[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
A REVIEW OF ANIMAL AGRICULTURE
STAKEHOLDER PRIORITIES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON LIVESTOCK, DAIRY, AND
POULTRY
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MAY 17, 2023
__________
Serial No. 118-12
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Agriculture
agriculture.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
53-121 PDF WASHINGTON : 2023
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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 Vice Ranking Minority Member
KAT CAMMACK, Florida JILL N. TOKUDA, Hawaii
BRAD FINSTAD, Minnesota NIKKI BUDZINSKI, Illinois
JOHN W. ROSE, Tennessee ERIC SORENSEN, Illinois
RONNY JACKSON, Texas GABE VASQUEZ, New Mexico
MARCUS J. MOLINARO, New York JASMINE CROCKETT, Texas
MONICA De La CRUZ, Texas JONATHAN L. JACKSON, Illinois
NICHOLAS A. LANGWORTHY, New York GREG CASAR, Texas
JOHN S. DUARTE, California CHELLIE PINGREE, Maine
ZACHARY NUNN, Iowa SALUD O. CARBAJAL, California
MARK ALFORD, Missouri ANGIE CRAIG, Minnesota
DERRICK VAN ORDEN, Wisconsin DARREN SOTO, Florida
LORI CHAVEZ-DeREMER, Oregon SANFORD D. BISHOP, Jr., Georgia
MAX L. MILLER, Ohio
______
Parish Braden, Staff Director
Anne Simmons, Minority Staff Director
______
Subcommittee on Livestock, Dairy, and Poultry
TRACEY MANN, Kansas, Chairman
SCOTT DesJARLAIS, Tennessee JIM COSTA, California, Ranking
TRENT KELLY, Mississippi Minority Member
DON BACON, Nebraska ABIGAIL DAVIS SPANBERGER, Virginia
JAMES R. BAIRD, Indiana JAHANA HAYES, Connecticut
RANDY FEENSTRA, Iowa YADIRA CARAVEO, Colorado
BARRY MOORE, Alabama JILL N. TOKUDA, Hawaii
RONNY JACKSON, Texas CHELLIE PINGREE, Maine
MARCUS J. MOLINARO, New York DARREN SOTO, Florida
MARK ALFORD, Missouri DONALD G. DAVIS, North Carolina
DERRICK VAN ORDEN, Wisconsin ------
------
(ii)
C O N T E N T S
----------
Page
Costa, Hon. Jim, a Representative in Congress from California,
opening statement.............................................. 3
Mann, Hon. Tracey, a Representative in Congress from Kansas,
opening statement.............................................. 1
Prepared statement........................................... 2
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 4
Prepared statement........................................... 5
Witnesses
Wilkinson, Todd, President, National Cattlemen's Beef
Association, De Smet, SD....................................... 8
Prepared statement........................................... 10
Supplementary material....................................... 87
Hays, Scott, President, National Pork Producers Council; Member,
Missouri Pork Association, Monroe City, MO..................... 18
Prepared statement........................................... 20
Supplementary material....................................... 87
Zimmerman, John, Vice Chairman, National Turkey Federation,
Northfield, MN................................................. 23
Prepared statement........................................... 25
Supplementary material....................................... 88
Burns, J.D., Byran, Vice President and Associate General Counsel,
North American Meat Institute, Washington, D.C................. 30
Prepared statement........................................... 32
Supplementary material....................................... 88
Hubbard, Laurie, Region I Director, Executive Board, American
Sheep Industry Association, New Paris, PA...................... 46
Prepared statement........................................... 47
Supplementary material....................................... 89
Scott, Kelsey R., Director of Programs, Intertribal Agriculture
Council, Eagle Butte, SD....................................... 51
Prepared statement........................................... 52
Supplementary material....................................... 89
A REVIEW OF ANIMAL AGRICULTURE STAKEHOLDER PRIORITIES
----------
WEDNESDAY, MAY 17, 2023
House of Representatives,
Subcommittee on Livestock, Dairy, and Poultry,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Tracey
Mann [Chairman of the Subcommittee] presiding.
Members present: Representatives Mann, DesJarlais, Kelly,
Bacon, Feenstra, Moore, Jackson of Texas, Molinaro, Alford, Van
Orden, Thompson (ex officio), Duarte, Johnson, Miller of Ohio,
Costa, Hayes, Caraveo, Tokuda, Soto, and Davis of North
Carolina.
Staff present: Caleb Crosswhite, Justina Graff, Patricia
Straughn, Erin Wilson, John Konya, Daniel Feingold, Emily
Pliscott, and Dana Sandman.
OPENING STATEMENT OF HON. TRACEY MANN, A REPRESENTATIVE IN
CONGRESS FROM KANSAS
The Chairman. The Committee will come to order. Welcome,
and thank you for joining today's hearing entitled, A Review of
Animal Agriculture Stakeholder Priorities. After brief opening
remarks, Members will receive testimony from our witnesses
today, and then the hearing will be open to questions. In
consultation with the Ranking Member, and pursuant to Rule
XI(e), I want to make Members of the Subcommittee aware that
other Members of the full Committee may join us today.
Now for a quick opening statement, last month we hosted the
first hearing of the House Agriculture Committee's Subcommittee
on Livestock, Dairy, and Poultry in this 118th Congress. As a
fifth generation Kansan, having grown up on my family farm, and
having spent thousands of hours on the tractor, combine, and
riding fence, doctoring sick cattle, I understand the grit,
tenacity, and courage that it takes to make a living in
agriculture. I represent the Big First District of Kansas where
ag producers sell about $10 billion worth of livestock, dairy,
poultry, and products like beef, milk, and eggs every year.
At our previous hearing we heard from USDA officials about
their work to protect the health of livestock in America. It is
important that this Subcommittee engage with USDA on that vital
work. Equally important, however, is that we hear from those
directly involved in the day-to-day business of feeding the
world. From commodity growers to livestock producers, everyone
represents a piece of the American agriculture picture. We are
all in this together. We must remember that, for example, our
commodity producers greatly benefit from a strong livestock
sector, as livestock consumes grain. The livestock industry
benefits from the biofuels industry, as that industry relies on
them as an important feed source. Agriculture is
interdependent, and interconnected, and that is important for
this Subcommittee and the full Committee to understand.
A few weeks ago Chairman Thompson and I hosted a Food and
Agriculture Listening Session in a wheat field near Gypsum,
Kansas, which is almost exactly the center part of the State of
Kansas. More than 150 farmers, ranchers, and ag producers came
together to talk about the next farm bill. There is a good
chance that today's witnesses will highlight many of the same
priorities raised by livestock producers with Chairman Thompson
and I while we were in Kansas: Disaster programs and risk
management tools, research, trade promotion, and animal health
research like what we will see at the National Bio and Agro-
Defense Facility opening in Manhattan, Kansas later this month.
I am eager to continue learning about whether existing programs
need to be tweaked or enhanced to ensure producer success. I am
also interested in hearing more about what producers do not
want in this next farm bill, as time has taught us, even if
well intended, more legislation and regulation often is not the
answer.
Unfortunately, producers know well what can happen to the
farm when the government gets in the way. I am especially
concerned with the Biden Administration's false narrative about
the protein sector's contribution to the skyrocketing cost of
food in America, the Administration's continued push for a set
of controversial Packers and Stockyards rules, and more
recently, the disappointing Supreme Court decision to uphold
Proposition 12, which opens the door to unthinkable,
unscientific regulatory overreach against all producers. I am
looking forward to a productive conversation on these issues
and a variety of others highlighted in your testimony, and I am
excited to work together on solutions that benefit the whole
industry.
[The prepared statement of Mr. Mann follows:]
Prepared Statement of Hon. Tracey Mann, a Representative in Congress
from Kansas
Last month, we hosted the first hearing of the House Agriculture
Committee's Subcommittee on Livestock, Dairy, and Poultry in the 118th
Congress. As a fifth generation Kansan having grown up on my family
farm, I understand the grit, tenacity, and courage that it takes to
make a living in agriculture. I represent the Big First district of
Kansas where agricultural producers sell $10 billion worth of
livestock, dairy, poultry, and products like beef, milk, and eggs every
year.
At that hearing, we heard from USDA officials about their work to
protect the health of livestock in America. It is important that this
Subcommittee engages with USDA on that vital work. Equally important,
however, is that we hear from those directly involved in the day-to-day
business of feeding the world. From commodity growers to livestock
producers--everyone represents a piece of the American agriculture
picture. We are all in this together. We must remember that, for
example, our commodity producers greatly benefit from a strong
livestock sector as livestock consumes grain. The livestock industry
benefits from the biofuels industry as the industry relies on them as
an important feed source.
A few weeks ago, Chairman Thompson and I hosted a Food and
Agriculture Listening Session in a wheat field near Gypsum, Kansas.
More than 150 farmers, ranchers, and agricultural producers came
together to talk about the next farm bill. There is a good chance that
today's witnesses will highlight many of the same priorities raised by
livestock producers with Chairman Thompson and me in Kansas: Disaster
programs and risk management tools; Research; Trade promotion; and
Animal health research like what we will see at the National Bio and
Agro-Defense Facility opening in Manhattan, Kansas this month.
I am eager to continue learning about whether existing programs
need to be tweaked or enhanced to ensure producer success. I am also
interested in hearing more about what producers do not want in the next
farm bill, as time has taught us, even if well intended, more
legislation and regulation is often not the answer.
Unfortunately, producers know well what can happen to the farm when
the government gets in the way. I am especially concerned with the
Biden Administration's false narrative about the protein sector's
contribution to the skyrocketing cost of food in America; the
Administration's continued push for a set of controversial Packers and
Stockyards rules; and most recently, the disappointing Supreme Court
decision to uphold Proposition 12, which opens the door to unthinkable,
unscientific regulatory overreach against all producers.
I am looking forward to a productive conversation on these issues
and a variety of others highlighted in your testimony, and I am excited
to work together on solutions that benefit the whole of industry.
The Chairman. With that, I now would like to welcome the
distinguished Ranking Member, my good friend, the gentleman
from California, Mr. Costa, for any opening remarks that he
would like to make.
OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA
Mr. Costa. Thank you. Thank you, Mr. Chairman. Good morning
to each and every one of you, and it is nice to have the
Chairman of the full House Agriculture Committee here as well,
and other Members, as we set the table, so to speak, literally
and figuratively, for the reauthorization of the farm bill this
year. As we all know, the incredible productivity that American
agriculture does every day, day in and day out, is the envy of
the world. No one produces more cost-effective food that ends
up on America's dinner table than American farmers, ranchers,
dairymen and -women, with farmworkers, who are a critical part
of that partnership. And, therefore, it is important that this
Subcommittee, Mr. Chairman, as you have stated in your own
comments, focus on the issues that are key to the Subcommittee.
And while livestock may not have its own title, we know it is
critical in providing protein for America. As I like to say,
food is a national security issue. And the witnesses that we
have here at our table this morning reflect a diverse set of
constituencies that understand that food is a national security
issue.
So, we have had a lot of challenges in recent years, with
the pandemic. We have had disruptions in our supply chain that
have led to incredibly difficult circumstances. I, for one, did
not understand, when we saw the impacts of, as an example,
America's pork industry, that 70 percent of Americans--or
seven--let me rephrase this. 70 percent of the bacon and pork
bellies for Americans are consumed in restaurants. I never
thought about that. So, all of a sudden you close the
restaurants, and, my gosh, you have a real disruption.
While we have recently seen a gradual increase in cattle
prices for small producers, I think it is critical that we take
lessons learned from the pandemic and ensure that livestock
operations can continue to remain viable during economic
downturns. I think that is critical, and we ensure that there
is security and stability. I am happy to work with Members, as
I always have, on a bipartisan effort through the number of
farm bills that we are working on. This is my fourth farm bill
reauthorization. And the stakeholders, obviously, are key, as
the Chairman noted, that we listen. That we listen to what has
worked, and, just as importantly, what hasn't worked, as we
contemplate the next 5 years to set American farm policy in
place.
As a third generation farmer, I know the effectiveness of
many of the programs in the 12 titles, and the importance that
we maintain that bipartisanship. In California, as we all like
to boast about our own states--but California is, obviously,
the leading the agricultural state of the nation, we do a great
deal in producing agricultural products. At the farm gate last
year, over $51 billion: $3 billion of that was in products that
deal with cattle and calves; $7.4 billion was in the dairy
industry, which we produced 20 percent of all the milk products
in America.
So programs such as the Livestock Indemnity Program,
otherwise known as LIP, the Livestock Forage Program, otherwise
known as LFP, don't get as much attention as others, but they
are essential tools for our producers, especially as we see
impacts from climate change that lead to more and more extreme
weather. I think many of you know that we have had extreme
droughts in the West, and California. It was dry, dry, dry. We
prayed, we prayed, we prayed for rain. I guess we prayed really
good, because the last 4 months it has been biblical. It has
been biblical, in the amount of rain and snow that we have had
in California, and now we have floods. So, it is one extreme or
another. That is part of the--roots causes of climate change.
So we need to support our producers to navigate the fallout
from weather patterns that will continue to change, whether you
are in the West, Midwest, or the South, or the Northeast.
We heard last month from Under Secretary Moffitt on animal
health programs, which are critical tools to maintaining the
safe and secure food supply. It is real important that we
reauthorize those tools for stakeholders, such as the witnesses
here who will testify today. We want to hear from you, and from
the comments and the experiences your constituency have. So
thank you, Mr. Chairman. I am looking forward to the testimony,
as an essential part of us are putting together through the
authorization of this year's farm bill. I yield back.
The Chairman. Thank you. I now recognize Chairman Thompson
for any opening comments that he would like to make.
OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA
Mr. Thompson. Well, thank you very much. Good morning
everyone, and thank you to Chairman Mann, Ranking Member Costa,
for your great leadership, and, quite frankly, for convening
today's hearing. And more importantly, thank you to our
witnesses who have taken time out of your busy schedules, your
families, your business, your farms to appear before us today,
and I look forward to hearing from each of you. As a fellow
Pennsylvanian, I am especially proud to have Ms. Laurie Hubbard
representing not only the sheep industry, but the Keystone
State on today's panel. Laurie, thank you for doing that.
As Chairman Mann, noted in his statement, my colleagues and
I have had the opportunity to hear from a wide variety of
livestock stakeholders in our travels all across this country.
But given the size and diversity of the livestock industry, I
am glad that we are making time for a deeper dive into the
issues facing the industry's various segments. Especially as we
head into a farm bill, we need a full picture of on-the-ground,
or quite frankly, in-the-pasture conditions, and an honest
assessment of what is and isn't working to ensure that we
appropriately arm producers with the tools they need for
success in the coming years.
And with the impending expiration of the Livestock
Mandatory Reporting Program, or LMR, I also look forward to
your thoughts on any necessary programmatic changes, and the
possibility of a multiyear reauthorization to provide longer-
term certainty. And just as much as I want to hear your
priorities for inclusion in the upcoming legislation, sometimes
I know it is even more important that Congress understand what
you want kept out and why. So I also welcome your expertise and
wisdom on avoiding legislative pitfalls as we navigate this
process.
Speaking of pitfalls, the livestock and protein processing
sectors are no strangers to unwarranted regulatory assault, and
I would like to insert for the record, and request unanimous
consent to insert, a recent Wall Street Journal op-ed entitled,
Big Meat Conspiracy Theory Unravels.
[The article referred to is located on p. 6.]
The Chairman. So approved.
Mr. Thompson. This article articulates how the Biden
Administration simply got it wrong when pointing the finger at
the packing industry for food inflation. In addition to the
Administration's continued blame game with industry, I remain
concerned with the Administration's insistence on contentious
Packers and Stockyards regulations, and a lack of certainty
regarding our pork and poultry processors' ability to
efficiently operate at speeds proven safe and reliable for
decades. I know there has been some recent--at least in the
poultry area, some recent support from USDA, and I believe in
giving credit where credit is due. I just hope for more of that
as we look at the state of processing.
I appreciate your partnership as we continue to explore
potential solutions to these and a variety of other issues that
will surely be highlighted in today's discussion. Thank you,
and with that, I yield back.
[The prepared statement of Mr. Thompson follows:]
Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good morning and thank you to Chairman Mann and Ranking Member
Costa for convening today's hearing.
And more importantly, thank you to our witnesses who have taken
time out of your busy schedules to appear before us today--I look
forward to hearing from each of you.
And as a fellow Pennsylvanian, I am especially proud to have Ms.
Laurie Hubbard representing not only the sheep industry, but the
Keystone State on today's panel.
As Mr. Mann noted in his statement, my colleagues and I have had
the opportunity to hear from a variety of livestock stakeholders on our
travels across the country.
But given the size and diversity of the livestock industry, I am
glad we are making time for a deeper dive into the issues facing the
industry's various segments.
Especially as we head into a farm bill, we need a full picture of
on-the-ground conditions and an honest assessment of what is and isn't
working to ensure we appropriately arm producers with the tools they
need for success in the coming years.
And with the impending expiration of the Livestock Mandatory
Reporting program, or LMR, I also look forward to your thoughts on any
necessary programmatic changes and the possibility of a multi-year
reauthorization to provide longer-term certainty.
Just as much as I want to hear your priorities for inclusion in
upcoming legislation, sometimes I know it is even more important that
Congress understand what you want kept out and why. So, I also welcome
your expertise and wisdom on avoiding legislative pitfalls as we
navigate this process.
Speaking of pitfalls, the livestock and protein processing sectors
are no strangers to unwarranted regulatory assault, and I would like to
insert for the record a recent Wall Street Journal op-ed entitled, Big
Meat Conspiracy Theory Unravels,\1\ that articulates how the Biden
Administration simply got it wrong when pointing the finger at the
packing industry for food inflation.
---------------------------------------------------------------------------
\1\ https://www.wsj.com/articles/tyson-foods-profits-meat-packers-
president-biden-elizabeth-warren-987e6c95.
---------------------------------------------------------------------------
In addition to the Administration's continued blame game with
industry, I remain concerned with the Administration's insistence on
contentious Packers and Stockyards regulations, and a lack of certainty
regarding our pork and poultry processors' ability to efficiently
operate at speeds proven safe and reliable for decades.
And the Supreme Court's disappointing decision on Proposition 12
threatens to even further complicate the regulatory landscape.
I appreciate your partnership as we continue to explore potential
solutions to these and a variety of other issues that will surely be
highlighted in today's discussion.
Thank you, and I yield back.
Attachment
[https://www.wsj.com/articles/tyson-foods-profits-meat-packers-
president-biden-elizabeth-warren-987e6c95]
The Big Meat Conspiracy Theory Unravels
Tyson Foods loses money, which doesn't sound like a monopoly.
By The Editorial Board \1\
---------------------------------------------------------------------------
\1\ https://www.wsj.com/news/author/editorial-board.
---------------------------------------------------------------------------
Updated May 15, 2023 2:42 p.m. ET
Remember when President Biden and progressives last year accused
meat packers of colluding to fatten their profits. Are they now
conspiring to lose money? Tyson Foods \2\ last week reported its first
quarterly loss since 2009 as meat prices tumbled. Here's a lesson in
market economics, Mr. President.
---------------------------------------------------------------------------
\2\ https://www.wsj.com/market-data/quotes/TSN.
---------------------------------------------------------------------------
Tyson's stock plunged after it reported anemic sales and downgraded
its forecast. The quarterly loss at the largest U.S. meat supplier
marks a stunning reversal from 2021 and early last year when it earned
record profits amid a run-up in meat prices. What happened?
Well, meat supply increased as packers ramped up production and
increased wages for employees to meet demand. But producer costs for
cattle and chicken have remained elevated. At the same time, consumer
demand for pricier cuts of beef and pork has declined as inflation ate
into purchasing power. All of this has shrunk Tyson's margins.
As we explained in ``Carving Up Biden's Inflation Beef'' \3\ (Jan.
7, 2022), the gusher of pandemic transfer payments swelled demand for
more expensive meat products and contributed to a labor shortage that
constrained production. When demand exceeds supply, business margins
increase as markets ration scarce goods via prices.
---------------------------------------------------------------------------
\3\ https://www.wsj.com/articles/carving-up-bidens-inflation-beef-
meat-producers-tyson-prices-11641587628?mod=article_inline.
---------------------------------------------------------------------------
Yet Democrats alleged a corporate conspiracy. Mr. Biden claimed
that rising meat prices and profits reflect ``the market being
distorted by a lack of competition'' and ``capitalism without
competition isn't capitalism; it's exploitation.'' Massachusetts Sen.
Elizabeth Warren accused Tyson of abusing its ``corporate market power
and raking in record profits by jacking up meat prices.''
If markets were ``distorted,'' the culprit was pandemic transfer
payments that were a disincentive to work. As these programs lapsed,
hiring became easier. Competition for workers and market share raised
supplier costs while pushing down prices and profits. Meat prices fell
0.4% in April and are up only 0.3% over the past 12 months.
Tyson's stock has fallen by nearly half over the past year and is
trading at the lowest levels since 2015. This doesn't look like an
antitrust conspiracy or market oligopoly, but the meat packers and
their shareholders will never get an apology from Washington.
Photo: Toby Talbot/Associated Press.
Copyright 2023 Dow Jones & Company,
Inc. All Rights Reserved.
Appeared in the May 15, 2023, print edition as `The
Big Meat Conspiracy Theory Unravels'.
The Chairman. Thank you. 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.
To introduce our first witness today, I am pleased to yield
to our colleague, someone who is no stranger to this
Subcommittee, the gentleman from South Dakota, Mr. Johnson.
Mr. Johnson. Mr. Chairman, thank you, and it is an honor
that today's panel is bookended by South Dakotans. We first
have Todd Wilkinson, who is the President of the National
Cattlemen's Beef Association, and in a beautiful town out on
the South Dakota Prairie, De Smet, Todd Wilkinson runs a cow-
calf operation, finishing and feeding as well, and he has
practiced law for nearly 40 years. And, Mr. Chairman, you
cannot find a more respected voice in cattle country on these
issues than Todd Wilkinson.
And we also have Kelsey Scott, from a beautiful town out on
the South Dakota Prairie of Eagle Butte. She is representing
the Intertribal Agriculture Council, but she runs a direct to
consumer beef operation. She really, really understands these
issues. And she is whip smart and has taught a lot of us a
whole lot about her world. It is an honor to have them both
here.
The Chairman. Thank you. To introduce our second witness
today, I am pleased to yield to our colleague, the gentleman
from Missouri, Mr. Alford.
Mr. Alford. Thank you so much, Mr. Chairman. It is an honor
to introduce Scott Hays, the President of the National Pork
Producers Council today. Scott is a fifth generation pork
producer from Hannibal, Missouri. He is involved in several
state and national organizations as well, serving as a strong
advocate for pork producers and the broader agriculture
industry. I am proud to call Scott a friend. We have gotten to
know each other quite well over the last couple of weeks
especially, and I know his expertise is going to be a great
resource as we dive into pressing issues facing the livestock
and meat processing industries. Scott, good to have you here,
and Mr. Chairman, I yield back.
The Chairman. I thank the gentleman. Our third witness
today is Mr. John Zimmerman, the Vice Chairman of the National
Turkey Federation. The next witness is Mr. Bryan Burns, the
Vice President and General Counsel for the North American Meat
Institute. The fifth witness is Ms. Laurie Hubbard, who is the
Region I Director of the American Sheep Industry Association.
And, as was mentioned, our sixth and final witness today is Ms.
Kelsey Scott, the Director of Programs for the Intertribal
Agriculture Council.
Thank you all for--our witnesses for joining us today. We
will now proceed with your testimony. You will each have 5
minutes. The timer in front of you will count down to zero, at
which point your time will be expired. Mr. Wilkinson, please
begin when you are ready.
STATEMENT OF TODD WILKINSON, PRESIDENT, NATIONAL CATTLEMEN'S
BEEF ASSOCIATION, DE SMET, SD
Mr. Wilkinson. Chairman Mann, Ranking Member Costa, and
Members of the Subcommittee, on behalf of America's cattle
producers, thank you for inviting me to provide an update on
the state of the U.S. cattle industry. My name is Todd
Wilkinson. I currently serve as President of the National
Cattlemen's Beef Association, the oldest and largest national
trade association representing the U.S. cattle industry. NCBA
represents over 25,000 direct members, and approximately
178,000 producers through our 44 state affiliate organizations.
When I last appeared before this Committee in October of
2021, my report to Congress was bleak. Prices were low, and
cattle were substantially backlogged across the supply chain.
Countless family farmers and ranchers struggled to remain
profitable as cattle prices slogged. Today I am pleased to
report that the state of the cattle industry has greatly
improved. Earlier this month USDA's Livestock Mandatory
Reporting Program showed an average fed cattle price of around
$173 per hundredweight. When I was here last in 2021, that
figure was closer to $122 per hundredweight. I would be remiss
if I did not underscore the fact that the entirety of this
price movement we are currently seeing has occurred without the
enactment of market altering legislation. Our membership
opposes any bill that would restrict their ability to market
cattle in the most profitable and effective manner. We call
upon Congress to respect their wishes.
While price environment for cattle has drastically improved
over the past 2 years, the recovery has been bittersweet. Herd
contraction, largely spurred by drought across most of cattle
country, has resulted in a year over year beef cattle inventory
reduction of nearly four percent, the lowest in 61 years. Make
no mistake, even amid a recovering cattle market, producers
still face a myriad of challenges. And this is by no means a
comprehensive list, but I want to address three specific areas.
First, animal disease preparedness. NCBA calls on Congress
to fully fund three critical animal health components in the
farm bill, the National Animal Vaccine and Veterinary
Countermeasures Bank, the National Animal Disease Preparedness
and Responsive Program, and the National Animal Health
Laboratory Network, collectively referred to as the three-
legged stool. The U.S. must be prepared to deal with disasters
like a foot-and-mouth disease outbreak, as economic
consequences would be in the tens of billions of dollars. We
simply cannot afford to do nothing. In this case, an ounce of
prevention is truly worth more than a pound of cure, and NCBA
calls on Congress to robustly fund the three-legged stool.
Second, USDA's proposed forthcoming Packers and Stockyards
rules. Yet again USDA is attempting to unilaterally expand its
authority under the Packers and Stockyards Act. We have seen
this same playbook employed by USDA several times over the past
15 years. If finalized, these rules would upend decades of
innovation in livestock marketing agreements and open the door
to frivolous lawsuits. Put simply, the rules empower trial
lawyers to impose regulation by litigation. This is precisely
why NCBA, and the vast majority of livestock and poultry
groups, have opposed, and continue to oppose, these misguided
regulations.
Finally, the beef check-off. The beef check-off is one of
the most important marketing tools available for today's cattle
producers. Unfortunately, it appears some have bought into
misinformation about commodity check-offs and introduced a
deceptively titled ``Opportunities for Fairness in Farming,''
or OFF Act (H.R. 1249/S. 557). Let me be clear, the OFF Act is
nothing more than a thinly veiled attempt by radical animal
rights activists and their allies to eradicate the most popular
and longstanding beef promotion effort in history. Contrary to
the claims of the bill's proponents, check-off dollars are not
used to influence public policy or disparage other commodities,
period. There are ample safeguards, audits, and accountability
protocols already in place both at USDA and internally to
ensure compliance of the law. Cattle producers overwhelmingly
support the beef check-off, and we urge Congress to continue to
do the same. I have highlighted more issues in my written
testimony, and I refer those to you.
In closing, Mr. Chairman, many of you have said it before,
and I wholeheartedly agree, food security is national security.
Working together, we can ensure the long-term success and the
viability of those on the front line providing critical food
security. We owe it to the next generation, and the generations
beyond, to get this right. Thank you, Mr. Chairman, and I will
now stand for questions.
[The prepared statement of Mr. Wilkinson follows:]
Prepared Statement of Todd Wilkinson, President, National Cattlemen's
Beef Association, De Smet, SD
Introduction
Chairman Mann, Ranking Member Costa, and Members of the
Subcommittee. On behalf of America's cattle producers, thank you for
inviting me to provide an update on the state of the U.S. cattle
industry.
My name is Todd Wilkinson, and I currently serve as President of
the National Cattlemen's Beef Association. I am a second-generation
rancher and live in De Smet, SD. I own and operate a cow-calf and
cattle backgrounding operation with my son, who is the third generation
of our family to work the ranch. Additionally, I run a small cattle
feeding facility and maintain a law practice, where I assist other
farmers and ranchers with estate planning and other agricultural law
issues.
I am testifying today on behalf of the National Cattlemen's Beef
Association (NCBA), the trusted leader and definitive voice of the U.S.
cattle and beef industry. Initiated in 1898, NCBA is the American
cattle and beef industry's oldest and largest national trade
association. In addition to our nearly 26,000 direct members, NCBA
represents forty-four state cattlemen's associations with collective
memberships numbering some 178,000 cattle producers. It is important to
note that well over 90% of those members are, like myself, family-owned
business entities involved in the cow-calf, stocker/backgrounder, and
feeding sectors of the supply chain. Each of those members has a voice
in our organization's century-old policymaking process, and it is from
the resolutions and directives resulting from this process that NCBA
takes positions on legislation and proposed regulations.
The State of the Cattle Industry
When last I appeared before this Committee in October 2021, my
report to Congress was bleak. Market-ready cattle were oversupplied and
beef packing capacity--despite operating at or near maximum
throughput--was insufficient to meet the immense processing demand. As
a result, prices were low and cattle were substantially backlogged
across the supply chain. While that underlying supply-demand dynamic
was cyclically appropriate, and mostly anticipated, the unprecedented
market shocks brought on by the COVID-19 pandemic drastically
exacerbated the adverse effects of that phase of the long-term cattle
cycle. Countless family farmers and ranchers struggled to remain
profitable as cattle prices slogged.
I. Current Cattle Market Conditions
Today, I am pleased to report that the state of the cattle industry
has greatly improved. As we have further transitioned into a new phase
of the cattle cycle, prices have significantly increased--and done so
in a relatively short amount of time. Just last month, we set a record
high spot futures price for Live Cattle, with the April 2023 contract
hitting $175.50/cwt. For context, when I last testified on October 7,
2021, spot Live Cattle closed the day at $125.27. This upward pricing
trend has been true across marketing methods (i.e., negotiated cash,
formula, etc.) and classes of cattle (i.e., calves, feeders, finished
steers and heifers, etc.). So far this month, USDA's Livestock
Mandatory Reporting (LMR) program showed a weighted average fed cattle
cash price of $173.93/cwt. Again, in October 2021, that figure was
closer to $122.55/cwt.
While the price environment for cattle has drastically improved
over the past 2 years, the recovery has been bittersweet. The naturally
occurring contraction phase of the cattle cycle, which we are currently
experiencing, has been accelerated by severe drought experienced across
the country. In fact, herd contraction has resulted in a year-over-year
beef cattle inventory reduction of nearly 4% as of January 2023.\1\
There are currently about 89.27 million head of cattle in the U.S.--the
lowest inventory in 61 years.\2\ Make no mistake: even amid a
recovering market, cattle producers still face a myriad of challenges.
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\1\ Cattle Report. USDA-NASS: 2023.
\2\ Beef Cow Numbers Decline. American Society of Animal Science:
2023.
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I would be remiss if I did not underscore that the entirety of the
price improvement we are currently seeing has occurred without the
enactment of market-altering legislation. Claims suggesting cattle
market conditions would never again favor producers unless Congress
intervened with massive government programs have been undeniably proven
false. The market has unequivocally demonstrated it functions best when
free from interference by Federal planners--when cattle producers are
at liberty to make economic decisions in the best interests of their
unique businesses. To that end, NCBA has been clearly directed by its
membership to maintain opposition to any bills which would limit their
ability to market cattle in the way they see fit, and we call upon
Congress to continue respecting their wishes.
II. Insufficient Forage Availability
Cattle producers are also experiencing substantially reduced access
to forage. From persistent drought in the Midwest to record spring
precipitation in parts of the Great Basin, grazing land is either mud
or dust, and feed is more difficult to come by across most of cattle
country. Tight land and hay supplies even further exacerbate forage
costs and lease rates. While weather events cannot be controlled, the
tools which producers utilize to respond to its effects can be. As I
will explain later in my testimony, access to risk management tools and
disaster indemnity programs is crucial to ensuring the strength of the
livestock sector.
III. Rising Interest Rates
Economic headwinds, such as higher interest rates, continue to
undermine producer profitability and the economic sustainability of
rural America. Cattle producers rely on consistent, dependable access
to credit to cover many different needs, from budgeted operating costs
to unexpected events like emergency veterinary costs or rebuilding
fence after a disaster. To cover these costs, many producers take out
loans that are repaid after their cattle are sold. Unfortunately, for
most of the year cattle operations define cash flow as money leaving
the business instead of coming into the business. Access to credit
allows cattle producers to purchase goods and services in their local
market and support local businesses. While news of higher cattle prices
is welcome, we are also the recipients of higher interest rates that
result in larger loan payments, smaller profit margins for producers
and less business activity for local economies. This is a situation
that most producers know all too well.
