. It would be tremendous, and I can't speak 
exactly to dairy, but every third row of corn and every third 
row of soybeans either go to production of fuel that is going 
to be exported somewhere else. Being able to trade with other 
countries opens up the market for us to be able to be more 
productive, more resilient, and more sustainable on our farms. 
And we have depended on trade for many, many years. And when it 
is disrupted like we have seen here lately, especially before 
the Ocean Shipping Reform Act, it cost farmers and everyone 
tremendous amounts of money because exactly what my friend here 
to my right said, when we can't ship it overseas, it will go 
back into our local market and depress the prices to farmers.
    Mr. Miller of Ohio. Thank you very much. And I don't mean 
to pick on you, but, Mr. Duvall, in your testimony, which I 
enjoyed a lot, you state inflation is slashing the purchasing 
power of American consumers and weakening the economy, which 
both undercuts demand for farm products and lowers prices. 
Inflation is driving up the price of groceries in Ohio. We see 
it every day in the Seventh District. Increasingly pinching 
Ohioans' budgets, farmers and consumers alike are suffering 
from spiking food prices. As USDA reports, food at home prices 
increased by 11.4 percent in 2022, it is incredible, with costs 
continuing to rise 7.1 percent this far in 2023.
    Mr. Duvall, can you elaborate on how inflation can increase 
the cost of inputs, which can reduce farmers' economic 
viability, and in the end make it more difficult to provide 
affordable food for our families and to make it affordable for 
all of you to help us?
    Mr. Duvall. Good observation. And if you just take a family 
and what you have to purchase to get that family through the 
day and compare it to what a farmer has to spend to produce 
that food that they are going to produce, I mean, it is 
tremendous of what percentage increase that we have seen from 
fertilizer to fuel and everything that we do, and then you 
compound it with over-regulation, it even makes it more 
difficult for farmers to survive. And in that increase the food 
people are consuming or paying for food at the grocery store, 
very little if none of that is getting back to the farmer.
    Mr. Miller of Ohio. Thank you, sir. And, Mr. Chairman, I 
yield back.
    The Chairman. I thank the gentleman. I am now pleased to 
recognize for 4 minutes the gentlelady from Hawaii, Ms. Tokuda.
    Ms. Tokuda. Thank you, Mr. Chairman. I know we have a lot 
to talk about ag. I would welcome all of you to come to my home 
State of Hawaii anytime, and we can show you what ag is all 
about.
    The Chairman. I accept. I think you will get some 
volunteers.
    Ms. Tokuda. There we go. Thank you very much to the 
witnesses for being here. According to the U.S. Department of 
Agriculture's Economic Research Service, about 40 percent of 
farmland in the United States is rented, most of it owned by 
landowners, as you know, who are not actively involved in 
farming. In September 2022, a survey of the National Young 
Farmers Coalition, young farmers named finding affordable land 
for purchase as one of the top barriers and challenges last 
year.
    Now, to all of you, the cost of land and rent, especially 
in my home State of Hawaii, is a barrier for both new as well 
as longtime family farmers, new farmers, and a major expense 
for small family farms who lease their lands. Do any of your 
organizations or any of you here at the panel have any concerns 
about private equity and nonagricultural corporate investors 
purchasing agricultural land? As we know, Bill Gates owns a 
majority, a vast majority of the farmland here in the United 
States. What do you feel has to be done? What is the solution 
for farmers that are looking at the cost of land as a barrier?
    Mr. Larew. Okay. I will go ahead and start because it is a 
huge question, and I am really glad that you raised the 
question here. But particularly for those new entrants and 
those young and beginning farmers, land access and land 
affordability is absolutely paramount. And it is been an issue 
for a number of years obviously. And I think we are all 
continuing to look for what is probably a whole collection of 
solutions in this process.
    But I think that there are a few things that we can 
continue to look at. There are some states, through their 
Departments of Agriculture and their state legislatures, that 
have been creative in finding ways for perhaps retiring or 
farmers who want to make that transition, creating incentives 
and reducing some of the barriers that currently exist out 
there to allow these young farmers to come into the business 
perhaps without that overhead.
    I think that this other question that you raise about those 
who are farming on rented land raises a lot of other questions. 
And I brought it up a number of times here, but I think Zippy 
and I are proud of the work that the Food and Ag Climate 
Alliance has done on the question of rented land. Oftentimes, 
there are disincentives for folks to participate in some of the 
conservation programs. And so whether we are talking about new 
and beginning farmers and those looking for land access or 
those who currently rent land, making sure that we are finding 
solutions to all those challenges.
    Ms. Tokuda. Zippy?
    Mr. Duvall. And one of the things, I think it was in the 
recommendations of the factors that we increase the lending 
limits at USDA on the young and beginning farmers because those 
limits aren't the reality of what it would cost to try to go 
into business. And it would be an extremely small farm if 
limited to the limits they have on it. Farm land ownership is a 
discussion that farmers have among themselves, and it crosses a 
line of private property rights and who should be able to tell 
me, well, I can sell it to the highest bidder, regardless of 
where they come from, is a big debate. But we should, as a 
country, be concerned about what the ownership is of our 
farmland because it goes back to who is actually feeding us.
    Ms. Tokuda. Absolutely. I will say, especially in Hawaii 
where we are very land-limited this is a big issue for us as 
well. I know I am running out of time, but I would put out 
there that my concern in a state that is hit by drought, 
flooding, wind damage, volcanoes, I am concerned about current 
disaster aid programs and Federal crop insurance actually being 
effective. Does it makes sense for farmers given how some of 
the reimbursements are done? Sometimes it is not a disaster 
declaration, but it is a disaster for our farm, so I think we 
have to make sure we are flexible and nimble enough to make 
sure we take care of those who take care of us, so thank you 
for being here.
    Mr. Chairman?
    The Chairman. I thank the gentlelady.
    Now, I am pleased to recognize the gentlelady from Florida, 
Mrs. Cammack, for 4 minutes.
    Mrs. Cammack. Hello.
    The Chairman. Who didn't quite make it to her chair. 
Whoops.
    Mrs. Cammack. [inaudible]. Okay. Can you hear me? Okay. 
They have us packed in here like sardines.
    As the lone Republican representative for the Sunshine 
State--I can't believe I am doing this standing, Mr. Chairman. 
This is a first. We are faced with a couple of unique issues. 
As so many of you guys know, Florida is home to 300 specialty 
crops, and one of the things that is particularly concerning is 
the fact that we don't have a seasonal or perishable provision 
as part of the USMCA agreement. I am hopeful that we can 
rectify that in the upcoming farm bill.
    And I know we have had a lot of discussion today, very 
productive, about the regulatory I will call it regime because 
to me that is really what it is. I am going to go down the 
line, give you each a crack at your favorite regulation. Mine 
is WOTUS because I think everybody wants to take WOTUS out.
    But while you all are thinking about that, I do want to 
highlight that as one of the token Millennials in not just this 
Committee but in Congress, as someone who grew up in 
agriculture, it is very concerning the fact that we do not have 
that next generation really primed and ready to go because it 
is such a high barrier to entry. So I do want to highlight the 
fact that I think there is opportunity for us to work on 
streamlining some of these projects and programs.
    And with that, I will start with you, Mr. Duvall, your 
favorite regulation that you would like to see taken off the 
books and why?
    Mr. Duvall. The regulation around guestworker programs and 
what we had to go through to get the labor that we need to get 
our farms operated and stay sustainable.
    Mrs. Cammack. Things like adverse wage effect, housing, 
transportation, that whole gamut?
    Mr. Duvall. And the list goes on and on and on.
    Mrs. Cammack. It is almost like you are making the case for 
a new guestworker program to be housed under USDA.
    Mr. Duvall. You took the words right out of my mouth.
    Mr. Friedmann. The hodgepodge of truck weight regulations 
around the country. You cannot drive a truck across the United 
States without stopping and getting new permits and revising 
the number of axles on your truck as you move across.
    Mrs. Cammack. Would you say 88,000 pounds would be the 
truck weight that would be acceptable for interstate commerce?
    Mr. Friedmann. Why don't we do what Canada does and has for 
years and Oregon and Washington and many states, 105,500 with 
an extra axle. The truck brakes faster and straighter under our 
current law.
    Mrs. Cammack. All right. Perfect, thank you.
    Mr. Rosenbusch. Well, NEPA seems like the easy one, but I 
am going to go with the Florida one and say phosphogypsum 
reuse.
    Mrs. Cammack. Okay.
    Mr. Rosenbusch. And if you don't know what phosphogypsum 
is, are that we have to stack it as the only country in the 
world. Somebody else can ask that question next.
    Mrs. Cammack. Excellent. Thank you.
    Mr. Twining. I would say regulations around energy and the 
use of renewable fuels and maintaining a kind of all-the-above-
energy policy.
    Mrs. Cammack. Okay.
    Mr. Brown. I would say the GIPSA rules and contracting. I 
hear so much about consolidation. Our industry is--the top four 
is 54 percent. The other protein industries are over 80 
percent. If I took half of our industry, added 15 more 
companies to that, we still wouldn't hit that margin. And I 
hear about concentration, and I think about it. And maybe the 
only way it will resonate with some people is this way. You 
want a job in high tech, you go out to Silicon Valley. You want 
to be a movie star, you go to Los Angeles. You want to get the 
chicken business, you can do it in over 30 states in America, 
so please join us.
    Mrs. Cammack. Never heard that one before, but that is 
smart. I like that.
    Mr. Larew. Absolutely. Well, I will stay on this theme but 
actually flip it around and say that the existing regulations 
right now in the Packers and Stockyards Act are what needed to 
change. They limit individual farmers' and growers' abilities 
to challenge deceptive practices, to challenge retaliation, and 
for competitive injury and harm within this consolidated 
market, individuals have to prove harm to the entire industry. 
Nobody who wants to seek remedy should have to go through that. 
Therefore, we need to change that.
    Mrs. Cammack. Suffice it to say that the regulatory regime 
is killing agriculture as a whole and it needs to change 
dramatically, correct? Let the record reflect that every single 
one of the witnesses is shaking their head yes. I yield back.
    The Chairman. All right. I thank the gentlelady. We were 
going to keep going here, but we will--because of the interests 
of Members, which I really appreciate, the folks come back and 
we will recess at some point. We just have two votes, but we 
are not going to recess yet. We will keep going. And I am 
pleased to recognize my friend and the gentleman from 
California, Mr. Carbajal, for 4 minutes.
    Mr. Carbajal. Thank you, Mr. Chairman. My staff challenged 
me to walk up the stairs, this old Marine, to remind me that 
those were a long time ago when I served in the Marine Corps.
    Since 2019, my colleagues and I have worked in a bipartisan 
manner to address the workforce challenges that producers 
throughout the nation are facing through passing the Farm 
Workforce Modernization Act in the House twice (H.R. 5038, 
116th Congress, H.R. 1603, 117th Congress), the Senate 
introduced a companion bill that would have provided much 
relief, specifically to H-2A users dealing with adverse effect 
wage rate, AEWR, increases. This may have been the closest we 
have ever come in a long time to seeing ag labor reform done in 
decades.
    Last night, the Department of Labor put out a final rule 
for AEWR. There is much discussion today about regulations that 
are causing harm to farmers, who are already dealing with the 
higher input costs, supply chain disruptions, and other issues 
on the topic of inflation.
    Mr. Duvall, not to pick on you. But my question to you is 
why did the American Farm Bureau Federation not support the 
bipartisan effort to pass the Farm Workforce Modernization Act 
at the end of last year, which would have superseded the 
provisions of the recent AEWR rule and provided farmers with 
much relief on the labor front through a modernization H-2A 
program? I know many of the Farm Bureaus the largest ag 
producing state in the nation, California, supported it. The 
U.S. Chamber of Commerce supported it. The farmworkers UFW 
support it. So I was, to be quite honest with you, just quite 
baffled why we couldn't get over the line with the U.S. Farm 
Bureau supporting it as well.
    Mr. Duvall. So we have a serious problem with AEWR and the 
formula that they use to set that even though we were in favor 
of them freezing it. That was a good intention to freeze it for 
1 or 2 or 3 years or whatever it was. We don't think that was 
enough. We think that the AEWR needs to be reformulated and 
make it fair to the worker and make it fair to the employer. 
And no one size fits all. All of the country is different, and 
it should be handled differently.
    The second thing is private right of action. That bill put 
farmers at more risk and more regulation than it was before.
    The third thing is it allowed for year-round workers, but 
it had a cap of I think it was 20,000 on it. There are 100,000 
jobs needed in just dairy alone today. So we didn't have a 
problem with having year-round workers, but we did have a 
problem with the cap being there. And then we need to be 
assured that we have a guestworker program in place and have it 
successful and run multiple years before we are asked to do E-
verify. And E-verify, as most people know, there are a lot of 
undocumented workers that work in agriculture. Those 
undocumented workers have probably been in a lot of these 
communities for 10 or 15 or 20 years. There needs to be some 
way to allow them to stay and continue to work in agriculture.
    Mr. Carbajal. Thank you. I would just say that I do believe 
in Santa Claus and I, too, want perfect legislation out of 
Washington, but sometimes that is the enemy of good, and I 
think that was a good bill, and it was an unfortunate loss of 
an opportunity.
    Mr. Larew, you noted that President Biden's Executive Order 
and USDA actions have minimized supply chain disruptions by 
increasing capacity at ports. Can you expand upon how these 
legislative initiatives have benefited shippers of U.S.-grown 
agriculture commodities?
    Mr. Larew. I had stepped out for just a quick minute there. 
If you could, please, I realize that we are almost out of time 
here, but I am happy to follow up unless you want to restate 
the question. I am sorry.
    Mr. Carbajal. Feel free to just send in your answer.
    Mr. Larew. Absolutely.
    Mr. Carbajal. Mr. Chairman, with that, I yield back.
    The Chairman. I appreciate the gentleman. My good friend 
from California, we work closely together, I tried to play the 
role of Santa Claus and offer an amendment that was supported 
by the Farm Bureau that would have made some simple--and I 
supported that bill knowing that it needs to be fixed for it 
ever to be able to go forward and offered an amendment. 
Unfortunately, it was done under a closed rule in the 117th 
Congress out of the House. And so I think we have some 
components that we can all work together because without 
workforce in agriculture, we are going to have food insecurity.
    Now, I am pleased to recognize the gentlelady from Texas, 
Congresswoman De La Cruz, for 4 minutes.
    Ms. De La Cruz. Thank you, Mr. Chairman, for hosting this 
important hearing today. Farmers today are facing more 
uncertainty than ever before. Production costs are on the rise, 
and there are supply chain issues. Labor costs are up, and on 
top of all of this, we have experienced record inflation. Look, 
it is clear that we need to get things back on track. In a 
December Ag Economy Barometer published by Purdue surveyed 
producers and listed high input costs and rising interest rates 
as top concerns for farmers.
    Presidents Duvall and Larew, can you speak to how these 
issues are affecting your members?
    Mr. Duvall. Yes, a rising interest rate is making it very 
difficult for our farmers to borrow the capital to either 
improve their farms or buy new machinery, update their 
machinery or even get enough capital to put a crop in the 
ground. When interest rates goes up, it is crushing to farmers 
and ranchers. And as inflation hits when it affects fertilizers 
and fuels, that cost of production, that is the biggest cost 
that we have outside of labor. And it depends on what you are 
growing as well. Fuel, the labor is the biggest cost that you 
have. As inflation moves forward, all that puts our farmers in 
a bind, too.
    And I will defer to Rob.
    Mr. Larew. Yes, no, I would echo much of what was already 
said, and just say that that effect and the impact, of course, 
is strongest on some of the smallest- to medium-size farmers 
and producers out there. And there are families that are really 
struggling with the very thin margins. But it is also--we have 
made reference to the young farmers and beginning farmers and 
so forth, and so any additional cost and impact has really a 
damaging effect. That cost and inflation also impacts 
everything, a lot of the programs at USDA in effectively 
diluting the impact, whether it is a cost-share program or 
something like that that has impacts and raising the cost of 
everything and creating a bigger gap between what a farmer has 
to contribute to for those increased costs.
    Ms. De La Cruz. So are you finding that your farmers are 
actually sowing less so that means perhaps in the future there 
won't be as much that they are yielding as far as crops are 
concerned?
    Mr. Larew. Oh, I would always say that farmers and ranchers 
are some of the most innovative and creative folks out there, 
right? And so if they can produce and I think manage to produce 
even more, but when you have these higher costs, I think it 
does have the kind of dampening effect of keeping that 
innovation at the same rate.
    Ms. De La Cruz. Excellent. Thank you. Now, not long ago, 
America was the largest energy producer in the world. Oil and 
gas--I am from Texas, so those are two important resources 
there--the raw materials for diesel fuel were abundant and 
affordable. However, through the Biden Administration, they 
have paused significant domestic production of oil, while 
limiting and disincentivizing investments in American energy, 
infrastructure, and refining capacity.
    President Duvall, how has the Biden Administration's energy 
policies affected agricultural producers' access to reliable 
and affordable supply of diesel fuel?
    Mr. Duvall. Yes, it has tremendously affected it, and just 
like we were talking about, it really goes right down to the 
bottom line of our farmers when they had to pay more for it. 
When we were energy-independent--and I am proud to say that 
agriculture played a major role and played their part in 
ethanol and biodiesel production off our farms. Our country was 
stronger, our farmers were stronger, and we had a better chance 
to be sustainable.
    Ms. De La Cruz. Thank you. I yield back.
    The Chairman. I thank the gentlelady. Votes were called 
about 6 minutes ago, and so we are going to hear from one more 
Member, and then we are going to recess for anyone--I encourage 
folks to come back. But we are going to hear from one more 
Member, so I am pleased to recognize the gentlelady from 
Washington, Congresswoman Gluesenkamp Perez.
    Ms. Perez. Thank you, Mr. Chairman. And thank you to all of 
our witnesses for being here today.
    President Larew, as you may know, I am a big advocate of 
right-to-repair legislation, and that is not just because I fix 
cars for a living. I know that this is not just about cars and 
tractors. It is actually about our DNA as Americans. We believe 
in fixing things. DIY is part of our DNA. And so I was very 
pleased to see your testimony, the National Farmers Union 
supporting right to repair. I would just like you to elaborate 
and explain in the real-world terms how this trend of us not 
owning the things we rely on, not having the right to fix our 
own stuff is affecting farmers and our food security.
    Mr. Larew. Yes, I appreciate you raising that. And quite 
frankly, I appreciate your leadership on this issue. And, as 
you well know, as an auto mechanic yourself and farmers like 
that independence. They like to innovate. They like to be able 
to repair their own equipment. And so as manufacturers have 
increased the capabilities of the machinery that comes with a 
lot of complexity in equipment, so forth, but along with that 
has come really big restrictions on farmers' ability to either 
fix it, seek independent repairs, or to access even the 
diagnostic equipment in some cases. And what we have come up 
with is a patchwork, unfortunately, of approaches and MOUs and 
promises in the past that have never actually led to any 
concrete resolution to this issue so that farmers can handle 
their own equipment.
    The real-world impact that this has is delays and theme of 
this hearing is added cost. This is about creating additional 
burdens and ultimately affecting the bottom line for farmers 
out there all across the country, either through delays, either 
through because of that control of the repair and the parts, 
added cost that is built into really also in a monopolized 
equipment manufacturers' world.
    We hope that there will be a solution out there. We know 
that the states are addressing this issue. And we have seen 
parallels with the auto industry where promises by the industry 
have not led to the solution, but efforts to put that right to 
repair into law has that added effect of making that accessible 
to everyone.
    Ms. Perez. Yes. Would you say that these policies are 
increasing cost to the consumer for our----
    Mr. Larew. Of course. Any time that there is added costs 
raised into this, that has to be passed along somewhere.
    Ms. Perez. And what about the impacts on labor and in the 
growth of independent kids thinking about entering the trades 
or the accessibility of owning tools to open up your engine?
    Mr. Larew. Well, I think that there are two issues there. 
One of these is this question around independent repair, right, 
in the fact that one of the other themes from this is the 
impact that added costs and restrictions on farmers and 
ranchers is that that has a ripple effect through our rural 
communities. And part of that effect is that small businesses 
that may be able to offer repair or to provide some services 
are currently limited in their ability to do that.
    Ms. Perez. Thank you so much. Another issue that is 
critical to my state is that of trade. Washington State's 
agricultural economy is highly dependent on trade. We are one 
of the largest exporting states. According to the USDA, 
Washington ships $4 billion in domestic ag abroad annually. So 
fruit tree growers in Washington State have lost more than $800 
million exports to India and China because of these countries' 
retaliatory tariffs. And that puts our growers at a 
disadvantage when competing against growers that enjoy 
preferential treatment.
    With that, I will yield back my time. Thank you, Mr. 
Chairman.
    The Chairman. I thank the gentlelady.
    The Committee will stand in recess subject to the call the 
chair, which will hopefully be within 15 to 20 minutes.
    [Recess.]
    The Chairman. Well, I appreciate everybody's patience as we 
do continue here. And I am pleased to recognize the gentleman, 
a neighbor of mine actually, from New York, Congressman 
Langworthy for 4 minutes.
    Mr. Langworthy. Well, thank you very much, Mr. Chairman. 
And as many of my colleagues have already mentioned, one of the 
key drivers of skyrocketing prices facing our farmers and our 
ranchers, including a lot of the small family farmers in my 
district in western New York and the southern tier of New York 
along the Pennsylvania line, is energy. And my district sits on 
top of the Marcellus Shale, and it is considered one of our 
nation's largest natural gas resources. Yet, Democratic leaders 
in New York State and here in Washington have made it their 
mission to forever lock away this game-changing source of 
American energy. As a result of these policies, producers are 
struggling to survive, struggling to afford the fuel they need 
to run their trucks and their equipment. The energy crisis 
facing our farmers is leading towards a food crisis. And if we 
want to get serious about ensuring the future of American food 
security, we need to get serious about unleashing the power of 
American energy.
    And with that, President Duvall, as you know, this 
Administration has struggled with implementing an effective 
energy strategy. And I agree with others on the panel that 
Congress and the Biden Administration should avoid any policy 
that seeks to halt or hold back increased domestic energy 
production. And regarding inflation, energy costs couldn't be 
any higher. For example, the average price of diesel per gallon 
in 2020 was $2.58 a gallon, and since that, it has increased to 
around $5 a gallon.
    President Duvall, how are your members adapting to and 
managing high energy costs in their agricultural operations?
    Mr. Duvall. Well, we previously referenced it a little bit. 
I think a lot of our farmers and ranchers are putting a pencil 
to the crop that they are planning on planting, and it could 
change what crop they plant or it could even make their mind up 
not to plant it at all if the cost of production is going to be 
more than what they are going to reap out of it. So I think it 
is just one of the things that is in a formula that they go 
through to decide what and whether they are going to plant it.
    Mr. Langworthy. Great. And, Mr. Twining, in your testimony, 
you mentioned a study that your association conducted regarding 
potential scenarios of transitioning to electric light duty 
vehicles through 2050. I come from a state that is looking to 
enforce a transition to all electric vehicles and move away 
from natural gas and other affordable fossil fuels by 2050. 
Speaking with farmers back home last week, as we were on 
district work period, this is something that weighs very 
heavily on all of our producers. They have great uncertainty on 
how they are going to comply with these goals that have been 
arbitrarily set by our state government that may not be 
achievable at all, while at the same time, we have an 
Administration that is crippling our energy sector with 
policies here in Washington. So what are some of the challenges 
from moving an agricultural operation to all electric by 2050 
and moving away from natural gas and fossil fuels as a whole? 
Is this a timeline that you see as even remotely possible?
    Mr. Twining. Well, I definitely encourage you to refer back 
to the written testimony for the details, but I can tell you 
practically on a daily basis the type of equipment that most 
farmers and ag retailers like ourselves operate cannot be 
successfully operated currently with existing electric 
technology. And, more importantly, there is far better bridge 
fuels and renewables that lower our carbon footprint and enable 
us to continue to do business as normal with existing 
equipment, which lowers our cost. So to leap to electric is 
premature in my opinion and overlooks an important intermediate 
step we could take that does bring climate benefits with it.
    Mr. Langworthy. Thank you very much. And one separate 
question for President Duvall on a different topic. I know that 
you have been engaged on the right-to-repair issue, and just 
quickly, I was wondering your memberships' thoughts on that.
    Mr. Duvall. Yes, well, we would love to have a solution 
within the industry, and that is why we work real hard with 
John Deere, and we have a Memorandum of Understanding that 
allows us to work on our equipment, take it to our local 
dealer. They will give us access to the tools. But it is just a 
Memorandum of Understanding. And hopefully, we are working real 
hard to do that with other manufacturers. But if that doesn't 
work, then we are going to be looking to you all to help us 
solve that problem. And we will be revisiting it to be able to 
monitor it and see whether it is working.
    Mr. Langworthy. Thank you, Mr. Chairman. I yield back. 
Thank you, witnesses.
    The Chairman. I thank the gentleman. Now, I am pleased to 
recognize the gentleman from Florida, Mr. Soto, for 4 minutes.
    Mr. Soto. Thank you, Mr. Chairman. And thank you all for I 
am sure what has been a long day on the Hill. But we have a lot 
of work to do, gentlemen. This Committee is charged with an 
incredible opportunity and responsibility. It is a farm bill 
term. I know you all know this crystal clear. When I look at 
what we are responsible for, I think about in central Florida 
where I represent so many ranchers and citrus growers, farmers 
of fruits and vegetables who are counting on us, and also many 
folks, whether in our urban or rural areas, who are availing 
themselves of SNAP as well and in some of our suburbs. And so 
as we all work together, we have a responsibility to make sure 
that we keep this critical coalition together.
    Just speaking to some of my constituents at home briefly, 
so many of our ranchers are going to need to continue to have 
the vaccine bank to help out with livestock. Specialty crop 
investments for citrus greening are going to be important, 
preserving seasonality for our fruits and vegetables, growers 
who are providing so many nutritious fruits and vegetables 
during the wintertime, and then so many areas around the 
district, whether it is rural, whether it is urban, and even 
some of our suburban areas that desperately need to make sure 
to have SNAP so no child in central Florida goes hungry.
    And boy, did we have a roller coaster during the 115th 
Congress. We had a great bill pass out of the Committee, and 
then it failed once or twice on the floor. And then it took us 
until the end of the 115th to finally get it done. And, of 
course, we worked with our Senators as well and finally got a 
product that we got through, thank goodness, and thanks to a 
lot of work by everybody in the 115th Congress.
    President Duvall, how key is this partnership between our 
farmers, ranchers, and growers, along with SNAP and other food 
assistance, to ensuring we pass a farm bill? How key is this 
partnership?
    Mr. Duvall. Well, of course, you brave men and women that 
serve us in these capacities have to answer to your 
constituents, and a lot of the people that serve in your 
positions don't come from agricultural areas, so they don't 
have an understanding, don't have a need to understand, and it 
is important that we understand how important the safety net is 
for agriculture so that we will have the food to be able to use 
in the safety net for the people that are not as fortunate as 
others during that period of their lives.
    So I think they go together well. It gives us a true 
picture of the food, where it is produced and where a lot of it 
is consumed, and making sure that those people have access to 
good quality food.
    Mr. Soto. And I am glad you mentioned that, President 
Duvall. Not only is it a coalition that pass the farm bill, but 
so many of Florida's farmers, ranchers, and growers are helping 
supply the food for the SNAP program. How important is it that 
we continue that partnership to put our local agriculture to 
work for the SNAP program? And how important is it for outreach 
for Members of this Committee to make sure our whole coalition 
understands this partnership?
    Mr. Duvall. Well, it is important to all agriculture, but 
it is really important to the small-, medium-sized farmers 
looking for a local market. They may supply the local school 
with those fruits and vegetables or whatever it might be. And I 
just think that--and that is the partnership everybody desires 
to have. We live in an era where everybody wants to know the 
farmer, and they want to know how they produce his food, and 
what better way to do that and do it local. Of course, we can't 
feed everybody in America and everybody around the world that 
way, but it is a market that flourished during the COVID 
pandemic.
    Mr. Soto. Well, thank you so much and yield back.
    The Chairman. I thank the gentleman. I now recognize the 
gentlelady from Illinois, Congresswoman Miller, for 4 minutes.
    Mrs. Miller of Illinois. Thank you. President Duvall, in 
your testimony you mentioned that receipts for major row crops 
such as corn and soybeans are expected to fall. How do you 
think new trade agreements could improve the situation?
    Mr. Duvall. Anytime the field in the arena of trade is 
leveled and we have access to those markets, it helps our 
farmers and ranchers tremendously. So we are all the time 
working to encourage trade across the country and across the 
world, and we just think there are some great opportunities out 
there, especially in the Asia Pacific areas and hoping that we 
will get around to doing that because we feel like this 
Administration just hasn't moved fast enough in that area.
    Mrs. Miller of Illinois. I was going to ask you if you 
thought that this Administration was passive or aggressive, so 
thank you for sharing that.
    And Mr. Rosenbusch, in your testimony, you note that 
natural gas accounts for between 70 to 90 percent of ammonia 
production costs and that natural gas prices doubled in 2022. 
You also note that we need energy policies that support an 
abundant, safe, and affordable supply of natural gas. Do you 
think the Biden Administration has taken necessary steps in 
supporting domestic production of natural gas?
    Mr. Rosenbusch. So we obviously support anything that will 
allow for natural gas capacity to increase. And I think that 
you can turn to my colleagues at the energy association such as 
API, et cetera, to give you a roadmap of what exactly those 
energy producers do. But fossil fuels are a critical part of 
food and agriculture, and so we do need to be more aggressive 
at allowing our gas producers to expand production.
    Mrs. Miller of Illinois. Would you share some policies that 
you would like to see prioritized by Congress in order to 
promote natural gas production?
    Mr. Rosenbusch. Well, like I said, I would probably turn to 
my colleagues that are representing the natural gas producers. 
They are going to be the experts on that. But I could generally 
just say that some of the similar things we have talked about 
today around permitting, expansion of opportunities to expand 
natural gas production, but I think it is also signaling. And, 
we were talking about electric vehicles and phasing out of 
gasoline vehicles, and I think those kinds of messages also 
sound strong, and we need to just make sure we have strong 
energy policies for agriculture.
    Mrs. Miller of Illinois. I agree absolutely. My husband and 
I are producers, and we are very concerned about this.
    Under the Biden Administration, we have seen record 
inflation, rising input costs, and a decrease in American 
energy production. My fellow farmers are concerned that the 
Biden supply chain crisis, inflation crisis, and energy crisis 
threaten the very existence of the family farm. Farm income is 
decreasing while consumer prices hit record highs. China is 
taking advantage of us, and we must unleash American energy, 
including biofuels, to fight back. I appreciate our witnesses 
coming today to advocate on behalf of production agriculture. 
Thank you so much.
    Thank you, Mr. Chairman, and I yield back.
    The Chairman. I thank the gentlelady and now recognize the 
gentleman from New York, Mr. Molinaro, for 4 minutes.
    Mr. Molinaro. Thank you, Mr. Chairman. I appreciate it. I 
thank all of you for spending the day with us. It speaks 
obviously not only to the important work of the Committee, but 
obviously how important we feel agriculture remains not only to 
food security, but national security. So we appreciate you 
being here.
    I want to localize one of my questions, and then I just 
have one other, Mr. Chairman. So I represent a part of the 
State of New York where family farms remain the largest 
industry, but also where we continue to feel the pressure of 
out-migration from metropolitan areas, putting a lot of 
pressure for subdivisions and higher cost of land. I also, of 
course, serve and represent New York State, which I think 
California might give us a run for our money, but still perhaps 
is among the most over-regulated states in America.
    Most recently, as you likely know, New York began its 
transition to a 40 hour overtime threshold for agricultural 
workers, despite pleas from area farms and farmers across New 
York already struggling under inflation, high cost of doing 
business. I know this is a state issue but obviously has major 
impact on farming and agriculture. So Members across the New 
York State delegation have put forward legislation to try to 
claw back that imposition of that overtime threshold, and we 
are hopeful we can take some corrective action.
    Mr. Duvall, I just--although I did want to call you Zippy 
just because it felt good and it is fair enough. Mr. Duvall, 
could you just speak maybe broadly, but if you would like to 
speak specifically to the New York experiment about access to 
the workforce, what lowering the threshold will do to family 
farms and potentially hurt farms in New York State and maybe to 
the benefit of other states if you have an observation in that 
regard?
    Mr. Duvall. Sure. Well, when you start talking about 
overtime with farmworkers, it is a different conversation than 
it would in most production of anything else because we are 
driven by the weather and elements outside, and 1 week we may 
be full speed ahead doing the work, we may be in harvest, we 
have to get a harvester planted and you got to go long hours to 
get it done. And then the next week, it may be raining and you 
might not be doing anything. And overtime just really doesn't 
fit in the scheme we do things. And, two, a farmer is a 
businessman, and if you force him to pay overtime, a lot of 
farmers probably would say, okay, you made your 40 hours, I am 
going to hire somebody else to come in and work the other part 
of the overtime. So a lot of the workers don't like that. They 
want to work. They don't mind working overtime----
    Mr. Molinaro. So emphasize that for me one more time. So 
the State of New York imposes the overtime standard. Workers 
don't like it. In fact, I have talked to many farmworkers who 
say, listen, I came here to make money, not go on vacation. 
What does that mean for New York farms?
    Mr. Duvall. Yes, it means that they are--there is already a 
shortage of help, so finding somebody else that would work in 
another 40 hour slot would be difficult. But when crops need to 
be harvested, they have to be harvested. We can't wait or they 
will spoil in the field. And so much of what we do is on a 
timely basis and has to be done. So it would put farmers under 
a hardship, and it would put their employees under a hardship.
    Mr. Molinaro. So as much as I would like to speak, Mr. 
Chairman, about the high cost of land in states like New York, 
we will revisit that, but a broader consideration for land 
trusts in the context of purchase or transfer development 
rights as a means of protecting family farms in a state like 
New York, we have to patch together small farms in order to 
make large farming work, and using tools more creatively is of 
benefit to us. I won't belabor that.
    Mr. Brown, I would just like you to know that the 19th 
Congressional District in the State of New York is the 
birthplace of the chicken nugget, which I am told is still 
chicken.
    Mr. Brown. Well, sir, as somebody from Sing Sing, New York, 
the town, not the prison, and having gone to school upstate in 
Rochester, I am well acquainted with New York, and I am a New 
York Giants fan.
    Mr. Molinaro. As am I. Mr. Chairman, with that, I yield 
back.
    Mr. Rouzer [presiding.] Mr. Moore is recognized for 5 
minutes--or 4 minutes. Pardon me.