IV. Surging Input Costs
The meteoric rise in input costs--despite strong and strengthening
cattle prices--remains an immense barrier to producer profitability.
Inflationary pressures continue to erode bottom lines on family farms
and ranches across the country. Fuel, fertilizer, fencing materials,
animal health supplies, and equipment prices are sharply higher across
the board, and many of these cost categories have increased at a faster
rate than cattle prices. Congress must seriously evaluate the extent to
which Federal policies have contributed to this unsustainable situation
and, where appropriate, take the necessary steps to remedy it. Any
solutions must be rooted in sound monetary policy and in accordance
with the free-market principles which define the American economy.
V. Burdensome Regulations
Overly burdensome Federal regulations also complicate producers'
ability to be profitable, undermining their ability to maximize their
investments in all facets of sustainable operation. Whether it is
uncertainty resulting from arduous livestock transportation
requirements, compliance costs associated with the Biden
Administration's Waters of the United States (WOTUS) Rule, or land
management restrictions resulting from unscientific influences in
implementation of the National Environmental Policy Act (NEPA) and
Endangered Species Act (ESA), cattle producers end up being saddled
with the bill more often than not. Further compounding this problem is
the unserious manner in which Federal agencies calculate stakeholder
compliance costs in their rulemaking analyses, often grossly
underestimating financial burdens. At a time of great geopolitical
uncertainty, the U.S. simply cannot afford to further burden food
producers with massive costs and rules crafted by those farthest from
the ground. As elaborated later in my testimony, over-regulation must
be addressed. Food security is national security, and the current
regulatory environment jeopardizes the continued success of America's
farmers and ranchers--those on the front lines providing that food
security.
VI. Summary
To recap, though challenges remain, I am optimistic about the state
of the cattle industry. While cattle prices are reaching record highs,
many producers are not able to fully take advantage of this welcome
development due to increased input costs, climbing interest rates, and
a web of regulatory red tape. In fact, several producers are analyzing
these very risk factors and opting out while the going is good rather
than investing with confidence in the growth of our industry. Going
into a farm bill year and a new Congress, lawmakers can help those
producers share my optimism by addressing several key issues.
NCBA Priorities for the 118th Congress
As the Committee seeks to address a host of challenges during the
118th Congress, NCBA urges lawmakers to consider several key areas of
importance to cattle producers. While the following is by no means an
exhaustive list, these are the areas of most immediate concern to
farmers and ranchers.
I. Pass the 2023 Farm Bill
An important priority for cattle producers this Congress is timely
passage of a robust farm bill. The farm bill authorizes several
important U.S. Department of Agriculture (USDA) programs ranging in
mission from conservation to risk management, and trade promotion to
animal disease preparedness. Farmers and ranchers rely on efficient
implementation of these programs to ensure stability across the
agricultural sector.
Specifically, NCBA urges the following as the 2023 Farm Bill is
considered:
Protect Animal Health
Animal disease poses one of the greatest threats to the U.S.
livestock industry. Since passage of the 2018 Farm Bill, highly
pathogenic avian influenza has wreaked havoc upon the domestic
poultry industry, African swine fever has spread closer to U.S.
shores, and foot-and-mouth disease continues to run rampant
across the globe. These diseases, and others like them, will
cause tremendous economic devastation if not properly responded
to in a timely manner. Simply put, Congress cannot afford to
cut corners on animal disease prevention and preparedness
programs.
Therefore, NCBA calls on Congress to strongly support three
critical animal health components in the farm bill. First,
provide mandatory funding to the National Animal Vaccine and
Veterinary Countermeasures Bank (NAVVCB) at $153 million per
year. This level of support will significantly ramp up the
cattle industry's ability to respond to and eradicate animal
disease outbreaks through a robust vaccine bank. Second, NCBA
requests $70 million per year in mandatory funding for the
National Animal Disease Preparedness and Response Program
(NADPRP) at USDA's Animal and Plant Health Inspection Service
(APHIS). This crucial program allows USDA to collaborate with
interested stakeholders nationwide to better prepare for and
remedy animal health emergencies. Third and finally, NCBA urges
lawmakers to provide $10 million per year in mandatory funding
for the National Animal Health Laboratory Network (NAHLN), with
an additional authorization for appropriations of $45 million
per year. This program conducts critical animal disease
surveillance and diagnostic work which is instrumental to rapid
response in the event of an outbreak. Collectively, the
[NAVVCB], NADPRP, and NAHLN are colloquially referred to as the
``Three-Legged Stool,'' and NCBA reiterates the importance of
adequately supporting all three elements within APHIS.
Promote Voluntary Conservation Programs
Cattle producers graze on more than 660 million acres in the
United States, nearly \1/3\ of the nation's continental land
mass. Encouraging and incentivizing voluntary conservation
practices is an essential part of the equation when it comes to
managing across the portion of those acres that are privately
owned. NCBA strongly supports a number Title II conservation
programs in the farm bill, as many cattle producers' only nexus
with the Federal Government is through their local Natural
Resources Conservation Service (NRCS) or Farm Service Agency
(FSA) office.
Working lands programs such as the EQIP and Conservation
Stewardship Program (CSP)--in tandem with Conservation
Technical Assistance--provide the most direct, on-the-ground
support for cattle producers. The 2018 Farm Bill maintained a
50% carve-out for livestock-related practices under EQIP, but
this set-aside was removed in the Inflation Reduction Act.\3\
NCBA urges Congress to reestablish the set-aside; CSP funding
goes primarily to crop producers, and the EQIP set-aside will
ensure an equitable distribution of programmatic funding and
maximize impact across all working lands.
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\3\ Pub. L. 117-169.
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The Conservation Reserve Program (CRP) can be a valuable tool for
cattle producers, both for conservation purposes and for income
diversification. However, the current terms and parameters of
CRP leases discourage many producers from enrolling. NCBA
encourages Congress to allow grazing as a mid-contract
management tool, as a more climate-friendly alternative to
chemical use or controlled burning. We also urge Congress to
open CRP acreage for emergency haying and grazing. Certain CRP
practices lose emergency haying and grazing access when
counties quality for the Livestock Forage Disaster Program
(LFP). Not only does this limit grazing access when forage
supply is most limited, but the distribution of payments to all
producers in a county creates inflation within the industry and
pushes hay prices up.
Finally, NCBA requests that lawmakers direct USDA to allow
producers to graze cover crops planted as part of voluntary
conservation programs without a reduction in payment. Again,
grazing is a low-impact, nimble tool that can be highly
beneficial in place of burning, tilling, or chemical treatment.
Reinforce Disaster Programs
Natural disasters, livestock predation, and other unforeseen
events can have catastrophic consequences for cattle producers.
Disaster programs, such as the Livestock Indemnity Program
(LIP) and Livestock Forage Program (LFP) ensure farmers and
ranchers can easily recover from weather events or other causes
of death loss. Congress should continue to support such
programs in the upcoming farm bill and avoid changes that would
make programs less accessible or restrictive.
Support Risk Management Programs
Risk management is a major component of a successful and solvent
cattle operation. Cattle producers utilize a myriad of
insurance tools, production practices, and futures products to
better protect themselves from market volatility. While the
Federal crop insurance system is primarily geared toward crop
production, historically, those few products designed for
livestock producers have not been workable for the majority of
the cattle industry--particularly smaller, cow-calf operators.
However, recent administrative changes to programs like the
Livestock Risk Protection (LRP) and Pasture, Rangeland, Forage
(PRF) programs have resulted in record-breaking enrollment in
both programs. The Federal Crop Insurance Board and USDA's Risk
Management Agency (RMA) have taken feedback from the livestock
sector and improved upon their suite of products to ensure
efficacy and viability. In addition, new tools continue to come
to market which could help cattle producers better weather the
price swings inherent to commodity production. Congress should
continue to support RMA's crop insurance programs, including
LRP and PRF, in the farm bill and resist any attempts to roll
back support for these critical resources.
Oppose a Standalone Livestock Title
The cattle industry focuses on a handful of specific programs in
the farm bill, but a standalone livestock title is not
necessary to accomplish our purposes. However well-intended,
such action would open the door to harmful mandates or poison
pills--such as Mandatory Country-of-Origin Labeling--during
conference negotiations. We respectfully request Congress
advance a bill void of a livestock title.
II. Nullify USDA's Harmful Packers & Stockyards Rules
In July 2021, Agriculture Secretary Tom Vilsack announced that USDA
would begin work to, ``strengthen enforcement of the Packers and
Stockyards Act.'' \4\ Since then, the USDA's Agricultural Marketing
Service (AMS) has promulgated three rules in furtherance of this
objective: ``Transparency in Poultry Grower Contracting Tournaments,''
\5\ ``Poultry Growing Tournament Systems: Fairness and Related
Concerns,'' \6\ and ``Inclusive Competition and Market Integrity Under
the Packers and Stockyards Act.'' \7\ Additionally, NCBA anticipates at
least one additional rule which, as of this writing, has not been
proposed but is identified in the Fall 2022 Unified Regulatory Agenda
as, ``Unfair Practices, Undue Preferences, and Harm to Competition
Under the Packers and Stockyards Act.'' \8\
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\4\ USDA Press Release No. 0130.21.
\5\ 87 Fed. Reg. 34980.
\6\ 87 Fed. Reg. 34814.
\7\ 87 Fed. Reg. 60010.
\8\ Docket No.: AMS-FTPP-21-0046.
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This suite of regulations is the latest in a series of rulemaking
efforts dating back to the 2008 Farm Bill. That legislation directed
the Secretary of Agriculture to, ``promulgate regulations pursuant to
the Packers and Stockyards Act of 1921 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.'' \9\
USDA has attempted rulemaking in accordance with this Congressional
mandate three times: once in 2010,\10\ again in 2016,\11\ and finally
in 2020. The 2010 and 2016 rules were met with overwhelming opposition
from NCBA and the vast majority of livestock and poultry industry
representatives. As a result, the 2010 rule was defunded through the
appropriations process beginning in Fiscal Year 2012,\12\ and the 2016
rule was withdrawn by the Agency.\13\ The 2020 rule, which NCBA
reluctantly supported, was finalized and took effect in January 2021,
satisfying the Congressional directive outlined in the 2008 Farm
Bill.\14\ USDA bears no statutory obligation to continue promulgating
regulations under Sections 202(a) and 202(b) of the Packers and
Stockyards Act. Despite this fact, USDA is proceeding with the
aforementioned regulations and NCBA once again opposes these misguided
rules which, if enacted, would have devastating effects on the cattle
market.
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\9\ Pub. L. 110-234 [Sec. 11006]; 7 U.S.C. 228.
\10\ 75 Fed. Reg. 35338.
\11\ 81 Fed. Reg. 92703.
\12\ Pub. L. 112-55; Division A, Title VII, Section 721.
\13\ 82 Fed. Reg. 48603.
\14\ 85 Fed. Reg. 79779.
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Though not the sole source of our concerns with these rules, chief
among them is USDA's position regarding Harm to Competition, a crucial
legal precedent which has been upheld in Federal circuit court each of
the eight times it has been tried.\15\ In his 2021 announcement,
Secretary Vilsack indicated that USDA, ``will re-propose a rule to
clarify that parties do not need to demonstrate harm to competition in
order to bring an action under (the Packers and Stockyards Act).'' If
USDA is successful in this attempt, standard business practices
developed by cattle producers would be subjected to immense litigation
and Federal scrutiny by Washington bureaucrats. This would set the
industry back decades in terms of innovation and profitability, and
cost cattle producers billions in legal costs.\16\
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\15\ Terry v. Tyson Farms, Inc., 604 F.3d 272, 277-79 (6th Cir.
2010) (stating, ``All told, seven circuits--the Fourth, Fifth, Seventh,
Eighth, Ninth, Tenth, and Eleventh Circuits--have now weighed in on
this issue, with unanimous results.'')
\16\ An Estimate of the Economic Impact of GIPSA's Proposed Rules.
Informa Economics: 2010.
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To date, USDA has demonstrated little interest in seriously
engaging with livestock and poultry producers to address our concerns
with these regulations, and NCBA expects the proposed rules will
finalize with few significant amendments. As such, we urge Congress to
once again reign in USDA's egregious breach of both Congressional
intent and judicial precedent by taking action to bar the rules from
taking full force and effect.
III. Defend the Beef Check-off
Commodity research and promotion boards, authorized by individual
statute or the Commodity Promotion, Research, and Information Act,\17\
are indelible in promoting U.S. agriculture- and natural resource-based
commodities both at home and abroad. Earlier this year, H.R. 1249, the
so-called Opportunities for Fairness in Farming (OFF) Act, was
introduced in the House of Representatives. Despite purporting to be a
vehicle to modernize these critical tools, this bill is a blatant
attack on all commodity research and promotion boards (also known as
``Check-off'' programs) which, if enacted, would substantially
undermine producers' ability to market their products and stymie
critical research, including in the field of human nutrition.
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\17\ Pub. L. 104-127.
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The Beef Check-off, for example, was established by statute in 1985
and ratified by 79% of cattle producers in a national referendum 3
years later. The Beef Check-off collects $1 per head from the receipts
of cattle sold and uses these pooled resources to conduct research and
market U.S. beef to both domestic consumers and foreign importers.
According to USDA estimates, cattle producers realize $11.91 in return
for every $1 invested in the Beef Check-off assessments.\18\
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\18\ Cattlemen's Beef Board. U.S. Department of Agriculture.
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Research and promotion boards, including the Beef Check-off, exist
to develop new markets and strengthen existing channels for specific
commodities while conducting important research and promotional
activities (e.g., the immensely successful Beef. It's What's For
Dinner. campaign). They also work to educate consumers on behalf of a
particular commodity to expand total demand to the benefit of all
producers. Contrary to claims made by proponents of the OFF Act, check-
offs are prohibited from influencing public policy and disparaging
other commodity products. As such, they are currently subjected to
rigorous compliance protocols, both internally and by USDA.\19\
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\17\ Guidelines for AMS Oversight of Commodity Research and
Promotion Programs. U.S. Department of Agriculture: 2020.
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The Beef Check-off has measurably improved beef demand since its
inception. Without check-off programs, demand and education outreach
efforts would be adversely impacted to an immense degree. NCBA urges
Congress to defend the Beef Check-off and vehemently oppose the OFF
Act.
IV. Promote Animal Health and Disease Preparedness
As previously noted, one of the biggest threats to cattle producers
is animal disease. Established by Congress in 2003 as an amendment to
the Food, Drug, and Cosmetics Act,\20\ the Animal Drug User Fee Act
(ADUFA) authorizes the Food and Drug Administration (FDA) to collect
fees from animal health companies to enable FDA's Center for Veterinary
Medicine to meet performance standards for the timely approval of new
animal drugs.\21\ NCBA urges swift reauthorization of the ADUFA program
with no post-market amendments before September 30, 2023. An efficient
new animal drug review process is essential to the approval of safe and
effective new animal drugs that protect animal and public health.
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\20\ Pub. L. 75-717.
\21\ Pub. L. 108-130.
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Equally as important, in January 2023, USDA-APHIS announced a
proposed rule to require electronic identification (EID) for interstate
movement of certain cattle. NCBA recognizes that animal disease
traceability (ADT) is an essential component of protecting the U.S.
cattle herd during an animal disease outbreak. While NCBA would have
preferred industry take the lead on this issue rather than APHIS, we
support the development and implementation of a nationally significant
ADT system. An official ADT program rule from USDA should include
parameters that ensure strict data integrity throughout the system,
limit the cost passed onto producers, and operate at the speed of
commerce. Additionally, in order to ensure a smooth transition to
compliance with the proposed rule and robust participation in ADT
programs, Congress should provide APHIS sufficient funding to purchase
official EID tags and related infrastructure to be made available to
cattle producers impacted by the rule. This is not unprecedented, as
APHIS has previously used the Animal Health Technical Services line for
this purpose when EID was a voluntary form of official identification.
Without a national traceability system in place, the already
significant impacts of a foreign animal disease outbreak would be
magnified. For example, a foot-and-mouth disease (FMD) outbreak in the
United States would lead to an immediate stop of all livestock movement
for at least 72 hours. Most major export markets would close to U.S.
beef and the estimated economic impact would be in the tens of billions
of dollars. A traceability system would support a quick return to
normal operations for cattle producers following a disease outbreak.
Traceability data would allow producers in low-risk areas to resume
transporting cattle, while helping animal health officials stop the
spread of disease in high-risk areas. A traceability program would also
help expedite the return to an FMD-free designation, which is
beneficial for trading relationships and consumer trust in beef.
V. Correct the Record on Cattle's Climate and Conservation Benefits
The United States is home to the most sustainable beef production
system in the world, thanks to decades of and continual improvement by
American farmers and ranchers. Thanks to investments in cattle
genetics, technologies, and management practices, the same nutritious
protein today takes significantly less land, water, and feed to
produce. Our emissions per pound of beef have decreased nearly 40%
since 1960, and direct emissions from beef account for only 2% of our
nation's overall greenhouse gas emissions.
Cattle play an integral role in the carbon cycle on our nation's
grasslands, landscapes that have always existed in harmony with grazing
animals. Within 10 years, 90% of that methane combines with oxygen in
the atmosphere and converts to carbon dioxide. Carbon dioxide is
absorbed by grasses during photosynthesis, cattle graze the grass, and
the cycle begins anew. The methane emitted by cattle reenters the
carbon cycle; it does not remain in the atmosphere in perpetuity.
Thanks to the natural topography of the continent, cattle are able
to graze our vast landscapes without deforestation. Cattle spend most
of their lives grazing on pasture, oftentimes on ground that is
unsuitable for producing crops. Between their consumption of otherwise
inedible forage and the use of other food byproducts in cattle feed,
90% of what cattle consume is inedible to humans. This makes them
incredibly efficient upcyclers, turning forage and foodstuffs that
would otherwise end up in a landfill into nutritious, high-quality
protein that feeds consumers at home and around the world.
The livestock industry holds an unmatched capability to influence
land management in the United States for the better, and a strong track
record of sustainable stewardship. Forty-seven percent of all U.S.
private land is grazed by livestock, comprised of diverse range,
pasture, and forest ecosystems.\22\ On Federal lands, cattle and sheep
ranchers hold more than 22,000 Federal permits to graze on lands
administered by the Bureau of Land Management (BLM) and U.S. Forest
Service (USFS) on behalf of the American people. These ranchers
undergird the rural economy across much of the western United States,
contributing an estimated $1.5 billion each year to communities across
the region.
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\22\ Natural Resources Conservation Service. National Range and
Pasture Handbook. U.S. Department of Agriculture: 1997.
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Additionally, Federal grazing permittees make invests in the land
that benefit our natural resources, the Federal agencies tasked with
management, and the taxpaying Americans that treasure these iconic
landscapes. Grazing is an effective tool to manage a wide variety of
forage, encouraging the growth of perennial native grasses and curbing
the spread of invasive species like cheatgrass. Grazing makes
significant contributions to soil health, through both added organic
matter and mechanical hoof action, both of which improve the soil's
ability to store carbon. Last year, wildfires burned more than 7.5
million acres across the West.\23\ To state the obvious, the need to
reduce fuel loads and lower the risk of catastrophic wildfire is
critical. According to the National Interagency Fire Center, this work
costs Federal agencies on average $150/acre--livestock grazing can
accomplish the same task at no cost to taxpayers. Cattle grazing play a
critical role in fire suppression and creating resiliency on the land.
Grazing is also nimble and scalable, meaning it can be applied in
precise locations and patterns to create fuel breaks where other tools
like chemical treatments or prescribed burns may not be possible or
advisable.
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\23\ National Interagency Coordination Center Wildland Fire Summary
and Statistics Annual Report. National Interagency Fire Center: 2022.
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On both private and public lands, cattle ranchers' conservation
work supports some of our nation's most iconic wildlife species,
generates billions of dollars through recreation and tourism, and keeps
millions of acres healthy, green, and free of development sprawl. NCBA
urges Congress to continue to incentivize voluntary conservation work
on private lands, encourage cross-boundary collaboration on private and
public lands, and reduce the regulatory burden on ranchers so that they
can continue stewarding our nation's open landscapes.
VI. Develop New and Existing Export Markets for U.S. Beef
Trade is vital to the success of the U.S. cattle and beef industry.
Every effort should be made to expand export opportunities for U.S.
beef by removing tariff and non-tariff barriers through trade
agreements and other terms of market access. NCBA strongly supports
market-driven and science-based trade policy that removes restrictive
tariffs and arbitrary measures that punish U.S. cattle producers and
our global customers. NCBA's trade goals include reauthorizing Trade
Promotion Authority and prioritizing trade with our allies, especially
the United Kingdom. Effective trade policy will empower the entire
production chain--from cattle producer to retailer--to capitalize on
consumer demand and benefit from exports and imports of live cattle and
beef.
Trade agreements have been instrumental in removing tariff and non-
tariff trade barriers--resulting in record-setting export sales for
U.S. beef. In 2022, exports added $448 per head by selling certain cuts
like tongues and short plate at stronger prices overseas.\24\ Imported
lean beef trimmings are used in combination with our fat cattle
trimmings to make the leaner ground beef American consumers are
demanding. The volume of cattle involved in cross-border cattle trade
is small in comparison to overall U.S. cattle production, and Congress
should continue to support trade initiatives that include provisions
beneficial to cattle producers.
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\24\ 2022 Beef Exports Set Annual Records. U.S. Meat Export
Federation: 2023.
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The U.S. has some of the highest food safety and animal health
standards in the world, and for a foreign country to gain access to our
market it must demonstrate safety equivalence to these rigid standards.
U.S. beef consumers demand well-marbled steaks and lean ground beef--
two products which are not derived from the same animal. To meet lean
beef demand, we import approximately 11% of beef consumed domestically.
Of that, \3/4\ is lean trim for blending. One of the leading import
sources for lean trimmings is Brazil. Unfortunately, the government of
that country has repeatedly shown they are unwilling or unable to
report outbreaks of animal disease in a timely manner as prescribed by
the World Organization for Animal Health. NCBA has repeatedly raised
these concerns with USDA and Secretary Vilsack, and strongly encourages
the U.S. government to hold Brazil accountable and ensure protection of
U.S. beef producers and consumers.
VII. Reduce Regulatory Burdens for Cattle Producers
Cattle producers navigate an immensely bloated body of regulations
each day in the course of running their businesses and caring for the
land. One of the most impactful and burdensome regulations, on both
private- and public-land operators, is the Endangered Species Act
(ESA). The well-meaning law was intended to create a framework for
identifying at-risk species, evaluating status, listing, recovery, and
delisting when goals are met. In the half-century since its inception,
only 2% of listed species have ever met the recovery and delisting
thresholds; improvements are urgently needed.
NCBA urges Congress to work with cattle producers, not against
them, in their efforts to voluntarily conserve species habitat. Many
species of note, such as the lesser-prairie chicken, rely almost
entirely on private landowners for their habitat. Moving away from
overly punitive, restrictive, and prescriptive listings and encouraging
voluntary conservation work will benefit both producers and species at
risk. One fix to expand flexibility would be to pass legislation
allowing for the creation of a 4(d) rule under the ESA for species
listed as ``endangered,'' not just ``threatened.''
Additionally, we ask Congress to close ESA loopholes that have
allowed frivolous litigation to bog down the U.S. Fish and Wildlife
Service (USFWS) and other agencies for decades. Radical environmental
activists have perfected the art of using the ESA to target industries
they oppose, such as farming and ranching. Lawsuits that force USFWS to
jump through legal and administrative hoops bog down the agency, push
them to regulate by popular opinion rather than sound science, and
divert resources from the species that are truly in peril.
Finally, NCBA urges Congress to support efforts to de-list species
in a prompt and timely manner when recovery goals have been met. When
enacted, part of Congress' clear intent in the ESA was to measure
success, demonstrate recovery goals had been met, and de-list the
species. Litigation and constantly shifting definitions of recovery
have made delisting very rare. This opaque process has resulted in
species like the gray wolf, which has met recovery goals many times
over, to remain on the list, undermining public confidence and trust in
USFWS.
On Federal lands, the greatest regulatory burden facing cattle
producers is the National Environmental Policy Act (NEPA). NEPA
assesses nearly every activity on public lands, including grazing
permits. Cattle ranchers understand and support Federal land management
agencies making decisions based on the best available science. However,
NEPA has evolved from a decision-guiding tool into a barrier that is
exploited to obstruct projects. In 2018, the White House Council on
Environmental Quality estimated that it took the Bureau of Land
Management (BLM) and U.S. Forest Service (USFS) an average of 4.5 years
to complete a NEPA Environmental Impact Statement. Some ranchers have
waited years or even decades to complete simple tasks like renewing a
grazing permit, installing a water feature that will benefit livestock
and wildlife, or reducing fuel loads in wildfire-prone areas.
In its current form, the NEPA administrative process is completely
unable to keep pace with the needs of the livestock industry,
infrastructure projects, renewable and conventional energy development,
and overdue environmental management actions. NCBA urges Congress to
expand agencies' ability to use Categorical Exclusions for grazing
permit renewals and wildfire mitigation actions. We also request that
Congress require agencies to consider the full impacts of a proposed
action, including socioeconomic factors, in addition to environmental
criteria.
VIII. Reauthorize Livestock Mandatory Reporting
LMR is the most accessible and important market transparency tool
available to cattle producers today. Since its inception over twenty
years ago, cattle producers have benefited from consistent, timely, and
accurate reporting of market information by USDA-AMS. In addition to
using this information to make informed business decisions, LMR
information is often used in cattle pricing agreements. It is a trusted
source which has been wildly successful and popular throughout its
history.
LMR must be reauthorized by Congress every 5 years, and most
recently expired at the conclusion of Fiscal Year 2020. Though its
authority has been temporarily extended through the appropriations
process since then, cattle producers need the certainty and
dependability that only a full and complete reauthorization can
provide. As such, NCBA once again urges Congress to reauthorize this
critical program before September 30, 2023.
IX. Expand Beef Processing Capacity
NCBA is generally supportive of USDA's investments to expand meat
and poultry processing capacity. Increased hook space will further
improve producer leverage in cattle negotiations, increase resiliency
in the beef supply chain, and provide producers more options for
packing services. Programs such as the Meat and Poultry Processing
Expansion Program, which has awarded over $130 million in grants to
eligible processors to expand their capacity, is a significant tool
which will help strengthen the supply chain. NCBA appreciates USDA's
attention to this very important issue and looks forward to continuing
to work together to make sure investments go where they are needed
most, and processors can access the funds they need.
In addition to capital assistance, NCBA supports removing
regulatory barriers for smaller, regional beef processors where
practicable. However, we remain opposed to legislation that rolls back
longstanding food safety protocols and could unintentionally erode
consumer confidence in the security of beef. For example, the
Processing Revival and Intrastate Meat Exemption (PRIME) Act would pave
the way for uninspected meat and poultry products to be sold in retail
channels.\25\ While well-intended, this bill would cause consumers to
question U.S. beef's superb safety reputation, ultimately resulting in
a decline in beef demand which only harms cattle producers. Supply side
market shocks, such as the disruptions caused by COVID-19, are
comparatively easier to recover from than demand side market shocks
(i.e., reduced consumer confidence in the safety of meat and poultry
products). Consequently, NCBA has supported, and continues to support,
legislative proposals like the Direct Interstate Retail Exemption for
Certain Transactions (DIRECT) Act which would increase access to
marketing channels for state-inspected meat and poultry processors.\26\
We have also supported the Amplifying Processing of Livestock in the
United States (A-PLUS) Act, which would modernize regulations to allow
auction markets to invest in local beef processing.\27\ These bills
address key barriers for smaller processors while also accommodating
the food safety measures which consumers trust.
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\25\ H.R. 2814.
\26\ H.R. 547, 117th Cong.
\27\ H.R. 530.
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Conclusion
To summarize, Mr. Chairman, it has been said many times before and
will certainly be said again in the future: cattle producers are
resilient. Overcoming adversity, and sometimes the odds, we will
continue to produce the best beef on earth in the most sustainable way
in the world.
Thank you for inviting me to testify on these important issues. I
look forward to answering any questions.
Respectfully Submitted,
Todd Wilkinson,
President,
National Cattlemen's Beef Association.
The Chairman. Thank you. Mr. Hays, please begin your
testimony when you are ready.
STATEMENT OF SCOTT HAYS, PRESIDENT, NATIONAL PORK PRODUCERS
COUNCIL; MEMBER, MISSOURI PORK
ASSOCIATION, MONROE CITY, MO
Mr. Hays. Chairman Mann, Ranking Member Costa, and Members
of the Subcommittee, my name is Scott Hays, and I serve as
President of the National Pork Producers Council. I am a fifth
generation producer, and owner of Two Mile Pork in northeast
Missouri. The U.S. pork industry serves as a major contributor
to both agriculture and the overall U.S. economy. In 2021, U.S.
pork producers marketed more than 140 million hogs, valued at
over $28 billion, while supporting more than 610,000 U.S. jobs,
and supplying consumers with nutritious products that are
raised safely and humanely. To produce those hogs, pork
producers use roughly 1.6 billion bushels of corn, the meal
from 433 million bushels of soybeans, and purchase more than
1.6 billion in other feed ingredients annually.
While the successes in our industry are particularly
impressive, given the challenges our farmers have faced, today
is a tough time in the U.S. pork industry, where producers are
losing an average of $40 per head on hogs marketed so far in
2023. Current losses are largely due to record high production
costs that have increased about 50 percent from 2020. This is
putting a pinch on the pork industry, and could drive
consolidation at the farm level, as producers may be forced to
exit the industry due to this economic reality.
On top of this, the Supreme Court released a disappointing
decision on California's Prop 12 last week. The implications of
that decision will go far beyond the farm. We are committed to
ensuring our consumers have food on the table, our pork
producers and family farms are strong, and to working with our
champions to address the issues this decision raised. With
higher costs and fewer choices, every American will be impacted
by this decision. We stand behind the rights of farmers and
consumers across this country. As Congress drafts the next farm
bill, it must look to ensure not only--consider the needs and
economic conditions of today, but provide tools needed for the
next 5 years.
A growing threat of foreign animal disease, and
specifically African Swine Fever, is of particular concern, and
farmers need tools to prevent and rapidly respond to an
outbreak should one ever occur. The three-legged stool of
animal health that was laid out in the 2018 Farm Bill has set
the course for what pork producers need in the upcoming farm
bill. The outbreak of foreign animal disease would devastate
not just hog farmers, but also cattle, sheep, and feed grain
producers, and result in the loss of thousands of jobs through
disruptions in domestic production, and the loss of export
markets.
Outside of disease concerns and threats, Livestock
Mandatory Reporting remains a critical issue, and we cannot
allow this vital program to lapse. Market reporting is a
meaningful price discovery, and critical to pork producers'
ability to accurately market their livestock. Declaring
mandatory price reporting an essential service and improving
transparency and utility of the reported information are
critical and needed enhancements. Changes in the way hogs are
marketed over the past 3 years have made it necessary to re-
evaluate our priorities for full authorization.
While NPPC believes that we can make meaningful changes to
price reporting that would give producers greater transparency
in marketing their livestock, we are also concerned about
current efforts that would stifle innovation, reduce
competition, and introduce significant legal and regulatory
uncertainty. For these reasons, NPPC opposes the changes
proposed under the Packers and Stockyards Act and ask that USDA
work with the industry to find meaningful reforms that provide
greater transparency for pork producers.
Public policy should also reflect the tremendous value of
exports, and the benefits that would come from expanding
foreign markets for U.S. agricultural products. Comprehensive
free trade agreements are vital to the industry's continued
success. Additionally, the Market Access Program, Foreign
Market Development Program, are critical to building commercial
export markets for U.S. agriculture. The value of pork exports
equals $61 per every hog marketed. NPPC is therefore a strong
advocate for increase in funding for these programs through the
farm bill. In addition to export markets, U.S. pork producers
face challenges at home too, including an ongoing labor
shortage impacting much of the agricultural sector, and
threatening the food supply. Despite significant wage increases
and competitive benefits, pork farm employment has declined
since 2021.
Thank you for the opportunity to speak to you today. I am
happy to answer questions.
[The prepared statement of Mr. Hays follows:]
Prepared Statement of Scott Hays, President, National Pork Producers
Council; Member, Missouri Pork Association, Monroe City, MO
Introduction
The National Pork Producers Council (NPPC), representing 42
affiliated state associations, works to ensure the U.S. pork industry
remains a consistent and responsible supplier of high-quality pork to
domestic and international markets. Through public policy outreach,
NPPC fights for reasonable legislation and regulations, develops
revenue and market opportunities, and protects the livelihoods of
America's more than 66,000 pork producers.