    Mr. Moore. Thank you, Mr. Chairman. And I am not a New York 
Giants fan, but other than that, I am an SEC football fan.
    So first, let me say thanks to the witnesses for all being 
here. Guys, we got committee hearings going, so we are all over 
the place. Zippy, good to see you.
    First question, Zippy, you mentioned something earlier 
today, and I was trying to track on Scope 1, Scope 2, and Scope 
3. Somebody was talking about that, and it is just frustrating 
to me and this Committee. I am reminded of what Ronald Reagan 
said. He said the government's idea on the economy is when it 
is moving, you tax it; if it keeps moving, you regulate it; and 
when it fails, you subsidize it. So today, it seems like a lot 
of regulations have been the issues that we are addressing. So 
as we talk about consolidation, I think a lot of times 
government, we have our thumb on the scale and we cause a lot 
of problems. But can you elaborate a little more on this 
consolidation because of maybe the ESG, the things that are 
being pushed on farmers now that is fairly new to some of us 
here?
    Mr. Duvall. So the pressures on the farmers is every time 
when you put those regulations and start enforcing them, our 
farmers have to spend money and time or hire lawyers or have to 
hire consultants to help them get it done. And the margin that 
we work on is so thin, we can't afford to do that if we even 
had the time to do it. None of us have the--most of us don't 
have the expertise to get it done on our farms.
    Mr. Moore. So the middle and smaller farmers, it really 
challenges them. Every time the government says, ``Hey, you got 
to respond to this regulation, you got to fill out this 
paperwork,'' it puts you guys in tough spot.
    Mr. Duvall. It puts them in a tough spot. Movement toward 
demanding that we do certain things around climate puts farmers 
in a position where they got to have different equipment to do 
it with and different ways of doing that farming, and they 
can't afford to do that, And it just puts them in a very 
difficult--the American people love the farmer, but they are 
associated with the small-, medium-sized farm. And of course, 
98 percent of us are family-owned. They are not big, corporate 
farms everywhere. But we are doing everything in our power 
regulatorily to force that small-, medium-sized farm out of 
business, and that is opposite what the American people want.
    Mr. Moore. Zippy, my cousin just came back to our family 
farm that we hadn't been farming, haven't been row cropping 
since 1980. And he was getting started, and he told me his 
input cost. He budgeted for I think he said $3.30 a gallon for 
diesel fuel for this production season. And obviously, energy 
policies domestically, they just blew his budget up between 
that and fertilizer cost. And so it is something, like I said, 
I think a lot of times our policies here cause bigger problems.
    And real quick, Mr. Brown, I am a poultry science guy from 
Auburn from back in the day, and I think we used to hit about 
90 birds a minute, and I think that was kind of the target. And 
so tell me now, the USDA and how they are--you told me other 
countries are beating us basically in production of birds per 
minute now and line speeds. And so tell me, what are we facing 
and what is the holdup on getting the job done?
    Mr. Brown. Yes, sir. The line speeds typically for the 
chicken industry historically has been 140 birds per minute. 
Back in the 1990s when President Clinton was in office, USDA 
came up with a program called HIMP. It was going to be a trial 
program to see if companies that qualified could operate at 175 
birds per minute. So that has been ongoing now since about 
1998.
    Then we had some groups come and sue USDA and the industry 
about having this line speed program. We went to court. We 
actually joined USDA. USDA was supposed to come out of there 
and do a study on whether this was safe or not. As I mentioned 
earlier, having been in place for well over 20 years now, 
almost 25 years, we have all the statistics that the food 
safety profile is equivalent to equal at the higher end and 
also that the worker safety profile is equivalent. What is 
going on is we have the 175 waiver. We could lose it to go back 
to 140 when other nations, Canada, Germany, et cetera, are at 
220.
    Mr. Moore. Thank you, Mr. Brown. I will yield back. Sorry, 
Mr. Chairman.
    Mr. Rouzer. No problem. The gentleman's time has expired.
    I now recognize myself for 4 minutes. So Mr. Brown, if you 
want to continue on there just a little bit, I will give you a 
little leeway.
    Mr. Brown. Sure. And I am sorry I missed the click, Mr. 
Chairman, Mr. Rouzer.
    With regards to the GIPSA rules that are in our testimony 
that we are upset with is, basically, Congress never authorized 
these GIPSA rules. I think, Mr. Rouzer, as you know. In fact, 
in about 2010 during the first term of the Obama 
Administration, a trial lawyer out of Mississippi who made a 
living suing chicken companies was given a job as an 
Administrator at USDA. He crafted those original proposals. 
Congress forbade the Administration from going forward on those 
rules. When it had a change of Administration, they were not 
pursued by the Trump Administration nor Secretary Perdue. We 
have now had another change of Administration, and they have 
come back.
    We hope that they never are enacted. We are going to work 
with Congress, hopefully, to prevent them from being enacted. 
And if there is one son of a gun after 13 years that is sitting 
back just licking his lips waiting for these rules, it is the 
guy that wrote them, the trial lawyer in Mississippi, Dudley 
Butler. Let's deny him that joy.
    Mr. Rouzer. Mr. Rosenbusch, several of us were in a T&I 
markup earlier this morning, and we repealed through a CRA--it 
got out of committee anyway--a repeal of the WOTUS rule, and 
then also passed legislation that I had recently introduced, 
H.R. 1152, the Water Quality Certification and Energy Project 
Improvement Act of 2023, which addresses the weaponization of 
the Clean Water Act, specifically section 401. How big a 
problem--and you have touched on this a little bit before--but 
how big a problem is permitting in this country? And if we get 
our permitting right with clarity, transparency, easily 
enforceable and conforming to the law, how much would that 
improve our ability to source back in this country?
    Mr. Rosenbusch. Yes, it would be a huge impact. And I will 
start with WOTUS to your comment. I mean, farmers--and to build 
off what Zippy has said, they have been committed to 
conservation for a long time. And when you think about water 
and nutrient use and using the 4R's of using fertilizer at the 
right source, rate, time, and place, tremendous improvements. 
As a matter of fact, 34.7 percent was one example of nutrient 
use efficiency that a farmer in Illinois experienced after 
using some of these practices.
    So we really need to be practical with these regulations 
both on the farm because we know farmers are doing the right 
thing voluntarily, and then from a production standpoint, the 
permitting is key to fertilizer companies being able to deploy 
their capital and assets quickly and efficiently. And, they 
have projects, they are ready to go. We have invested a lot in 
the energy transition, and we are talking about how important 
natural gas is, but low-carbon ammonia is going to be a hot 
investment into the future. And these kind of innovations are 
going to need streamlined permitting that will allow them to 
meet those innovation goals.
    Mr. Rouzer. Mr. Duvall, real quickly, you touched on trade 
a little bit. Have there been any conversations with the 
Administration about a trade deal with the UK that you have 
been involved in?
    Mr. Duvall. I have not. I did have conversations with the 
UK last week. We talked about many things, but we also talked 
about trade. Also, we have talked to the Administration a lot 
about enforcing the rules of USMCA when it comes to corn going 
to Mexico and dairy in Canada.
    Mr. Rouzer. Thank you. My time has expired. I now recognize 
Mr. Duarte for 4 minutes.
    Mr. Duarte. Thank you, Mr. Chairman, I appreciate it.
    I think abundance and affordability are inextricably 
linked, and yet we have regulation after regulation, land use 
limitation after land use limitation, energy constraints here 
in the country that are entirely resolvable. So, Mr. Brown, you 
listed in your testimony that every American eats about 100 
pounds of chicken on average each year, so it is a real round 
number. We can work from there. Let's start and just tell a 
little bit of the other side of the story, at least one other 
side of the story on corn ethanol, the price of feedstock for 
chickens, biofuels in general, and what are some of the 
biofuels policies doing to the price of chicken?
    Mr. Brown. Well, sir, if you go back to when the ethanol 
mandate was put in, I believe it was 2007 or 2008, that drove 
the price of feed, the price of corn through the roof. It 
knocked 13 poultry companies out of business. Oddly enough, you 
have people that advocate for ethanol but they complain about 
consolidation. But we will set that aside. So it drove the feed 
cost up. Now, over that time, our industry has taken narrower 
margins, and we have learned to live with it because, again, we 
are not going to refight that war. I don't think Congress would 
have the appetite for that. But it drives up costs. You drive 
up costs, that is less money for others within the industry and 
its cost, if you are a grower, potentially less money, you are 
growing less birds. And if you are a consumer, you are paying 
at the meat counter.
    Mr. Duarte. Thank you. And on top of that, a chicken in 
every pot used to be a political kind of a proverb that was 
pitched upon by several politicians. We have a government that 
knows all about line speeds of chicken processing. We have a 
government that wants to pretend they know more than they do 
about chicken contracting and how chicken producers get to 
contract, make their own business decisions with companies you 
represent. I will leave that alone, but I think it is self-
evident that those are not putting chickens in every pot.
    Mr. Zippy Duvall, how are you doing?
    Mr. Duvall. I am good.
    Mr. Duarte. Long time since I have seen you in Tehama 
County on my property where we had a little WOTUS runaround.
    Mr. Duvall. That is right.
    Mr. Duarte. I was out there with Paul Winger years and 
years ago.
    Mr. Duvall. Thank you for allowing me to do that.
    Mr. Duarte. Back during the Obama era WOTUS rule, the Farm 
Bureau did a really good job of mapping and predicting what 
percent of American productive farmland would be impacted by 
the WOTUS rule. Have you done that again for the Biden WOTUS 
rule?
    Mr. Duvall. We have done it in particular states. I can't 
tell you which ones they are. But if it continues to move 
forward, we are going to be doing more of that. We are really 
focused on what the second ruling is going to say.
    Mr. Duarte. Yes. And this WOTUS rule actually has led to 
the criminal prosecution of farmers for farming their own land.
    Mr. Duvall. Yes, sir.
    Mr. Duarte. In production systems that have been farmed 
there before.
    Mr. Duvall. Yes, sir.
    Mr. Duarte. And so the vagueness of the WOTUS rule is a 
problem.
    From The Fertilizer Institute, Mr. Rosenbusch, we heard a 
few weeks ago in a State of the Union address that the 
President conceded that we would need fossil fuels for the next 
10 years. What is the fertilizer industry's plan to supplant 
fossil fuels as feedstocks to meet the nation's agricultural 
needs for nitrogen fertilizers after that 10 years is up? I am 
sure you have a plan.
    Mr. Rosenbusch. Well, great question, Congressman Duarte, 
and I think we will continue to need fossil fuels to support 
fertilizer supply. This is not a switch that you turn on and 
off. However, I will say that billions of dollars are being 
invested right now by manufacturers into low-carbon ammonia 
production, so essentially, the ability to produce nitrogen 
fertilizers without natural gas. And whether it is 
electrolyzers or renewable fuels that will allow that chemical 
process that we call Haber-Bosch to occur is something that is 
going to be invested in into the future. But that is not going 
to happen today and tomorrow, and a lot of that may end up 
going into hydrogen fuel for a source of fuel as well. So we 
will continue to need natural gas and strong energy policy for 
fertilizer production.
    Mr. Duarte. Thank you. I yield back to the Chairman.
    The Chairman [presiding.] Well, thank you. I think that is 
all of our Members. Well, we very much appreciated everybody's 
patience and your endurance. And, it's quite frankly, rural 
America, the agriculture industry, and meeting the needs of 
every American family is well worth our endurance.
    So today's hearing, just very pleased. We had 52 Members 
that participated in today's hearing. I don't know if that is a 
record, but I think it probably is for the Agriculture 
Committee because we have had so much interest. We have had to 
expand our Committee membership here, which I think speaks to 
the importance of this industry, to the American families, and 
quite frankly, to a lot of families around the world when you 
think about our exports and our humanitarian aid that we 
provide through food.
    Today's hearing has really shined a spotlight on many 
issues confronting producers and the entire agriculture sector 
from the farm to the consumer, whether it is market volatility, 
weather risks, or a wrongheaded government policy, much of 
which have been exacerbated by the Biden Administration. The 
House Committee on Agriculture has a responsibility to examine 
these challenges and develop responsible approaches to 
addressing them in the upcoming farm bill.
    Over the course of the next several months, the Committee 
will be holding numerous hearings, and we will be continuing 
our farm bill listening sessions at various locations across 
the country. I would like to challenge my fellow Committee 
Members to be present and heavily engaged in this process. 
Getting the farm bill done right and on time will require a lot 
of work and attention from all of us, but we owe it to all our 
constituents from producers to processors and, ultimately, to 
consumers to get that policy right.
    So I want to thank the witnesses here today for their 
excellent testimony and responses to the Members' questions. I 
do look forward to future hearings and as well as the next two 
listening sessions, one in Fort Worth on Thursday and one in a 
couple of weeks in Waco, Texas, and then with a lot more to be 
scheduled after that.
    And so 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 Committee on Agriculture is adjourned.
    [Whereupon, at 2:45 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
   Submitted Statements by Hon. Glenn Thompson, a Representative in 
                       Congress from Pennsylvania
                              Statement 1
on behalf of bill broydrick, executive director, national rural lenders 
                               roundtable
    Thank you for the opportunity to submit testimony for the February 
28th House Agriculture Committee Hearing on Uncertainty, Inflation, 
Regulations: Challenges for American Agriculture.
    The Committee, in preparation for the farm bill, is considering the 
current regulatory system at USDA. USDA operates several programs that 
utilize guaranteed lending to promote prosperity in Rural America.
    The National Rural Lenders Roundtable is a Trade Association of 
stakeholders in the rural lending sphere (See www.NRLRL.com). The goal 
of everyone concerned is to deploy capital to economically viable 
projects in Rural America. Our motto is that it is better to lend than 
to spend.
    USDA has undertaken a complex regulatory regime which constantly 
and needlessly delays deployment of capital to Rural America, unlike 
the Small Business Administration which operates similar programs. SBA 
has determined that its guaranteed lending programs are granted a 
Categorical Exclusion from the National Environment Protection Act 
(NEPA) because these guaranteed loans are not a major Federal action. 
On the other hand, USDA requires applicants through a series of time 
consuming and expensive reports to prove that they are not a major 
Federal action.
    USDA loans can not be closed unless and until all of the 
environmental requirements are met. The result are delays that hurt the 
borrower and rob the community of needed capital. For example, several 
hotel projects in California continue to be delayed because USDA has 
not reviewed environmental reports.
    We urge the Committee to consider adopting a presumptive 
categorical exclusion that can be overridden by the [Under Secretary] 
for Rural Development if she believes that a project is a major Federal 
action as part of the farm bill.
    We look forward to working with the Committee.
                              Statement 2
                   on behalf of j.r. simplot company
Overview
    The food supply chain, in particular key inputs to agriculture 
(such as nutrients), have shifted recently due to increased energy 
prices, the conflict in Ukraine and other interruptions in global 
trade. The result has been increases in prices throughout the entire 
food supply chain: costs for production of nutrients and growing food 
have increased and have contributed to record food prices. In the U.S., 
food prices have reached highs not seen in decades, while globally food 
prices are 25 percent higher than pre-pandemic costs.\1\ * The CPI 
(Consumer Price Index) for all food increased 0.7 percent from December 
2022 to January 2023, and food prices were 10.1 percent higher than in 
January 2022.\2\ The reasons for these cost and price increases are 
complex. As to nutrients, prices are affected by a variety of factors 
including global trade trends including unfair trade, energy prices,\3\ 
and supply and demand conditions.
---------------------------------------------------------------------------
    \1\ MacDonald, Alistair ``Globalized Supply Chain Brings More 
Turbulent Food Prices''  Wall Street Journal November 28, 2022, 
https://www.wsj.com/articles/globalized-supply-chain-brings-more-
turbulent-food-prices-11669557602.
    * Editor's note: footnotes annotated  with are retained in 
Committee file.
    \2\ ``Summary Findings Food Price Outlook, 2023'', Economic 
Research Service U.S. Department of Agriculture, February 23, 2023 
https://www.ers.usda.gov/data-products/food-price-outlook/summary-
findings/.
    \3\ Energy prices affect agriculture and the production of 
fertilizers in a multitude of ways. Natural gas is a major feedstock to 
make ammonia; as the price for natural gas increases so does the cost 
of making nitrogen fertilizers. For phosphate, sulfur is needed to make 
phosphoric acid, which is the building block for phosphate fertilizers. 
Sulfur is acquired from oil and natural gas production. Declines in 
domestic production of these fuels results in tightening supply for 
sulfur and increased prices.
---------------------------------------------------------------------------
    The J.R. Simplot Company (Simplot) has manufactured nutrients for 
American agriculture for over 75 years, with a focus on making 
phosphate fertilizers. Phosphate is a major component of nutrients 
needed to grow food in America. Being able to supply the food needs of 
the United States (i.e., food security) is a national and economic 
security issue. The ability to produce domestic phosphate for 
fertilizer needed to grow food in America is threatened by foreign 
imports and by a very burdensome, time and cost consuming regulatory 
process to obtain approvals for new mines. Fertilizers, including 
phosphate products are essential to maximizing crop yields and an 
essential input for farmers across America. As global supply chain 
issues persist, it is even more vital we as a country are able to 
access crop nutrition inputs like phosphate that are present in the 
United States.
    Over the past few years increasing domestic production of 
fertilizer has been a bipartisan issue and should remain a bipartisan 
objective at the top of minds for policymakers. Below are quotes from 
House Agriculture Committee Leaders and U.S. Department of Agriculture 
Secretary Tom Vilsack voicing support for increased domestic production 
of crop nutrition products.
    In a September 27, 2022 Press Release, then Chairman of the House 
Agriculture Committee and now Ranking Member David Scott said:

          ``The importance of American-made fertilizer production has 
        never been clearer than it is now. The war in Ukraine and other 
        challenges to our agricultural supply chain have been a 
        hardship for our farmers and impacted access to critical 
        production tools that will carry over into the next harvest 
        season,'' \4\
---------------------------------------------------------------------------
    \4\ Chairman David Scott Applauds USDA's American-Made Fertilizer 
Production Grants D House Agriculture Committee  (https://democrats-
agriculture.house.gov/news/documentsingle.
aspx?DocumentID=2664).

    Current House Agriculture Committee Chairman GT Thompson noted the 
importance of domestic production of phosphates in a June 2022 
---------------------------------------------------------------------------
factsheet saying:

          ``Streamlining leasing and permitting processes to expedite 
        exploration, production, processing, reprocessing, recycling, 
        and domestic refining of potash and phosphate is a critically 
        important way to reduce our nation's vulnerability to supply 
        chain disruptions and lower input costs. The majority of the 
        phosphate reserves in the world are found overseas; in 
        particular, Morocco and the Western Sahara have over 70% of the 
        world's reserves. To maintain a viable phosphate fertilizer 
        industry in the United States requires reliable and predictive 
        processes to access phosphate ore. A significant portion of the 
        phosphate present in the United States is found on Federal 
        lands in the western U.S. Though getting Federal and state 
        approvals to mine such ore is increasingly unpredictable due to 
        permitting process delays and litigation. The NEPA 
        environmental studies, permitting processes, and subsequent 
        litigation often result in permitting expenses exceeding $10 
        million.'' \5\
---------------------------------------------------------------------------
    \5\ https://agriculture.house.gov/uploadedfiles/
overview_and_bill_summary_-the_reduce_farm_
input_costs_and_barriers_to_domestic_production_act.pdf.

    Finally, in a March 11, 2022 press release, USDA Secretary Tom 
Vilsack announced his support for increased domestic production of 
---------------------------------------------------------------------------
fertilizer which included:

          ``Recent supply chain disruptions from the global pandemic to 
        Putin's unprovoked war against Ukraine have shown just how 
        important it is to invest in this crucial link in the 
        agricultural supply chain here at home,'' said Agriculture 
        Secretary Tom Vilsack, ``The planned investment is one example 
        of many Biden-Harris Administration initiatives to bring 
        production and jobs back to the United States, promote 
        competition, and support American goods and services. As the 
        President said [at the State of the Union], we are working to 
        rebuild the economy towards resilience, security, and 
        sustainability, and this support to provide domestic, 
        sustainable and independent choices for fertilizer supplies is 
        part of that effort. In addition to the jobs, lower costs and 
        more reliable supply, increased investment in the domestic 
        fertilizer industry will help address climate change by 
        reducing the greenhouse gas emissions associated with 
        transportation, while also fostering more sustainable 
        production methods and more precise application.''
          Fertilizer prices have more than doubled since last year due 
        to many factors including Putin's price hike, a limited supply 
        of the relevant minerals and high energy costs, high global 
        demand and agricultural commodity prices, reliance on 
        fertilizer imports, and lack of competition in the fertilizer 
        industry.
          The United States is a major importer and dependent on 
        foreign fertilizer and is the second or third top importer for 
        each of the three major components of fertilizer. The top 
        producers of the major components of fertilizer include China, 
        Russia, Canada and Morocco, with Belarus also providing a 
        significant share of potash.\6\
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    \6\ https://www.usda.gov/media/press-releases/2022/03/11/usda-
announces-plans-250-million-investment-support-innovative.