The U.S. pork industry serves as a major contributor to both the
agricultural and overall U.S. economy. In 2021, U.S. pork producers
marketed more than 140 million hogs valued at over $28 billion, while
supporting more than 610,000 U.S. jobs and supplying consumers with
nutritional products that are raised safely and humanely. The U.S. is
also a global supplier of pork, with exports accounting for nearly a
quarter of annual pork production and supporting more than 155,000 U.S.
jobs.
To produce those hogs, pork producers used roughly 1.6 billion
bushels of corn and the soybean meal from 433 million bushels of
soybeans in 2022. They also used roughly 5 million tons of distillers
dried grains with solubles (DDGS), a major byproduct of corn ethanol
production.
The successes seen in our industry are particularly impressive
given the challenges our farmers face. From trade retaliation, supply
chain issues exacerbated by the COVID-19 pandemic, labor shortages, and
looming threats of foreign animal diseases, pig farmers have prevailed
in difficult times to put safe and accessible food on American tables.
It remains a challenging time for the U.S. pork industry, with hog
producers losing on average $40 per head of hogs marketed. While
current markets are within the range typically seen at this point in
the marketing year, input costs have risen by some 50 percent in the
past year. This is putting a pinch on the pork industry and will lead
to greater consolidation as producers may be forced to exit the
industry due to this economic reality. This only adds to the
uncertainty that exists with the credit market and the presence of
African Swine Fever in the western hemisphere.
On top of this, the Supreme Court released its very disappointing
decision on California's Proposition 12 last week. The implications of
the decision will go far beyond the farm. With higher costs and fewer
choices, every American will be impacted by this decision. We stand
behind the right of farmers everywhere and consumers across the
country--and we look forward to working constructively to find a
reasonable solution.
NPPC is hopeful the 2023 Farm Bill fully funds programs vital to
ensuring animal health across species. The growing threat of foreign
animal disease is of particular concern, and farmers need tools to
prevent and rapidly respond to an outbreak.
Foreign Animal Disease (FAD) Prevention
Pork producers are facing an increasing threat from foreign animal
diseases (FADs), such as African swine fever (ASF). To combat this,
U.S. farmers collaborate with the U.S. Department of Agriculture's
(USDA) Animal and Plant Health Inspection Service (APHIS), state animal
health officials, and other stakeholders. They work to maintain early
detection, prevention, and rapid response tools to address any
outbreak, including a strong laboratory capacity for surveillance, and
a stockpile of vaccines to quickly respond to high-consequence
diseases. If an FAD, like foot-and-mouth disease (FMD), were to occur,
it would devastate not only hog farmers but also cattle, sheep, and
feed grain producers. It would lead to significant job losses due to
disruptions in domestic production and the loss of export markets.
The 2018 Farm Bill funded Animal Disease Prevention and Management
actions to address FAD risks, and NPPC urges continued funding for
these critically important programs, specifically:
National Animal Vaccine and Veterinary Countermeasures Bank
(NAVVCB): Established in the 2018 Farm Bill, this U.S.-only
vaccine bank allows USDA to stockpile animal vaccines and
related products to use in the event of an outbreak of FMD or
other high-impact FADs. The bank ensures vaccines are available
for rapid response in the case of an outbreak. It is also
imperative that the NAVVCB is well funded in the event that
vaccines for other high-consequence FADs, such as ASF, become
viable.
National Animal Health Laboratory Network (NAHLN): The NAHLN
is a network of over 60 laboratories that collaborates with the
National Veterinary Services Laboratories (NVSL) on disease
monitoring. Should FAD strike, diagnosing and detecting the
extent of the outbreak as rapidly as possible plays a key role
in responding to a disease and limiting the impact on
producers. The laboratory capacity of the NAHLN is critical to
ensuring the United States can rapidly and effectively respond
to an outbreak. Enhancing animal health diagnostic testing for
both endemic and high-consequence pathogens in the nation's
livestock and poultry is vital to protecting animal health,
public health, and the nation's food supply.
National Animal Disease Preparedness and Response Program
(NADPRP): This program allows APHIS to collaborate with animal
health partners nationwide to implement high-value projects
that enhance prevention, preparedness, detection, and response
to the most damaging and emerging FADs that threaten U.S.
agriculture. Cooperative or interagency agreements between
APHIS and states, universities, livestock producer
organizations, Tribal organizations, land-grant universities,
and other eligible entities are vital to addressing the risk of
animal pests and diseases.
National Veterinary Stockpile (NVS): The NVS provides
veterinary countermeasures (animal vaccines, antivirals, or
therapeutic products, supplies, equipment, and response support
services) that states, Tribes, and Territories need to respond
to animal disease outbreaks. Depopulation is a key component of
any FAD control effort, and adequate euthanasia equipment is
critical to its success. Also essential is sampling and
vaccination equipment. The NVS should be well-supplied to step
in if a large-scale outbreak requires resources beyond what
states, Tribes, or Territories may have.
Several other measures to prevent foreign animal diseases from
entering the United States have been enormously successful, and farmers
would benefit from them being continued if not expanded.
The Feral Swine Eradication and Control Pilot Program (FSCP), for
instance, is a joint effort between USDA's Natural Resources
Conservation Service (NRCS) and Animal and Plant Health Inspection
Service (APHIS). Originally included in the 2018 Farm Bill, FSCP
addresses the threat of feral swine pose on agriculture, ecosystems,
and animal health. Given feral swine's role in the worldwide ASF
pandemic, funding for this program should be increased to reduce the
risk of the potential spread of FADs, including ASF, in the United
States.
The Agricultural Quarantine and Inspection (AQI) Services User Fees
Program, jointly administered by the USDA and U.S. Customs and Border
Protection, is crucial to keeping invasive plant and animal pests and
diseases out of the United States. This critical program is funded
through user fees collected by APHIS from international travelers and
commercial traffic.
Unfortunately, in September of last year, APHIS lost its 30 year
authority to collect a surcharge through certain fees because of a
District of Columbia Circuit Court ruling. The loss of this
longstanding authority to collect reserve funds destabilizes AQI
funding and threatens the effectiveness of its programs. NPPC urges
Congress to restore this fundamental user fee authority to APHIS
through the 2023 Farm Bill.
To prevent the introduction of ASF and other FADs into the United
States, the Secretary of Agriculture has used discretionary authority
to operate the National Detector Dog Training Center. The center is the
primary training facility for the so-called ``Beagle Brigade'' of the
AQI program and other agricultural canine teams that help protect
America's natural resources and agriculture producers from foreign
animal and plant diseases and pests. The Beagle Brigade is crucial to
securing the country against ASF, as the disease has gained a foothold
in the Western Hemisphere for the first time in 40 years. We are
therefore imploring Congress to include the Beagle Brigade Act (H.R.
1480/S. 759) in the farm bill.
Livestock Marketing and Transparency
Livestock Mandatory Reporting (LMR) remains a critical issue for
pork farmers today, and we cannot allow this vital program to lapse.
Market Reporting and meaningful price discovery are critical to pork
producers' ability to accurately market their livestock. In 2020,
producers identified several priorities to include in the
reauthorization of LMR. While we consider the declaration of mandatory
price reporting as an essential service and improving the transparency
and usefulness of reported information for producers to be crucial and
necessary improvements, changes in the marketing of hogs over the past
3 years have prompted our industry to reevaluate its priorities for
full reauthorization. Therefore, NPPC has convened a task force and is
seeking a 1 year LMR authorization to allow additional time for
stakeholders to work collaboratively to develop specific
recommendations.
While NPPC believes that we can make meaningful changes to price
reporting that would give hog producers greater transparency in
marketing their livestock, we are also concerned about current efforts
that would stifle innovation, reduce competition, and introduce
significant legal and regulatory uncertainty. In January 2020, the USDA
proposed rules outlining criteria to determine if a preference or
advantage given to a producer can be justified based on market
conditions and reasonable business decisions. USDA also made clear in
the rule that to prevail in the Packers and Stockyards Act (PSA)
challenges, a plaintiff must show a preference or advantage that is
likely to harm competition in the marketplace. The new rules were
finalized in December 2020 and took effect on January 11, 2021.
In 2021, USDA announced it would propose a series of three new
rules to strengthen the Packers and Stockyards Act, two of which have
been proposed. The first rule, proposed in June 2022, focused on the
poultry industry. A second proposed rule, published in October 2022,
would create a new class of producers called ``market vulnerable
individuals'' and names a broad list of conduct retaliatory. Rather
than promoting competition, the rule would create uncertainty,
confusion, and needless litigation in the pork industry without
addressing any specific existing issue. A third rule covering the scope
of the PSA is expected sometime in 2023, meaning that the industry has
not had the opportunity to assess the potentially overlapping impacts
of this series of rulemaking. NPPC opposes the implementation of these
rules and believes that hog producers must have the freedom to enter
contracts that best fit their operations.
Expanding Market Access
Trade is vital to America's pork producers, who annually export
about \1/4\ of their total production to more than 100 countries. The
pork industry exported $7.68 billion of pork in 2022. Those exports
contributed more than $61 to the average price received for each hog
marketed, supported 155,000 American jobs, and contributed more than
$14.5 billion to the U.S. economy, according to Iowa State University
economists.
Despite numerous challenges, a strong U.S. dollar, ongoing supply
chain issues and trade retaliation from some of its top foreign
markets, the U.S. pork industry continues to export a significant
amount of pork. In fact, as of February this year, American pork
producers had already exported products worth $1.2 billion to foreign
destinations. This represents an increase of nearly 123 percent
compared to the same period last year when exports were valued at about
$1.1 billion.
The biggest reason for U.S. pork export growth over the past 2
decades has been through trade initiatives, whether free trade
agreements (FTAs), less-formal trade and investment framework
agreements (TIFAs) or one-off market access deals. Through such
initiatives, the United States moved from a net importer to a net
exporter of pork in 1995.
As a result of trade agreements, U.S. pork exports have increased
more than 1,850 percent in value and more than 1,560 percent in volume
since 1989, the year the United States implemented its FTA with Canada
and started opening international markets for value-added agriculture
products.
Since 2000, pork exports to FTA countries have increased 913
percent, and in countries where the United States has negotiated
preferential market access and where tariffs were slashed, pork exports
increased tremendously.
In addition to comprehensive trade agreements granting better
market access for U.S. pork, the pacts are usually the best avenue for
U.S. agricultural science-based standards to be accepted and for
broader non-tariff market access issues to be resolved.
Policies that foster the free flow of goods and expand export
markets--mostly through trade agreements--are critical to the continued
success of America's pork producers, U.S. agriculture and the overall
American economy. The bottom line: The United States needs more
comprehensive trade agreements that eliminate or significantly reduce
tariffs on and non-tariff barriers to U.S. exports.
Other Priorities for Hog Farmers
As noted above, exports are critical to the U.S. pork industry. We
believe there are two opportunities that should be prioritized to
promote market access. The first is the Indo-Pacific Economic Framework
for Prosperity (IPEF), a U.S.-led initiative developed to forge closer
relationships among nations in the Asia-Pacific region. Pork producers
encourage negotiators to include tariff elimination and agricultural
market access among member nations. NPPC agrees it is important to
negotiate a level playing field for agricultural sanitary and
regulatory standards. However, the biggest disadvantage facing our
industry is high tariffs as competitors have negotiated and entered
into agreements such as the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) that eliminate tariffs and quotas for
pork and pork products.
Another opportunity is the U.S.-Taiwan Initiative on 21st-Century
Trade, which was launched in June 2022 to develop concrete ways to
deepen the countries' economic and trade relationship. NPPC welcomes
these negotiations and hopes that market access issues for U.S. pork
will finally be addressed. Until recently, when new barriers to trade
were enacted, Taiwan had been a growing market for U.S. pork products.
U.S. pork exports peaked in 2020 at $53.9 million but fell to $16
million in 2021. Meanwhile, exports from competing countries increased
by over 70 percent in 2021. The initiative is a timely opportunity to
negotiate eliminating Taiwan's unjustified restrictions on U.S. pork.
U.S. pork producers face challenges at home too. Chief among them
is an ongoing labor shortage impacting much of the agriculture sector
and threatening the food supply. Despite significant wage increases and
competitive benefits, pig farm employment has declined since 2021.
Historically low unemployment rates, changing demographics, and
declining populations in rural communities indicate that the domestic
labor force will not be able to offset the pork industry's worker
shortage. As a result, pig farmers are increasingly dependent on non-
domestic workers, and current visa programs fail to meet our workforce
needs. Improving and updating the antiquated H-2A visa program by
granting access to year-round agriculture industries would solve this
problem and address the needs of non-seasonal farming.
Conclusion
While the industry is facing many challenges, hog farmers, like me,
and our industry allies are committed to working together to maintain
the strength of the U.S. pork industry. We are proud of the work we do
and appreciate the opportunity to help feed America's families.
NPPC and our members are thankful to Chairman Mann, Ranking Member
Costa, and Members of the Subcommittee for their leadership and
consideration of these important issues.
The Chairman. Thank you. Next we will hear from Mr.
Zimmerman. Please begin when you are ready.
STATEMENT OF JOHN ZIMMERMAN, VICE CHAIRMAN, NATIONAL TURKEY
FEDERATION, NORTHFIELD, MN
Mr. Zimmerman. Good morning, Chairman Mann, Ranking Member
Costa, Members of the Subcommittee, and thank you for the
opportunity to be here today. My name is John Zimmerman, and I
am a turkey grower from Northfield, Minnesota, where I also
grow corn and soybeans. I also serve as the Vice Chairman of
the National Turkey Federation, which represents every segment
of the turkey industry, from growers like me to processors,
breeders, and their allied companies. Last year the turkey
industry raised more than 216 million turkeys and produced 5.2
billion pounds of ready to cook turkey meat. We are coming off
an especially challenging year, but the industry is determined
to stay competitive and meet consumer demand in a crowded
protein field.
Since the current Avian Influenza outbreak began in early
2022 there have been 227 cases in commercial turkey flocks,
resulting in the loss of ten million turkeys. Minnesota was
hardest hit, with over 40 percent of the national total. NTF
appreciates USDA's coordinated response to the outbreak,
including the indemnification program, that has been an
economic lifeline to growers, processors in rural America. We
also deeply appreciate the strong support from Congress.
Working together, we have come a long way from the last major
outbreak in 2015. Though viral loads in the wild bird
population have been much higher this time, and the current
strain of the virus is resistant to warm weather, USDA reports
far fewer instances of farm to farm transmission of the virus.
Biosecurity enhancements implemented during the last 7 years
are working. The speed with which USDA deployed a coordinated
response was impressive, and trade disruptions have been
reduced. But we still have more to do.
The outbreak has put tremendous strain on USDA's APHIS. The
agency has been understaffed for some time and needs at least
150 full time employees to return to normal strength, and
ensure we are able to depopulate infected barns as quickly as
possible. Results from APHIS's Wild Bird Surveillance Program
provide a vital early warning system that helps the turkey
industry take timely action to slow the introduction and spread
of the virus, and we need Congress's continued support.
An effective vaccine could be an important tool for
eradication, but outdated trade agreements create enormous
trade ramifications. NTF has repeatedly stated that we are not
seeking to vaccinate commercial poultry if it would severely
damage export opportunities for any poultry or egg product, but
we must work together to identify a potential vaccine and to
modernize our trade agreements. No one should be afraid of
sound science, scientific research, and open negotiation with
our trading partners.
Indemnity payments have been a vital tool in this battle.
It does not cover all grower losses, but they provide a vital
economic lifeline. APHIS has begun paying higher indemnities
for breeders and organic turkeys, and we hope Congress will
support expanding this approach to other special categories,
including no antibiotics ever turkeys, and grandparent and
great-grandparent breeder stock. The up and coming farm bill
can play an important role in battling HPAI. The 2018 Farm Bill
created a strong program to combat foreign animal diseases by
establishing a three-tier animal disease program with mandatory
funding, and legislation is being introduced in the House and
Senate this week to highlight the three-tiered program, and we
urge everyone here to cosponsor the bill, and we look forward
to continuing our work together on the upcoming farm bill.
These are not our only challenges, and I would like to
touch on a few more. CO2 is essential in turkey
production as a stunning agent, and as a way to safely cool
products in our plants. But CO2 prices have soared,
and suppliers have invoked force majeure numerous times because
of CO2 shortages. Almost every turkey plant has
experienced at least one force majeure, and the industry has
lost over 500 days collectively to shortages. Initial
disruptions were driven by maintenance at CO2
processing plants, but the looming doubling of the Sec. 45Q tax
credit for carbon sequestration in the Inflation Reduction Act
(Pub. L. 117-169) is sure to exacerbate the problem.
The turkey industry's commitment to food safety will always
be our top priority, and NTF welcomes the exploration of new
approaches to controlling Salmonella, so long as the new
policies are science and data-driven, and likely to improve
public health. In April USDA's FSIS released a proposed rule to
declare Salmonella an adulterant in a raw chicken product. The
agency also is conducting two risk assessments related to
Salmonella in poultry and preparing to draft a new Salmonella
policy for poultry plants. The risk assessment will provide
valuable data, and new policy proposals may lead to advances in
food safety regulation, but new regulations should not be
proposed before the risk assessments are complete.
USDA has also recently issued two proposed rules seeking to
address what the Department says are flaws in the current
poultry production contracting process. The first rule dealt
with contract transparency, and the second is designed to
ensure inclusiveness in the poultry contracting. The first rule
lacks a clear understanding of turkey production, and as a
turkey grower, I can tell you this proposal does not benefit
me, or any of my neighbors. The second rule is far too
ambiguous, clearly invites litigation, and will make it much
more difficult for processors and growers to conduct business.
We urge USDA to withdraw the rule.
And finally, our industry continues to suffer from a lack
of access to workers. Most turkey plants are located in rural,
low unemployment areas, and to fully staff our plants, our
processors need outside labor, including immigrant labor.
Guestworker programs target only seasonal, on-farm labor and
non-agricultural manufacturing. The turkey industry supports
immigration reform that will maximize benefits to the industry
and ensure a strong immigration system that meets the needs of
the U.S. economy.
Once again, thank you for the opportunity to testify today
on the state of the U.S. turkey industry and the issues
impacting our businesses, and I would be happy to answer any
questions.
[The prepared statement of Mr. Zimmerman follows:]
Prepared Statement of John Zimmerman, Vice Chairman, National Turkey
Federation, Northfield, MN
Good morning, Chairman Mann, Ranking Member Costa[, and] Members of
the Subcommittee. Thank you for the opportunity to share the turkey
industry's perspective today.
My name is John Zimmerman, and I'm a second-generation turkey
grower from Northfield, Minnesota. On my farm, we raise about 100,000
turkeys annually that produce roughly 4 million pounds of turkey meat
each year. We also grow corn and soybeans as well. For me, raising
turkeys is a family business. I've been around the industry my entire
life. My father raised turkeys before me, and I took over the family
business. I won't say it's easy work. But I do what I love.
I also serve as the Vice Chairman of the National Turkey
Federation, which represents every segment of the U.S. turkey
industry--from growers like me to processors, breeders and the allied
companies that produce the goods and services we use to bring turkeys
from the farm to tables in this country and around the world.
Last year, more than 216 million turkeys were raised in the United
States, and USDA's latest data projects that turkey meat production
will exceed last year's 5.2 billion pounds of ready to cook turkey
meat. As the industry continues to work through challenges and
ultimately recover from the current highly-pathogenic avian influenza
(HPAI) outbreak, we are also working to find more ways to remain
competitive and meet consumer demands in a crowded protein field.
Turkey may have its big day on Thanksgiving, but it's also a great
year-round protein source. While HPAI has dealt the industry a severe
blow, our history indicates a tremendous resilience in our industry
that translates into growth opportunities in the near future.
Disease isn't the only challenge we face. We need common-sense
policies from our leaders in Washington that protect food safety,
animal welfare and the environment without undermining our ability to
produce safe, wholesome and nutritious products affordable to Americans
of all income levels. We need your help, and we look forward to working
with Congress, and this Committee, to address these issues.
Highly-Pathogenic Avian Influenza
Since the HPAI outbreak began in early February of 2022, there have
been 227 cases in commercial turkey or turkey breeder flocks, resulting
in the loss of slightly more than ten million turkeys. Across all
commercial poultry and egg producing operations, almost 57 million
birds have been lost to the disease. The H5N1 strain has been found in
commercial and backyard flocks in 47 states, taking a huge toll on
farmers and the communities in which they operate.
NTF appreciates USDA's coordinated response to the outbreak,
including the indemnification program that has been an economic
lifeline to growers, processors and rural America. We also deeply
appreciate the strong Congressional support as we manage through this
crisis. That support will be critical in the months ahead as we seek to
put this outbreak behind us and reduce the chances of another outbreak
in the future.
Working together, we have come a long way from the 2015 outbreak.
The viral loads in the wild-bird population have been significantly
higher this time than they were in 2015, and the current strain of the
virus is more heat resistant, meaning the virus did not die out with
the arrival of summer. Nonetheless, we have scored some important
victories on which we can build. USDA reports far fewer instances of
farm-to-farm transmission of the virus, meaning the biosecurity
enhancements implemented across the last 7 years are working. The speed
with which USDA deployed a coordinated response was impressive. Trade
disruptions have been reduced.
We still have important work yet to be completed. We would like to
outline some of the most important challenges that lie ahead.
Readiness: While the Federal response has been impressive, dealing
with a large multi-state outbreak has put tremendous strain on USDA's
Animal and Plant Health Inspection Service (APHIS). The agency has been
understaffed for some time and needs at least 150 full-time employees
(FTEs) to return to normal strength and provide maximum assistance with
all aspects of this outbreak. Time is of the essence when dealing with
a positive flock to reduce the shedding of additional virus into the
environment. Addressing the staffing shortage will ensure the speediest
possible depopulation and disposal times, which are essential to fully
that save money and avoid unnecessary flock mortality. We encourage
Congress to provide the funds that will allow APHIS to compete with the
private sector and hire and train the 150+ FTEs the agency so badly
needs. It not only will help speed the end of this outbreak; it will
allow for the type of effective, rapid response that will be needed in
any future outbreak.
In addition to providing APHIS with the necessary financial
resources, Congress should empower the agency to pursue other creative
solutions such as developing cooperative agreements to train state, or
even industry employees, so they can be called upon during animal
health emergencies. In addition, there should be an effort made to
explore options to incentivize veterinarians to enter Federal service.
Potential programs could include a debt forgiveness package along with
a more robust vet school intern program.
Continue Funding APHIS Wild Bird Surveillance: Timely reporting of
results from APHIS' wild bird surveillance program provide a vital
early warning system about the potential introduction and distribution
of avian influenza viruses in the United States. Routine sampling of
wild birds in all four major flyways--Atlantic, Mississippi, Central
and Pacific--allows for APHIS and the turkey industry to take timely
and enhanced actions to reduce the introduction and spread to our
commercial flocks. This program must continue to be fully funded in the
future.
Vaccination: Vaccination could be an effective tool for eradicating
an outbreak but trade agreements based on outdated science create
enormous obstacles to vaccination, even if an effective vaccine is
developed to combat the current strain. For this reason, NTF has
repeatedly and emphatically stated we are not asking for USDA to
approve vaccination of commercial poultry if it would severely damage
the export opportunities for any poultry or egg product. USDA also has
made it clear it would not authorize vaccination if it would decimate
trade. With the Federal Government and all poultry and egg trade
associations in complete agreement on this important issue, there
should be no cause for alarm in any quarter of the poultry and egg
industry. All of which makes it baffling to NTF that some continue to
generate fearmongering communications about vaccination. So, we will
try once again to state clearly and unequivocally the turkey industry's
position on vaccination.
NTF and its members are calling for federally supported research to
determine if an effective vaccine can be developed to treat the current
HPAI strain. A verifiable program also must be in place to
differentiate between vaccinated birds and birds that have been
infected with HPAI (also known as a DIVA program). Any vaccine that
meets these requirements should be used only to end an active outbreak,
not as an open-ended control measure. We also are urging the Federal
Government to begin discussions with our trading partners to see if new
agreements can be reached that would permit vaccination without harm to
trade. We appreciate that Secretary Vilsack and the USDA team recognize
that this strategy currently is being pursued in Europe and likely will
be pursued by other poultry producing countries as well, creating the
very real possibility that other countries will gain a competitive edge
over the U.S. Those that do not support a judicious, constructive
approach to vaccination--one that moves as fast as science and
diplomacy allow--are fundamentally pursuing an America Last policy.
This obviously is a complicated challenging process, and it is
impossible to predict exactly how long it will take. That is why we are
gratified USDA has begun to take some preliminary steps. It still is
unclear how the international community will respond, we are encouraged
by the fact that the European Union is exploring vaccination
strategies, and we hope others will follow suit.
Our industry remains strongly supportive of the process of
developing a vaccination strategy through sound scientific research and
critical conversations with our trading partners. The U.S. needs to
pursue this regardless of whether the current outbreak remains active
or not to better prevent further impacts on the poultry industry.
Indemnity to Mitigate the Impact of HPAI: Indemnity payments are
made when the Federal Government orders the depopulation of a flock to
control or eradicate HPAI and other animal diseases. While indemnity
values traditionally reflected the costs associated with conventional
commercial turkey meat production, APHIS (utilizing a limited NTF
survey) during this outbreak has created turkey production
subcategories of premium value, including turkey breeders and organic
turkeys. Additional funding and Congressional direction to update
indemnity values for all current subcategories on a yearly basis to
reflect current costs associated is necessary and to include missing
subcategories, such as no antibiotic ever (NAE) production as well as
grandparent and great-grandparent breeder stock.
2023 Farm Bill
The current HPAI outbreak is a prime example of how important the
farm bill is to our industry and the animal agriculture community.
Foreign animal diseases have the ability to cripple the entire
agricultural sector and have long-lasting ramifications for the
economic viability of U.S. livestock and poultry production. It is
critical that the new farm bill continue to address these risks to
animal health while likewise bolstering the long-term ability of U.S.
animal agriculture to be competitive in the global marketplace and
provide consumers around the world safe, wholesome, affordable food
produced in a sustainable manner.
The 2018 Farm Bill established a three-tiered animal disease
program with mandatory funding to ensure the sufficient development and
timely deployment of all measures necessary to prevent, identify and
mitigate the potential catastrophic impacts that an animal disease
outbreak would have on our country's food security, export markets and
overall economic stability. With Congress on the brink of writing a new
farm bill, NTF and its coalition partners are asking for these programs
to be renewed and remain robustly funded for the life of the next bill.
The three-tiers include:
The National Animal Disease Preparedness and Response
Program (NADPrep), which allows APHIS to collaborate with
farmers, ranchers and animal health companies to develop
programs that help prevent and eliminate the most serious
animal disease threats.
The National Animal Disease Vaccine and Veterinary
Countermeasures Bank (Vaccine Bank), which helps fund the
stockpiling of vaccines and diagnostic tests that may be needed
to prevent or control disease outbreaks.
The National Animal Health Monitoring System (NAHMS)
Laboratory Network, which is comprised of more than 60 Federal,
state and university veterinary diagnostic labs. The NAHMS
network has been critical in the effort to rapidly detect and
diagnose HPAI cases.
We are extremely grateful for the support Congress has shown to our
industry through this challenging time of HPAI. We look forward to
continuing our work together in the upcoming farm bill.
Carbon Dioxide (CO2) Supply Disruptions
Carbon Dioxide (CO2) is essential to turkey production.
It is a highly effective stunning agent for turkeys that are about to
be processed, it is used to help cool the chillers that are a critical
component of plants' food safety systems and it is utilized in other
facets of turkey production. During the last year, CO2
prices have soared, and suppliers have invoked force majeure numerous
times because of increasing CO2 shortages. This has created
new chaos in a supply chain that had just begun to recover from the
[COVID]-19 pandemic, has disrupted production and processing schedules
and created new levels of uncertainty for an industry already reeling
from the HPAI outbreaks. Many of these initial shortages have been
caused initially by disruptions at CO2 processing plants,
but the looming tax incentives for carbon sequestration, passed as part
of the Inflation Reduction Act, are sure to exacerbate the problem.
As background, we associate carbon dioxide with global warming and
climate change. It's easy to assume that a carbon dioxide shortage
would be a good thing, but in recent years the depletion of this gas
has caused an onslaught of issues for the industries that rely on it
for key elements of their supply chain. There simply isn't enough of it
in the right places to satisfy the myriad uses of this atmospheric gas.
With global shortages on this rise, there is no clear solution to the
CO2 shortage and disruptions in the food and beverage space
at the current time.
As stated, the food and beverage industry has been the most
affected by the carbon dioxide shortage. From the carbonation of beer
and soda to food chilling and packaging applications, CO2 is
an essential component of the supply chain for our industries.
Furthermore, the turkey industry has a specific and critical use of
CO2 in the stunning of birds at the start of processing. All
of this has led to what is now being categorized as a potential food
and drink crisis.
CO2's importance to many food and beverage production
systems was most obvious during the supply chain challenges at the
beginning of the pandemic. However, as most supply chain challenges
have improved, CO2 has continued to be a source of
significant challenges and it is no better observed than during high
demand season--especially in the summer when many plants that produce
CO2 shut down for maintenance.
Now we are beginning to learn that these shortages have caused
almost everyone, across all sectors, to ration or prioritize products
to some degree, but over the past 12 months the turkey industry alone
has witnessed a cumulative of 505 days of lost processing because of
not enough CO2 available for a day's production. That does
not even include turkey plants that had to reduce daily capacity
because of rationing. This is leading to significant price increases,
so we ask a couple of critical questions. Other concerning developments
since 2020 is the ever-increasing use of the Force Majeure clauses to
limit supply as all turkey companies have indicated the use, at least
once in the past 12 months, of this and one company indicated its use
as many as 18 times. The exponential uptick in the use of this clause
should be one that Congress should more closely monitor and evaluate to
reduce disruptions and efficiencies. All totaled these actions have
resulted in increased costs to all turkey companies with a range of
mid-six figured to low seven-figures across the board.
This all creates questions that we think Congress should more
closely review to ensure the Federal Government policy that is now law
is not a driving factor of this realized tax. First, minus true
oversight of the CO2 utilization market, can any Federal
department or agency have the ability to assist in predicting or better
forecasting when CO2 supplies will truly respond to the
market and correct itself thus curbing this increased cost or tax? With
annual shutdowns of CO2 production facilities for
maintenance causing supply chain disruptions, could the Federal
Government assist in managing this commodity to improve the
predictability of the markets? Finally, there is significant concern
for those of us that need CO2 on a daily basis to make the
food and beverages that the Inflation Reduction Act's (doubling of the
45Q tax credit has prioritized carbon capture over other important and
necessary uses. I recognize the realities of what this tax incentive
was meant to do but Congress overlooked an important sector of the
economy that is harmed by increasing the tax credit.
A coalition of like-minded industries including a broad swath of
food and beverage producers has begun asking these questions. Without
exception, Members of Congress, their staff and Committee staff all
have indicated they did not take into account the signals this
legislation sent to the market. We recognize this Committee does not
have jurisdiction over these provisions; however, you do have the
ability to shine a spotlight on the impact this legislation has had on
the industries you do oversee.
Food Safety
The turkey industry's commitment to food safety is widely
recognized by a wide range of stakeholders. It always will be our top
priority. NTF is supportive of new approaches or technological
advancements that enhance control of Salmonella and other foodborne
pathogens. However, any new policies should be founded in science, data
driven and highly likely to impact public health.
On April 25 USDA's Food Safety and Inspection Service (FSIS)
released a proposed rule to declare Salmonella an adulterant in breaded
stuffed raw chicken products when the chicken component tests. While
this proposed rule does not impact the regulatory process for turkey
products, this is the first time FSIS has declared Salmonella an
adulterant in raw poultry and represents a substantial shift in the
agency's position.
Additionally, FSIS is currently conducting two risks assessments
related to Salmonella in poultry. Ultimately, the risk assessments will
be released for public comment and review from industry and all other
stakeholders before being updated and finalized. Simultaneously, FSIS
has indicated it will be drafting new Salmonella policy for
establishments producing turkey and chicken products and anticipates
publishing a proposed rule this summer. A proposed rule ultimately may
lead to important advances in food safety regulation, but the timing is
troubling. New regulations should not be proposed before the risk
assessments are complete.
We also are concerned that FSIS engagement with stakeholders since
the proposed framework was issued has been limited. Additional data
input would be incredibly valuable to the risk assessments, however,
due to the policy timeline posed, the collection period was short. That
is why, NTF along with the National Chicken Council and the North
American Meat Institute have officially asked for an additional 120 day
extension to that review process given the significance of the impacts
this could have on all parties involved. Unfortunately, on Friday, May
12th the agency granted only a 30 day extension. Given the magnitude of
this proposed determination, we ask that the Committee also support us
by seeking an additional extension.