    As a domestic producer of phosphate fertilizer, the J.R. Simplot 
Company applauds the remarks and efforts of Congressmen Scott and 
Thompson and Secretary Vilsack, and would encourage bipartisan support 
to find solutions that make increased domestic production more 
achievable and to ensure the reliable supply of crop nutrition products 
to American farmers. Included in this submission are suggestions for 
reforms that could positively impact domestic producers providing crop 
nutrition products to American farmers who work every day to feed our 
country and the world.
Background
    Simplot has a more than 90 year history as a family-owned, 
privately held global food and agriculture company headquartered in 
Boise, Idaho. Its portfolio includes phosphate mining, fertilizer 
manufacturing, food processing, farming, ranching and cattle 
production, and other enterprises related to agriculture. The company 
has large mining and manufacturing operations with three mines in Utah, 
Idaho, and Nevada and four manufacturing facilities in Idaho, Wyoming, 
and California distributing fertilizer products and material throughout 
the U.S., Canada, and Mexico. Simplot owns 16 ranches in Idaho, Nevada, 
Oregon, and Utah and 40 working farms across Idaho and Washington. 
Simplot is one of the world's largest frozen potato processors, with 
annual production of more than 3 billion pounds of french fries and 
related products.
    Simplot's ``mine to plate'' vertical integration strategy gives us 
a unique understanding of the food supply chain, including specific 
segments such as the fertilizer supply chain. Thus, in this testimony, 
Simplot provides insight from an integrated producer's perspective into 
food supply dynamics with an emphasis on the challenges of producing 
phosphate nutrients for American agriculture.
Phosphate is a Critical Mineral Essential for Food Security
    Phosphate is critical to the production of our nation's major 
crops, such as wheat, corn, soybeans, and cotton. Phosphate is the base 
mineral for phosphate fertilizer, an irreplaceable nutrient for these 
crops. The importance of phosphate to national security has been 
recognized for well over a century. President Taft, in a special 
message to Congress on natural resources, stated the following: \7\
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    \7\ Taft. 1910. Special Message to Congress. January 14.

          ``The extent of the value of phosphate is hardly realized, 
        and with the need that there will be for it as the years roll 
        on and the necessity for fertilizing the land shall become more 
        acute, this will be a product which will probably attract the 
---------------------------------------------------------------------------
        greed of monopolists.''

    President Taft's message on phosphate was prescient: he recognized 
that having fertilizers to grow food was a national security issue and 
also that foreign interests posed a threat to this security. President 
Taft was concerned about the acquisition of phosphate by foreign 
interests.\8\ In those days, the eastern U.S. phosphate deposits were 
owned or controlled by European companies. Most, if not of all this ore 
was being exported for the use of European farmers. It was widely 
recognized that domestic sources of phosphate for domestic fertilizer 
manufacture and use was vital to the development of this country, and 
that we should not be dependent on European suppliers.
---------------------------------------------------------------------------
    \8\ USGS. A History of Phosphate Mining in Southeastern Idaho.
---------------------------------------------------------------------------
    Besides the eastern phosphate deposits, the other main source of 
phosphates in the United States is the Western Phosphate Field. The 
Western Phosphate Field covers over 350,000\2\ km in Idaho, Montana, 
Utah and Wyoming and is one the largest resources of phosphate rock in 
the world.\9\ The importance of this source of phosphates was 
recognized by Presidents Roosevelt, Taft and Wilson. On December 9, 
1908, the Secretary of the Interior issued a Secretarial Order that 
created a ``temporary'' phosphate reserve of 18,400\2\ km in Idaho, 
Utah and Wyoming. Three additional Secretarial withdrawal actions in 
1908 and 1909 added approximately 18,600 km2 to the phosphate reserve.
---------------------------------------------------------------------------
    \9\ Hein. 2004. Life Cycle of the Phosphoria Formation. Elsevier 
B.V. Amsterdam.
---------------------------------------------------------------------------
    In response to President Taft's 1910 Special Message, the Pickett 
Act was passed on June 25, 1910. The Pickett Act provided the Secretary 
of Interior the ability to withdraw certain Federal lands from 
exploration and occupation. Under the Pickett Act, Presidents Taft and 
Wilson withdrew approximately 10,500\2\ km in Idaho, Utah and Wyoming 
(1910-1917) and formally created the Western Phosphate Reserve. The 
Mineral Leasing Act of 1920 rendered moot the need for phosphate 
withdrawals. Eventually, the Department of Interior created Known 
Phosphate Leasing Areas (KPLAs) where the phosphate resource is 
available only through the competitive leasing provisions of the 
Mineral Leasing Act.
    Western phosphate is a major source of phosphate used to grow crops 
in the United States. Approximately 1.2 million tons of phosphate 
fertilizer (as P2O5) is produced in the Western 
Phosphate field. This can provide sufficient fertilizer to grow 24 
million acres of corn.\10\ For context, in 2015 approximately 90 
million acres of corn was grown in the United States.\11\ Fertilizers 
are one reason that corn production has increased, while the number of 
planted acres has decreased (see Figure 1). This ``value add'' by 
fertilizers such as phosphate, is one reason why having strong domestic 
sources of phosphate is important for the United States to produce its 
own food supply.
---------------------------------------------------------------------------
    \10\ California Fertilizer Association. 1995. Western Fertilizer 
Handbook, 8th edition. Approximately 100 lbs. of 
P2O5 is needed per acre of corn.
    \11\ Department of Agriculture. 2018. Economic Research Service. 
https://www.ers.usda.gov/topics/crops/corn/background.aspx.
---------------------------------------------------------------------------
Figure 1. U.S. Corn Acreage and Yield

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          [https://www.ers.usda.gov/webdocs/charts/63406/
        cornplantedacresand
        yield.jpg?v=43054]
          Source: USDA, World Agricultural Outlook Board, World 
        Agricultural Supply and Demand Estimates.
          Updated: November 2017. [Online version updated June 2018.]
The Production of Domestic Phosphate Fertilizers is Threatened by 
        Government Policies and Unfair Trade
    The phosphate supply in the United States is subject to disruption 
due to the difficulty in obtaining approvals for mining of phosphate 
ore, an ever increasing regulatory burden and unfair competition from 
foreign sources.
Obtaining Approvals for Phosphate Mining is Growing in Difficulty
    Avoiding disruption of supply and maintaining a viable phosphate 
fertilizer industry in the United States requires a reliable and 
predictive process to access phosphate ore. As described earlier in 
these comments, a significant portion of the phosphate reserves present 
in the United States are found in federally managed land in the western 
U.S. Thus, phosphate reserves exist and can be developed in the right 
economic and regulatory environment. However, substantial hurdles 
discourage opening new mines and processing facilities.

   As noted above, phosphate deposits in the Western United 
        States are often located on Federal lands. This requires 
        Federal permitting as required by the National Environmental 
        Policy Act (NEPA). States also have permitting requirements. 
        Obtaining permits has become very unpredictable due to 
        permitting process delays, changes in the policy preferences of 
        Administrations, and litigation. Often, the environmental 
        studies, permitting processes and subsequent litigation result 
        in permitting expenses exceeding tens of millions of dollars. 
        These costs are incurred without any certainty of being able to 
        successfully develop a mine.

   A good example is Simplot's new Dairy Syncline Mine project 
        in Eastern Idaho, which took 12 years to secure approval from 
        the Federal Government. After submission of the proposed action 
        in 2008, the notice of intent for the Dairy Syncline mine 
        project was published in 2010 but Federal approval of the 
        project did not occur until 2020.\12\ Opening the mine would 
        grow Simplot's capacity and certainty to produce phosphate 
        fertilizer for decades.
---------------------------------------------------------------------------
    \12\ ``BLM and USFS Approve Dairy Syncline Mine Project,''  U.S. 
Department of the Interior Bureau of Land Management (Apr. 7, 2020), 
available at https://www.blm.gov/press-release/blm-and-usfs-approve-
dairy-syncline-mine-project.

   Adding to the lengthy delays and inefficient process, there 
        are many problems with the process after the agency issues its 
        decision. Typically, before a plaintiff can challenge a final 
        agency decision in Federal court, it must exhaust all 
        administrative remedies. Courts are allowing too many loopholes 
        in this important procedural step which signals to the agency 
        and company that a legal challenge maybe facing the project. 
        This has a significant influence on development of the mine. 
        The current statute of limitations for administrative review 
        (generally 6 years) is far too long to promote lawful 
        development; and even though permitting decisions usually span 
        multiple Administrations, changes in Administrations and their 
        particular policy preferences is leading to major uncertainty 
        during litigation. Finally, if a project has commenced, 
        environmental plaintiffs should be required to post a bond 
---------------------------------------------------------------------------
        during the pendency of the litigation.

   Simplot is concerned that permitting delays will be 
        exacerbated by recent rule changes related to NEPA which 
        require Federal agencies to engage in lengthy environmental 
        assessments and consultations, including for potential issues 
        that are indirect, not within the control of the permitting 
        agency or remote in time or geography.\13\
---------------------------------------------------------------------------
    \13\ National Environmental Policy Act Implementing Regulations 
Revisions, 87 Fed. Reg. 23453 (April 20, 2022).
---------------------------------------------------------------------------
Regulatory Burdens are Increasing
    In addition to the difficulties in getting approvals to access 
phosphate ore, the Federal Government is proposing new regulations and 
Federal land management policies that will undoubtedly complicate the 
ability to develop and operate phosphate mining facilities.
    Federal land management policies and rules dramatically affect the 
availability of mineral resources for development. In the Western 
Interior Great Basin, the conservation of the Greater Sage Grouse 
[Centrocercus urophasianus] has been debated both by agencies and 
Federal courts for over 2 decades. In the past decade the Federal 
Government has produced three different management plans, with some 
being at odds with individual state management plans. Too often though, 
the Federal Government approach is to remove site-specific decision 
making and replace it with large-scale land withdrawals and very 
prescriptive land management requirements. On December 30, 2016, the 
BLM issued a Notice of Amended Proposed Withdrawal, Draft Environmental 
Impact Statement, with associated Notice of Public Meetings in Idaho, 
Montana, Nevada, Oregon, Utah, and Wyoming in the Federal Register,\14\ 
proposing to withdraw approximately 10 million acres of Federal land 
from mineral development.\15\ This includes millions of acres that were 
identified as part of the Western Phosphate Reserve. Prescriptive 
requirements that set disturbance boundaries and disturbance densities 
further limit the ability to successfully develop mineral resources. A 
more constructive approach to the conservation of species of concerns 
is to work with state agencies and other stakeholders (like mining 
companies) to develop mitigation and management methods that allow 
multiple use to occur while enhancing habitat for such species.
---------------------------------------------------------------------------
    \14\ Sagebrush Focal Areas Withdrawal Environmental Impact 
Statement Idaho, Montana, Nevada, Oregon, Utah and Wyoming  (Draft 
EIS) 81 Fed. Reg. (December 30, 2016), page 96478.
    \15\ Such large withdrawals are not supported by the scientific 
record; mining affects less than 0.1 percent of greater sage grouse 
across its occupied range. Federal Register, Vol. 80, (October 2, 
2015), page 59915.
---------------------------------------------------------------------------
    Voluntary mitigation discussions need to consider a wide variety of 
opportunities including preservation (such as establishing conservation 
easements on private land), the establishment of mitigation banks, 
public-private partnerships, conservation plans, habitat restoration, 
noxious weed control, fence marking/removal, riparian restoration 
projects, prescribed fire (where appropriate), fuel breaks, green 
strips and payment in lieu.\16\
---------------------------------------------------------------------------
    \16\ In Utah, Simplot has an active partnership with the Utah 
Division of Wildlife Resources focused on restoring and improving 
habitats used by big game and sage grouse. Projects completed at our 
Vernal Utah mine include removal of approximately 400 acres of pinyon/
juniper to help establish sagebrush and understory as well as re-
seeding and planting of sagebrush to enhance sage grouse habitat. 
[2018. Simplot Comments on the Utah Draft Resource Management Plan 
Amendment and Environmental Impact Statement for Greater Sage-Grouse 
Conservation. July 25.]
---------------------------------------------------------------------------
    Recent EPA regulations or proposed regulations add further 
regulatory hurdles. The recent finalization by the Environmental 
Protection Agency (EPA) of the Waters of the United States (2023 WOTUS 
rule).\17\ This new regulation provides EPA (and implementing agencies) 
jurisdiction over ditches, non-navigable waters, ephemeral and other 
isolated waters that are currently not regulated as WOTUS. Thus, 
additional permitting is now required, along with other requirements 
(monitoring, etc.). Also, there will be new uncertainty in Clean Water 
Act (CWA) Section 404 Permits\18\ due to an expansion in jurisdiction 
of these ``other waters'' including additional tributaries and wetlands 
that EPA now argues is covered by Justice Kennedy's ``significant 
nexus'' standard.\19\ Just as absurd as these new requirements is EPA 
promulgating this new rule while the Supreme Court is considering a 
case which has the potential to significantly limit EPA's authority 
under the Clean Water Act.\20\
---------------------------------------------------------------------------
    \17\ 88 Federal Register 3004, (January 18, 2023), pages 3004-
3144.
    \18\ Section 402 of the CWA establishes the national pollution 
discharge elimination system which is a national permit program that 
may be administered by EPA, states, or Indian Tribes. Section 404 of 
the CWA regulates permits for discharge of dredge or fill into 
navigable water, which is defined by the waters of the United States 
definition and is administered jointly by the Army Corp of Engineers 
and EPA.
    \19\ 547 U.S. 715, Rapanos Et ux., et al. v. United States, June 
19, 2006.
    \20\ Sackett v. EPA, 8 F.4th 1075 (9th Cir. 2021), cert. granted 
January 24, 2022.
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    Finally, at the end of 2022, EPA proposed a Clean Water Act 
regulation that establishes a new designated use for WOTUS Tribal 
reserved rights.\21\ The proposal usurps the authority of states (the 
delegated authority) over establishing its own designated uses for 
water and the appropriate water quality standards. The proposed rule 
potentially dictates that states must set water quality criteria based 
on pre-industrial conditions (or at least based on conditions in the 
19th Century). The proposal stipulates water quality should be set at 
levels to protect ``Tribal reserved rights unsuppressed by water 
quality or available aquatic resources.'' The impact on current 
activities regulated under the CWA as well as future activities would 
likely be substantial. Such new water quality criteria will be 
unattainable due to the inputs (such as extremely high fish consumption 
rates) used to calculate the criteria. Also, the proposal can 
potentially affect water rights.
---------------------------------------------------------------------------
    \21\ Federal Register. 2022. Vol 87 (232), December 5. p. 74361.
---------------------------------------------------------------------------
Foreign Phosphate Threatens Domestic Production
    Foreign production of phosphate fertilizers is increasing and 
imports of such materials into the United States have increased 
substantially. Historically, the largest sources of phosphate imported 
into the United States are from Morocco and Russia (see Table 1). In 
recent years, China has also been a major exporter of phosphate into 
the United States. Overseas, major phosphate production projects 
(especially in Saudi Arabia and Morocco) are being built, creating new 
capacity that will drive additional foreign phosphate into the United 
States. However, these foreign sources have engaged in unfair trade 
practices and do not have to comply with the same level of 
environmental standards as in the United States.