Packers and Stockyards Act Contracting Rules
USDA so far has issued two proposed rules in the last year seeking
to address what the department says are flaws in the current poultry
production contracting process. The first rule dealt with contract
transparency and indicated a surprising lack of understanding about
turkey production. In the preamble to rule, USDA acknowledged that it
based most of the rule based on information it had gathered about the
chicken industry. It shows. It sought to require provisions that
fundamentally already exist in turkey contracts but that now may need
to be rewritten to comply with a rule designed for another industry. As
a turkey grower, I can tell you this does not benefit me, and it does
not benefit most of my neighbors. We have urged USDA to withdraw the
rule. If it must move forward with a new rule, it should gather
additional input to better reflect unique differences between the
various species it is attempting to regulate.
The second proposed rule, ``Inclusive Competition and Market
Integrity Under the Packers and Stockyards Act,'' is even more
concerning. NTF has urged the agency to withdraw and repropose the rule
because the current version is far too ambiguous regarding what
activities are prohibited. It will lead to increased legal and
regulatory uncertainty, clearly invites increased litigation, and will
make it far more difficult for processors and growers to conduct
business. In addition, the proposed rule targets conduct that is
already clearly prohibited by provisions of the Packers and Stockyards
Act, creating redundant, duplicitous red tape.
Labor
As I mentioned a few years ago during my testimony before this
Committee, our industry continues to suffer from a lack of access to
workers. The turkey industry supports immigration reform that includes
policies and provisions that will maximize benefits to the industry and
ensure a strong and durable immigration system that meets the needs of
the U.S. economy.
Most turkey plants are located in rural, low-unemployment areas. To
fully staff these plants, producers must recruit from outside of their
local areas and in many instances must rely on immigrant labor.
Existing guestworker programs target only seasonal, on-farm labor and
non-agricultural manufacturing. We need workers in our plants year-
round, and we stand ready to work with all parties to achieve a
workable system. The turkey industry hopes that Washington can put the
rhetoric aside and find a solution.
Once again, thank you for the opportunity to testify today on the
state of the U.S. turkey industry and the issues impacting our
businesses. I will be happy to answer any questions.
The Chairman. Thank you. Mr. Burns, please begin when you
are ready.
STATEMENT OF BYRAN BURNS, J.D., VICE PRESIDENT AND
ASSOCIATE GENERAL COUNSEL, NORTH AMERICAN MEAT INSTITUTE,
WASHINGTON, D.C.
Mr. Burns. Chairman Mann, Ranking Member Costa, and Members
of the Subcommittee, thank you for the opportunity to testify
today on behalf of NAMI, the North American Meat Institute. I
am Bryan Burns, VP and Associate General Counsel at NAMI. Prior
to my time at the institute I worked 20 years in the industry,
both as legal counsel, and head of environment health and
safety at two different meat and poultry packing companies.
NAMI is the oldest and largest trade association representing
meat and poultry packers, both large and small. More than half
of our members have fewer than 100 employees.
Make no mistake, our industry is facing headwinds, both due
to economic factors and due to recent court decisions, proposed
regulations, and laws that will negatively impact our industry,
and thus the consumers and customers we serve. On the economic
front, fed cattle prices are at record highs. Our pork
processor members are facing declining wholesale pork prices,
and some of our larger members have seen reduced earnings, have
been forced to lay off employees, and have closed facilities.
These market dynamics have unfolded exactly as four member
company CEOs testified would happen before the full Committee a
little over a year ago. And just this week The Wall Street
Journal ran an article on these dynamics entitled, The Big Meat
Conspiracy Theory Unravels, and thank you to Chairman Thompson
for inserting that into the record today.
However, I want to emphasize that the industry is
incredibly resilient, despite claims to the contrary. Against
challenges such as COVID, supply chain disruptions, labor
availability, and the impact of drought, beef production set
new records for 4 consecutive years, from 2019 through 2022.
Pork production has seen similar 4 year totals over the same
period.
The industry faces challenges on the judiciary,
legislative, and regulatory fronts. The U.S. Supreme Court
recently issued a fragmented decision to uphold California
Proposition 12. That decision will trigger similar regulations
in Massachusetts under their Ballot Initiative 3. It will also
embolden anti-animal ag groups to pursue burdensome laws
elsewhere, and it will open the door to chaos of interstate
commerce through state by state trade barriers. Not just for
meat and poultry products, but for any products not meeting the
standards set by another state. Industry needs certainty, but
any Federal or legislative solution to this requires careful
drafting to ensure it is legally sufficient to address the
problem, but not vulnerable to legal challenges in court.
USDA's recent round of proposed rules under the Packers and
Stockyards Act is also a threat, both to packers and producers.
The Department should withdraw its entire suite of
interconnected rules and publish them together, if they are
going to publish them at all, with a sufficient comment period
to allow stakeholders and Congress to consider the overlapping
impact of the intertwined rules. The piecemeal approach that
USDA has chosen in promulgating these rules is deliberate
regulatory obfuscation.
Courts have repeatedly held that the Packers and Stockyards
Act, like other anti-trust laws, is a competition statute.
These laws exist to protect the marketplace, and not to address
individual grievances that could be decided in state courts.
Eight Federal Circuit Courts of Appeals have held that a
Plaintiff must show harm, or likely harm, to competition to
prevail in a case brought under the Packers and Stockyards Act,
yet USDA seeks to circumvent the court decisions, and
Congressional intent, and rewrite the Packers and Stockyards
Act by regulation as a Federal tort claim statute.
The Administration claims the proposals are needed because
the injury to competition standard is an insurmountable bar for
Plaintiffs and eliminating it will help rein in the big
companies. However, the small family-owned poultry company I
once worked for suffered a $14\1/2\ million verdict in a
Packers and Stockyards case that was decided under the injury
to competition standard. That amount was large enough to drive
that company to the verge of bankruptcy, and the result was
that that company is now owned by an owner outside the United
States. Small and medium companies stand much to lose from
large verdicts in these cases.
The most pressing day to day need for the meat industry
continues to be access to a reliable, stable workforce. We are
pleased that Chairman Thompson plans to establish an
Agricultural Workforce Working Group within the House
Agriculture Committee. We urge the working group to consider
the workforce needs of our industry as it deliberates. We
aren't eligible currently for the H-2A Program, even though we
are the hardest stage of the agricultural process, and we are
essential to the food supply. We would welcome the opportunity
to be a part of the discussion so that a solution can be found
that works for all of agriculture.
Another key priority is reauthorization of LMR. Since 2020
Congress has extended LMR's 5 year authorizations through the
appropriation process. NAMI has, since 2019, and continues to
support, a clean 5 year reauthorization of LMR. The meat and
poultry industry is a critical part of the agriculture
industry. It provides an essential, nutritious component of
Americans' diets. Thank you for the opportunity to testify
today, and I look forward to answering your questions.
[The prepared statement of Mr. Burns follows:]
Prepared Statement of Byran Burns, J.D., Vice President and Associate
General Counsel, North American Meat Institute, Washington, D.C.
Chairman Mann, Ranking Member Costa, and Members of the Committee,
thank you for the opportunity to present testimony today on behalf of
the North American Meat Institute (NAMI or the Meat Institute).
The Meat Institute is the United States' oldest and largest trade
association representing packers and processors of beef, pork, lamb,
veal, poultry, and processed meat products. The Meat Institute has 330
general members, operating more than 800 facilities subject to daily
Federal inspection by the U.S. Department of Agriculture's (USDA) Food
Safety and Inspection Service. Of those members, more than half have
fewer than 100 employees. NAMI also has 200 supplier members, which
provide a broad range of products and services ranging from large
processing equipment to laboratory testing for food safety to
packaging, all to help ensure Americans enjoy a safe and abundant
supply of meat and poultry products. The U.S. meat and poultry
processing industry produces nutrient-dense foods that play a unique
role in healthy diets and are driving solutions for the environment,
farmers' livelihoods, animal care, and more.
The North American Meat Institute and our partners in the Protein
PACT for the People, Animals & Climate of Tomorrow are committed to
accelerating progress and building momentum for public commitments in
each of five focus areas: the environment, animal care, food safety,
nutrition, and our workforce. Protein PACT is a commitment to
continuous improvement toward a common set of ambitious goals across
the industry. It empowers the animal protein industry to proactively
meet the needs of its customers and consumers by accelerating
continuous improvement across animal agriculture, transparently
verifying progress toward ambitious targets, and proactively
communicating that progress. Protein PACT unites partners committed to
sustaining healthy people, healthy animals, healthy communities, and a
healthy environment.
To achieve its Protein PACT targets, the Meat Institute pioneered
creating a sector-wide dataset and published in October 2022 the first-
ever data report measuring baselines and providing a snapshot of
achievements to date. In its first year, the Meat Institute's data
collection effort covered an estimated 90% (by volume) of meat sold in
the United States. By 2030, 100% of Meat Institute members will report
on all metrics.
Other Protein PACT targets include:
By 2025, the Meat Institute will help measure and fill the
``protein gap''--the difference between the high-quality meat
and dairy products needed by families facing hunger and what
food banks and charities can provide. In 2022 alone, Meat
Institute members announced more than $12.9 million in food
security contributions, including building and expanding
infrastructure needed to safely receive, store, and distribute
fresh meat and milk.
By 2030, 100% of Meat Institute members will have emissions
reductions targets approved by the independent Science-Based
Targets Initiative (SBTI). Today, 12 of the sector's leaders
have set or committed to setting an SBTI, and 84% of facilities
reporting data are covered by a company commitment to reduce
emissions.
On May 1, the Meat Institute opened the second Protein PACT data
reporting period, which will run through July 31. The Meat Institute
and our Protein PACT partners look forward to sharing the animal
agriculture industry's proactive improvement over the coming years.
The Meat Institute's member companies operate in what has become
one of the toughest, most competitive, and certainly one of the most
scrutinized sectors of our economy: meat packing and processing. The
industry is very efficient, highly complex, extremely capital
intensive, and heavily regulated. Beyond live animals, the packing and
processing industry requires labor, capital, and technology, as well as
other inputs to produce the products consumers enjoy and expect.
The most recent data from the U.S. Census Bureau shows meat and
poultry processing is a $266.99 billion industry employing 526,849
people directly and supporting many more jobs up and down stream in the
value chain across both rural and urban communities. Of course, packers
and processors depend on livestock and poultry producers. Likewise,
they support these farmers' livelihoods. According to the U.S.
Department of Agriculture, animal agriculture represents 47 percent of
total U.S. farm cash receipts.
Meat packers and processors compete, sometimes struggle, and mostly
thrive in a volatile industry. They must continually adapt to changing
market conditions and innovate to remain competitive and viable. And in
times like these, they must maintain the capital to withstand negative
margins in periodic down cycles. Indeed, the industry currently is
facing economic headwinds due to a variety of factors, from higher
production costs to consumers' concerns over economic uncertainty, and
global economic forces. For the record, this is exactly what four beef
company CEOs predicted would happen in testimony before the full
Committee a little more than a year ago. Supply and demand fundamentals
are at work.
USDA's most recent forecast, and the first look at 2024, projects
total red meat and poultry production will decrease, which would be the
first year-over-year decrease in a decade. On the beef side, a rapid
decline in the beef cattle herd has resulted in record cattle prices,
similar to 2014 when the cattle herd size was at its smallest since
1952. Moreover, USDA projects cattle prices in 2024 to increase further
from today's records. On the pork side, building inventories, declining
wholesale pork prices, and increased production costs are weighing on
the industry.
Additionally, the pork and hog sectors now face the costs and
uncertainty of California's Proposition 12 (Prop 12), which was
recently upheld by the U.S. Supreme Court. Proposition 12, a 2018
ballot initiative, will effectively regulate sow housing, not only in
California, but nationally by banning the sale in California of whole
pork meat derived from sows--or the pigs they produce--unless they were
housed with 24 square feet or more of floorspace.
The Prop 12 decision will embolden anti-animal agriculture groups
to pursue ballot measures in other states and localities. The decision
opens the door to chaos in interstate commerce through state-by-state
trade barriers, not just for meat and poultry products, but for any
agricultural or manufactured products not meeting standards set by
another state. No industry can operate when facing 50 different
standards. It is worth noting that with the Court's decision, similar
restrictions will be allowed to go into effect in Massachusetts under
that state's ballot initiative, Question 3. It is estimated that
California represents about 13 to 15 percent of U.S. pork consumption.
Based on the population in Massachusetts, it can be assumed that an
additional two percent or more of U.S. pork consumption would be
subject to these rules.
Our industry, like any other, needs certainty. But any Federal
solution requires deliberation and careful drafting to ensure it is
legally sufficient.
Beef and Pork Industry Market Overview
Despite the economic pressures facing the meat and poultry industry
and its employees, consumers, and producer suppliers, it is important
to highlight the industry's resiliency, especially over the past few
years.
Cattle Market Fundamentals at Work
Faced with the many challenges--COVID, supply chain disruptions,
labor availability, and impact of drought on the cattle supply--since
2020, the U.S. beef packing sector has proven resilient. Beef
production has set historical records for the past 4 consecutive years.
In short, since the pre-COVID year of 2019, beef production has
increased 3.9 percent, and is up a remarkable 9.2 percent over the 20
year average from 2000 to 2019.
U.S. Beef Production Annual
Source: USDA ERS.
Cattle markets are driven by the fundamentals of supply and demand.
After a 5 year expansion cycle in the cattle herd size, inventories
reached a peak in January 2020. Two and a half months later COVID hit,
which created a shock to the demand for cattle as packers were
temporarily unable to operate at full capacity. That shock created a
backlog of cattle, negatively affecting cattle prices. Ultimately,
packers worked their way through the bottleneck, and exceptionally
strong consumer demand for beef in 2021 led to improving cattle prices
and further increases in 2022.
Total receipts for cattle in 2022 reached a record $86.8 billion,
compared to the previous record of $81 billion in 2014, the only other
year in which total producer receipts topped $80 billion.
Cattle Market Fundamentals at Work
Source: USDA AMS.
In 2022, liquidation of cattle off farms and ranches led to record
monthly inventories of cattle on feed in 9 of the 12 months of the
year. But U.S. beef packers, having generally recovered from labor
shortages and supply chain disruptions faced in 2020 and through much
of 2021, were able to harvest and process all these cattle. As a result
of packers' demand, cattle prices rose dramatically.
In December 2022, fed cattle prices hit their highest level for
that month since 2014, when the overall cattle herd was at its smallest
since 1952 (during the Truman Administration), and in January 2023
reached the highest January prices since 2015. So far in 2023, cattle
prices have hit record levels--exceeding those of 2014 and 2015.
Weekly Fed Cattle Prices
Current Versus 2014-2015 Record Highs
Source: USDA AMS.
Looking ahead for the rest of the year, USDA projects record fed
cattle prices to continue. The May World Agricultural Supply and Demand
Estimates (WASDE) report forecast cattle prices to maintain an annual
average of $166 per hundredweight. That is $12 per hundredweight, or
7.6 percent higher, than the previous record. USDA's forecast for 2024
projects another 5.4 percent increase over this year's historical
record.
Annual Average Fed Cattle Prices
Source: USDA AMS.
Consumer Demand & Beef Quality
Consumer demand for beef has been extremely strong. Consumption has
grown by more than 5 pounds per capita since 2015.
Beef Per Capita Consumption
Source: USDA ERS.
Importantly, beef quality over that time has improved hand-in-hand
with per capita consumer demand because packers and producers have both
focused on what consumers demand. From 2020 to 2022 beef production at
the two highest quality grades, Prime and Choice, has averaged 84.8
percent. That compares to 76 percent for the same quality grades in
2014 and 2015.
Percent of Beef Grading Prime and Choice
Source: USDA ERS.
Hog Market Fundamentals at Work
Pork production faced the same challenges from COVID and the
ongoing disruptions, which came on the heels of unprecedented global
pressures resulting from the outbreak of African swine fever in China,
which maintains nearly half of the world's swine herd. U.S. pork
packers also showed their resiliency through all this volatility. Pork
production hit a record in 2020 at 28.3 billion pounds. Although pork
production was down in 2022 to 26.995 billion pounds, it remained a
staggering 19.5 percent above the 20 year average from 2000 to 2019.
U.S. Pork Production Annual
Source: USDA ERS.
Like cattle, hog prices are driven by the fundamentals of supply
and demand. After a 6 year expansion cycle driven by tight global
supplies and record export demand, the December inventory of hogs and
pigs hit its peak in 2019. Three and a half months later COVID hit,
which created a shock to the demand for market hogs and feeder pigs as
packers were temporarily unable to operate at full volume.
Total receipts for hogs in 2022 reached a record $29.375 billion,
compared to the previous record of $28.03 billion in 2021--the only
other year in which total producer receipts topped $27 billion.
Hog Market Fundamentals at Work
Source: USDA AMS.
USDA is projecting an increase in pork production in 2023 of 1.4
percent. That would bring total output to 27.4 billion pounds--the
fourth time that pork production has exceeded 27 billion pounds, and
all since 2019.
Red Meat Outlook
With exceptionally strong meat demand in 2021, inflation was an
issue that year despite a record volume of 55.9 billion pounds of red
meat production. In 2022, however, meat prices lagged far behind the
general food inflation index. Red meat and poultry still lag behind the
general consumer price index inflation rate, but consumers are faced
with a great deal of economic uncertainty.
Food Inflation 2022
Source: Bureau of Labor Statistics.
With rising cattle prices in 2022, cattle producers saw their share
of the consumer beef dollar rise from 39 percent to 45 percent. The
packers' share ended 2022 at eight percent, remaining the smallest
share of the consumer dollar it has been in the 640 months since
records started in January 1970, with the exception of May 2020 at the
height of the COVID disruptions to the packing sector.
2022 Share of Retail Beef Dollar
Source: USDA ERS.
So far, for the first quarter of 2023, based on cattle and beef
prices to date, the producers' share has averaged 46 percent, one
percent higher than the retailers' share, and above the packers' share
of nine percent.
2023 Q1: Share of the Consumer Beef Dollar
USDA Meat Price Spreads data
Source: USDA ERS.
In 2022, the producers' and packers' share of the retail pork
dollar came under pressure late in the year as the retailer share
increased.
2022 Share of Retail Pork Dollar
Source: USDA ERS.
So far in the first quarter of 2023, that situation has continued.
2023 Q1: Share of the Consumer Pork Dollar
USDA Meat Price Spreads Data
Source: USDA ERS.
Public Policy Issues
Rulemaking Under the Packers and Stockyards Act
First announced in July 2021, USDA is in the midst of proposing a
``suite of major actions'' to alter the structure of the meat and
poultry industry through regulatory changes under the Packers and
Stockyards Act (PSA). Last year, USDA's Agricultural Marketing Service
(AMS) published a proposed rule and Advance Notice of Proposed
Rulemaking to alter the poultry growing system, followed by a proposed
rule titled, ``Inclusive Competition and Market Integrity Under the
Packers and Stockyards Act'' (Inclusive Competition Proposed Rule) that
would change the marketing of all species. Finally, USDA has stated it
plans to publish a third proposed rule to limit the harm to competition
standard under the PSA.
As a threshold matter, the Department should withdraw all the PSA
proposals and publish the entire ``suite'' of interconnected proposals
together, with a comment period sufficient to allow stakeholders and
Congress to consider the authority undergirding the proposals, the
overlapping impact of the proposals, and so stakeholders can provide
comments with a comprehensive understanding of USDA's agenda. The
piecemeal approach USDA has chosen is deliberate regulatory
obfuscation.
For example, the Inclusive Competition Proposed Rule itself makes
no reference to longstanding court precedent that a plaintiff in a PSA
section 202 case must show injury, or likelihood of injury, to
competition to prevail. The proposal's preamble, however, is a
different story and is littered with statements to the contrary. In at
least seven locations, AMS asserts an individual need not ``show
market-wide harm to secure relief under the Act,'' which suggests the
agency believes simply saying something enough times is sufficient to
overturn the precedent established by eight Federal appellate circuits.
As the United States Court of Appeals for the Fifth Circuit
correctly explained, Congress enacted the PSA ``to combat restraints on
trade'' and to ``promote healthy competition'' in the livestock
industry.\1\ In enacting the statute, Congress ``incorporate[d] the
basic antitrust blueprint of the Sherman Act and other pre-existing
antitrust legislation.'' \2\ Congress intended the PSA to be a
competition law, not a law creating individual rights of action. Under
the settled principle of antitrust law, a plaintiff must show antitrust
injury--a harm that the antitrust laws were designed to prevent.\3\ To
prove an antitrust injury, it is not enough for the plaintiff to show
it was harmed by the defendant's conduct; rather, the plaintiff must
prove that competition was harmed or likely to be harmed by the
defendant's conduct.\4\
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\1\ Wheeler v. Pilgrim's Pride Corp. 591 F.3d 355, 361 (5th Cir.
2009) (en banc); see H.R. Rep. No. 85-1048, at 1 (1957) (Act's purpose
was to ``assure fair competition and fair trade practices in livestock
marketing and in the meatpacking industry'').
\2\ De Jong Packing Co. v. United States Dep't of Agric., 618 F.2d
1329, 1335 n. 7. (9th Cir. 1980), cert. denied, 449 U.S. 1061 (1980).
\3\ See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477,
489 (1977).
\4\ See, e.g., Race Tires Am., Inc. v. Hoosier Racing Tire Corp.,
614 F.3d 57, 83 (3d Cir. 2010); see also Brunswick, 429 U.S. at 488
(``[A]ntitrust laws . . . were enacted for `the protection of
competition not competitors.' '').
---------------------------------------------------------------------------
In an en banc decision, the Fifth Circuit stated succinctly:
Once more a Federal court is called to say 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. That is
this holding.\5\
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\5\ Wheeler 591 F3d at 357.
And the most recent appellate court to address this issue said it
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best:
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.\6\ (Emphasis added.)
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\6\ Terry v. Tyson Farms, Inc., 604 F.3d 272, 277 (6th Cir. 2010).
USDA's attempt to circumvent the courts and Congress to impose a
new interpretation of the harm to competition standard brings to mind
the Supreme Court's recent decision in West Virginia v. EPA.\7\ In that
decision the Supreme Court invoked explicitly the ``major questions
doctrine,'' which requires Congress to speak clearly when authorizing
agency action in certain cases.
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\7\ West Virginia v. EPA, 142 S. Ct. 2587 (2022); see also NFIB v.
OSHA, 142 S. Ct. 661 (2022) (per curiam); Alabama Association of
Realtors v. HHS, 141 S. Ct. 2485 (2021).
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The ``major questions doctrine'' turns on several considerations,
including whether: the agency discovered in a ``long-extant statute an
unheralded power'' that significantly expands or even ``transform[s]''
its regulatory authority; the claimed authority derives from an
``ancillary,'' ``gap-filler,'' or otherwise ``rarely used'' provision
of the statute; or the agency adopted a regulatory program Congress had
``conspicuously and repeatedly declined to enact itself.'' \8\ The
Court is skeptical where an agency seeks to promulgate a rule ``that
Congress has conspicuously and repeatedly declined to enact itself.''
\9\
---------------------------------------------------------------------------
\8\ West Virginia v. EPA.
\9\ West Virginia v. EPA at 2610.
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Where an agency has long administered a statute, the ``lack of
historical precedent, coupled with the breadth of authority that the
[agency] now claims, is a telling indication that the mandate extends
beyond the agency's legitimate reach.'' \10\ Section 202 of the PSA can
hardly be called an ancillary or rarely used provision of the statute
and given Congress has amended section 202 multiple times over the
decades, when it considered amending the statute to articulate the
legal standard AMS promotes, Congress declined to do so.
---------------------------------------------------------------------------
\10\ NFIB, 142 S. Ct. at 666 (quotation marks omitted).
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Indeed, Congress has ``conspicuously and repeatedly'' declined to
alter the harm to competition standard. In the 2008 Farm Bill that led
to this rulemaking, Congress considered and rejected a proposal to
amend section 202(a) to state that a business practice can be found to
be ``unfair, unjustly discriminatory or deceptive'' ``regardless of
whether the practice or device causes a competitive injury or otherwise
adversely affects competition and regardless of any alleged business
justification for the practice or device.'' \11\ Senator Tom Harkin,
who was then the Chairman of the Senate Committee on Agriculture,
Nutrition, and Forestry, explained that his legislation would overturn
court rulings that ``producers need to prove an impact on competition
in the market in order to prevail'' in cases alleging that packers or
dealers engaged in ``unfair'' or ``unjustly discriminatory''
practices.\12\ Not only did the legislation not pass either the House
or Senate, but Sen. Harkin did not include it in the Senate farm bill
he introduced.\13\ Congress's decision not to amend section 202 ``after
years of judicial interpretation supports adherence to the traditional
view'' that a finding of harm or likely harm to competition is
required.\14\
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\11\ See Competitive and Fair Agricultural Markets Act of 2007, S.
622, 110th Cong. 202 (2007); see also H.R. 2135, 110th Cong. 202
(same).
\12\ 153 Cong. Rec. S2053 (daily ed. Feb. 15, 2007).
\13\ S. 2302, 110th Cong.
\14\ Wheeler, 591 F.3d at 362 (quoting Gen. Dynamics v. Cline, 540
U.S. 581, 593-94 (2004)).
---------------------------------------------------------------------------
And the 2008 Farm Bill was not the only instance Congress kept the
harm to competition standard. Between 1921 and 2002, Congress amended
section 202 of the PSA seven times, but it never disrupted the courts
of appeals' statutory interpretation.\15\ Congressional inaction in the
face of the decisions of the appellate courts suggests that it has
accepted that settled understanding.
---------------------------------------------------------------------------
\15\ See Wheeler, 591 F.3d at 361-62; see also General Dynamics
Land Sys., Inc. v. Cline, 594, 599 (2004) explaining that
``Congressional silence'' in the face of ``years of judicial
interpretation'' suggests that Congress has accepted the judicial
consensus.
---------------------------------------------------------------------------
But Congress has also affirmatively acted to stop changes to the
harm to competition standard. AMS's statements regarding harm to
competition embedded in the Inclusive Competition Proposed Rule's
preamble are not the first time the agency has taken this position. In
a 2010 failed rulemaking the agency stated a violation of sections
202(a) or (b) of the PSA ``can be proven without proof of predatory
intent, competitive injury, or likelihood of injury.'' \16\
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\16\ 75 Fed. Reg. 35338, 35340 (June 22, 2010).
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The 2010 proposal failed when Congress, on a broad, bipartisan
basis, prohibited USDA from moving forward with the rulemaking.
Proposed section 201.3(c) of the failed 2010 rulemaking would have
attempted to overrule the harm to competition standard established by
the courts. However, Congress intervened and the appropriations bills
for each of Fiscal Years 2012 through 2015 included language
prohibiting the agency from expending any funds to ``publish a final or
interim final rule in furtherance of, or otherwise implement'' proposed
section 201.3(c), among other sections of the 2010 proposed rule.
The appropriations language Congress passed four times prohibiting
USDA from finalizing the proposed rule supports the conclusion that the
standard set by the appellate courts is the proper one. Congress spoke
directly to the issue and stopped USDA from changing the harm to
competition standard. Yet, once again, in the Inclusive Competition
Proposed Rule and the announcement of a future proposal also related to
the harm to competition standard, USDA is attempting to circumvent both
Congress and the courts, directly contravening Congressional intent and
exceeding the authority granted by the PSA.
The Inclusive Competition Proposed Rule's faults related to the
harm to competition standard are compounded by the proposal's other
provisions. The proposal would broaden the basis of liability under the
PSA in a way that will fundamentally alter the operations of protein
markets in the United States to the detriment of producers, packers,
and consumers.
First, the agency proposal prohibits unequal treatment of a
``market vulnerable individual,'' which AMS would define as a
person who is a member, or who a regulated entity perceives
to be a member, of a group whose members have been subjected
to, or are at heightened risk of, adverse treatment because of
their identity as a member or perceived member of the group
without regard to their individual qualities. A market
vulnerable individual includes a company or organization where
one or more of the principal owners, executives, or members
would otherwise be a market vulnerable individual.\17\
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\17\ 87 Fed. Reg. 60054, proposed section 201.302.
This definition is so vague, and the preamble discussion associated
with it so wide ranging, a regulated entity could not begin to know
what actions to take or policies to implement to even attempt to ensure
compliance. The proposed rule would subject packers and poultry
integrators to untold litigation risks and force the industry toward a
one-size fits all, lowest common denominator approach to procurement
and contracting practices.
The proposal would also prohibit certain actions the agency
characterizes as retaliation or deception. As the courts have required
showing harm or likely harm to competition in cases brought under PSA
section 202, the courts have consistently rejected claims that the PSA
makes a Federal offense out of breaches of contract or retaliatory
actions that have no adverse effect on competition. In London v.
Fieldale Farms the Eleventh Circuit found no section 202 violation
based on allegations that a poultry dealer committed a breach of
contract and terminated a grower's contract in retaliation for the
grower's testimony against the dealer in a separate lawsuit.\18\
Likewise, the Sixth Circuit rejected claims that an alleged retaliatory
act by a poultry dealer violates the PSA absent harm, or likelihood of
harm, to competition.\19\
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\18\ London v. Fieldale Farms Corp., 410 F.3d 1295, 1303 (11th Cir.
2005).
\19\ Terry v. Tyson Farms, Inc., 604 F.3d at 279.
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Under the Inclusive Competition Proposed Rule, a regulated entity
could be subject to liability under the Act for simply terminating, or
refusing to renew a contract, with any covered producer that has
``communicated with a government agency with respect to any matter
related to livestock, meats, meat food products, livestock products in
unmanufactured form, or live poultry.'' In creating such broad
liability, the proposed rule will increase litigation costs for
processors, which will likely be passed on, in some measure, to
consumers.
Covered entities seeking to reduce litigation risk will be
incentivized to reduce the variety of contracts, and instead offer
standardized contracts to producers, reducing producers' ability to
reap the rewards of value-added production practices. USDA has
advocated the need for increasing environmentally sustainable
agricultural production practices. Ironically, the Inclusive
Competition Proposed Rule will disincentivize packers from contracting
with producers to provide premiums for innovative sustainability
practices.
USDA's Inclusive Competition Proposed Rule also attempts to
transform a Federal competition law into a Federal tort claim statute.
Producers have significant protections under state laws for the
grievances USDA would turn into Federal cases. Allowing individual
claims to be brought under the PSA would trigger spurious litigation,
reduce efficiency and inject added costs throughout the supply chain,
resulting in higher costs and less innovative products available to
consumers and limiting producers' ability to collect premiums for value
added production practices. The Meat Institute urges Congress to once
again step in and stop USDA's regulatory overreach.
Livestock Mandatory Reporting Reauthorization
Despite claims to the contrary, there is robust price discovery in
the cattle and beef markets. Congress established, and USDA
administers, the Livestock Mandatory Reporting Act (LMR) program to
facilitate open, transparent price discovery and provide all market
participants, both large and small, with comparable levels of market
information for slaughter cattle and beef, hogs and pork, and sheep and
lamb. Despite the desires of some, LMR is not a tool to direct market
changes.
Under LMR regulations, packers must report to AMS daily the prices
they pay to procure cattle, and other information, including slaughter
data for cattle harvested during a specified period and with net
prices, actual weights, dressing percentages, percent of beef grading
Choice, and price ranges, and then AMS publishes the anonymized data.
AMS publishes 24 daily and 20 weekly cattle reports each week,
starting Monday afternoon and ending the next Monday morning. These
reports cover time periods, regions, and activities and the data
include actual cattle prices. Further, packers report all original sale
beef transactions in both volume and price through the Daily Boxed Beef
Report. This data is reported twice daily, at 11:00 a.m. and at 3:00
p.m. Central Time. The morning report covers market activity since 1:30
p.m. of the prior business day until 9:30 a.m. of the current business
day. The afternoon report is cumulative, including all market activity
in the morning plus all additional transactions between 9:30 a.m. and
1:30 p.m., and is on the USDA DataMart website. The boxed beef report
covers both individual beef item sales and beef cutout values and
current volumes, both of which are derived from the individual beef
item sales data.
AMS also publishes 20 daily and two weekly hog reports each week
covering similar time periods, regions and activities. Further, AMS
reports four daily and eight weekly reports covering prices and
quantities of all wholesale pork sold. Packers are required to report
this information twice daily as well.
Few, if any, other industries have this degree of transparency via
government mandated reporting of detailed price and product data on an
on-going, daily basis, published for all other market participants--
including up-stream sellers, downstream buyers, and direct
competitors--to view, analyze, and use strategically. Given these
regulatory mandates on packers, the most critical component of the
program is confidentiality. Without the firewall of confidentiality,
each entity in the supply chain from producer to retail and food
service will know exactly what the other entities are doing at a given
time.
When LMR was established, Congress smartly established a 5 year
authorization period such that the program was decoupled from the 5
year farm bill authorization. Keeping LMR decoupled from the farm bill
is critical: LMR requires highly technical knowledge of procurement and
sales in the complex livestock and meat markets. Well intended changes
to LMR enacted as part of broader farm bill policy negotiations and
compromises could drive unintended market responses. By keeping LMR
separate from farm bill policy deliberations, stakeholder groups can
negotiate the technical changes to LMR they seek, reach consensus over
any changes, and provide Congress with the technical changes upon which
stakeholders agree. This consensus-driven approach has allowed LMR to
be reauthorized without acrimony or market-disrupting changes.
The Livestock Mandatory Reporting program's 5 year authorization
was scheduled to sunset in 2020, but Congress has extended its
authorization annually in appropriations legislation. Since 2019, the
North American Meat Institute has supported a clean, 5 year
reauthorization of LMR, and NAMI continues to hold that position today.
Meat Institute member companies worked closely with the livestock
producer community, AMS, and other interested stakeholders when this
reporting program first came into being and on every reauthorization
effort since. This iteration of reauthorization must be no different.
In that regard, the Meat Institute is committed to working with its
membership and with livestock producer groups, to find consensus on
reauthorizing the Livestock Mandatory Reporting Act and I hope we
continue this partnership free of controversy. I am confident we can
achieve this goal in a manner that makes the program more effective and
efficient without increasing costs or regulatory burdens.
Labor Availability
Access to a reliable, stable workforce continues to be the most
pressing day-to-day challenge facing the meat industry--this was the
case before the pandemic, and it has only become more acute. Meat
packers and processors have significantly raised salaries and benefits,
with starting salaries in many beef slaughter operations starting at
more than $22 an hour, plus benefits.
The Meat Institute was pleased to hear Committee Chairman Glenn
Thompson's plan to establish an agricultural workforce working group
within the House Agriculture Committee. We appreciate the Chairman's
leadership and innovative thinking in creating the working group, and
are pleased the Committee will bring its expertise on agricultural
issues to the agricultural workforce discussion.
As Committee Members know, meat packing and processing facilities
are not eligible to employ workers under the agricultural guestworker
visa (H-2A) program. However, meat packers and processors are quite
simply the harvest stage of the livestock industry--they are essential
to the livestock industry and food supply. The Meat Institute urges the
working group to consider the workforce needs of the packing and
processing community as it deliberates, and we would welcome the
opportunity to be part of the task force's discussions so a solution
can be found that works for all of agriculture.
International Trade
Last year, 2022, was a strong year for U.S. meat exports. U.S. pork
exports were the third highest on record, totaling more than 5.89
billion pounds and valued at $7.68 billion. Beef exports set records in
both volume and value in 2022, at nearly 3.25 billion pounds and a
value of $11.68 billion. According to the U.S. Meat Export Federation
(USMEF), pork exports equated to $61.26 per head slaughtered,
representing 27.5 percent of pork production, while beef exports
equated to a record $447.58 per head of fed cattle slaughtered in 2022,
and 15.2 percent of total beef production.
For the first quarter of 2023, beef exports are down, based on a
smaller cattle herd and reduced production, from the record levels of
2022. Pork exports, however, are strong. Exports of U.S. pork through
March 2023 are up 17 percent over March 2022 by volume and 18 percent
by value. The month of March 2023 was the ninth largest month on record
for pork exports in both volume and value, according to USMEF.
It is clear international trade is vital to the long-term strength
of the U.S. meat and poultry industry, supports thousands of jobs along
the supply chain, particularly in rural communities, and improves
livelihoods of American producers, farmers, and ranchers. However, the
U.S. meat and poultry industry's export potential remains limited by
unjustified sanitary barriers, prohibitive tariffs and tariff rate
quotas, and onerous registration and approval requirements for
exporting facilities. These challenges are further exacerbated by the
lack of new, comprehensive U.S. free trade agreements (FTAs).
Preserving and enforcing existing U.S. trade agreements and
frameworks, while indispensable, will not alone guarantee export growth
or the economic benefits it confers. This assertion is especially true
as China, the European Union (EU), and other competitors forcefully,
and swiftly, negotiate FTAs that shirk internationally-recognized
standards and undermine U.S. access to growing and mature markets,
alike. Rather, the U.S. would be prudent to negotiate additional access
with existing trading partners, while also pursuing new markets to
compete effectively, for example, with China's Regional Comprehensive
Economic Partnership and the EU's mounting list of ratified FTAs and
ongoing negotiations in Asia and the Americas.
Although the Meat Institute supports the Administration's
initiatives to deepen collaboration, trade, and economic ties with the
Indo Pacific region and in the Americas through the Indo-Pacific
Economic Framework (IPEF) and the Americas Partnership for Economic
Prosperity (APEP), respectively, these initiatives, as currently
envisioned, will not create an equal playing field for American workers
and businesses, especially small- and medium-sized businesses, without
addressing both tariff and non-tariff barriers inhibiting U.S. export
trade. With the proliferation of FTAs in the Indo-Pacific, in
particular, U.S. exporters face a substantial, and growing, tariff
disadvantage compared to countries in the European Union and China, for
example.
Therefore, NAMI continues to encourage the Biden Administration to
prioritize improved market access through tariff reductions and non-
tariff barrier elimination in IPEF and APEP negotiations. Existing
tariff disadvantages facing U.S. agriculture in the Indo-Pacific
drastically reduce the export potential of U.S. meat and poultry in the
region. Even if non-tariff barriers are addressed through IPEF, APEP,
and other similar initiatives, access will be severely impeded by
prohibitive tariffs, leading customers in key markets to source product
from alternate suppliers outside the U.S. This not only weakens U.S.
export value, but also detrimentally affects American meat and poultry
companies and the workers and communities they sustain.
In exercising its oversight and consultative authority on trade,
Congress is well positioned to advance, in outreach to the
Administration, the importance for American workers and the U.S.
economy of addressing barriers--both tariff and non-tariff--that
preclude U.S. exports from reaching strategically-significant global
markets.
In addition to encouraging a more comprehensive, robust trade
policy, Congress has an opportunity to support and promote U.S.
agricultural exports by funding the successful USDA Market Access
Program (MAP) and Foreign Market Development Program (FMD). According
to USDA, between 1977 and 2019, every dollar invested in these proven
export promotion programs returned on average $24.50 in annual export
value. During the same period, these programs increased U.S. export
revenue by $9.6 billion annually and added $12.2 billion to farm cash
receipts. In an increasingly competitive global trade environment,
where 95 percent of consumers reside outside the U.S., these export
promotion programs provide critical investments that help level the
playing field for American agricultural products in markets around the
world, increase consumer awareness about the quality and safety of U.S.
agricultural exports, and return value to American businesses and
workers.
Xylazine
We have all watched with horror the death, trauma, and pain that
fentanyl has inflicted across the country. Now, xylazine, a drug
approved by the U.S. Food and Drug Administration for use in animals as
a sedative, is being added to fentanyl to create what is sometimes
called ``tranq'' or the ``zombie drug,'' which is cheaper to produce
and sell than pure fentanyl. Xylazine is not an opioid and so does not
respond to naloxone, further complicating the challenges for first
responders to treat overdoses.
Xylazine is used legally and safely by beef packers and others in
the animal agriculture industry. For beef packers, xylazine is used to
quickly and humanely sedate sick or injured cattle before euthanization
in a manner that can safely and effectively be administered by workers.
Beef packers using xylazine follow strict protocols, including keeping
it locked in a safe with access limited to a small group of specially
trained personnel, and maintaining meticulous records of all
administration and doses.
As Congress examined ways to address the human crisis related to
xylazine, the Meat Institute worked closely with the bipartisan
sponsors of the Combating Illicit Xylazine Act (H.R. 1839). The
legislation gives the Drug Enforcement Agency (DEA) the power to stop
the flow of xylazine to humans, while allowing its continued access for
veterinary purposes. Thus, veterinary use of xylazine may continue,
while the DEA and other law enforcement officials can go after
criminals manufacturing and selling xylazine to humans.
The Meat Institute supports the Combating Illicit Xylazine Act and
appreciates the deliberative approach the bill's sponsors took to
ensure that xylazine would remain available for approved veterinary
use. If you have not already, please consider cosponsoring the bill.
The Meat Institute urges Congress to quickly pass the legislation to
give DEA the tools it needs to go after xylazine traffickers.
Rural Development Opportunities: Public-Private Partnerships
NAMI member companies are vital contributors to the predominantly
rural areas in which they operate. Not only are they major employers
and economic drivers, but also stewards of their communities. NAMI has
several members providing free community college and other educational
opportunities for their team members, cost-share, and in some cases
free childcare in childcare deserts, and affordable housing in areas
needing more infrastructure to support economic growth.
Our member companies are making substantial investments to improve
rural communities, investments that stand to cost-effectively benefit
even more rural Americans should a mechanism exist within Rural
Development to foster public-private partnerships. The upcoming farm
bill reauthorization presents a real opportunity to better leverage
private company investments into a more prosperous rural America.
Conclusion
Thank you for the opportunity to testify before the Subcommittee.
The meat and poultry industry is a critical part of the agriculture
industry, and it provides an essential component of Americans' diets. I
look forward to answering any questions.
The Chairman. Thank you. Next up, Ms. Hubbard. Please begin
when you are ready.
STATEMENT OF LAURIE HUBBARD, REGION I DIRECTOR,
EXECUTIVE BOARD, AMERICAN SHEEP INDUSTRY
ASSOCIATION, NEW PARIS, PA
Ms. Hubbard. Chairman Mann, Ranking Member Costa, Members
of the Subcommittee, thank you for the opportunity to speak
with you today on the priorities of America's sheep producers.
I raise sheep in Pennsylvania and speak today from my
experience as a livestock producer, but also as a
representative to 100,000 family farms and ranches raising
sheep across the country. For the majority of sheep operations,
this year continues to be a struggle. The cost of feed and
literally every input on our farm is dramatically higher, which
stretches our ability to cover our production expenses. I
believe we are still working through the disruption caused by
the pandemic.
As a former Director on the Board overseeing the American
Lamb Check-off, I share firsthand the critical piece of our
market that restaurants, particularly fine dining, represent.
This customer all but disappeared in 2020, and sadly, many of
those businesses have yet to return: 40 percent of our lamb
went to fine dining before 2020, and today it is possibly only
at 25 percent. We are pressing hard in our promotions at retail
grocery, as well as direct marketing of American lamb, to
strengthen demand. Last month we completed the single largest
marketing season of the year for lamb, with Easter, Passover,
and Ramadan holidays. While demand improved over 2022, it was
not back to pre-pandemic levels. The commercial lamb feeding
sector has been unprofitable for 13 consecutive months. Some
feedlots were empty this winter as operators could not pencil
their cost of gain for profit, despite the lowest feeder lamb
prices in a decade.
We are fortunate that two lamb slaughter plants began
operations in late 2020 and early 2021, following the
bankruptcy of the second largest processor. These companies
promote more competition for our lambs, yet, due to their
structure, we remain lacking in price reporting. We fully urge
the reauthorization of Livestock Mandatory Price Reporting and
provide suggested changes to enhance the program's
effectiveness. The first recommendation is to change or replace
the 3/70/20 confidentiality guideline. The current guideline is
not required by statute, and current market prices have a
relatively short-term relevance.
Additionally, we support Congressional and Administration
efforts to expand livestock processing facilities. To my
knowledge, neither of our new companies were able to avail
themselves of the existing programs, however, I can attest from
my part of the world that processing is very tight. Producers
often need to book their lamb processing as far as a year in
advance. Before leaving the topic of the lamb market, I want to
thank you for supporting our American check-off programs, and
let you know that we are here to help you protect the programs
in Congress. We have approved our check-off twice through
national referendums by wide margins of both producers and
production.
Regarding the wool market, unfortunately, we find the same
volatility in demand as with lamb. As you can imagine, the
demand for wool suits, sports coats, and slacks has dropped
dramatically with the remote work of recent years. This created
a huge backlog of unsold wool in storage around the world, and
our markets reflect that oversupply. The American Sheep
Industry Association is the cooperator with USDA Foreign
Agricultural Service, and aggressively uses the export programs
to market to the world's textile industry. Thank you for your
support of the USDA export programs, and we strongly encourage
increased funding in the next farm bill.
I also ask your support to reauthorize the Wool Marketing
Loan. The program is designed to kick in when markets fall
apart. After nearly a decade of no payments nationwide, when
the wool market collapsed in 2020, the program reacted. For
some producers, it is the only revenue available for wool this
year. I do ask for your full consideration of updating the loan
rate to the Wool Marketing Loan Program in the farm bill. The
program was created in 2002, and currently reflects wool prices
from 2 decades ago.
As relayed in my written testimony, I share three final
priorities for the farm bill. We join our colleagues today with
strong support of the animal disease prevention and management
programs, established in the 2018 Farm Bill. The Wool
Manufacturers' Trust Fund of the 2018 bill is critical to our
industry and the customers for American wool. And, finally, the
Sheep Production and Marketing Grant Program proved invaluable
to our industry, replacing the lamb processing plant lost in
2020, and the commercial wool testing laboratory, and we fully
support reauthorization. Thank you very much.
[The prepared statement of Ms. Hubbard follows:]
Prepared Statement of Laurie Hubbard, Region I Director, Executive
Board, American Sheep Industry Association, New Paris, PA
Introduction
Chairman Thompson, Ranking Member Scott, and Members of the
Committee, thank you for the opportunity to speak with you today. I am
Laurie Hubbard, a sheep producer from Pennsylvania and a director on
the 13-member Executive Board of the American Sheep Industry
Association (ASI). ASI is the national trade association for the United
States sheep industry, representing the nation's 100,000 lamb and wool
producers. I appreciate the opportunity to present the state of the
sheep industry and our industry's perspective across several
priorities.
State of the American Lamb and Wool Industries
Price inflation, labor challenges, lamb imports and ongoing
economic uncertainty are pressuring the American lamb and wool
businesses. These are in turn impacting the sustainability of the sheep
industry. There is some optimism as consumer interest in sustainability
has become more mainstream and is providing opportunities for our
industry as wool is being recognized as a natural regenerative fiber
for performance wear, and the vast environmental benefits of targeted
grazing with sheep, are being recognized by private and public land
managers and solar developers across the country.
We are fortunate to have an American Lamb check-off program which
proved invaluable during the disruptions of the recent years. According
to the American Lamb Board, the [COVID] pandemic caused huge losses
within lamb's fundamental fine dining market but created opportunities
for retail sales and at-home consumption. While consumers are buying
lamb, elevated price levels have made it difficult for lamb to compete
with other proteins. More product is coming from imports, usually with
a significant price advantage over American lamb. The non-traditional
or ethnic market, with demand for smaller carcasses, has grown and
cultural preferences are creating new opportunities for our industry.
The pandemic led to the loss of a major lamb processor in 2020, yet
smaller processors are emerging and being embraced by a society seeking
a more local supply structure. High production costs have made it more
costly to get lamb to the consumer and the inflationary environment has
impacted consumer's willingness to purchase American lamb. Producer and
lamb feeder profit margins have been pressured as lamb prices have not
kept pace with higher input costs and feed prices.
I would note that commercial lamb feeders have been unprofitable
for 13 consecutive months.
The American wool industry continues to endure several challenges
which are adversely impacting American wool producers. The American
wool market is heavily dependent on the export market. Over the last
decade, approximately 67% of American wool is exported, with 72% of
those exports destined for China. The ensuing global pandemic resulted
in the closure of key international markets and drastically altered
consumer demand for apparel products. The Chinese trade tariffs and the
lost markets for American wool, drove wool prices down and large
supplies of wool into storage. We have classes of wool today that bring
only pennies per pound to producers and the impending closure of the
Mid-States Wool Cooperative headquartered in Ohio is a major concern
for Midwest and Eastern sheep producers.
Farm Bill Priorities
The American Sheep Industry strongly supports reauthorization of
the Agricultural Improvement Act of 2018 (Farm Bill). The farm bill
should provide producers with a reasonable safety net for market risk,
encourage rural growth, and support the production of food and fiber.
Risk Management
The 2018 Farm Bill authorized nonrecourse marketing assistance
loans (MALs) and loan deficiency payments (LDPs) for wool to eligible
producers who grow and shear wool. This safety net needs to be
drastically improved to address current market conditions including
inflation and supply chain disruptions. Illustrative of how little
support the wool commodity program provides, our records indicate over
the life of the 2018 Farm Bill, specifically the 2019-2022 crop years,
the commodity program supporting wool has only expended approximately
$12.5 million. The national loan rates for graded and ungraded wool
were established in 2002 and have not been adjusted since to keep pace
with the market and producer costs. The outdated rates creating an
ineffective support program, coupled with the recent low levels of
producer income, is why ASI is supporting a re-examination of the wool
loan rate and an adjustment so that sheep producers have one effective
risk management tool.
The American lamb industry is currently without a market-based risk
management program. As the lamb industry continues to face market
challenges due to pandemic related market disturbances, lamb producers
and feeders do not have the tools to address higher feed and input
prices, price instability and increased market risk. The increase in
interest rates is also going to impact sheep producers and lamb feeders
needing to secure capital to sustain their operations. The data gaps in
Livestock Mandatory Price Reporting resulting in the corresponding lack
of published prices led the industry to support USDA's withdrawal of
Livestock Risk Protection--Lamb (LRP-Lamb) in 2021. LRP-Lamb was a
Federal lamb price insurance product and the only risk protection
product available to lamb producers and feeders to hedge their risk.
Animal Disease Prevention and Management
An outbreak of Foot-and-Mouth Disease (FMD) in the United States
would have a devastating impact on the sheep and wool industry. That is
why the American Sheep Industry is supporting several efforts aimed at
safeguarding sheep production and promoting business continuity in the
face of a foreign animal disease outbreak. ASI strongly supports
continued funding of the animal disease prevention and management
programs established in the 2018 Farm Bill. These programs include the
National Annual Vaccine and Veterinary Countermeasures Bank (NAVVCB)
which is the only vaccine bank that allows USDA to stockpile animal
vaccines and related products to use in the event of an outbreak of FMD
or other high-impact foreign animal diseases, the National Animal
Disease Preparedness and Response Program (NADPRP), the National Animal
Health Laboratory Network (NAHLN), and the National Veterinary
Stockpile (NVS). All these programs are vital to protecting the United
States livestock industry against a foreign animal disease outbreak.
Minor Use Minor Species Animal Drug Program
America's sheep producers have limited means to protect and prevent
disease in their animals as animal health and welfare are critical
aspects for ensuring a sustainable sheep industry. The cost to bring a
new animal drug to market is rising and many pharmaceutical companies
are not investing in developing products for sheep. USDA established
the Minor Use Animal Drug Program to address the shortage of animal
drugs for minor species and uses by funding and overseeing the
efficacy, animal safety, and human food safety research and
environmental assessment required for Food and Drug Administration
(FDA) drug approval. Funding for this program ceased in 2016, and a
result the program lacks the staff and expertise to meet its mission of
increasing the number of therapeutic drugs approved for minor animal
species. To remedy this, ASI supports an annual allocation to USDA's
National Institute of Food and Agriculture (NIFA) Minor Use Animal Drug
Program (MUADP) of $5 million to fund research and development to
support the approval of new drug products for sheep.
Mandatory Price Reporting
Ensuring there is not a lapse in Livestock Mandatory Price
Reporting (LMR) is critical to the United States sheep industry.
Unfortunately for sheep producers, LMR has not adjusted to changes in
the lamb industry. Of particular concern is the implementation of the
current LMR confidentiality guideline which restricts market
information available to sheep producers. In 2011, there were 13
reports under mandatory price reporting for lamb. Today, there are only
five reports available, all of which are national reports released on a
weekly basis. Of these five reports, the amount of information provided
in the slaughter lamb report has increasingly diminished over the years
with the data on formula traded lambs not being reported since 2020.
The American Sheep Industry Association has proposed several
potential changes to LMR that we believe would enhance the program's
effectiveness for lamb producers while protecting the interests of
everyone in the supply chain. The first recommendation is to change or
replace the 3/70/20 Confidentiality Guideline. This guideline is not
required by statute and current market prices have a relatively short-
term relevance. By the time prices are reported, they only reflect past
transactions. Prices and market activity can be reported without
sacrificing confidentiality and the current confidentiality guideline
by USDA is stifling the information lamb producers need to make
accurate marketing decisions. Additionally, ASI has recommended that
USDA amend LMR, so it reflects the unique nature of today's lamb
industry and is in discussions on developing a lamb contracts library
pilot program based on the recent program for cattle. ASI believes
these changes would greatly enhance the program for all users.
Trade
The lamb market in the United States is heavily influenced by
imported lamb, particularly from Australia and New Zealand, which make
up over 50% of total lamb sales. The American Sheep Industry
Association in response has asked successive Administrations to
prioritize lamb export opportunities for United States producers before
allowing additional imports. Our industry still cannot access
potentially lucrative markets like China, the European Union, and the
United Kingdom; this despite the opening of our market in 2021 to
imported lamb from the United Kingdom. The domestic industry's ability
to withstand additional import pressure at this challenging time, and
the United Kingdom's tremendous potential for significant lamb exports
in the wake of their departure from the European Union is a concern for
United States lamb producers. A cautious and deliberative approach is
necessary to ensure that while trade may be free, it is fair.
Wool trade too remains a challenge. While we have seen an increase
in wool shipments to China, numbers are still significantly lower than
they were prior to the tariff retaliation. Additionally, shipping
challenges continue to mount. The same holds true for the export of
pelts. Prior to the implementation of tariffs, 72 percent of American
raw wool exports and 80 percent of sheep skins were sent to China.
Continuing to build strength in the international marketing of lamb and
wool requires a commitment to the promotion and export of United States
wool to export markets through strong USDA Foreign Agricultural Service
(FAS) Program funding. ASI supports increased funding for FAS programs
including the Market Access Program, the Foreign Market Development
Program, and the Quality Samples Program. These programs are vital for
providing value to America's wool producers through expanding export
markets for American wool and sheepskins.
H-2A Temporary Agricultural Workers
The American Sheep Industry has a decades long history of a
reliable, consistent, and legal workforce. Sheep ranchers depend on the
H-2A sheepherder program to help care for and protect more than \1/3\
of the ewes and lambs in the United States. To meet those needs, the
industry has participated in temporary visa programs (in various forms)
since the 1950s. As a result, sheep producers employ a legal labor
force with an estimated eight American jobs created/supported by each
foreign worker employed. A workable temporary foreign labor program is
essential for the sheep industry including the special procedures for
herding in future legislation involving immigration reform.
Access to Animal Drugs
With five million head of sheep, animal drug manufacturers often
find that securing FDA approval for new, innovative, and even older
products is not cost effective for this market. While the Minor Use and
Minor Species Animal Health Act of 2004 (MUMS Act) is intended to make
more products legally available for minor animal species, the current
FDA animal drug-approval process is unworkable for the sheep industry.
It is prohibitively expensive, which is discouraging the development of
products for the prevention and treatment of sheep diseases in the
United States. The lack of access to these products which are used by
our competitors in other countries, places the United States sheep
producers at a disadvantage, not to mention limiting their ability to
ensure the welfare of their animals and the safety of the national food
supply. While imported lamb may be treated with a product that has a
USDA/Food Safety Inspection Service accepted residue level, that same
product often is not approved for use in the United States by the FDA.
ASI is requesting a study by the [Government] Accountability Office
(GAO) on the MUMS Act to evaluate if the objectives set forth are being
met with respect to sheep, the effectiveness of the incentives to
address the high development costs, the cost and duration to bring a
new animal drug product to market versus other countries, and to review
the number of products for sheep in the United States relative to the
those available in our competing markets.
Predation
Coyotes, mountain lions, wolves, and bears kill tens of thousands
of lambs each year. Livestock losses attributed to these predators cost
producers more than $232 million annually. American sheep producers
rely on USDA/Wildlife Services, state, and county programs to
effectively control and manage predation by state managed and federally
protected predatory species. The Livestock protection program is
majority funded by industry and local cooperators. Sheep producers have
adopted many techniques to reduce predation, including the wide-spread
use of livestock protection dogs, but access to lethal and non-lethal
predator control methods must be maintained. We add our support for
Congressional action to provide us more options to address avian
predators primarily the black vulture which is expanding its range and
increasingly the primary predator in areas of the U.S.
Thank you for your support of the livestock industry and for
allowing me to visit with you about our priorities.
The Chairman. Thank you. Next, Ms. Scott, please begin when
you are ready.
STATEMENT OF KELSEY R. SCOTT, DIRECTOR OF PROGRAMS, INTERTRIBAL
AGRICULTURE COUNCIL, EAGLE BUTTE, SD
Ms. Scott. Hihhahni waste and Wophila, Chairman Mann,
Ranking Member Costa, and Members of the Subcommittee. My name
is Kelsey Scott, and I am here in two capacities, as a rancher
and direct to consumer grass-fed beef business owner, and as
the Director of Programs for the Intertribal Agriculture
Council, an organization that has worked with Tribal producers
that have family operations much like mine for over 35 years.
Home for me is on the Cheyenne River Sioux Indian Reservation
located in the Northern Great Plains. Our family operation
allows us the privilege to engage with local consumers amidst a
USDA-defined food desert. Like many rural family-run
operations, we aim to be good stewards of the land and our
community.
While running a cow-calf operation consists of grueling
work, accompanied by risk of plenty, it offers fulfillment
beyond what many have the chance to ever experience. This way
of life, passed on to me by my family, is one that I hope to
pass on to my own son. It is this very hope, one that I share
with many other livestock operations, that brings me here
today. An alarming 89 percent of agricultural producers
nationwide must supplement their operational income with off-
farm income in order to survive. While these folks have learned
to be profoundly resilient, this Congress has the opportunity
to make improvements that will provide a greater chance of
viability for these small family livestock operations.
To do this, Congress must understand that the set of
solutions often proposed by large-scale animal agriculture
stakeholder groups is an entirely separate set of solutions
than those needed by the small family agricultural operations,
a segment of which constitutes many of the historically
underserved, including Tribal producers, whom I have set out to
represent today. I urge Congress to consider the following
solutions tailored to the needs of smaller family operations.
Enhanced USDA services, and a cooperatorship that
reimagines farm loans, conservation support, and disaster
responsive programming to better serve family operations.
Livestock operations should have the same options as crop
growers, including market assistance, price loss support, and
on-farm storage facility loans that crop producers have had
access to for generations. There should be more realistic
values attributed to livestock losses in disaster programs.
Solutions must encompass cost-shared risk mitigation and price
guarantee tools that are affordable and enhance a family
operation's management, ensuring that the value received at the
farm gate is proportional to the retail price enjoyed later on
in the supply chain.
Further, unrestricted and quality access to fair credit
that models a greater appreciation for family operations as the
multi-generational businesses they truly are will be vital to
the future of small, family-sized farms. A lack of access to
credit is exacerbated by the lack of financial investments in
the operational infrastructure that otherwise ensures family
operations can continue to steward our most important
ecosystems.
We must urgently address just how powerless family
livestock operations are when there are no diversified market
opportunities, and a lack of transparency in the marketplace.
Livestock producers become victims to the demands of
homogeneity and uniformity preferences that offer them nominal
value but demand tremendous investment. Increasing market
options and practicing rigorous, unbiased scrutiny of the
industry monopolies that currently amass wealth at the expense
of our livelihoods and sanity is long overdue. The
decentralization of our food system demands scalable food
safety regulatory requirements and increased remote meat
inspection utilization. Keep in mind, this utilization does
demand up front capital, and will require investment to support
value-added production and retail market access.
Finally, the actions this Congress takes to support smaller
family livestock operations will require accountability when it
comes to implementation. USDA cooperators will prove vital to
informing agency discretion to best serve family operations.
These priorities, if addressed, will not only strengthen this
country's food security, but they will uplift rural economies
by supporting living wages for family operators. I invite
Congress to reach out to small family operators like myself to
continue to inform how your decisions can enhance or impede our
ability to stay in business. And I have faith that together we
can build a future where my son enjoys a ranching livelihood
where his take-home pay is no longer best measured in
Meadowlark songs, sunsets on the prairie, and ``it will get
better'' promises. Wophila for the chance to be here to testify
today.
[The prepared statement of Ms. Scott follows:]
Prepared Statement of Kelsey R. Scott, Director of Programs,
Intertribal Agriculture Council, Eagle Butte, SD
Hihhahni waste (good morning) and Wophila, (thank you) Chairman
Mann, Ranking Member Costa, and Members of the Subcommittee on
Livestock, Dairy, and Poultry, for the opportunity to appear before you
today to discuss animal agriculture stakeholder priorities.
Introduction
My name is Kelsey Scott, and I am here today in two capacities--as
a rancher and direct-to-consumer grass-fed beef business owner, and as
the Director of Programs for the Intertribal Agriculture Council (IAC);
an organization headquartered in Billings, Montana, that has, for 35
years, worked alongside Tribal producers throughout the United States
to help develop their agriculture resources. As recent as the 2017
Agriculture Census, despite Tribal producers' agriculture operations
accounting for more than six percent of U.S. farmland, our agriculture
operations account for less than one percent of U.S. agriculture
sales.\1\ IAC works with Tribal producers in navigating and accessing
USDA programs that are not necessarily tailored to meet the needs of
Tribal producers, and the majority of agriculture producers, generally.
---------------------------------------------------------------------------
\1\ USDA NASS, 2017 Census of Agriculture, Highlights, American
Indian/Alaska Native Producers (October 2019), https://
www.nass.usda.gov/Publications/Highlights/2019/2017Census_
AmericanIndianAlaskaNative_Producers.pdf.
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Home for me is on the Cheyenne River Sioux Indian Reservation,
located in the Northern Great Plains of South Dakota; a vast landscape
which many of my Lakota ancestors deserve credit for stewarding into
the robust, resilient prairie ecosystem that is now home to 5.3% of the
United States' beef cow inventory--the fifth highest in the country.\2\
Our family operation allows us the privilege to engage with local
consumers amidst a USDA defined ``food desert''. Our unofficial ranch
motto is ``to be good stewards of the land and our community.''
---------------------------------------------------------------------------
\2\ South Dakota Governor's Office of Economic Dev., Livestock
Development (2023) https://sdgoed.com/key-industries/livestock-
development/.
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As a fourth-generation rancher on lands that include my great-
grandfather's original allotment on the Cheyenne River Sioux
Reservation, land stewardship and animal husbandry have been ingrained
in me since birth. While running a cow-calf operation consists of
grueling work, accompanied by risk of plenty, it offers fulfillment
beyond what many have the chance to experience. It is a way of life
that was passed on to me by my family, and it is one I hope to pass to
my children. It is for this reason, as well as for the many other
livestock producers who hope for the same opportunity, I am here with
you today. I hope that in sharing how profoundly resilient one must be
to carry out this way of life, you will appreciate the ways in which
you can make improvements that will provide a greater chance of
viability for the livestock producers who see the least help when the
unforeseen and unplanned circumstances occur; detrimentally impacting
their livelihood, stifling rural economies, and jeopardizing this
Country's own food security.
Family operations are the cornerstone of rural communities
throughout the United States. It is family operations that are
responsible for stewarding what remains of this country's topsoil; the
very lifeblood of our agricultural industry. We sequester carbon at
rates unrealized in any other sector of the industry. We maintain safe
haven landscapes where wildlife fauna can complete their mating rituals
each spring so that the gamesmen and -women can enjoy their annual
hunts each winter. We offer our own reputation as the face of
agriculture while we fortify rural economies; conducting our business
in Small Town America. Serving on school boards, volunteering at the
polling stations, and joining in county-wide trash clean up days, we
find ways to model quality U.S. citizenship, and we so rightly deserve
a more meaningful representation in Congressional action as a response
to the contributions we make to this country.
But to date, Congress has failed to respond to the very real needs
of the majority of family operators in ways that will guard against
farm and ranch closures and financial ruin. With nearly a decade of
experience providing technical assistance as a USDA Cooperator, it is
urgent that the realities endured by the majority of family farmers and
ranchers guide Congress's actions in agriculture-related legislation.