           Table 1--MAP/DAP Imports (metric tons) to the U.S.
------------------------------------------------------------------------
      Country             2017              2018              2019
------------------------------------------------------------------------
       Morocco           1,177,500          1,518000         1,707,800
        Russia             383,900           840,200           738,700
  Saudi Arabia              32,800           167,900           224,700
        Mexico              27,000           104,800           162,100
------------------------------------------------------------------------

    Expansion of overseas operations also threatens the economic 
viability of domestic phosphate producers. Saudi Arabia in the past 
decade has invested billions of dollars into phosphate production. The 
Al-Jalamid Phosphate fertilizer complex in Saudi Arabia is capable of 
producing approximately three (3) million metric tons of diammonium 
phosphate fertilizer (DAP) (approximately 1.5 million metric tons as 
P2O5).\22\ A second mega phosphate fertilizer 
being built at Waad al-Shamal will increase total Saudi Arabian 
production to over six (6) million metric tons of DAP (3 million metric 
tons of P2O5 annually).\23\ These projects will 
make Saudi Arabia the third largest phosphate fertilizer manufacturer 
in the world. Similar investments have been made in Morocco. Morocco's 
phosphate and derivatives exports reached $11.31 billion in 2022. That 
shows a 43.9% increase from the previous year.\24\
---------------------------------------------------------------------------
    \22\ International Fertilizer Association. 2004. Production and 
International Trade Conference, Dubai, UAE. Note, this project produces 
approximately 3 million metric tons of DAP; for conversion to 
P2O5, it is assumed that 50% of the final product 
is P2O5.
    \23\ Reuters. 2016. Saudi Ma'aden seen ramping up phosphate output 
from Waad al-Shamal in 2017. November 24.
    \24\ Kasraoui, Safaa, ``Morocco's Phosphate Exports Hit Over $11 
Billion in 2022''  Morocco World News, February 3, 2023. https://
www.moroccoworldnews.com/2023/02/353853/moroccos-phosphate-exports-hit-
over-11-billion-in-2022.
---------------------------------------------------------------------------
    It can be challenging to compete against foreign sources that do 
not have the same environmental standards and do not incur related 
compliance costs. For example, the Moroccan state-owned phosphate 
fertilizer monopoly, OCP, S.A., has a practice of simply dumping 
phosphogypsum waste from its factories into the coastal waters in 
Morocco.\25\ These irresponsible practices starkly contrast with the 
highly regulated management of phosphogypsum in the United states. The 
environmental compliance costs for our facilities amount to millions of 
dollars a year--costs our import competition do not face. Addressing 
this regulatory arbitrage that benefits foreign producers would help 
support U.S. manufacturing.
---------------------------------------------------------------------------
    \25\ CITE. Editor's note: this reference has been reproduced herein 
as submitted.
---------------------------------------------------------------------------
    Challenges have also occurred from unfairly traded and subsidized 
imports of phosphate fertilizers from Morocco's state-owned monopoly, 
OCP, S.A. (``OCP''), and from Russian companies owned by oligarchs. 
Fortunately, the U.S. Government implemented trade remedies to combat 
these subsidized imports and make significant headway in restoring fair 
market conditions. Furthermore, the Section 301 tariffs imposed by the 
U.S. Government covered phosphate fertilizer from China, which had 
started to surge into this country. Well before the recent price spikes 
we have seen for fertilizers generally, these trade remedies brought 
U.S. prices more into line with global prices, provided a market 
opening for fairly traded imports from other sources, and helped U.S. 
producers remain competitive.
    It should also be noted that the single Moroccan producer, OCP, 
immediately cut off its shipments of phosphate fertilizers to U.S. 
farmers as soon as the Commerce Department and the ITC initiated their 
investigations in July 2020, well before any tariffs were applied. This 
shows that the Moroccan supplier is more than willing to squeeze 
American farmers and disrupt their supplies when it suits foreign 
interests. This is compelling evidence that phosphate is extremely 
vulnerable to disruption and it is critical to support U.S. production 
efforts.
Solutions for Increasing Domestic Phosphate Fertilizer Production
    There are numerous steps that the Federal Government can take to 
increase the production of domestic phosphate fertilizer. Such steps 
require coordination in changes in policy direction and regulation 
changes across the Federal Government including the Departments of 
Interior, Agriculture, and Commerce and agencies such as the 
Environmental Protection Agency.

   Recognize the importance of phosphate. Add this mineral to 
        the Federal list of critical materials needed to ensure the 
        nation's food supply.

   Adopt Efficient and Streamlined Permitting Practices to 
        Facilitate New Mines and Production. Meaningful reform for 
        permitting includes: (a) establishing a single lead agency for 
        all permitting requirements that incorporates (and utilizes) 
        state agencies and their programs; (b) issuance of a single 
        agency decision rather than multiple Federal agency decisions--
        each of which are subject to litigation; (c) and set limits for 
        judicial review such as limiting legal challenges to being 
        filed within 60 days of the final agency decision, requiring 
        the plaintiffs to post a bond when the project has commenced, 
        and limiting the scope of appeals and litigation to issues 
        already raised within the NEPA process.

   Reform NEPA requirements to a reliable and predictive 
        process. It is necessary to strengthen and reaffirm the 
        original procedural intent of NEPA. This has been lost within 
        the implementation of NEPA. It is no longer the planning tool 
        it was designed to be, nor does it inform or facilitate 
        meaningful input from the public. Instead, it has become the 
        tool used by organizations who oppose domestic mineral 
        extraction in general, as well as multiple use on Federal 
        lands, to prevent responsible and lawful mineral development.

   Cease Large-Scale Withdrawal of Federal Lands for Mineral 
        Access. Too often Federal land management is singularly focused 
        on a specific natural resource issue (such as conservation of a 
        single species or ecological attribute). Instead, Federal 
        agencies need to take a more holistic and comprehensive 
        approach that preserves the concept of multiple use, which is 
        the foundation of Federal land management statutes. Instead of 
        extremely prescriptive mandates, Federal agencies should 
        instead truly collaborate with local communities, state natural 
        resource agencies and other stakeholders (such as mining 
        companies) to develop durable and effective species and 
        ecological conservation measures.

   Change the Approach Used by EPA to Environmental Regulation. 
        The 2023 WOTUS rule and the proposed Clean Water Act rule 
        creating a new designated use (Tribal reserved rights) are 
        examples of EPA creating new, broad and expansive environmental 
        requirements that impose substantial burdens on the regulated 
        community and diminish delegated authorities to the states. An 
        alternative approach would be dialogue with state agencies and 
        stakeholders (including the regulated community) on better 
        definition of environmental issues and how existing rules and 
        programs cans address such challenges. In other words--looking 
        for cooperation rather than Federal control.

   Create a Regulatory and Policy Environment that Supports Oil 
        and Gas Supply. Derivative products such as ammonia and 
        sulfuric acid are essential building blocks for fertilizers. 
        The impact of energy sector policies on fertilizer production 
        and costs is substantial. When natural gas is expensive, 
        domestic production of ammonia and other fertilizer inputs can 
        be negatively affected. This relationship was demonstrated in a 
        2009 USDA report analyzing increases in fertilizer prices 
        between 2002 and 2008.\26\ Likewise, fertilizer production 
        depends on sulfur (sulfuric acid), which is also derived from 
        oil and gas production.\27\
---------------------------------------------------------------------------
    \26\ Factors Contributing to the Recent Increase in U.S. Fertilizer 
Prices, USDA ERS (Feb. 2009), at 8.
    \27\ Also, it needs to be recognized that sulfur supply is also 
important for the production of lithium. Sulfuric acid is a key 
chemical needed in the processing of lithium ores.

   Implement Policies that Support Free and Fair Trade. Fairly 
        traded imports will always compliment domestic manufacturing in 
        the U.S. market; however the Federal Government needs to use 
        appropriate trade remedies for unfairly traded fertilizer.
                                 ______
                                 
  Submitted Letter by Hon. Brad Finstad, a Representative in Congress 
                             from Minnesota
February 28, 2023

  Hon. Thomas J. ``Tom'' Vilsack,
  Secretary,
  U.S. Department of Agriculture,
  Washington, D.C.

    Dear Secretary Vilsack,

    We are writing to urge you to take immediate action by issuing an 
extension of the Time-Limited Trial for pork processing plants in the 
New Swine Inspection System (NSIS), avoiding another unnecessary hit to 
our nation's hog farmers and the pork processing capacity they rely on.
    As you know, on June 30, 2021, an estimated 2.5 percent of the pork 
industry's slaughter capacity was taken off-line. Plants that had been 
operating for years under the Hazard Analysis and Critical Control 
Point (HACCP) Inspection Models Project (HIMP) program were required to 
reduce production despite compelling data about the safety of NSIS 
workers.
    On March 4, 2022, nearly 9 months after the court-ordered slowdown, 
the first NSIS plant was allowed to return to its former line speed, 
through a 12 month Time-Limited Trial. We commend you for your work to 
ensure these NSIS facilities were able to get back to their full 
operational capacity, however, we are rapidly approaching the end of 
the respective 12 month periods for the plants participating in the 
trial.
    Without an extension, producers will again be facing lost market 
leverage and fewer options for selling their hogs, potential contract 
cancellations, and greater transportation costs. Our family farmers, 
the food supply chain, and consumers need the certainty that our pork 
processing capacity will remain strong, and plants will not be forced 
to reduce production and thereby hog purchasing.
    Accordingly, we strongly urge you to issue an extension of the 
Time-Limited Trial and provide written notice to NSIS plants prior to 
the end of their 12 month trial. We also implore USDA to develop a 
permanent solution for these facilities that allows them to function at 
full operational capacity rather than continued short-term trials. 
Thank you for your time and attention to this important matter.
            Sincerely,

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Hon. Chuck Grassley,                 Hon. Brad Finstad,
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Hon. Tracey Mann,
Member of Congress
 

                                 ______
                                 
  Submitted Letter by Hon. John W. Rose, a Representative in Congress 
                             from Tennessee
May 25, 2022

  Hon. Gary Gensler,
  Chairman,
  Securities and Exchange Commission,
  Washington, D.C.

    Dear Chair Gensler,

    We write to express significant concerns with the impact the 
Securities and Exchange Commission's (SEC) proposed rule on ``Enhanced 
and Standardization of Climate-Related Disclosures for Investors'' will 
have on the agricultural community.
    It is our strong belief that this proposed rule, if promulgated, 
would be a significant and unworkable regulatory burden, and a 
considerable departure from the SEC's mission to protect investors, 
facilitate capital formation, and foster fair, orderly, and efficient 
markets. It is not within the purview of the SEC to regulate farmers 
and ranchers, which is what this rule would do by requiring public 
companies to disclose their Scope 3 greenhouse gas (GHG) emissions. To 
do business with public companies, small farms would be required to 
disclose a significant amount of climate-related information. But 
unlike large corporations, small farms do not have full-scale 
compliance departments. Imposing these additional reporting 
requirements could disqualify small, family-owned farms from doing 
business with companies which could lead to more consolidation in the 
agriculture industry.
    Farmers are already regulated by agencies at the local, state, and 
Federal levels. There are currently multiple programs at the Federal 
level to help farmers implement conservation practices. Bureaucrats in 
Washington, D.C.--specifically unelected SEC staff--who have no 
jurisdiction over environmental policy and who have never stepped foot 
on a farm should not have such influence over how farmers take care of 
their land.
    We also have concerns about the specific information from each farm 
that would have to be reported under this proposal. The time and energy 
put into complying with this new regulation will divert American 
farmers away from their primary goal of producing our nation's food, 
fuel, and fiber. As this rule is written, it is also unclear how 
farmers will be protected from privacy concerns as they, unlike 
corporations, live at their places of business where they would now 
have to disclose significant amounts of information. In American Farm 
Bureau Federation v. EPA, the 8th U.S. Circuit Court for Appeals 
affirmed that public disclosure of farmers' personal information would 
constitute a ``substantial'' and ``clearly unwarranted invasion of 
personal privacy.'' \1\ Similarly, the SEC should consider how the 
disclosure of Scope 3 GHG emissions could have privacy implications for 
farmers and scrap this rule entirely to ensure their private property 
information would not end up on any public disclosures.
---------------------------------------------------------------------------
    \1\ American Farm Bureau Federation v. EPA, 836 F.3d 963 (8th Cir. 
2016).
---------------------------------------------------------------------------
    Finally, we are concerned that the comment period, although 
recently extended until June, is inadequate given the magnitude of this 
proposed rule, which totals 510 pages and has 1,068 technical 
footnotes. The Commission's use of abbreviated comment periods for 
complex rules like this as well as the lack of consistency across 
rulemakings is troubling, as it will result in less, much-needed input 
from the public on these important issues.
    We appreciate your attention to our concerns and request a response 
no later than June 24, 2022.
            Sincerely,
            
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cc:

Hon. Hester M. Peirce, Commissioner
Hon. Allison Herren Lee, Commissioner
Hon. Caroline A. Crenshaw, Commissioner
                                 ______
                                 
    Supplementary Material Submitted by Peter Friedmann, Executive 
             Director, Agriculture Transportation Coalition
Insert
          Mr. Davis of North Carolina. . . .
          And I heard Mr. Duvall--and maybe I will just leave this as a 
        comment at this point as we run out of time. How do we really 
        make this nexus disconnection when there are so many job 
        opportunities with the lack of our students engaging? There is 
        some disconnect here that is going on.