Identifying Gaps in USDA Services to Small Family Operations
Recently, USDA's Economic Research Service published data on
Farming and Farm Income, which noted that ``[f]amily farms (where most
of the business is owned by the operator and individuals related to the
operator) of various types together accounted for nearly 98 percent of
U.S. farms in 2021[, and] [s]mall family farms (less than $350,000 in
GCFI) accounted for 89 percent of all U.S. farms.'' \3\ A significant
reality that has yet to guide meaningful legislation in recent years is
that the approximately 89 percent of U.S. farms that constitute small
family operations represent households that must ``typically rely on
off-farm sources for the majority of their household income. In
contrast, the median household of operating large-scale farms earned
$486,475 in 2021, and most of that came from farming.'' \4\
---------------------------------------------------------------------------
\3\ USDA ERS, Farming and Farm Income (last updated March 14,
2023), https://www.ers.usda.gov/data-products/ag-and-food-statistics-
charting-the-essentials/farming-and-farm-income/.
\4\ Id.
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The most meaningful takeaway that the Subcommittee can have from my
testimony is that the set of solutions often proposed by large scale
animal agriculture stakeholder groups is an entirely separate set of
solutions than those needed by the family agriculture operations that
account for 89% of producers in the United States. If Members of
Congress want to meaningfully and adequately represent constituents who
have family operations in their districts, all while addressing the
consolidation and homogenization of our food system, then I would
encourage Congress to prioritize the design of a solutions toolbox
tailored also to the needs of smaller family operations. This toolbox
would include:
1. Enhanced USDA Services & Programmings Customized for Family
Operations
2. Cost-shared Risk Mitigation and Price Guarantee Tools
3. Unrestricted and Quality Access to Fair Credit
4. Meaningful Financial Investment in Infrastructure
5. Diversified Market Opportunities & Transparency in the
Marketplace
6. Scalable Food Safety Regulatory Requirements & Increased Remote
Meat Inspection Utilization
7. Investment in Value Added Production & Retail Market Access
8. Receptivity to Feedback on 2023 Farm Bill Implementation Process
Solutions Tailored to the Needs of Family Operations and Historically
Underserved Producers
Enhanced USDA Services & Programmings Customized for Family Operations
Enhanced county-level USDA services are critical to family
operations. Among these enhanced services is the need for inclusive,
renovated farm lending offerings, updated farm programming and
conservation resources, and more flexible and responsive disaster
assistance. Coupled with elevated investment in USDA cooperatorship,
Congress can ensure dynamic accommodation and representation of the
specific producer needs which tend to vary drastically from one county
to the next. While the farm bill presents us with a unique opportunity
to establish national efforts to support our agricultural and food
systems, many aspects of implementation at the county level encompass
efforts towards exclusion, rather than inclusion. This can be largely
attributed to a mindset still practiced today in many USDA offices that
producers should not need, or should not qualify for, the support
initially intended by farm bill programming.
Disaster programming available to livestock producers does not
carry the same weight in support as appreciated in other sectors of the
industry. Each producer's livestock valuation is based on an
institutionalized pricing index that is updated (at best) annually by
the USDA. This pricing valuation is not inclusive of speciality
production practices and voids appreciation for a producer's uniquely
specific genetic pool they've curated to match their environment over
generations. Additionally, this pricing index only compensates
producers for a singular unit of production lost, rather than
appreciating that when a livestock animal dies or loses their
offspring, the entire production unit falls out of the operation. This
displaces future income potential for the producer and also results in
a significant loss of investment that had been placed in the production
unit. Livestock producers therefore realize a financial hardship across
several production seasons but can only find compensation for a short
term income disruption through current USDA disaster programs.
Smaller family operations are often home to several operators who
are reliant upon the pooling of resources in order to accommodate
production demands. Certain disaster programming payment schedules do
not account for this form of enterprise diversification. Further, many
programs are absent of appreciation for the elevated livestock care
apparent on family operations; this contributes to further disparity in
disaster assistance programming valuation realized by family operators.
In addition to these programmatic variances from real-world
experiences of family farmers and ranchers, these producers must
navigate confusing application processes, limited and unaccommodating
sign-up periods, and county office scrutiny that ultimately dissuades
producers from applying. Not only does USDA disaster programming need
to be expanded upon for family livestock operations, but the services
provided to these individuals at a county level could stand to be
enhanced as well. In other words, as Federal assistance programs are
updated to more adequately address the needs of family livestock
operations, we need to ensure County Office services to these
stakeholders adopt a mindset of enhanced, expanded, and inclusive
outreach and programmatic access for our producers who are laboring
day-in and day-out to provide for their families, communities, and this
country.
Cost-shared Risk Mitigation and Price Guarantee Tools
Cost-shared risk mitigation and price guarantee tools must be
created to do more for the livestock producer than hedge prices in the
existing Cattle Market Exchange; these tools need to be affordable and
must enhance--not prohibit--a manager's ability to adapt.
Accessing the current risk mitigation and price guarantee tools
require time and financial resources that the majority of family
operations do not have the liberty to expend. We operate at a level
where economies of scale do not yet come into play. Each animal, acre,
or unit of production that we are able to attain in our operation's
expansion comes with a direct cost increase that offsets potential
profit from expansion.
With this limited ability to expand production, family operators
are under extreme pressure to elevate income derived per production
unit. One common way family operations can attain this increase in
income per unit, is by differentiating their product into a specialty
commodity. The underlying goal in this diversification is to have a net
gain realized in the valuation of your livestock in comparison to the
industry standard. By growing an animal that better withstands the
climate, raises a larger calf, or presents more desirable traits,
family producers claw ahead incrementally with each elevated investment
(often in the form of time, money, and expertise). However, current
risk mitigation and price guarantee tools do not accommodate an
awareness of this investment. Family producers that have made the
effort to create an above industry standard animal through strategic
management approaches have limited ability to protect this investment.
And, in the instance there is a coverage tool that can offer such
protection, the producers are often too overextended financially to
take up the offering. For this reason, cost-share support for family
operations to be able to access risk mitigation and price guarantee
tools proves invaluable.
Unrestricted and Quality Access to Fair Credit
Family operations deserve unrestricted and quality access to fair
credit that models a greater appreciation for family operations as the
multi-generational businesses they truly are. We must abolish the
suggestion that family operations have to be subsidized by off-farm
incomes, we need to prioritize lowering the average age of producers,
and we must focus on increasing equity for the smaller family farms
that are the foundations for rural communities. With a credit system
that is so intentionally tailored to the needs of corporate entities,
family farms are reliant upon the Federal Government to lead this
massive undertaking. The result? The next generations of family farmers
assume the debt of their predecessors, oftentimes beginning at a
deficit.
Like most family operations, in order to stay in business, I seek
an off-farm income to subsidize the nominal profits that our on-farm
enterprises can achieve. This is a reality endured by most family
operations. In my work with the IAC, I've been able to get to know
hundreds of family operations, and I have yet to meet a single producer
not reliant on some form of an off-farm income.
When family operations get to enjoy profit margins in our
businesses, it is because the weather patterns, market trends, and
inflation rates were in our favor that production season. And when we
do not see profit margins, we are told we are bad managers, when the
truth of the matter is that the system is not designed for us to amass
profits as a family operation. Even in the best years, though, most
financial institutions do not allow for us to account for a livable
wage in our cash flow. In fact, my local FSA loan officer once told me
that ``producer wages'' are merely ``owner's withdrawal'' and that my
cash flow could withstand a quicker repayment plan once we remove that
expenditure.
I suggested to the loan officer that without producer wages, I
would need an operating loan to accommodate the following production
year's cash flow. Laughably, they suggested that using my off-farm
income to cover on-farm operating expenses would be a better route,
given I wouldn't have the interest costs to worry about that fall.
Unsurprisingly, the next year I found myself in a similar situation as
most other family operations--floating my annual operating expenses on
credit cards, after the local bank that my family has been loyal
customers to for three generations was not able to ``find enough
collateral to extend credit,'' since I didn't have my calf crop on the
ground yet.
With a credit system that does not equitably serve us as
generational businesses that span across multiple lifetimes, we
continually overextend ourselves on our balance sheets just to
accommodate a banking system that better serves the large scale
producers. This is a reality that needs to be addressed, or young and
beginning farmers and ranchers will never be able to step in as the
next generation of producers, and the family operations will go
extinct.
Meaningful Financial Investment in Infrastructure
Meaningful financial investment in livestock infrastructure is
necessary to withstand extreme weather conditions, adopt climate-smart
practices, and update decades old land management developments.
Infrastructure investment will help keep family operations stewarding
our most important ecosystems that prop up this country's agriculture
economies.
Like most family operations in rural America, we must navigate
expansive landscapes void of the necessary infrastructure conducive to
withstanding extreme weather. For example, our closest gas station is
25 miles away, and the grocery store we frequent is 50 miles further.
When we sell our calves, we ship them 98 miles to a livestock auction
barn with the slogan, ``An Oasis on the Prairie.'' While traffic does
not usually burn up our time, the vast distances we have to travel for
basic accommodations, do. Our extreme rural existence also drives the
prices of basic living expenses higher, and demands a forward thinking
resourcefulness when it comes to how we extend our investments into
infrastructure on the landscape.
Production at this scale embraces tradition and culture that is
rooted deeply in the ``help thy neighbor'' teaching. This friendly
rural value system may currently be why family operations are able to
remain in business. At present, this teaching results in the sharing of
dilapidated infrastructure resources well beyond their useful lifespan.
For instance, a watering location shared by several herds, loading
corrals frequented by multiple producers, an irrigation line that is no
longer efficiently distributing water, and beyond. Producers can be
found sharing because they can't afford not to. When this exchange
works, it's great. However, an over extended resource can quickly serve
as a point of contention for neighbors. Overwhelmed by the lack of
support they are receiving by the industry, producers have no choice
but to ``blame thy neighbor'' for a lack of functional infrastructure
that is limiting their ability to manage.
Approaching the investment in infrastructure must accommodate an
awareness of individual operation demands. Present USDA infrastructure
support does not adequately account for the supply-chain disruptions,
inflated costs of materials and present-day labor shortages.
Additionally, most infrastructure support is funded through
competitive ranking processes and family operations often do not score
high enough to receive the financial support necessary for otherwise
critical infrastructure. This shortfall is especially true for many
family operations that are so small they are currently sharing
infrastructure access with their neighbors.
Unique to producers on Tribal lands, is a reality where livestock
producers function in a quasi-shared leasing management system. The
functionality and responsiveness of Bureau of Indian Affairs and Tribal
Land Offices adds in an additional layer of complexity that oftentimes
results in the expense of a producer's timely eligibility for current
infrastructure support.
A heavy infrastructure cost-share offering must be extended to
family operations, perhaps offering a prioritization of support to
efforts of producers cooperating amongst one another and operating on
Tribal lands.
Diversified Market Opportunities & Transparency in the Marketplace
Family operations are reliant upon extremely limited market
opportunities; many, like myself, rely upon access to a couple feasible
entry points. Lack of market entry points for my livestock results in
an undervalued commodity product. Within each of these limited market
opportunities, exists demand for homogeneity and uniformity in my
livestock herd. Penalized for lack of uniformity; the same uniformity
undermines our ability to withstand nature's woes.
Conforming to this demand benefits industry monopolies, vastly
undermines resiliency offerings of diversified livestock herds, and is
reliant solely on my own investment. Greater scrutiny of industry
monopolies (such as aggregators and corporations) that amass wealth at
the expense of our livelihoods and sanity is one of several steps
needed to enhance market opportunities and transparency in the
marketplace.
Scalable Food Safety Regulatory Requirements & Increased Remote Meat
Inspection Utilization
Livestock producers hoping to contribute to their local food system
will benefit greatly from scalable food safety regulatory requirements
that acknowledge small scale processing immensely reduces potential for
cross contamination. Further, embracing today's technology to increase
remote meat inspection capabilities will significantly increase the
prevalence of local meat purchasing options.
DX Beef is my family's direct-to-consumer grass fed beef business.
Our livestock leave the ranch for the first time ever when we load them
in the 26 horse trailer on slaughter day. We drive them 45 minutes to
a mom and pop butcher shop in a town of less than 700 people. Upon
arrival, we unload them into a facility that will only be occupied by
livestock from a handful of operations throughout the entire week.
Eventually, I'll pick up the product and we will typically feed a
maximum of 15-20 households per month, all within the state of South
Dakota (most often, within the tri county area).
Demand for this butcher's services and access to the limited state
certified meat inspection is so high that my slaughter dates are
scheduled anywhere from 12-18 months in advance. When the weather does
not accommodate a slaughter delivery date, we are simply out an entire
month's product, as our butcher is not able to easily reschedule with
the inspector without further disrupting his clientele base.
In addition to restrictive inspection access, production at my
scale is further encumbered by out of line food safety regulatory
requirements. I'm required to meet similar food safety regulation
standards of slaughter plants that process hundreds of animals per 12
hour shift. I've had instances in which the state lab testing timelines
have impeded my delivery schedules by nearly 2 weeks. I do not
highlight these realities to merely complain about the system. Rather,
I hope to demonstrate how nationally enforced regulatory requirements
intended to keep the masses safe actually create a disadvantage to
family livestock operations that would otherwise love to contribute to
local meat production efforts.
An increase in market opportunity and value-added production
potential for the producer can be matched by a localization of food
dollars that will have a net positive income on the communities that
the current food system most significantly exploits. Ultimately, this
can contribute to the decentralization of our meat supply chain. The
result would be a more informed consumer, as local meat offerings will
once again connect consumers with their farmers.
Investment in Value-Added Production & Retail Market Access
Continued investment in value-added production and retail market
access to fortify prevalence of local meat purchasing options available
to consumers.
Enhanced local market entry is not feasible until the underlying
issues with access to credit are first addressed. With each
diversification we pursue in an attempt to increase our ability to feed
our communities, we have to stand up an entirely new enterprise on-
farm. We have to do this enterprise development from the profits, or
lack thereof, from our already existing cash flows.
Receptivity to Feedback on 2023 Farm Bill Implementation Process
Congressional intent advanced through the farm bill is not always
matched in agency implementation. The actions this Congress takes in
the upcoming farm bill require agency accountability through
implementation to ensure that improvements to the animal agricultural
sector for operations of all sizes are actually achieved.
I can't, in good faith, use this opportunity to directly speak to
many of the issues presented by my fellow panelists before you today
without highlighting the glaring differences in the reality of their
stakeholders, and that of ours. The current livestock industry has been
systematically designed to exploit family operations. The reality is
that few of the 12% of producers who do not have to seek income outside
of their agriculture operations to make a liveable wage represent the
historically underserved at USDA. The missing piece for the
historically underserved producers, and their fellow producers in the
89 percent is not hard work. Rather, it is laws and policies that
create barriers to agriculture production providing a respectable,
living wage for the majority of this nation's producers.
I have hopes that these stories will shed light in a way that
inspires longer conversations that span far beyond this farm bill
season. This country's small family farmers and ranchers--especially
our historically underserved stakeholders who are working zealously to
hang on to operations passed down to them or working to bring new lands
into production--are the strongest neighbors, partners, and
cornerstones for the Tribes, counties, states, and regions from which
we come. I respectfully ask this Subcommittee to in turn be good
partners for small family farms, historically underserved producers,
and the 89 percent who, despite their best efforts, cannot live off
their agriculture operations alone. This type of partnership will only
serve to enhance this nation's food security and food economies.
Conclusion
I want to conclude by thanking the Subcommittee for inviting me
here today to share with you the priorities of the stakeholders that
include small family operations, Tribal producers like myself, and more
broadly, historically underserved producers. Our commitment to the
land, our families, our rural communities, and this nation's food
systems is unparalleled. These priorities, if addressed, will not only
strengthen this country's food security, they will uplift rural
economies by supporting living wages for producers. I hope that this
Subcommittee, and the Agriculture Committee as a whole, will continue
to reach out to smaller family operators like myself to inform how your
decisions can enhance or impede our livelihoods. And I have faith that
together, we can build a future where my son enjoys a ranching
livelihood where his take home pay is no longer best measured in
Meadowlark songs, sunsets on the prairie, and ``it'll get better''
promises.
The Chairman. Thank you all for your important testimony,
and for joining us this morning. At this time, Members will be
recognized for questions in order of seniority, alternating
between 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. First, I recognize myself for 5
minutes.
I am concerned 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 its intent is 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 America's animal agriculture.
Producers would lose the ability to reap the financial
rewards of their superior performance and product, and
customers would be saddled with higher costs for lower quality
goods. These rules are an egregious example of regulatory
overreach that will harm producers and consumers alike.
First question for you, Mr. Burns, and I know you talked
about this a little bit in your testimony, but if finalized,
what effect do you think these rules will have on the quality
of animal protein available to consumers? You talked about the
financial impact, but what do you see so far as the quality
impact for producers, and also consumers?
Mr. Burns. Thank you, Chairman Mann, for the question, and
we certainly agree with all of the statements you made within
the question. I think the impact, both on quality--would be
significant and on the price that consumers pay would be
significant. Adding costs to the industry will result in higher
food cost, and we are trying to recover from a period of
historic food inflation, so adding transactional cost to the
industry at this time would be a mistake for American
consumers.
And quality will suffer. If the industry cannot reward
producers of the highest quality, or niche, or specialized
products, there will be no economic incentive for producers to
produce those products for us to be able to supply to our
customers and consumers.
The Chairman. Okay. Thank you. The next question will be
for you, Mr. Wilkinson. On January 19, 2023 USDA APHIS proposed
a rule that would require electronic ID, or EID, tags for
purposes of animal disease traceability and as a requisite for
official interstate movement of certain cattle and bison. While
I understand the goals here, it would obviously come at an
added cost for producers in my district and across the country.
In the past APHIS has provided free EID tags and financial
assistance for related infrastructure to comply with the
regulation. Mr. Wilkinson, do you believe Congress should
bolster USDA animal traceability efforts to further promote
ongoing disease prevention, including mitigating the cost to
producers, and other entities like sale barns for compliance
with the EID rule?
Mr. Wilkinson. Mr. Chairman, I believe that if Congress
doesn't proceed in that fashion, we are exposing the American
beef herd to greater and greater risk. All we have to do is
look to poultry and pork and see the risks that they are
facing, and what is offshore. The foot-and-mouth disease has
spread across literally 70 percent of the cattle area in the
world, and unless we have an effective system of tracing
potential outbreaks, we run a serious risk of exposing our beef
herd to disastrous consequences.
America's cattle producers would welcome the ability of
having assistance on the tagging, but the mood shift over the
last 15 years in our industry has been remarkable. We have seen
cattle producers say absolutely no way am I going to tag my
cattle to yes, I understand the importance of protecting the
herd. The ability to do that is going to come through an
electronic means. And not only do we think that it needs to get
into the breeding herd, we feel, on a goal, it needs to get
into all of the cattle sector. And that is not going to come
without cost to the producers.
They are willing to shoulder the burden on a lot of that,
but we need some assistance. But yes, Mr. Chairman, it is
critically important.
The Chairman. All right. Thank you. Last question, with the
minute I have remaining, Mr. Hays, we heard in Mr. Burns'
testimony today that Proposition 12 ruling will embolden anti-
animal agriculture groups to pursue ballot measures in other
states and localities, which would open the door to chaos for
not only meat products, but many other agricultural
manufactured products as well. Can you elaborate on how this
decision sets a dangerous precedent for interstate commerce and
its impact on your industry?
Mr. Hays. Thank you for the question, sir. Yes, what
California used was the way some production practices don't
meet their moral standard. They had to pull the language on
animal welfare, they had to pull the language on public safety,
because those were just not true. And so all they were left
with was their moral standard. So this opens the door for
anyone in any state to say something doesn't meet their moral
standard, and they can start restricting it from coming from
another state.
The Chairman. Yes. Thank you. I see my time has expired.
Next I recognize the gentleman from California, Mr. Costa, for
5 minutes.
Mr. Costa. Thank you. I was interested to hear your
reactions to the Supreme Court's decision regarding Prop 12 in
California. It has been a challenge, in California, to adjust
to it, and there are a lot of decisions the Supreme Court makes
that I don't support or agree with. I guess I am wondering what
your solution or alternative is. In California, we--for better
or worse--have to live with it and adjust to it. But, it has
been a challenge. But I want to move on.
Mr. Burns, over the past 6 months or so, supply chain
issues have improved, but what lessons have the meat packers
taken from the supply chain crisis that, I don't assume that we
are over with pandemics. I think that this is something that we
need to be better prepared for in the future. So what lessons
are there to learn from this?
Mr. Burns. Well, I think that we have to be careful, in
terms of setting long-term policy based on black swan events.
We do have to be prepared; but, we have to be mindful of the
fact that some of the dynamics that played into that were
actually expected. From 2015 through 2020 the cattle herd
expansion happened. We actually happened to roll into the
pandemic with a very, very large record cattle herd. And that
is not something that I know--that I think could have been
predicted, or at this point.
Mr. Costa. But--no, I know--I understand, but I have family
in the cattle business, and I think you have to be prepared for
the unexpected. I mean, we have had pandemics, historically,
throughout world history. I think when we talk about
perishables and supply chains, cold chains, I think we--those
are areas that we can look to the future to better protect
ourselves, don't you think?
Mr. Burns. Well, one of the issues we ran into was
processing capacity. We really, as an industry, can't afford to
overbuild and have excess capacity that sits idle outside of
these unique events. That would be underutilized capacity, and
it is just not a cost, as an industry, we can absorb. So yes,
there are opportunities throughout the supply chain to be
better, but we need to be mindful of economic reality----
Mr. Costa. I mean, there were all sorts of impacts. I mean,
we have had our export ability--and I want to thank you for
making reference to the Market Access Program, and others that
have been very important, but we have products that we can
compete in, and ship in to foreign markets, and we can't get
consignment on containers--ships, and that has been a problem.
Mr. Burns. Yes.
Mr. Costa. And we have had internal problems with our
domestic supply chain issues that relate to our freight
capacity.
Ms. Scott, there have been numerous USDA programs that have
been rolled out that bring more processing online. Have you
seen any benefit to these programs in your area?
Ms. Scott. Absolutely. I think that, especially in the
communities where we have seen these most recent offerings, the
extra capacity is realized as a community service. There is now
access to local processing opportunities. Producers are able to
diversify their income streams.
Mr. Costa. Do you think we can improve on that in the farm
bill?
Ms. Scott. Absolutely. I think further investment in this
space, as well as expanded accommodation for identifying where
current processing capacity exists and being able to more
robustly----
Mr. Costa. Yes. And I think, for all of the witnesses, part
of the struggle I am having--I think many of us on the
Committee here, as we reauthorize the farm bill, is that many
of the titles here where we have popular programs, whether it
is with EQIP, or whether it is market access, or whether it is
NRCS, are oversubscribed. And how our producers around the
country are utilizing them. As we look in the farm bill to
provide opportunities for those successes to continue, any
comments?
Mr. Wilkinson. Who were you addressing the comment to, sir?
Mr. Costa. To whoever would like to respond.
Mr. Wilkinson. Well, the utilization of EQIP, and other
programs that you just mentioned, are critical to the cattle--
--
Mr. Costa. Yes. The problem is they are oversubscribed, and
so how do we deal with that in the farm bill?
Mr. Wilkinson. Well, it--I guess that would depend upon the
definition of oversubscribed.
Mr. Costa. They are popular. A lot of people want to
utilize them.
Mr. Wilkinson. Well, sometimes having a popular product is
a good thing, and----
Mr. Costa. No, I know, so how do you create more
opportunities?
Mr. Wilkinson. Well, I think as long as you offer a
reasonable rate of return on a voluntary basis for that
producer to participate, what--let us go with the programs.
Mr. Costa. Yes. Well, I am just figuring how we create more
opportunities. My time has expired. I was very interested in
talking about the comments, the sea change on tagging. Having
been from the dairy industry, obviously we identify our cattle
all the time, but I think it is important that we continue to
work on this. Thank you.
The Chairman. I now recognize the gentleman from
Pennsylvania, the Chairman of the full Committee, Chairman
Thompson.
Mr. Thompson. Thank you, and in response to my friend from
California, I would say promoting the SUSTAINS Act--or SUSTAINS
Law, which allows us to expand funding for conservation using
private-sector dollars. And there is a lot of interest out
there.
Ms. Hubbard, thank you again for being here. Can you
elaborate on how consumer interest in sustainability is
benefitting the sheep industry?
Ms. Hubbard. Sure. That is a great question, and
sustainability is key for the sheep industry. We have such a
great story to tell, from our animal stewardship, the
conservation, the passion that we put into raising of our
products, both meat and wool. The industry is currently working
on supporting further research so we can fine tune those
messaging that we can get out to the consumer.
Mr. Thompson. That is great. From what I am understanding,
the sheep industry is struggling with access to animal drugs.
Is the Federal Government responsive to those concerns?
Ms. Hubbard. Right now drug manufacturers--it is just not
profitable for them to produce for our industry, being so
small. There is a lack of access to products used by our
competitors, all of the imported lamb coming in, and it really
puts our industry at a significant disadvantage. We are asking
the Committee to mandate a study on barriers of minor-use
animal drugs to work toward bioequivalent approval through
USDA.
Mr. Thompson. Very good. Well, thank you. Mr. Wilkinson, as
you pointed out in your written testimony, Livestock Mandatory
Reporting, or LMR, is a critical tool for cattle producers, but
as you also know, in the wake of the pandemic, there were a
variety of obstacles and competing legislative priorities that
thus far prevented a formal multi-year LMR reauthorization by
Congress. In your opinion, have the concerns surrounding those
obstacles been addressed, and is it now time to return focus to
a longer-term extension effort to provide more certainty to
producers?
Mr. Wilkinson. Mr. Chairman, absolutely. This is way past
overdue. I know that there has been a lot of bills undertaken
by Congress, and a lot of discussion, but a full
reauthorization of LMR is critical.
Mr. Thompson. Are there any of the other witnesses wish to
weigh in on that?
Mr. Burns. Just one comment. We support, and have supported
since 2019, a full reauthorization. We would ask that it be
freestanding legislation, not tied to other pieces of
legislation. We think it is a successful program, and important
enough that it needs its own freestanding bill.
Mr. Thompson. Thanks, Mr. Burns. Any others? If not, I will
move on to my next question, for Mr. Hays. As you know, in
March the Department of Agriculture announced an extension of
their time-limited trial allowing eligible New Swine Slaughter
Inspection System, or NSIS, pork packing plants to operate at
higher speeds through the end of November as the Department
continues to collect a variety of data that relates to worker
safety. From a producer perspective, can you talk about the
importance of this trial, and the need for a permanent
solution?
Mr. Hays. Yes, Mr. Chairman. The line speed issues are very
critical to pork producers. We run very close on capacity when
it comes to getting pigs harvested, so any change in the amount
of pigs we can harvest per day has a great impact on the market
price of pigs. We don't have a real long shelf life. When a pig
is ready to be marketed, it needs to move. So, we have been
testing this for a number of years. It has been proven safe for
workers, safe for human health, and we would certainly like to
see the line speeds--the new rules that were proposed a number
of years ago in place permanently on line speeds. But we do
appreciate the pilot program, we appreciate that they are
continuing the line speeds as they continue to study it, but we
would appreciate a permanent solution.
Mr. Thompson. Absolutely. Yes. And, Mr. Zimmerman, the
ongoing Highly-Pathogenic Avian Influenza outbreak has been
devastating the poultry producers in the U.S. More than 58
million birds have been affected--ducks, turkeys, poultry--
across 47 states, including Pennsylvania. Can you walk us
through how your organization has been working with USDA to
address the outbreaks, educate producers and consumers, and
enact protocols that will help prevent spread and future
outbreaks?
Mr. Zimmerman. Thank you. As I said in my testimony,
compared to the 2015 outbreak, we are doing much better, and we
have had a lot of--great lessons have been learned. The virus
this time has a little bit of--it has had some changes. It is
more heat resistant. The wild bird population has a much higher
viral load, but you could see there was much less farm to farm
spread, and that is definitely because of our increase in
biosecurity. And our state and national organizations, along
with APHIS and USDA, have been great in educating both the
producers and the processors on how best we can manage our
biosecurity practices to limit that farm to farm spread.
So I think we have come a long way in eliminating that
spread. We have to look at other options in the future, and
that is why we are open to talking about vaccines, and other
things such as that.
Mr. Thompson. Very good. Thank you, Mr. Chairman. My time
has expired.
The Chairman. Thank you. I now recognize the gentlewoman
from Colorado for 5 minutes.
Ms. Caraveo. Thank you. And thank you to you, Chairman
Mann, and Ranking Member Costa, for hosting our hearing this
morning, and to all of our panelists. Thank you so much for
taking the time to provide your testimony today. It is
difficult to overstate the importance of livestock in Colorado:
66 percent of the states's over $7 billion in agricultural cash
receipts can be attributed to livestock, so I am very grateful
to hear from you all this morning on your stakeholder
priorities.
While our number one agricultural commodity is cattle,
Colorado's market share of sheep and lambs rank second in the
nation, and Colorado wool production ranks fourth. In recent
years the lamb industry, like others--farmers and ranchers have
faced unprecedented volatility and drastic price swings.
However, American lamb producers do not have a futures market,
or active insurance products, to help hedge against these price
swings. So, Ms. Hubbard, you go into this somewhat in your
testimony, but what would you recommend that risk management in
the lamb industry look like to provide a stronger safety net
for our producers and our wool growers?
Ms. Hubbard. It is really crucial, when we are talking
about risk management, that we work on that mandatory price
reporting. That is where all of our formula prices, our
contract prices--we have a growing non-traditional market
across the country, especially in the East, but it is growing
across the country. And that, unfortunately, isn't captured
within that price reporting, so we are at a huge disadvantage
there, not being able to capture those numbers. And as I did
mention in my verbal testimony, we really need some significant
changes to that confidentiality, the 3/70/20 rule. So that
would help us significantly.
Ms. Caraveo. Thank you, Ms. Hubbard. And, even though we
have had a very good winter, in terms of snowpack in Colorado,
drought continues to be a significant issue in the West. So for
Ms. Scott and Mr. Wilkinson, you touched on disaster assistance
in your testimonies. How would you recommend we improve our
existing programs to ensure that our livestock producers,
especially small producers, are getting timely, adequate
assistance with extreme weather events, such as drought?
Mr. Hays. I am sorry, I thought you were addressing Ms.
Scott. With--on--yes, I--in the pig industry, drought affects,
obviously, the feedgrain production, and so--we did have some
drought issues this winter, but hopefully we have a better
growing season this summer. We rely on our grain producing
partners for that, not so much for forage crop production. So I
will give back my time.
Ms. Caraveo. Yes, and I am sorry, I apologize, I said Scott
rather than Hays. Mr. Wilkinson, any thoughts?
Mr. Wilkinson. Yes. Thank you for the question, because it
is critical, both on the forage side and on the grazing side,
the total rainfall. And having those programs there have really
benefitted cattle producers the past 4 or 5 years. And I have
to give hats off to Congress, because there were some programs
that you put in place for cattle producers that have really
been helpful. And continuing those programs, and adequately
funding those programs, our Livestock Risk Protection Program,
is critical. So thank you. We don't get to say thank you a lot,
and in this case, from America's cattle producers, please
continue that program.
Ms. Caraveo. That is always great to hear. Switching topics
again, for Mr. Burns this time, your testimony touches on how
member companies contribute to educational opportunities,
affordable housing and childcare within rural communities in
which they operate. I know that that is a big part of what one
of our producers in Greeley does. How can we better leverage
private company investments in order to support, develop, and
invest in our rural communities?
Mr. Burns. Well, thank you for the comment on that. What we
are seeking is more public-private partnerships on that. Our
companies have made significant private investment. They care
about the rural communities in which they operate, and most of
our companies' plants are in rural communities. So perhaps the
farm bill is an opportunity to look at increased funding to
develop those educational opportunities, clinics, health
clinics. Anything that can improve the quality of life in our
rural communities, we would certainly be in favor of more
funding for.
Ms. Caraveo. Those are things that are very much
appreciated in rural communities like the ones that I
represent, and so I am definitely interested in working on
that.
Mr. Burns. Thank you.
Ms. Caraveo. With that, I yield back my time.
The Chairman. Thank you. I now recognize the gentleman from
Tennessee for 5 minutes.
Mr. DesJarlais. Thank you, Mr. Chairman. In just over 3
years President Biden's Environmental Protection Agency has
released a slew of overly burdensome regulations that
disproportionately impact rural communities and our nation's
producers. For example, we have seen yet another expansive
WOTUS rule, a proposed emission reporting requirement for on-
farm animal waste, crippling natural gas power plant emission
standards that will further increase farm and ranch input
costs, and increased oversight over thousands of animal feeding
operations in the Chesapeake Bay Watershed, setting a dangerous
national precedent.
Mr. Wilkinson, or any witness interested in weighing in,
can you speak to the detrimental effects these type of onerous
rules have on livestock producers, and how uncertainty and
compliance costs trickle down to the American consumer?