    Thank you Congressman Davis.
    This is a very important question, as it is a challenge that is 
facing all sectors of agriculture, all commodities, all geographies, 
and all components. There is a significant shortfall of labor in 
agriculture, exacerbated by the lack of a pipeline of young people 
entering the agriculture supply chain--from the planting and 
harvesting, to the raising of livestock and the processing industry, 
the elevators and cold storage, the transport to the customer--all 
modes, rail, truck, ocean--both international and domestic.
    Simply not enough young people consider agriculture for a career. 
Part of this is the urbanization of America, with a greater percentage 
of the U.S. population clustered in cities and suburbs, every year. The 
young people are simply not exposed to agriculture.
    Part of it is the barriers thrown up by government and others--such 
as the barriers facing a young person who wants, after high school to 
become a truck driver. Licensing, insurance restrictions serve to 
divert many who would consider obtaining a CDL and beginning to drive, 
to other employment, such as construction. There are pilot programs at 
Dept of Labor, but participation is quite limited as criteria are 
restrictive; removing some of the restrict[i]ons would increase the 
numbers. New driver training programs are currently proposed in 
legislation, some in the T&I Committee's jurisdiction. The Committee is 
urged to move forward this Session.
    Our public schools, mainly high schools, need to offer an 
introduction into careers in agriculture. These would be tailored to 
the agriculture commodities in the region where the high school is 
located. There are community colleges which are engaging with local 
agriculture business, to provide internships. Those are invaluable, 
with a very high success rate; while encouraging, there are not enough 
of them.
    Finally, another addition to the high school curriculum would be 
immensely helpful, a basic course--where does our food come from? It 
seems that a large segment of our country's population simply has no 
idea where our food comes from--meat, dairy, cereals/bread/grains, etc. 
Or how it gets to us.
    The Agriculture Transportation Coalition would be honored to work 
with both the Agriculture and T&I Committees, to develop a pilot 
program to educate and prepare young people to enter the agriculture 
production and transportation supply chain, authorized jointly by these 
Committees and administered by USDA and DOT. We stand ready to work 
with both Committees.
    Thank you Mr. Davis for the opportunity to share some ideas that 
could lead to expansion in young person participation in agriculture.

Peter Friedmann,
Executive Director,
Agriculture Transportation Coalition.
                                 ______
                                 
  Supplementary Material Submitted by Mike Brown, President, National 
                            Chicken Council
March 9, 2023

    Chairman Thompson:

    Thank you for your recent invitation to testify before the House 
Committee on Agriculture on February 28, 2023, in the hearing entitled, 
``Uncertainty, Inflation, Regulations: Challenges to American 
Agriculture.''
    In addition to the written testimony NCC submitted prior to the 
hearing, NCC respectfully requests that the attached report from the 
American Enterprise Institute entitled, ``Poultry Tournaments: Risk 
Management or Just a Game of Chicken?'' be included in the 
Congressional Record as supplementary material related to my testimony.
            Respectfully,

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Mike Brown,
President, National Chicken Council.
                               attachment

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Poultry Tournaments: Risk Management or Just a Game of Chicken?
By Barry K. Goodwin

January [3,] 2023
Key Points
   The four-firm industry concentration ratio for chicken 
        processors is lower than for pork or beef, but concerns about a 
        unique tournament contracting system have prompted calls for 
        increased oversight that would raise further concerns about 
        costs and the public release of confidential data.

   However, competition through tournaments that offer farmers 
        significant risk protection has encouraged innovation that has 
        increased efficiency in poultry production, ultimately 
        benefiting growers and processors and lowering prices for 
        consumers.

   Claims that tournaments lower poultry farmers' incomes do 
        not square with the evidence that on both median and average 
        poultry farms, household incomes are higher than those of both 
        other farm and non-farm households.

    The Biden Administration seems to have decided that any suggestion 
of market power by buyers of livestock from the farm is necessarily 
harmful to farm businesses and consumers. Thus, the Administration's 
argument continues, contracts between farms and processors should be 
viewed as vehicles for hiding information about prices and enabling 
further exercise of market power by processors that lower farm gate 
prices and raise consumer prices.
    Recent proposals to regulate and limit the tournament production 
contracts widely used in the poultry industry are clear examples of the 
Administration's approach. However, there is no evidence to support the 
claims that contracting in the livestock industry has harmed farm gate 
prices or consumer welfare. On the contrary, by creating incentives for 
improved product quality, quality-based contracts have greatly 
benefited the beef industry and consumers.\1\
---------------------------------------------------------------------------
    \1\ Ted C. Schroeder, ``Policies That Support Growth in Beef Demand 
Drive Industry Prosperity and Benefit Consumers,'' American Enterprise 
Institute, November 2, 2022, https://www.aei.org/research-products/
report/policics-that-support-growth-in-beef-demand-drive-industry-
prosperity-and-benefit-consumers.
---------------------------------------------------------------------------
    Similarly, as discussed in this report, tournament contracts in the 
poultry industry have provided incentives for increased efficiency and 
lower production costs. In fact, there is overwhelming empirical 
evidence that concentration and contracting have enabled livestock 
markets to function more efficiently, with benefits for all 
participants--farmers, processors, and consumers. In short, when it 
comes to contracting and concentration in the livestock industry, the 
message to the Biden Administration and other critics should be: 
``Don't mess with success.''
Marketing and Production Contracts in Agriculture
    The U.S. livestock industry has gradually transitioned to a system 
under which contracts often govern marketing and production. Figure 1 
provides information about the extent of marketing and production 
contracts for individual crops and livestock commodities in the U.S., 
and Figure 2 shows the extent to which such contracting increased 
between 1996 and 2020.
    Marketing contracts, widely used for crops, differ from production 
contracts in that the farmer retains ownership of the product, and 
prices, or pricing mechanisms (for example, through the use of futures 
contracts), are set before marketing.
    Production contracts are more common for livestock commodities and 
extensively used in the pork and poultry sectors. In such contracts, 
farmers provide management, labor, and production assets, while 
processors, often called integrators,\2\ provide most of the inputs, 
including the beginning stock (e.g., piglets and chicks), feed, 
veterinary services, and other variable inputs.
---------------------------------------------------------------------------
    \2\ Processors in the poultry and pork industry are called 
integrators because they vertically integrate different stages of 
production.
---------------------------------------------------------------------------
    For broilers--chickens raised for meat--over 90 percent of 
production is managed under contracts.\3\ Typically, the integrator 
owns the animals, and the farmer follows prescribed methods of 
production. This form of production contract is also becoming more 
common in the beef cattle industry. When livestock reach the 
appropriate size and age, a processor takes delivery and manages 
slaughtering, processing, and marketing the meat products.
---------------------------------------------------------------------------
    \3\ See Linda Qiu, ``Biden Administration Aims to Increase 
Regulation and Competition in the Poultry Industry,'' New York Times, 
May 26, 2022, https://www.nytimes.com/2022/05/26/business/biden-
poultry-processors-growers.html.
---------------------------------------------------------------------------
    Production contracts are widely used in livestock markets where 
production can be confined and controlled to obtain more consistent 
product quality and for attributes preferred by consumers. They are 
often criticized as lacking in transparency because their terms are 
usually confidential. Further, when most production is commissioned 
through contracts, prices in cash markets may not be relevant for 
farmers' and processors' production decisions and may be lower and more 
volatile because animal quality cannot be guaranteed and is likely to 
be lower.
Market Concentration
    The meat industry has also become highly concentrated, with a small 
number of processors handling a significant share of production. A 
White House press release noted, with significant alarm,

          Four large meat-packing companies control 85 percent of the 
        beef market. In poultry, the top four processing firms control 
        54 percent of the market. And in pork, the top four processing 
        firms control about 70 percent of the market. . . . When 
        dominant middlemen control so much of the supply chain, they 
        can increase their own profits at the expense of both farmers 
        who make less--and consumers--who pay more. Most farmers now 
        have little or no choice of buyer for their product and little 
        leverage to negotiate, causing their share of every dollar 
        spent on food to decline.\4\
---------------------------------------------------------------------------
    \4\ White House, ``Fact Sheet: The Biden-Harris Action Plan for a 
Fairer, More Competitive, and More Resilient Meat and Poultry Supply 
Chain,'' press release, January 3, 2022, https://www.whitehouse.gov/
briefing-room/statements-releases/2022/01/03/fact-sheet-the-biden-
harris-action-plan-for-a-fairer-more-competitive-and-more-resilient-
meat-and-poultry-supply-chain.

    There are many good reasons for concentration in the livestock 
industry related to economic efficiency and substantially reduced 
production cost. However, alarmists often point to concentration as de 
facto proof of price discrimination through market power without 
examining the evidence.
    The White House press release, for example, claims that ``the meat 
and poultry processing sector is a textbook example [of a] lack of 
competition hurting consumers, producers, and our economy.'' \5\ In 
fact, in the livestock processing sector, average costs fall 
substantially as scale increases, resulting in market concentration and 
some degree of market power. The empirical evidence is clear: 
Concentration has lowered processing costs, and processor marketing 
margins sufficiently result in higher prices for farmers' livestock and 
lower prices for consumers at the grocery store.\6\ Bigger is indeed 
sometimes better, for everyone.\7\
---------------------------------------------------------------------------
    \5\ White House, ``Fact Sheet: The Biden-Harris Action Plan for a 
Fairer, More Competitive, and More Resilient Meat and Poultry Supply 
Chain.''
    \6\ Ted Schroeder's recent comprehensive review of the empirical 
literature examining the impact on contracting and market concentration 
on beef prices and quality provides compelling support for this 
conclusion. See Schroeder, ``Policies That Support Growth in Beef 
Demand Drive Industry Prosperity and Benefit Consumers.''
    \7\ In fact, any link between market concentration and market power 
without detailed information about purchasing and marketing practices 
is purely speculative and tenuous. A high degree of competition may 
exist even when three of four large companies seem to dominate the 
market. For example, the White House press release notes that the four-
firm industry concentration ratio for poultry is 54 percent but fails 
to note that many other processing companies produce the remaining 46 
percent of production.
---------------------------------------------------------------------------
Toumament Production Contracts
    The Biden Administration has expressed many concerns about the lack 
of competition in the meat-processing sector, many of which are not 
consistent with the evidence about the impacts of increased 
concentration on either prices received by farmers or prices paid by 
consumers.\8\ The high level of market concentration in poultry 
processing has received special attention. In contrast to contract 
arrangements for cattle and pork, poultry contracts operate uniquely by 
using a tournament system to reward producers.
---------------------------------------------------------------------------
    \8\ See Ted C. Schroeder, ``Subsidized Beef Packing Expansion 
Unlikely Sustainable,'' American Enterprise Institute, February 1, 
2022, https://www.aei.org/research-products/report/subsidized-beef-
packing-expansion-unlikely-sustainable; Vincent H. Smith and Benjamin 
Goren, ``Where's the Pork in the Surge in Recent Pork Prices? Maybe 
Nowhere, and Not in the Meatpacking Industry,'' American Enterprise 
Institute, February 1, 2022, https://www.aei.org/research-products/
report/wheres-the-pork-in-the-surge-in-recent-pork-prices-maybe-
nowhere-and-not-in-the-meatpacking-industry; and Schroeder, ``Policies 
That Support Growth in Beef Demand Drive Industry Prosperity and 
Benefit Consumers.''
---------------------------------------------------------------------------
Figure 1. Production and Marketing Contracting by Commodity in 2020

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: U.S. Department of Agriculture, Economic Research 
        Service, ``Farm Structure and Contracting,'' https://
        www.ers.usda.gov/topics/farm-economy/farm-structure-and-
        organization/farm-structure-and-contracting.
Figure 2. Changes in the Adoption of Marketing and Production 
        Contracts, 1996-97 to 2020
        
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
          Note: This figure includes the value of production under 
        marketing and production contracts combined. An average of 1996 
        and 1997 was used to provide a more statistically reliable 
        estimate. No tobacco production was covered by contracts in 
        1996-97.
          Source: Christine Whitt, ``Farmers' Use of Contracts Has 
        Declined over Last 25 Years,'' U.S. Department of Agriculture, 
        Economic Research Service, June 23, 2022, https://
        www.ers.usda.gov/amber-waves/2022/june/farmers-use-of-
        contracts-has-declined-over-last-25-years.