Mr. Wilkinson. Yes. Thank you for the question. The WOTUS
field, and the whole EPA approach on this, has been troubling
for America's ranchers and farmers. We go from the Obama
Administration, with a series of rules, to the Trump
Administration, with a series of rules, to the Biden
Administration, with a series of rules. And, unfortunately,
America's producer is left out there, trying to figure out
which way to go. And we can't be dealing with these constantly
changing rules from the EPA. We feel like we are being
attacked.
And to try and make our operations go forward, we need one
set of rules. You can't keep changing the rules. It is like
playing a football game and tying your hand behind your back.
So we need to move forward with one set of rules, and we ask
that Congress consistently apply the rules, and don't give us a
mixed signal constantly.
Mr. DesJarlais. Well, certainly that would be helpful. Any
other witnesses like to comment on this?
Mr. Burns. Just a brief comment. We support everything Mr.
Wilkinson says with regard to the WOTUS rule, and the
uncertainty that has existed on that front. And we too have
felt somewhat under attack by EPA. They are currently engaged
in a process to revise effluent limitation guidelines for meat
and poultry processing facilities that are going to impose
tremendous costs on those facilities that we don't think the
agency has factored in. That is a big concern.
And the recent change to the national drinking water
standard involving PFAS chemicals we believe can have
unintended consequences, in terms of other agencies that tie
their regulations to the national drinking water standards. We
don't believe that EPA has adequately sought input from those
other agencies or has adequately sought input from industry.
And, finally, I will mention we now have a second
environmental agency, in that the SEC issued climate guidelines
that impose all sorts of environmental requirements. Too deep
to go into today, but we would suggest that the SEC stay in its
lane, and not try to become a second Environmental Protection
Agency, and withdraw those rules.
Mr. DesJarlais. Yes. Well, I appreciate your thoughts.
Anyone else like to comment?
Mr. Hays. Yes. The pig industry is proud of our record on
climate and sustainability and the environment, and we would
just like for Congress to recognize that manure from a pig farm
is a very valuable resource. It is not a waste, and we apply it
that way, especially with prices of fertilizer today. Pig
farmers rely on that storage of manure to fertilize the next
crop, and we use it very judiciously, and we don't need rules
that restrict our ability to use it properly.
Mr. DesJarlais. Anyone else?
Ms. Scott. Thank you for the question. I would like to
share, just an underscore of the fact, that we are not only
meat, protein producers for the country, but landscape
stewards. A lot of times, when regulatory enactment takes
place, there isn't also the offering of opportunity to be able
to update our resources, such as infrastructure, on family
operations to be able to accommodate.
One of the things that I am really excited and hopeful for
is the diversification of how conservation efforts are able to
reach our producers, through cooperatorship and through
identifying more flexible, regionally adaptive conservation
efforts to support our family operators.
Mr. DesJarlais. Okay. That is it? All right. Well, I hope
the Administration, the EPA, is listening to your important
thoughts, and I yield back.
The Chairman. I now recognize the gentleman from North
Carolina for 5 minutes.
Mr. Davis of North Carolina. Thank you so much, Mr.
Chairman, and to the Ranking Member. Thanks for bringing us
together today, and to all the witnesses who are here. Good
morning, and thank you for all that you do in particular to
help us not only feed and clothe eastern North Carolinians, but
Americans. I am proud to support bipartisan common sense
priorities for stakeholders here today, including the Beagle
Brigade, as well as combating illicit Xylazine.
Eastern North Carolina producers desperately need farm
labor, in terms of the workforce. And, given the ongoing
population loss, in particular in the eastern North Carolina,
and often many rural parts of America, and yet the growing
workforce needs, I am just curious to hear from any of the
witnesses today on your thoughts on how we can update an
outdated H-2A program, in particular to ensure that our
producers have a steady labor supply.
Mr. Zimmerman. Well, thank you for the question. We have
been struggling with this issue for quite a number of years,
but we need a visa program that recognizes that our meat
processing plants are year-round operations. The current
programs are for seasonal workers, and we just don't fit into
that mold. So we need some sort of visa program that recognizes
that we need that labor force year-round, would be the greatest
change we could have. And I know it is a very contentious
issue, but all our plants are struggling with 15 to 20 percent
shortages in labor right now, and that affects me on the farm,
all the way through the processing plant. It took 3 years to
find help for my farm, and I finally did find a person, but we
can't operate successfully with this shortage of labor.
Mr. Davis of North Carolina. Okay.
Mr. Hays. Yes, sir, the pig industry has the same issue
with labor. The pig farms are year-round, so we need a visa
program that provides year-round labor. In the rural areas,
where pig farms are at, unemployment is at three percent or
less. And coupled with that is an aging population, and a
shrinking family size. So it is just--the labor is just not
available. We pay very competitive wages, we provide good
benefits. The people just aren't there. So we need a visa
program that works for our industry the way it works.
Mr. Davis of North Carolina. Okay.
Mr. Hays. And reform to the H-2A Program seems to be a
common sense approach to fixing that.
Mr. Davis of North Carolina. Let me ask, what other
potential reforms would you consider putting on the table that
goes beyond just the year-round program?
Mr. Hays. Well, one of the programs that has been
successful for us is the TN (Trade NAFTA) Visa Program through
the--and an improvement in that would--currently a TN visa
worker can bring their family up with them, but the family
members are not allowed to work. So it would certainly help our
rural areas if those family members could take some type of job
in our rural community. Maybe it is not on the farm. Maybe it
is helping in our schools, or working in our restaurants, or
whatever part time work. Just be able to do some work in our
small communities that would free up labor for the farms.
Because our rural communities are hurting for labor across the
board.
We are seeing reduced services in our communities, and
obviously seeing technology, we have to order our own
cheeseburger now like everybody else.
Mr. Wilkinson. At least you are ordering a cheeseburger.
Mr. Hays. With bacon.
Mr. Burns. If I could, just briefly, I would like to echo
everything my colleague said, but remind everyone that the same
issues apply within the plants, and the processing capacity is
essential. We need year-round workers.
Mr. Davis of North Carolina. Yes. Well, I do appreciate
those comments today. I am very concerned and interested in how
we deal with workforce. So thank you for that. And we are
getting close, Mr. Chairman, to lunchtime, and a cheeseburger
sounds pretty good. Therefore I yield back.
The Chairman. With bacon. Yes, bring me one, please. Thank
you. I now recognize the gentleman from Mississippi for 5
minutes.
Mr. Kelly. I am all about cheeseburgers. Mr. Wilkinson, in
your testimony you mentioned how CSP funding primarily goes to
row crop producers. However, in my home State of Mississippi,
we have seen a tremendous amount of interest and contract
enrollment by our livestock producers, in particular our beef
cattle producers. That is why I have authored a bill to restore
CSP back to the 2014 Farm Bill level of $9 billion, as opposed
to the 2018 authorized levels of $3.9 billion. My proposal
increases CSP by repurposing dollars in the Inflation Reduction
Act for conservation programs and reduces the burdensome
environmental CSPRA barriers to entry for producers created by
the Biden Administration. Can I get a commitment from you to
work with me and my staff to look at this bill, and can you
also elaborate on the value and the importance of voluntary,
incentive-based conservation programs, such as CSP, in the farm
bill?
Mr. Wilkinson. Congressman, I think your last part of your
question hits the nail on the head. Voluntary program is the
solution, and absolutely the cattle industry is behind moving
that idea forward. The idea of producers getting to select what
they want to get involved in, and then getting behind it with
both feet, that is why you get things accomplished. Not a
mandate, but a voluntary basis, and I absolutely harken to your
comment.
Mr. Kelly. Thank you, Mr. Wilkinson. To any of our producer
witnesses, the Inflation Reduction Act authorized $8 billion
for EQIP, however, the law removed the existing requirement
that at least 50 percent of EQIP funding support livestock
producers. How does this impact livestock producers' fair
consideration for receiving contracts through the funding?
Mr. Wilkinson. Well, I will take that first. I believe in
the 2018 there was a direct set-aside for a portion of that
funding, and that was removed, and we believe that that needs
to be restored so that there is a direct allocation to at least
the beef industry.
Ms. Scott. I might add, I believe the EQIP funding supports
livestock infrastructure development that other USDA offerings
leaves livestock producers out of, and so I think it is
critical to be able to have a set-aside specific to animal
agriculture to utilize the tools that offer greater
opportunity, expanded practices eligibility, as well as
allowable participation. There are some programs right now
that, after a certain amount of years within the contract, you
are no longer eligible to qualify for those practices as a
livestock producer, and I don't think that is fair when you
compare against some of the crop producers' access to
programming year after year.
Mr. Kelly. Thank you, and I now yield the balance of my
time to Mr. Bacon.
Mr. Bacon. Thank you. First of all, I appreciate Mr.
Wilkinson's comments on WOTUS. The farmers and ranchers are
angry as can be in Nebraska about this new change in the rule.
I think whatever support the Administration had in our farmer
and ranch land has been undermined. I also appreciate the
comments on foot-and-mouth disease. That was an initiative I
brought forward in the last farm bill. I am so proud of the
progress that we have made.
And I have one question for Mr. Hays. What is the status of
the African Swine Fever? Are you seeing the risks and threats
going up, or are we making progress? Thank you.
Mr. Hays. Yes, the status is--it continues to move around
the world. The only place that we have it in the Western
Hemisphere is the Dominican Republic and Haiti, with really no
hopes of cleaning it up, at least in Haiti. So it is going to
be a threat there for a long time, and that is just too close
to our shores.
So, our first priority is prevention, and we have made some
great strides in prevention, closing some loopholes. I think
you have the Healthy Dog Importation Act (H.R. 1184) ahead of
you. That was one of the glaring loopholes that we had no idea
about until we got to studying the problems.
Mr. Bacon. Yes.
Mr. Hays. That--made some big strides identifying how long
the virus can live, and products that come to us from positive
countries. And now we are storing those products at the coast
for that period of time, before they even move in to where the
livestock is at.
But, beyond prevention--and the Beagle Brigade is huge for
prevention. We are so proud of that program, and what they are
doing, and any expansion of that would be great, because an
accidental introduction of disease is probably the most likely
course that it would come in. We need to do some work on feral
swine. But after prevention, preparedness is huge. If we do get
the disease in this country, then we have to get our arms
around it quickly. We have to get it stamped out. If it moves
across this country, especially if it gets in the feral swine
herd, it would be very, very difficult to ever clean up.
Mr. Bacon. Thank you. I appreciate your feedback, and, Mr.
Chairman, thank you.
The Chairman. Thank you, Mr. Bacon, for your questions to
the pork industry. Seems fitting. We will now----
Mr. Bacon. I was asked today what my favorite steak is.
Bacon wrapped steak.
The Chairman. There you go. Next I will recognize the
gentlewoman from Hawaii for 5 minutes.
Ms. Tokuda. Thank you very much. Obviously we are all very
hungry and looking forward to lunch now. Thank you to the panel
for being here. I just returned recently from a trip back home,
to our Second Congressional District in Hawaii. There I flew to
five islands in 5 days, and met with agriculture ranchers,
farmers, producers, stakeholders, in some of our most rural and
remote communities in our country.
During a very candid roundtable with our Hawaii Cattlemen's
Council, they shared with me the real struggles and harsh
realities that they face. Some spoke openly about the ability
for them to maintain a way of life that goes back generations
for them, being able to pass that on to their children, and how
hopes were harsh as to that potential reality. Access to water,
labor shortages, a lack of local processing capacity and
inspectors, transportation costs.
We ship and fly cows, as some of you know, thousands of
miles away to be finished and processed in the Continental
United States. There is actually a plane that sits at the Kona
Airport that only flies cows for finishing. And having more
than 90 percent of cattle from Hawaii sent to the Continent for
processing, only to come back to our islands more expensive
than mainland or foreign beef for local consumption, is not
sustainable, from a food security, business, or environmental
perspective. Furthermore, because of the limited processing
capacity in Hawaii, processing fees can be more than four times
what they may be in the Continental United States.
Ms. Scott, how can we increase access to mobile processing
and small-scale processors in rural and remote communities
through USDA programs, and what steps can the USDA take to
improve access to inspection services for producers in remote
communities, and how can we encourage scalable food safety
regulatory requirements that may assist in smaller scaling
processing?
Ms. Scott. Thank you very much for the question, and I
empathize with what the producers that you met with shared. The
rural communities of Indian Country face similar challenges.
There are estimations that the meat in some of our grocery
stores that could have been raised right out the back door
actually has traveled 1,200 miles in order to be in our grocery
store shelves available for purchase by our Tribal members.
I think that one of the things as small operators--we
maintain predominantly closed cattle herds. We are able to
utilize NRCS EQIP cost-sharing for cross-fences so we don't
have cross-contamination. We have all of these opportunities to
mitigate potential for food-borne illnesses on farm. And if we
had a more direct access to processing capacity right there
locally, there would be regulatory concerns that wouldn't
necessarily have to encumber in the development of that more
localized food system offering.
In order for us, as an operation, to be able to produce at
that direct to consumer scale, though we had to plan out 12 to
24 months in advance to get on the books, so an increase
processing capacity is essential. There is also the need for
improved infrastructure, to be able to enter in and diversify,
and it takes up-front capital. We were investing our off-farm
income into the standing up of this food business, and there
was generally a lack of guidance or support in the form of
technical assistance that could be extended to us. So I think
if we can really, as a group, identify support to all of those
buckets, it makes it that much more viable for us to diversify
in enterprise development, and provide that community service
of feeding our communities.
Ms. Tokuda. Thank you, and I would absolutely agree with
you. Infrastructure, lacking just the up-front capital. So hard
for many of our smaller producers to really come up with. And
technical assistance in ways that people can understand. Even
broadband access sometimes is hard for people to get in remote
areas. It is really important.
Ms. Scott, I also want to just take a look at some of your
testimony that you provided, talking about USDA disaster
assistance and how it can be more responsive.
Ms. Scott. Yes.
Ms. Tokuda. Do existing programs adequately meet the needs
of small producers, and can you talk a bit more about what
changes could be made at the USDA to tailor the programs to
family farmers and ranchers? In particular I am looking at the
pricing index, and how it does not fully compensate for
production loss, and cash flow issues many small family farms
may face as they wait for assistance to arrive.
Ms. Scott. Thank you very much for that question. I think
one of the glaring realities is that the pricing index for my
cow's calf is based on that cow's--or that calf's age or
evaluation at the time of loss. Only if it is above an
allowable expectation for loss within my herd will I qualify
for compensation. The issue being that my cow then falls out of
production, so it is not just the loss of that production, it
is the entire reproducing unit that my business has taken a hit
on.
And while that calf may have been born at that age, there
has been investment up through the entire gestation of that
animal is carrying of that offspring, and so that investment
has already been made, but I am not able to realize the value
in being able to grow that calf all the way to the sale. And so
figuring out how we can increase and access a more equitable
valuation is crucial.
Ms. Tokuda. Thank you very much. And, as you know, this
becomes a go/no go situation for many of our farmers and
ranchers. Thank you, Mr. Chairman. I yield back my time.
The Chairman. Thank you. I now recognize the gentleman from
Alabama for 5 minutes.
Mr. Moore. Thank you, Mr. Chairman, and thank you to our
panel of witnesses for being here today. In Alabama's Second
District, we represent cattlemen and broad swaths of the
poultry industry, so disease outbreaks, over-regulation of the
industry, obviously labor shortages, and supply chain
bottlenecks make it difficult for my districts to survive
sometimes, and to do business necessarily profitable.
So--we also have a lot of birds, Mr. Zimmerman, and so--and
I don't know if you know I am an animal--I am actually a
Poultry Science major from Auburn, so I understand some of this
industry pretty well, but I am a little rusty, it has been a
few years. But, if you could, would you please explain the need
for research and investment in the poultry industry to combat
this high-path avian influenza we hear about?
Mr. Zimmerman. I am sorry, the research investment?
Mr. Moore. Yes. Just kind of--just explain the need for
that, if you will.
Mr. Zimmerman. Well, it has been a coordinated effort
between the state organizations, our national organizations,
USDA, APHIS. And we have learned by experience, obviously. The
2015 outbreak has taught us tremendously, and the
epidemiological studies that USDA did in the 2015 outbreak
showed us what we needed to improve on, and that was
biosecurity. And we did that, and we saw the results of that
with a very much decreased farm to farm spread in the 2022
outbreak that we are currently going through.
Unfortunately, we are dealing with viruses, and they tend
to mutate, so we are constantly learning, and constantly have
to change our strategy, and how to deal with this. I think we
have come a long way with biosecurity, but we need to look at
other things. And, right now, with the high viral load in the
wild bird population, a lot of studying needs to occur to
figure out why do these birds have a higher viral load, and why
are they living while our domestic birds are dying from this
virus, and what can we do to live with a wild bird population
that seems to have endemic High-Path Avian Influenza in their
system?
In the future we talk about vaccines. And, as I said in my
testimony, we want to make sure--I think all the poultry groups
are in agreement on this that we will not pursue a vaccine
until the trade issues are taken care of, and that our trade--
there are no--there will be no damage to our trade partners,
our trade agreements, if we start to vaccinate.
So research needs to occur on a vaccine. Hopefully we can
differentiate between a wild strain and the domestic vaccinated
strain, and then just how we would go about vaccinating the
birds, whether it be small areas to stamp out an outbreak, or a
wider vaccination strategy. So I think vaccination is our
primary research goal for the near future.
Mr. Moore. Thank you. I didn't realize that it was in the
wild populations. I had no idea that it was pretty prevalent
there.
Mr. Zimmerman. It is incredibly prevalent. I mean, the
water fowl, the ducks and the geese, are our primary enemies.
If I take my 8 year old son to Disney World, we will cross to
the other side of the street if Donald Duck comes down the
road. We do not want to go anywhere near----
Mr. Moore. That is also a good excuse to go duck hunting,
too, though, Mr. Zimmerman.
Mr. Zimmerman. No.
Mr. Moore. No?
Mr. Zimmerman. No.
Mr. Moore. Okay. So I am going to change gears a little
bit, and--Mr. Wilkinson, Mr. Hays, and Mr. Zimmerman, I am
going to kind of ask you guys to address this. Could you all
describe how the USDA's proposed Packers and Stockyards rules
will impact your members? And what, if any, role do you think
Congress needs to play in that? Mr. Wilkinson?
Mr. Wilkinson. Thank you, and I am glad you brought that
up. The change that--the proposed change to the harm--the
competition is really--it is really frustrating to a cattle
producer, because you work all your life to improve your cattle
herd, to make yours a little bit better. That is what you are
trying to work for. And now suddenly, because I am getting a
deal from Packer A that recognizes my improved genetics, we are
going to have my neighbor be able to sue that packer? That is
going to totally defeat the increase in the market, and we are
going to go back to commodity cattle. We are going to be back
to the 1970s. Let us not go back to the 1970s.
Mr. Moore. Mr. Hays?
Mr. Hays. We have some serious concerns about lawsuits, the
door this opens to just a number of lawsuits to increase our
production costs. And we believe that this system in place
today, with the DOJ and USDA, provides the protection that
producers need. We don't think we need another police force
looking over our shoulders that is out looking for violations.
Mr. Moore. Mr. Zimmerman, I have 38 seconds.
Mr. Zimmerman. We have serious concerns about the rules.
Number one, it appears that USDA does not differentiate between
different species of poultry, and the turkey industry is vastly
different than the chicken industry. We have many different
styles of contracts in the turkey industry. We have no idea--
many of our processors are cooperatives, grower-owned
cooperatives, and we don't understand how this rule would
affect a grower cooperative.
And the second part of the rule, dealing with inclusivity,
it is so vague that we are not really sure who a market-
disadvantaged individual would be. I am not sure. I am a small
grower. Am I market-disadvantaged individual? We just don't
know. So, it just seems like fertile ground for trial lawyers
to set up and sue people.
Mr. Moore. Got you. Thank you for your time. Mr. Chairman,
I will yield back.
The Chairman. Thank you. I now recognize the gentleman from
Florida for 5 minutes.
Mr. Soto. Thank you, Mr. Chairman. Proud to represent
central Florida, home to the largest cattle herd in the nation.
Look it up, if you want to double check on that. We do our cow-
calf operations throughout the region. Not only do we have
cattle country, but citrus, blueberries, strawberries, and
more. And proud that we preserve millions of acres for
ranching, hunting leases, and environmental leases throughout
the region, even as we were experiencing a lot of high growth.
Mr. Wilkinson, Florida cattlemen have asked about more
regional beef processors, and some finally are on their way.
What do you think the proper balance is for competition between
large and regional beef processors so that we can have access
for the whole country?
Mr. Wilkinson. Yes. And, first of all, hats off for the
Florida cattlemen. It is a great bunch of people down there,
and they are doing a wonderful job with production down there.
The level, I don't know if there is a magic number one way or
another, but I will tell you, greater regional competition
gives us more competition in the market, and that is always a
good thing. The concern we have is are they going to have the
staying capacity when the market conditions turn, and that has
to be part of the equation. So The cattle industry is all for
greater regional competition, because that means money in our
pocket.
Mr. Soto. Thank you. And how critical is this upcoming farm
bill to the long-term prosperity of ranchers and of consumers?
Mr. Wilkinson. Well, it is critical. Ranchers--and I am not
going to disparage the row crop operators, but ranchers don't
look for subsidies. We want to operate without a great deal of
regulation, and where we need protection in particular is in
that animal disease arena, and we need Congress to adequately
fund that three-legged stool to make sure that we can reduce
the risk to our producers.
Mr. Soto. So the vaccine bank is a critical part, through
the farm bill, to make sure to fight off future diseases?
Mr. Wilkinson. Absolutely.
Mr. Soto. Mr. Burns, would you say that the SNAP Program is
a key market for our meat producers?
Mr. Burns. Absolutely. I believe that all the government
programs are important markets for our producers.
Mr. Soto. Do you think there has any way we can improve
access for local ranchers and other beef producers to be able
to participate in SNAP within their states?
Mr. Burns. We are happy to work with our producer partners.
They may have ideas on that as well, but we stand ready to work
with them on anything that improves access.
Mr. Soto. We have seen a limit on immigration, because of
COVID, over the last couple years in the farm workforce
program. I realize that poultry, and beef, and others don't use
as much farm workers as row crops, but has that been a source
of barriers? Has that been a problem for our meat producers, a
lack of labor?
Mr. Burns. I would say, prior to the pandemic, lack of
labor was our biggest day to day issue. During the pandemic it
got worse, and it has not really fully rebounded. Access to
stable, reliable workforce is our biggest issue, and one of the
biggest problems is the current H-2A Program, and the
seasonality aspect of it, when we are the harvest stage of an
agricultural process, and we run year-round. So that program
definitely needs to be expanded, and we would be happy to work
with you to find solutions that address all of agriculture.
Mr. Soto. And I am glad you mention that year-round issue,
because I hear a lot from our local cattlemen that it is not a
row crop that comes out, and then you don't--and you need
people for next year, and--which is why we had worked together
on the Farm Workforce Modernization Act (H.R. 1603, 117th
Congress), to create these 5 year visas where people can go and
come back. Obviously, lawful immigration, so something I am
happy to continue to work on.
And, Ms. Scott, in past farm bills, were there any gaps in
what Tribal producers were able to benefit from, and ways we
might be able to improve in this farm bill to increase
agriculture in Tribal country?
Ms. Scott. Yes, absolutely. Thank you for the question. I
think it comes down to offering of opportunities. What can
livestock producers in Indian Country actually qualify for, or
what programs are designed specifically to reach their unique
set of needs? Which is often different. It often is needing to
access some of the programming that was accessed by their non-
Tribal counterparts decades ago. But that programming has since
come and gone.
And so more locality, and being able to diversify the
offerings, as it relates to conservation, and other Rural
Development support investment would be really helpful. In
addition, continued enhanced quality of service, and
understanding of how to speak to some of the Tribal specific
needs. And I think that cooperators and local expertise within
those county offices that represents the folks who are trying
to serve in Indian Country is really meaningful to that end.
Mr. Soto. Thanks, and my time has expired.
The Chairman. Thank you. I now recognize the gentleman from
Iowa for 5 minutes.
Mr. Feenstra. Thank you, Chairman Mann. Thank you for
holding this hearing. I want to thank each of our witnesses. It
was incredible to hear and read your testimonies. I am from one
of the largest ag districts in the country, and I got hit
severely with, really, Prop 12, and this is what I want to talk
about. The Prop 12 ruling, I would say, it--was a poor opinion,
in my opinion, simply my opinion, allowing a single state to
impose rules on the rest of America. Obviously, for my state,
and for my district, it imposes rules on the number one hog
producing area in the country, along with the number one ag
producing district in the country.
This, to me, is a direct attack, direct attack on our
producers. I want to be very clear, our producers treat our
animals very well. They really do. I watch it every day. My in-
laws are part of the livestock industry, and we take care of
our animals. So this rule, really, to me, is very
counterintuitive. The ruling, to me, opens the floodgates for a
lot more laws coming down the pipe. I mean, what is next? What
does New York want to do, what does Illinois want to do? All of
a sudden you have these different rulings from different
states, and now all of a sudden the producers--the bread basket
to the world--have to follow each and every state.
So my question, Mr. Hays, how do you look at this, as we
move forward with Prop 12, and do you have concerns about what
the future could look like, and the uncertainty for our
producers, especially when it comes to the unknown? I mean, we
really don't know what is unknown out there.
Mr. Hays. Yes, we have a lot of concerns about the unknowns
of--implications of Proposition 12. Right now we are trying to
protect consumers in California. We are trying to ensure that
they have product, even though it is going to cost them a lot
more for the same product. And we are trying to protect
producers' freedom to operate, but we do have concerns moving
forward. Like I said, these rules are--it is not about the pork
industry. It is about everyone who produces something.
So--and then it is also about being able to comply with so
many different rules. I mean, I guess, in theory, we could have
50 different markets in this country, if each state adopts its
own rules, and that would just be devastating to every
industry, as far as being able to produce for those small
markets, and then segregate the product to go into them.
Mr. Feenstra. Yes. And that is what I am afraid of. I mean,
you literally could have 50 different rules for every producer.
And it blows me away that we have interstate commerce, and yet
the Supreme Court went down this path. And, being the number
one producer of hogs and eggs, now all of a sudden it is going
to cost millions of dollars for each producer to retrofit, to
get this done. And it concerns me not only with hogs and
cattle--or hogs and eggs, but where does it go from here? I
mean, cattle, you name it.
And it is all touchy feel-good stuff. Let that chicken walk
around a little. Let that pig--they have no idea. They have
never spent time on a farm, I guarantee it. We, as farmers, as
producers, we understand what it means to take care of an
animal, we really do. And it just slays me to have California
saying, Iowa, this is what you have to do, and we know best.
And you know what? They don't grow hogs in California, or even
eggs. They don't have eggs. Why? Because they are so
burdensome. It is just a frustration point for me.
I want to talk a little bit about the export market.
Obviously we want to grow our export market, and,
unfortunately, our Administration is doing a very poor job. It
is like pushing a rope. I mean, we haven't had any free trade
agreements in the last several years under this Administration.
But that is not what I want to talk about. I want to talk about
cold chain storage.
Again, when you start talking about pork, when you start
talking about other commodities that have to be refrigerated,
to get into the export space, especially in developing
countries, we need more cold chain storage. Mr. Hays, sorry to
hit you again, but can you talk about the importance of
developing infrastructure like cold chain storage, and what
that would mean to grow our pork exports and other ag exports?
Mr. Hays. So obviously we need adequate storage to be able
to put together orders to ship out of the country. I am not
sure I am the best to speak on this, but I know the amount of
product across the board in the meat industry is growing in
storage, and the storage capacity certainly could be an issue.
Mr. Feenstra. Absolutely. Thanks for the comments. I just
want to--I have 12 seconds left. I just want to quickly note
this. You think about Prop 12, you think about Waters of the
U.S., you think about the lack of exports. I mean, this is just
crushing our producers in the bread basket to our nation, to
the world, and it is all because of this Administration. Thank
you, I yield back.
The Chairman. And I now recognize the gentleman from
Connecticut for 5 minutes.
Mrs. Hayes of Connecticut. I am a lady.
The Chairman. Gentlelady from Connecticut for 5----
Mrs. Hayes of Connecticut. Thank you, Mr. Chairman, and
thank you, Ranking Member Costa, for holding this hearing, and
to the witnesses today. Thank you so much for being here. In
Connecticut, dairy cows make up most of the animal agriculture.
As of January 2023 there were 18,500 cows in the state,
compared to just 4,500 beef cattle, and 2,800 hogs. In the
Fifth District, 94 percent of operations are family farms, and
92 percent have less than $100,000 in sales value.
Ms. Scott, in your testimony you highlighted the ways in
which agriculture policy often overlooks small farms. South
Dakota and Connecticut are very different, but our small family
farms face similar challenges. Producers in my district know
how important it is to keep operations resilient. They are the
leaders in climate resilience. But the assistance offered by
the farm bill is often depleted before they have a chance to
access it.
My question to you, Ms. Scott--in your testimony you spoke
about your ancestors' stewardship of a robust, resilient
prairie ecosystem. How does climate change threaten those
generations of work, and what support can this farm bill
provide to ensure that small family farms can survive the
worsening impacts of climate change?
Ms. Scott. Thank you very much for the question. I want to
underscore some of the reasons why I believe that there is a
shortage of young folks coming up in, and this growing age gap
relates back to how hard it is for family operations to grow
their own children into being the next generation of farmers
and ranchers to help to steward these landscapes. And I think
we need to address that, so that we can stop seeing that
disruption, so that it is feasible for our own children to
imagine themselves making a livable career operating on the
land.
As it relates to adapting with the climate, and--I think
that our livestock growers, especially those that are
practicing regenerative grazing efforts, who are adapting with
what is presented to them as natural disasters, or weather
events surface, really do a tremendous job of practicing that
resilience and that tenacity, accommodating the woes that come
their way.
But if we could offer risk mitigation support to those
individuals, such as accessing opportunity for Price Loss
Coverage, or farm storage capacity--or, sorry, infrastructure
support that would accommodate their ability to withstand the
climate shifts, they can then have less disruption in their day
to day management and stewardship that helps with stewarding
these ecosystems to be more resilient to change, and to
offering the niche ecosystem offerings that our lands are
intended to offer.
Mrs. Hayes of Connecticut. Thank you. Two things you
reminded me of, because I have seen many of our generational
farming families where the children now are choosing different
careers, and leaving the family farm.
Ms. Scott. Yes.
Mrs. Hayes of Connecticut. So I am a strong advocate for
vo-ag training programs so that young people can see the many
opportunities that are available in this industry, and really
recognize how it applies to the talents and the gifts that they
already have. And the second thing, many of my small farmers in
Connecticut I have seen make voluntary shifts, where they are
on their own deciding that it is good for their economic
forward prospects if they make these--address these climate
issues. The thing that they are telling me, that the up-front
costs are astronomical, so they are really looking for ways to
mitigate some of those things. But the decision to make those
shifts has been made voluntarily by most of these small
farmers, because they recognize that it just makes good
business sense.
You also spoke about building a diverse and robust food
system. The pandemic revealed how fragile our food systems and
food supply chains are. The consolidation of production and
processing presents serious risks. I am particularly interested
in your work serving a food desert in your community. The
USDA's Meat and Poultry Processing Expansion Programs can
increase capacity to support small farmers, and create more
resilient local food systems. How can limited processing
capacity threaten food security, and what are your
recommendations for this farm bill to strengthen local
processing?
Ms. Scott. Yes. Well, cold storage facility has been
mentioned several times. My small family business had to save
up for several years before we could afford a storage facility
that would enhance our ability to serve more of our local
consumers. And, in filling that storage facility, we are
waiting months in advance with booking out our processing, and
if we have a normal South Dakota weather event in the winter,
we missed that gap, and our inventory supply is disrupted
because there is not an adequate access for meat inspection at
that facility, and so we are just out for that month's
production. So I think that being able to enhance and expand
upon these areas is critical.
Mrs. Hayes of Connecticut. I am sorry, my time has expired.
Thank you. And anyone on the panel who has any thoughts on how
we could improve SNAP feeding people, anything we can do for
food security, I welcome your thoughts. Please reach out to my
office.* I am sorry, I yield back.
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* Editor's note: the responses to the information referred to are
located: for Mr. Wilkinson, on p. 87; Mr. Hays, on p. 87; Mr.
Zimmerman, on p. 88; Mr. Burns, on p. 88; Ms. Hubbard, on p. 89; Ms.
Scott, on p. 89.
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The Chairman. Thank you. And I recognize the gentleman from
Texas for 5 minutes.
Mr. Jackson of Texas. Thank you, Mr. Chairman, Mr.