    Under that system, producers are rewarded using metrics about their 
performance relative to other similarly situated producers regarding 
feeding efficiency, quality, medical costs, flock mortality rates, and 
other factors, all of which affect production costs and the value of 
the birds.\9\ Thus, rewards are typically based on a comparison of 
overall production costs (chick, feed, and medical costs) per pound of 
meat produced relative to other producers in each group of growers. 
Contracts are often automatically renewed unless the farm fails to 
comply with their terms, including following the production practices 
prescribed in the contracts.
---------------------------------------------------------------------------
    \9\ For a detailed description of the tournament system for broiler 
production, see Charles R. Knoeber, ``A Real Game of Chicken: 
Contracts, Tournaments, and the Production of Broilers,'' Journal of 
Law, Economics, and Organization 5, no. 2 (Autumn 1989): 271-92.
---------------------------------------------------------------------------
    Critics of the tournament system have pointed to a 2011 U.S. 
Department of Agriculture (USDA) report that found that although farm 
households that raise broilers have higher incomes, they experience 
more variation in household incomes.\10\ In 2011, as shown in Figure 3, 
at the 80th percentile, broiler growers had household incomes of 
$143,294, compared to only $114,417 for other farm households and 
$101,582 for all U.S. households. Median household incomes for the same 
relative comparisons are $68,445, $57,050, and $50,504, suggesting that 
more than \1/2\ of all broiler households had significantly higher 
incomes than other farm households and U.S. households in general. At 
the bottom end of the income distribution, broiler producers do a 
little worse, though the differences are modest.
---------------------------------------------------------------------------
    \10\ See James M. MacDonald, ``Financial Risks and Incomes in 
Contract Broiler Production,'' U.S. Department of Agriculture, Economic 
Research Service, August 4, 2014, https://www.ers.usda.gov/amber-waves/
2014/august/financial-risks-and-incomes-in-contract-broiler-production.
---------------------------------------------------------------------------
Figure 3. Broiler Contract Growers' Incomes Relative to Other Farmers'

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Source: James M. MacDonald, `` Financial Risks and Incomes in 
        Contract Broiler Production,'' U.S. Department of Agriculture, 
        Economic Research Service, August 4, 2014, https://
        www.ers.usda.gov/amber-waves/2014/august/financial-risks-and-
        incomes-in-contract-broiler-production.

    Some commenters have used these findings to argue that incomes of 
broiler households vary more than incomes of other farm and non-farm 
households. However, most of the differences occur at the upper end of 
the income distribution. Thus, the reasonable evidence-based conclusion 
is that broiler production under tournament contracts tends to result 
in substantially higher incomes than those of other farm households and 
U.S. households in general.\11\ Broiler production appears to be a 
viable and rewarding business, likely because it is largely driven by 
tournament contracts that incentivize poultry farms to be innovative 
and efficient.
---------------------------------------------------------------------------
    \11\ As an aside, median farm households made about $4,500 more per 
year than the median U.S. household did, and broiler producers made 
even more--about $18,000 more in 2011.
---------------------------------------------------------------------------
    The extent of that innovation is reflected by the significant 
changes in poultry production that have taken place. While prices for 
chicken have fallen, broiler production has been profitable in recent 
years because of advances in production techniques that increased 
yields and lowered costs. In 1955, it took 73 days to produce the 
average broiler, which weighed 3.1 pounds and required 2.85 pounds of 
feed for each pound of chicken produced. By 2011, it took only 38 days 
to produce a 4 pound broiler, requiring only 1.74 pounds of feed for 
each pound of gain.\12\ In response to lower costs and prices (in 
inflation-adjusted terms), chicken consumption has increased 
substantially, and today consumers buy more chicken than beef.
---------------------------------------------------------------------------
    \12\ Production statistics were taken from James M. MacDonald, 
``Technology, Organization, and Financial Performance in U.S. Broiler 
Production,'' U.S. Department of Agriculture, Economic Research 
Service, June 2014, https://www.ers.usda.gov/webdocs/publications/
43869/48159_eib126.pdf. James MacDonald quotes statistics from an 
earlier U.S. Department of Agriculture report. Floyd A. Lasley, ``The 
U.S. Poultry Industry: Changing Economics and Structure,'' U.S. 
Department of Agriculture, Economic Research Service, July 1983, 
https://naldc.nal.usda.gov/download/CAT84800258/PDF.
---------------------------------------------------------------------------
    The Biden Administration has criticized tournaments as both a 
source and a reflection of processor market power.\13\ In that context, 
along with other proposals for ``reforming'' beef and other livestock 
markets, the Administration has proposed new rules, claiming it will 
improve the ``fairness'' of poultry contracts. The USDA intends to 
implement these proposed rules, which would significantly change the 
poultry tournament system.
---------------------------------------------------------------------------
    \13\ Secretary of Agriculture Thomas Vilsack, for example, has 
stated that the proposed rule ``ultimately will help us give farmers 
and ranchers a fair shake, strengthen supply chains and make food 
prices fairer.'' See Qiu, ``Biden Administration Aims to Increase 
Regulation and Competition in the Poultry Industry.''

          The tournament system provides incentives for growers to 
        minimize mortality rate, maximize feed efficiency, and reduce 
---------------------------------------------------------------------------
        production costs.

    In fact, tournaments are a particular type of risk-sharing 
arrangement. Because payment is based on performance relative to peers, 
system-wide risks that affect all growers are shifted to the processor. 
These include losses due to factors such as weather and widespread 
diseases. Through the tournaments, integrators are guaranteed access to 
a reasonable level of production, and growers are guaranteed a minimum 
level of compensation and a market for their output. They are also 
guaranteed supplies of some of their inputs, such as feed, at a fixed 
cost. Thus, the tournament system provides incentives for growers to 
minimize mortality rate, maximize feed efficiency, and reduce 
production costs. Moreover, Chuck Knoeber and Walter Thurman found that 
tournament contracts shifted nearly all feed and product price risks, 
and most systemic production risks, from producers to processors.\14\
---------------------------------------------------------------------------
    \14\ Charles R. Knoeber and Walter N. Thurman, `` `Don't Count Your 
Chickens . . .': Risk and Risk Shifting in the Broiler Industry,'' 
American Journal of Agricultural Economics 77, no. 3 (August 1995): 
486-96.
---------------------------------------------------------------------------
    A tournament contract exists only for the life of a single 
contract. Thus, growers do face some risks. For example, an integrator 
may close a plant and stop accepting broilers. This risk is a 
significant concern since many growers substantially invest in fixed 
assets such as chicken houses and production facilities. Another risk 
is associated with flock placements. Depending on the desired bird 
size, grow out may take 38-61 days. Once a flock has been shipped for 
processing, growers must clean and repair facilities and await 
placement of the next flock. James MacDonald reports an average wait 
time of 16-17 days for the next flock, although 25 percent of growers 
reported waiting 20 days or more, reducing their revenues and 
profits.\15\
---------------------------------------------------------------------------
    \15\ MacDonald, ``Financial Risks and Incomes in Contract Broiler 
Production.''
---------------------------------------------------------------------------
Changes Proposed by the Biden Administration
    Tournaments have been profitable for growers and incentivize 
technological innovation, but some commenters see them as just another 
unfair production practice that allows processors to price discriminate 
against individual growers. The USDA Agricultural Marketing Service has 
proposed revisions to the Packers and Stockyards Act of 1921 that would 
fundamentally alter the use of tournaments in poultry production. The 
proposals would mandate the disclosure of information used by 
processors in determining the premiums and discounts associated with 
production differences among growers. Thus, Secretary of Agriculture 
Thomas Vilsack has claimed that these actions ``ultimately will help us 
give farmers and ranchers a fair shake, strengthen supply chains and 
make food prices fairer.'' \16\
---------------------------------------------------------------------------
    \16\ Qiu, ``Biden Administration Aims to Increase Regulation and 
Competition in the Poultry Industry.''
---------------------------------------------------------------------------
    The new rules would require integrators to disclose details about 
how payments are determined for other growers in a tournament group. 
The rules would also require disclosure of feed use, chick placements, 
and the detailed ranking of individual growers within their tournament 
group. Processors would also face a mandate to guarantee a minimum 
number of chicks and stocking density that they would place with each 
grower in a year.
    When each flock and tournament is settled, a processor would have 
to provide every grower with a ranking sheet that reveals their exact 
position relative to every one of their competitors. The sheet would 
include growers' housing characteristics and the metrics used to 
generate rankings or scores, including details on the distribution of 
inputs; the names, sexes, and ratios of specific breeds; and each 
breeder's facilities, flock ages, and feed disruptions. While growers' 
names would not be included, the detailed information would enable 
competitors to identify other growers in most situations.
    The rules would also require processors to provide a summary of all 
bankruptcies and litigation involving the integrator and its growers 
over the previous 6 years. The processor would also have to provide a 
statement outlining the policies and procedures that apply when a 
grower's facilities are either sold or assigned to another processor. 
Finally, if the 5 year average of gross payments does not accurately 
reflect a projection of future payments, a processor would have to 
supply the reasons for the discrepancy to growers.

          The required information would essentially make details 
        regarding individual production practices widely known, and 
        such information could be used to affect other aspects of 
        business practices among poultry farmers.

    The Administration and others argue that these changes would 
improve transparency in the tournament system. The required information 
would essentially make details regarding individual production 
practices widely known, and such information could be used to affect 
other aspects of business practices among poultry farmers. For example, 
a lender would have access to detailed performance information about 
growers with whom they do not have a business relationship.
    The public disclosure of businesses' confidential information has 
raised a number of concerns regarding unfair business practices. Agri 
Stats is a firm that collects detailed information from processors and 
then provides this information anonymously to anyone willing to pay for 
its service. Extensive litigation has occurred because Agri Stats 
provides such information, in which it has been alleged that such 
information could be used to conduct nefarious business practices, 
paradoxically including the more extensive practice of price 
discrimination.
    To the extent that the tournament system provides effective risk 
sharing and has motivated improved efficiency and positive 
technological innovation in the industry, disruptions to the system 
could hurt growers, consumers, and processors.
Concluding Remarks
    The tournament contract system that dominates poultry production 
has developed in response to the needs and options available to both 
farmers and processors in the industry. Processors want a consistent 
supply of high-quality broilers, and the confined nature of poultry 
production has allowed careful genetic selection and precise production 
practices to provide that outcome. Despite assertions that poultry 
farmers are suffering because of the system, poultry farmers enjoy much 
higher incomes on average than those received by other farm and non-
farm households.
    The USDA study by MacDonald reported that, in 2011, the average 
income of households with contract poultry production was twice as 
large as the average income of U.S. households in general. Contract 
poultry growers had gross farm incomes that averaged $233,000, of which 
71 percent came from tournament and other production contract fees. The 
study also noted that most contract growers do not raise any other 
livestock and that \1/3\ of poultry farmers have no cropland. Further, 
over \1/2\ of contract growers had no agricultural commodity 
enterprises (for example, raising corn or managing an apple orchard) 
beyond their poultry operation. Contract growers also tended to be 
part-time farmers who devote only 28-40 hours of labor per week to the 
operation.\17\
---------------------------------------------------------------------------
    \17\ MacDonald, ``Financial Risks and Incomes in Contract Broiler 
Production.''
---------------------------------------------------------------------------
    The Biden Administration's proposed changes may disrupt this system 
and could lower poultry producers' earnings and incomes. The provision 
of private business information specific to an operation could result 
in economic losses if such information were used to discriminate 
against growers because of characteristics other than their efficiency 
in producing poultry. If the system changes in ways that lessen rewards 
for superior performance, poultry products will likely be lower 
quality, more costly to produce, and, because of those higher costs, 
more expensive for consumers. Not exactly what the doctor ordered.
About the Author
    Barry K. Goodwin is the William Neal Reynolds Distinguished 
Professor of Agriculture and Resource Economics at North Carolina State 
University and a nonresident scholar at the American Enterprise 
Institute.

          2023 by the American Enterprise 
        Institute for Public Policy Research. All rights reserved.
          The American Enterprise Institute (AEI) is a nonpartisan, 
        nonprofit, 501(c)(3) educational organization and does not take 
        institutional positions on any issues. The views expressed here 
        are those of the author(s).
                                 ______
                                 
    Supplementary Material Submitted by Robert L. Larew, President, 
                         National Farmers Union
Insert
          Mr. Vasquez. . . . To any one of our panelists, how can we 
        address the disparity of rural versus urban inflation and 
        provide relief and make good policy that helps support rural 
        Americans that live outside of major cities?
          Mr. Larew. It is a good question. I am not sure I have--I 
        would love to follow up as well.

    The Consumer Price Index (CPI) does not accurately display a 
meaningful measurement, and I agree it does not display both urban and 
rural numbers. When looking to ease rural inflation costs, we need to 
be talking about the urban-rural inflation gap and look at ways to 
close it. Factors that contribute to this disparity can be attributed 
to increased fuel costs, supply chain disruptions, higher input costs, 
or paying more for healthcare.
    The cost of travel must be reflected in CPI calculations for rural 
areas. Rural Americans must travel longer distances to do business, 
access essential services, and be a part of their communities. In 
recent years, supply chain disruptions have made long-distance travel a 
necessity. Farmers have had to haul crops to elevators that are farther 
away and oftentimes need to cross multiple counties to buy farm inputs. 
For essential services such as healthcare, insurance costs are on the 
rise and with many rural hospitals shutting down it all comes down to 
having to travel far for access or forgoing treatment altogether.
    Congress can look at ways to provide relief in any of these areas. 
Investing in rural economies to boost resilient and competitive 
industries can ensure that the uneven effects of inflation do not have 
an extreme effect on our communities. Investing in biofuels 
infrastructure helps farmers' bottom line and helps consumers save at 
the pump. We need to look at how consolidation prevents our supply 
chains from running smoothly and enact stronger antitrust laws and we 
should also consider what is driving the cost of inputs for family 
farmers and ranchers. Last, Congress and the Biden Administration 
should help existing rural healthcare services that are on the brink of 
collapse and find ways to bolster our healthcare providers for the 
years to come.

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