Wilkinson, I know that some of this was covered in your opening
statement, so I appreciate that, but I just want to make a
statement here. America's animal agriculture industry has been
extremely fortunate that the U.S. has kept out many foreign
animal diseases that have devastated producers throughout the
world. If and when a foreign animal disease outbreak occurs in
the U.S., the effects are devastating.
African Swine Fever, which has been detected in the
Dominican Republic and Haiti, is projected to cost the U.S.
swine industry $50 billion. A foot-and-mouth disease outbreak
is projected to lead to $57 million a day losses. I repeat, $57
million a day in losses. We have already seen the devastating
consequences of the High-Path Avian Influenza, where the USDA
has spent over $800 million in indemnity payments.
Mr. Hays, could you please expand on the importance of the
National Animal Vaccine and Veterinarian Countermeasures Bank,
the National Animal Disease Preparedness and Response Program,
and the National Animal Health Lab Network, and how additional
funding in the upcoming farm bill will help protect producers
from the effects of a foreign animal disease outbreak?
Mr. Hays. Yes, sir. Thank you for the question. We refer to
that as our three-legged stool for foreign animal disease. The
vaccine bank is important, not only to the pig industry, but
all--or several of the industries because of the foot-and-mouth
vaccine. When it comes to African Swine Fever, there is no
vaccine that is viable, so preparedness, and then having the
ability to prevent it first, and then prepare to deal with it
if it does get here is really our only resources.
So, it is critical that we have the funding for these
programs. It is critical too, for the Beagle Brigade, for the
vaccine bank, for all of these programs, so that we are
prepared, and we can prevent it.
Mr. Jackson of Texas. Thank you, sir. Mr. Wilkinson or Mr.
Zimmerman, do you have any additional insight into the
significance of these programs, and the need for additional
funding?
Mr. Wilkinson. Yes, I would just--I don't know if everybody
is aware of what happens if we get a foot-and-mouth outbreak in
the United States. First thing that is going to happen is there
is no movement of cattle for 72 hours. Everything goes to all
stop. You think we have an issue with a plant fire at Holcomb,
magnify it hundreds of times over by what happens if we get a
foot-and-mouth outbreak.
The other thing that is going to happen is all of our trade
partners are going to immediately shut us off. So we are going
to lose China, we are going to lose Korea, we are going to lost
Japan. Just ding, ding, ding. BSE is going to be a cakewalk
compared to what is going to happen with a foot-and-mouth
outbreak. It is going to spread north to south, and east to
west, in a matter of days. We have to be prepared.
Mr. Jackson of Texas. Yes, sir. Thank you. Mr. Zimmerman?
Mr. Zimmerman. We have been through this. The last thing I
want to have happen is that my colleagues over here have to go
through what we have been through. You know how devastating
this outbreak has been for the poultry industry. If we were to
get foot-and-mouth or African Swine Flu at the same time as the
High-Path outbreak, I don't know what would happen. I mentioned
in my testimony APHIS is 150 full-time equivalent short. We
need to be prepared for these outbreaks now, before they
happen.
And, it is a combination of the three-legged stool being
prepared, and then working on containment, and then also what
the future is, whether that be vaccination or whatever. So the
importance of this three-legged, or three-tiered, program is
essential, as we have seen in our industry, to protect my
colleagues to both sides of me in the future if we have any
more outbreaks.
Mr. Jackson of Texas. Thank you, sir, I appreciate it. And
a lot of what you have all said here, and what we know to be
true, and we have heard here today, in other statements about
the animal disease prevention program and management, I
encourage all of my colleagues to support my Foreign Animal
Disease Prevention, Surveillance, and Rapid Response Act (H.R.
3419), which we will work to include in this year's farm bill,
so thank you.
Real quickly, I have one real quick question. One of the
things that we have heard today is that, even when market
conditions are favorable, the cumulative weight of misguided
Federal regulation is one of the quickest ways to put cattle
producers out of business. One of the heaviest bricks in that
pile is the Endangered Species Act. I hope to support Chairman
Mann's Congressional Review Act to oppose the overreaching,
burdensome listing of the Lesser Prairie Chicken that will
disrupt cattle production and devastate producers in my
district. Mr. Wilkinson, can you please give us some more
information on the impact this Endangered Species Act listing
will have on cattle producers?
Mr. Wilkinson. Yes, and I appreciate the comment, and I
will be quick. When we go to the Endangered Species Act, and
produce--and particularly with the Prairie Chicken issue, 90
percent of that is on private land. If you want to put cattle
producers out of business, you try and regulate them out of
business. And I guess if that is what is intended, that is what
you are going to succeed with, if it still proceeds in that
fashion. You have to let the best conservationists in the world
do their job, and they will get the production because they
want their rangeland to produce, and that way you are going to
have the best habitat for the Prairie Chicken.
Mr. Jackson of Texas. Yes, sir. Thank you. I am out of
time. Thank you.
The Chairman. Thank you. And I recognize the gentleman from
Missouri for 5 minutes.
Mr. Alford. Thank you, Mr. Chairman. Good to be here. Thank
you to all of our panelists and guests today, witnesses. Mr.
Wilkinson, in your written testimony you talk about NCBA's
objection to the PRIME Act, but also state that you support
removing regulatory barriers for small and regional meat
packing plants. Specifically, you identified the DIRECT Act,
and our bill, the A-PLUS Act, as more viable means of achieving
the same objective without jeopardizing consumer confidence in
the safety of beef. Can you elaborate as to why the A-PLUS Act,
and acts like that, are more tenable solutions than the PRIME
Act?
Mr. Wilkinson. Thank you for the question. And while I
think the PRIME Act is well intended, the consequences of
having uninspected meat going into commerce could be disastrous
for the reputation of the cattle industry. The producer out
there expects that their meat is going to be inspected, it is
going to be wholesome, and a hearty product, and we have spent
decades building that reputation. The advantage of your Act, or
the DIRECT Act, the A-PLUS Act still maintains that inspection
process and gives us the best of both worlds. So I appreciate
you bringing a product forward that allows us to get the meat
into the commerce stream, but doesn't subject our consumers to
any risk of uninspected meat.
Mr. Alford. Well, hopefully we can get through Congress. I
appreciate your support on that. I know you talked about foot-
and-mouth disease, and you were very impassioned about that. I
want to delve in a little bit deeper now on the trade
implications of that, should there be an outbreak. How programs
like the Vaccine Bank, how would it impact our restoration time
for foreign markets? How devastating could this be in foreign
trade?
Mr. Wilkinson. Well, just look at BSE. There's a classic
example. How long did it take us to get back into those Asian
markets? It took years. We can't wait years. We just came
through some pretty difficult times in the beef industry for
the cow-calf sector, and if we lose those markets, we don't
have the ability to sit on the sidelines and just deal with all
of that meat coming just in the United States.
Contrary to some people out there, we need exports, and our
exports are phenomenal right now. And the ability to export is
putting hundreds of dollars on that paycheck when it comes back
to me as a feeder. If you cut that off, if you cut off those
export markets, you are going to cut off hundreds of dollars
that goes to the producers, and it is going to take years for
us to get back into that. We don't have that time.
Mr. Alford. Thank you, sir. Let us go from beef to pork.
Mr. Hays, I want to talk a little bit more about Prop 12. I
know we have talked ad nauseum. I have been in other committee
meetings, so some of this may have been covered, but I was very
interested to hear what you had to say in your opening remarks.
So I want you to put on your pork prognostication hat right
here a little bit. What happens if restrictions like Prop 12
continue to be propagated across our country? What happens to
the pork industry?
Mr. Hays. It would be a real challenge for the pork
industry. As I said earlier, we could have as many as 50
different markets to raise pigs for, and they very easily could
be conflicting where you would have to pick a market. So I may
be in a market that is profitable, while my neighbor is in a
market that is not profitable. But the real shame of that whole
thing is the cost. So the consumer has to bear the cost of all
that, upgrades at the farm, segregating the meat.
And one of the challenges with--we don't eat all of the pig
in this country. That is what exports do for, we eat all the
bacon, we eat all of the ribs, but everything else, a portion
of it gets shipped overseas. So the Californians are going to
find out pretty quick, they have to bear all of the cost of
Prop 12 on the small percentage of the pig that they eat.
Mr. Alford. Thank you so much, once again, to everyone for
being here today. This is a very important hearing as we put
together the farm bill, and I yield back.
The Chairman. Thank you. I now recognize the gentleman from
Wisconsin for 5 minutes.
Mr. Van Orden. Thank you, Mr. Chairman. I have to tell you,
I have to continue along these lines of Mr. Alford and Mr.
Feenstra in reference to Prop 12. I do not think that the State
of California should be able to control interstate commerce for
the entire United States of America. I think that is an absurd
proposition. And I just got back from California, and it just
reinforced that. Sorry, John.
So, Mr. Burns, what is the actual--do you think the actual
monetary impact that is going to happen? Because we are talking
about 13 to 17 percent of the consumption of pork going out to
California, additional potentially two percent--this is from
your testimony--with Massachusetts if they do something like
that. So, in hard dollars, do have an estimate what that would
cost your industry?
Mr. Burns. I don't have a hard number for that yet. We are
still working on assessing the impact of that, so I can't
answer that directly, but I can tell you it is going to be very
significant. And I would echo the concerns raised by our
producer community, and also I would mention that I think
Chairman Mann captured the concern really well in the
agriculture community a few days ago when he said today it is
the pig pen, and tomorrow it is the whole barnyard.
Mr. Van Orden. Yes.
Mr. Burns. We need to be concerned not just about the
financial impact on the pork industry, but also other species,
and, in fact, other manufacturing enterprises.
Mr. Van Orden. Thank you for that. Mr. Hays, are we
importing hogs from countries that are at risk, or have been
shown to have African Swine Fever?
Mr. Hays. So we don't import live animals from countries
that would have ASF. There are some meat products that come in,
but we recognize regionalization and we ask other countries to
recognize our regionalization plan as well.
Mr. Van Orden. Okay.
Mr. Hays. So there is a little bit of product that comes
in, mostly from Poland, but it is from a region that would be
ASF free.
Mr. Van Orden. Okay. For now. That is my concern. So right
now Poland doesn't have ASF, but what are their types of
controls that are put in place so that, if it is introduced
into Poland, and then we bring it here to the United States? Do
you have any visibility on how they are inspecting their hogs,
and how they are getting things into their country before it
comes to ours?
Mr. Hays. Yes. USDA's spent a significant amount of time
over there understanding their system, and is satisfied that
their system will protect our hog industry.
Mr. Van Orden. Okay. Outstanding. And, Ms. Scott, I had the
opportunity to work on Shiprock Reservation in New Mexico, a
Navajo Reservation, and I just had a woman from my district--I
represent the Third Congressional District of Wisconsin, and
our indigenous folks are Ho-Chunk. And she is--your testimony
is fascinating, because we are trying to figure this out right
now. And she raises small specialty crops, and how to get them
into the rez, and teach people on the rez how to farm so that
they can have a sustainable ecosystem within the reservation,
and Indian Country, as you said. So I just want you to know
that we are working on this from my office, and I appreciate
all of your efforts. With that, sir, I yield back.
The Chairman. Thank you. I now recognize the gentleman from
California for 5 minutes.
Mr. Duarte. Thank you, Mr. Chairman. In the Supreme Court
arguments on Prop 12 just a few days ago--well, the ruling was
a few days ago, the arguments were a few months ago--the
arguments supporting it centered around morality. It is immoral
to keep a pig in too tight a pig pen, it is immoral--not an
animal welfare issue, not a human health issue. Those were all
presented in Prop 12 during the balloting, but they weren't
argued in the Supreme Court. It was a moral issue. So I will
ask any of the panel that would like to chime, please compare,
if you will, the morality of your pork production processes
to--take your pick. I suggest cobalt mines of 9 year olds
swimming in toxic water in Africa, producing lithium ion
batteries for green energy fantasies. I will invite any of you
to jump in.
Mr. Hays. If I could, I would like to go first. I am a
fifth generation pork producer. My great-grandfather bought our
farm in 1918, and we have been known as pig people for five
generations, and now the sixth generation is raising pigs. I
have seen it done several different ways. When I was a kid, all
the pigs were outside. Sows are bullies. That is what they are.
We changed our production practices--my dad, my grandpa changed
the production practices to protect the animals from one
another.
And what Prop 12 requires us to do is to put those animals
back together, basically have pig fights every day on our farm.
There are farms that make it work, and they can make it work
well, but that is not how we choose to humanely take care of
our pigs. We think our pigs need to--we prefer them in
individual pens. So I would encourage you to get on a modern
pig farm, look at it, and see what you think.
The other--as far as production practices, one of the
things--in the 1980s, the consumers demanded that we get pigs
leaner, pork leaner, and we have done that. Pigs today have
about \1/2\" of back fat. When I was a kid, they had 2" of back
fat.
Mr. Duarte. That tasted really good.
Mr. Hays. It did.
Mr. Duarte. I remember those pork chops.
Mr. Hays. It tasted really good. But what we did is we took
their coat away from them. We took their protection away from
them. So the pigs I raise today are--and we also bred pigs to
be more docile. When I was a kid, you didn't mess with baby
pigs with a mama sow.
Mr. Duarte. Yes.
Mr. Hays. Today, we can do whatever we want.
Mr. Duarte. So please do--I mean, you are doing great, but
I am just--so I represent a district in California. It is a big
agricultural district. I am a farmer myself, so I like to take
pride in the sustainability and the humanity of what we do.
Compare the morality of this bill, and those like it--chickens
have to spread their wings, and everything else nowadays--to
the working families in my district.
I have the--I think the 17th highest poverty rate in my
district. Working families are facing food inflation, the water
has been taken off their farms, they are having trouble making
ends meet. They can't go to work. It is a lot, lot of hardship
in my district right now. And somebody, I call them Bobos in
Paradise sometimes, are deciding that they have to pay a little
more for their pork, and that would be just fine, from a moral
framing. So I will take comments on that also, please.
Mr. Hays. Well, if we go backwards in production standards,
it is going to cost more to raise pigs, no doubt about it, and
the consumer has to pay that. And, and pig farming today is
very sustainable. We have reduced the amount of land it takes
to produce a pound of pork by 75 percent, the amount of water
by 25 percent. Our carbon footprint is smaller than ever
before, because we just keep doing a better job at what we do.
Mr. Duarte. Would any of you on the panel agree that there
is a moral problem with our animal husbandry production systems
in America today?
Mr. Wilkinson. I would agree that there has a problem with
some state imposing their moral judgment on the rest of the
country. I can't relate to pigs, because I don't raise pigs, I
raise cattle. But for somebody to say that they know better how
to raise my cattle than I do, I challenge them to come out to
South Dakota when it is ^25 and tell me that they know how to
raise cattle.
Mr. Duarte. Do you doubt that they are cattle ranchers
themselves?
Mr. Wilkinson. Pardon me?
Mr. Duarte. Do you doubt that they are cattle ranchers
themselves?
Mr. Wilkinson. Yes, I doubt that they are cattle ranchers
themselves, correct.
Mr. Duarte. Very well. Thank you very much. I yield back.
The Chairman. Thank you. And I recognize the gentleman from
New York for 5 minutes.
Mr. Molinaro. Thank you, Mr. Chairman. I am so glad I came
in at that very moment. They are neither hat nor cowboy those
folks, I suppose. Although I do look forward to coming to your
part of the country. How cold was it?
Mr. Chairman, I have served 20 years in--the last 20 years
in local elected office in the State of New York, and time and
time again Upstate New York farms, which are somewhat unique,
smaller, obviously more family driven, have all talked about,
and raised concern regarding access to meat processing. Beyond
the dangerous implications on supply chain, there are also real
challenges associated with costs for rural communities
throughout my district. In particular, Upstate New York's lack
of meat processing closes our opportunity to take advantage of
New York City as a marketplace opportunity.
Now, we do know the USDA and New York State did create
programs that expand local processing capacity, however, from
what I know, and, of course, the farmers I represent know,
these programs dedicate a lot of capital to the problem, which
is important, but they don't address some of the more nuanced
problems, and I suspect it continues the conversation that was
just had.
Mr. Wilkinson, as you have mentioned in your testimony, you
talk about those regulatory barriers, and I would like to ask
my first question of you. Like many states, New York in
particular does not have its own meat and poultry inspection
service, and therefore relies on a very small number of USDA
inspectors. And so, beyond access and capital, many small and
custom processors don't wish to become USDA inspected
facilities due to lack of technical assistance, et cetera. Have
you seen any progress in eliminating some of these barriers by
the USDA, and are any of the USDA's recent efforts producing
expanded local processing capacity?
Mr. Wilkinson. Yes, we actually have, and if anything came
out of COVID that was a positive, it was the spotlight that got
shone on how our system cannot handle everything that just has
to go through a major packing facility. And the regional and
the small butcher shops, the local processor--I would harken
back to the comments about having to wait months and months, if
not up to a year, to get a slot to be able to process animals.
It has become readily apparent that we can market our
cattle, in many respects, through that local processing
facility more quickly, and at a better rate of return for me,
as a cattle operator. So we have seen some improvements, and I
believe that that is going to continue. But I would also tell
you that just simply throwing money at everything, which seems
to be the course out here, isn't the answer to everything.
Mr. Molinaro. Yes, this government, and I would say,
respectfully, this Administration, thinks it is their money. It
is not. It is the taxpayers'. So, to continue that, though,
what would be the one thing that would move the needle a bit
more to accessing processing capacity in--and I will say, in
smaller farm regions like my own.
Mr. Wilkinson. Well, I think the DIRECT Act, the A-PLUS
Act, are both really good starts at that, and I think that that
would help a lot. But, again, building the facility is not just
the issue. It is the capital to run the facility, and the labor
to work in the facility. And having those things handled--
everybody wants to put up brick and mortar, but you have to run
the thing once you have it up, and that is what we need to deal
with.
Mr. Molinaro. Yes. And I actually appreciate that, only
because it segues to what I know has been a topic of
conversation today, in your testimony, and certainly we
understand it nationally, and that is the lack of access to
labor force, workforce. And so in--just outside my district is
the State of New York University Cobleskill, Cobleskill, New
York. It offers training available to the public to offer
hands-on courses for those interested in meat processing. It is
a great program, however, it needs to be scaled.
And so to any of you on the panel, is there a method, or a
solution, to scaling this kind of college level--I would say
non-credited training capacity nationally? And anyone, in my
last 30 seconds, feel free to take the lead on that.
Ms. Scott. I think that that effort has been modeled in
utilizing some of the federally supported initiatives, such as
the federally recognized Travel Extension Program, right? Like,
the community extension efforts, which cooperate with land-
grant institutions, as well as Tribal colleges, historically
underserved colleges, to increase access to that knowledge
base, and to that curriculum. And we can look back at what has
been successful, and try to ensure that we model that pilot
with this particular subject area.
Mr. Molinaro. Mr. Chairman, without extending my welcome, I
just would say the issue we--that challenges us is the
connection between K-12 to that experience. We have the
capacity, but we need to bridge the divide to encourage young
people to do it. Thank you, Mr. Chairman.
The Chairman. Thank you. I now recognize the gentleman from
Ohio for 5 minutes. You have been very patient.
Mr. Miller of Ohio. Thank you, Mr. Chairman. Thank you to
all our witnesses, and I usually go last, so it is normal. But
thank you again. Ohio is one of the country's leading producers
of livestock, which represents about half of all Ohio
agricultural production. Ohio farmers and ranchers raise more
than 2.95 million hogs each year, 296,000 cows, and there are
about 2,200 dairy farms in Ohio.
Means to safeguard the nation's food supply against threats
from foreign animal disease, fostering foreign markets for
United States agricultural products, voluntary incentive-based
conservation tools, and risk management are among the key farm
bill priorities I am hearing from our Ohio livestock producers.
Among these, I wanted to call attention to the fact that, if a
foreign animal disease outbreak were to occur, it could
immediately impact the agricultural sector, stifle needed food
supplies, and curtail critical U.S. exports. As such, farm bill
disease prevention programs are vital.
Finally, as we work to meet tomorrow's livestock
challenges, I would like to mention the work of Ohio State
University's Agricultural Technical Institute training
facility, which provides literally hands-on training in beef,
cattle, dairy, and swine production, as well as the state of
the art skills to educate livestock leaders of the future. And
I had a lot of questions regarding animal disease. I am not
going to ask them now because our colleagues did such a great
job in their tact, and you gave us great answers on those.
But, to Mr. Wilkinson, Ohio ranks 12th in the nation in
number of cattle operations, supporting more than 12,300 jobs
in Ohio. As you mentioned in your testimony, the farm bill
authorizes several important USDA programs, ranging from animal
health to conservation, risk management, and trade promotion.
Can you expand on these priorities, including conservation,
beef check-off, and reinforcement disaster programs?
Mr. Wilkinson. Yes, and I would start first with the beef
check-off. The beef check-off is a classic example of something
that works. It was voted in by producers, it gives you almost a
12 to 1 rate of return for every dollar invested, and that
doesn't happen very often. You actually put something in place
where you can generate a 12 to 1 rate of return, and out of
that comes some of the things that you are talking about. The
research, the education programs that come out of there, the
trade promotion issues. And yet we continue to have Members of
Congress that want to take a shot at it that are directly based
on, what I believe, are animal activists that want to put us
out of business.
Mr. Miller of Ohio. Yes.
Mr. Wilkinson. And, to put in something that would defund a
program that has been so successful is just ridiculous to me.
And I don't understand how animal rights activists can get a
Member of Congress to substantiate that argument and to put it
forward, because all it does is prove that there is an ignorant
population out there that doesn't know what they are talking
about when they are trying to defund the check-off.
Mr. Miller of Ohio. Yes. Well--and regarding the other
ones, but what some of our colleagues do is they tie emotion
into messaging, and that is how they fall into that, because
when you get into being emotional, you lose logic and reason,
and you are more reactionary, and it is hard to disassociate a
business decision as to how you feel personally. And that is a
lot of what I see here when you talk about activism, right? And
we see a lot of that with our colleagues here, and it is
cutting through that, and it is really representing the
American people at its core.
And that is why I am glad and proud to be here today, and
every time we have one of these hearings, and even for the full
Committee, so the American people can see what it is that our
farmers are going through, and the struggle throughout our
country, and the regulatory policies that have been put in
place by this Administration, and how they are inhibiting
growth through farming.
Food is national security. People say that all the time. I
feel as if when they say that it is cute fodder. They truly
don't understand where we are within this country, and the
regulatory policies that have been implemented on you all, and
you are the ones dealing with it every single day. So I thank
you for your time, I truly appreciate all of you being here.
Mr. Chairman, I yield back. Thank you.
The Chairman. Thank you. Today's hearing has been a perfect
example of why the livestock sector is so important. As I
mentioned earlier, agriculture is all in this together. Our
commodity producers greatly benefit from a strong livestock
sector, as livestock consumes grain. The livestock industry
benefits from the biofuels industry, as that industry relies on
them as an important feed source. Agriculture is incredibly
interconnected.
To our witnesses, thank you for being here today. Those of
us in Congress have heard you loud and clear. From lessening
the burden of unfunded mandates on producers, like the
electronic identification tag rule, to pushing pack on the
UDSA's unnecessary Packers and Stockyards rules, from
supporting the three-legged stool to strengthening the markets
for American protein exports and pushing back on the
regulations that continue to threaten our industry as we know
it, we have our work cut out for us. I look forward to working
with you all on the livestock issues that are so important to
America as we reauthorize the strongest farm bill yet.
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. I hope
everyone enjoys their lunch today, which is grown by an
American ag producer. This hearing of the Subcommittee on
Livestock, Dairy, and Poultry is adjourned.
[Whereupon, at 12:20 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Supplementary Material Submitted by Todd Wilkinson, President, National
Cattlemen's Beef Association
Insert
Mrs. Hayes of Connecticut. I am sorry, my time has expired.
Thank you. And anyone on the panel who has any thoughts on how
we could improve SNAP feeding people, anything we can do for
food security, I welcome your thoughts. Please reach out to my
office. I am sorry, I yield back.
Farmers and ranchers are committed to providing wholesome,
nutritious beef to all Americans at every stage of life, in rural and
urban communities, and within all socioeconomic populations in the
United States. Ensuring food and specifically nutrition security for
all Americans is increasingly important for effectively improving
public health. America's beef producers are predominantly found in
rural communities across our country. Limitations or lack of healthcare
and nutritious foods in rural areas has led to food deserts in many of
these areas. Beef producers are part of the foundation of local food
systems, helping to sustain rural communities. Additionally, many beef
producers work at a local level to enrich farm to school nutrition
programs, agricultural education, and assist local foodbanks and hunger
organizations.
In addition, there's a growing need to balance people's plates with
nutrient-dense foods that they enjoy eating, such as beef, to address
consumer behavior barriers and meet Americans' needs for delicious,
safe, wholesome, convenient, and affordable food. Beef nourishes
Americans with its unique combination of high-quality protein, iron,
zinc, choline, and B vitamins. In fact, no other protein food source
delivers the same nutrient-rich package as beef. Research continues to
demonstrate that eating high-quality protein, like beef, as part of a
healthy dietary pattern can help Americans meet their protein needs,
improve satiety (or feelings of fullness) and preserve lean muscle
mass, which is increasingly important given current overweight and
obesity rates in America.
Lack of availability, affordability, and access to protein is a
struggle in many parts of the world, including America's urban food
deserts. In the past few years, many Americans gained a greater
understanding and appreciation of supply chains and our vulnerabilities
as consumers. The Biden Administration's focus on building more
resilient supply chains is a goal we can all support, but we must make
sure that we are expanding our supply chains through robust, market-
based, and science-based trade agreements with our allies. The Biden
Administration's current approach of abstaining from market access
negotiations is not helpful for American consumers who need greater
access to food. Trade frameworks that do not remove tariff barriers
will result in higher food prices for U.S. consumers and less export
opportunities for U.S. producers. Many American consumers have year-
round access to safe and affordable food, and we need trade policy that
extends that opportunity to all Americans.
______
Supplementary Material Submitted by Scott Hays, President, National
Pork Producers Council; Member, Missouri Pork Association
Insert
Mrs. Hayes of Connecticut. I am sorry, my time has expired.
Thank you. And anyone on the panel who has any thoughts on how
we could improve SNAP feeding people, anything we can do for
food security, I welcome your thoughts. Please reach out to my
office. I am sorry, I yield back.
I appreciate the opportunity to respond to the question. Our
industry is deeply concerned with food security, both domestically and
globally, and that is a critical piece of this equation. We work hard
every day to ensure that we can produce a steady supply of readily
available, affordable, nutritious and safe products. And the SNAP
Program plays a critical role in reducing food insecurity across the
country by providing millions of Americans the ability to purchase
high-quality protein like pork.
While we look for ways to improve [] SNAP, we also must ensure that
there is food available to purchase. That is why it is also important
to make sure that we have the tools in place to protect against and
prepare for an outbreak of a major foreign animal disease (FAD), such
as African Swine Fever (ASF) or Foot-and-Mouth Disease (FMD). In
addition to the impact on animal health and welfare, and the
livelihoods of farmers, one of these diseases could also devastate
domestic production at a time when global protein production is already
under strain, driving prices dramatically higher. The latest estimate
our industry has is that the economic impact of FMD alone would be in
excess of $240 billion over 10 years, including impacts to the pork,
beef, and lamb industries as well as feed grain and other producers.
The U.S. is one of the only major livestock producing countries in
the world that are free of these diseases. The farm bill provides many
of the robust tools, like the ``three-legged stool'' of animal health
(H.R. 3419), that help ensure that we can stay free of these diseases
or, in a worst-case scenario, respond to them rapidly if they arrive on
our shores. While the price of preparation may be high, it is not
nearly as high as the cost of one of these FADs. I think we can all
agree that protecting our food supply is critical to addressing food
security, and our industry looks forward to working with Congress on
this.
______
Supplementary Material Submitted by John Zimmerman, Vice Chairman,
National Turkey Federation
Insert
Mrs. Hayes of Connecticut. I am sorry, my time has expired.
Thank you. And anyone on the panel who has any thoughts on how
we could improve SNAP feeding people, anything we can do for
food security, I welcome your thoughts. Please reach out to my
office. I am sorry, I yield back.
Mrs. Hayes, Thank you for your question. The National Turkey
Federation' members recognize the important role the SNAP program has
played in ensuring Americans of all income levels have access to turkey
and other nutritious foods. A 3 oz. (or approximately 100 g) of roast
turkey breast provides 25-30 g of high biological value (HBV) protein
while only contributing 140-160 calories and 3-4 g of fat (most of
which (2.6 g) are unsaturated fats), according to USDA Foods Fact Sheet
\1\ and other online nutrition data analyzer tools.\2\ Turkey also
provides important B vitamins and several important minerals including
iron, zinc, and selenium. While I obviously have a strong bias toward
this particular nutrient-dense lean meat, NTF believes an important
component of food security is ensuring SNAP recipients have access to a
wide variety of food choices. Shopping options can vary greatly, so
excessive restrictions on food choices can be unnecessarily limiting to
those recipients. The turkey industry will continue to work closely
with others in the food supply chain to maintain turkey's availability
for all those seeking to enjoy this nutrient-dense lean meat regardless
of socioeconomic conditions.
---------------------------------------------------------------------------
\1\ U.S. Department of Agriculture. Household USDA Foods Fact
Sheet. Turkey, Roast, Frozen. July 2012.
\2\ SELFNutritionData. Turkey, all classes, light meat, cooked,
roasted; Nutrient data for this listing was provided by USDA SR-21.
2014. Accessed at: http://nutritiondata.self.com/facts/poultry-
products/825/2.
---------------------------------------------------------------------------
______
Supplementary Material Submitted by Byran Burns, J.D., Vice President
and Associate General Counsel, North American Meat Institute
Insert
Mrs. Hayes of Connecticut. I am sorry, my time has expired.
Thank you. And anyone on the panel who has any thoughts on how
we could improve SNAP feeding people, anything we can do for
food security, I welcome your thoughts. Please reach out to my
office. I am sorry, I yield back.
Meat and poultry are essential staples of the Supplemental
Nutrition Assistance Program, and these nutrient-dense products play a
critical role in improving nutrition and ending hunger in the United
States. Meat and poultry products provide a convenient, direct, and
balanced dietary source of all essential amino acids. These products
are important sources of micronutrients, such as iron, zinc, potassium,
selenium, and vitamins B12, B6, thiamin,
riboflavin and niacin. The iron and zinc in beef, pork, lamb, poultry,
and fish are also more bioavailable than from other sources, meaning
these minerals are more easily absorbed and utilized by the body.
The Meat Institute supports maintaining customer choice within
SNAP, rather than limiting products eligible for purchase under SNAP to
only those products government officials deem nutritious. Directing the
government to define foods as ``in'' or ``out'' means a bureaucratic
approach to picking winners and losers on retailers' shelves,
increasing bureaucratic influence over private enterprise and making
decisions about what Americans can buy. SNAP restrictions would create
a new bureaucracy built around establishing and maintaining a list of
foods eligible for SNAP; a list that would change with each new
Administration. Identifying, evaluating, and tracking the nutritional
profile of every food available would be a substantial undertaking, in
addition to implementation and enforcement. This expanded bureaucracy
would mean increased, not decreased, administrative costs. With
thousands of new food items introduced on the market each year, the
bureaucracy's work would be ongoing and immense.
SNAP is characterized by its efficiency--providing targeted
populations with resources to purchase food in the normal channels of
commerce. Congress should embrace that efficiency and reject
bureaucratic and burdensome SNAP restrictions.
The meat and poultry industry provides a wide variety of products
that meet a large range of individual nutrient and lifestyle needs and
preferences. SNAP should continue to respect the dignity, autonomy, and
choice of participants and provide benefits and purchasing
flexibility--including online purchasing--adequate to ensure
participants can purchase the nutrient-dense meat and poultry products
their families want and need.
According to Feeding America, for every meal the Feeding America
network provides, SNAP provides nine meals. SNAP and food banks work in
combination to ensure food security. Meat and poultry are some of the
most needed foods for food banks, but most food banks have extremely
limited capacity to safely store, pack, and distribute meat and poultry
products. Thus, improving cold storage and distribution infrastructure
are critical to ensuring nutrient-dense animal protein products are
available to those in need. Investments in food donation infrastructure
complement SNAP and help ensure food security.
______
Supplementary Material Submitted by Laurie Hubbard, Region I Director,
Executive Board, American Sheep Industry Association
Insert
Mrs. Hayes of Connecticut. I am sorry, my time has expired.
Thank you. And anyone on the panel who has any thoughts on how
we could improve SNAP feeding people, anything we can do for
food security, I welcome your thoughts. Please reach out to my
office. I am sorry, I yield back.
Seeing as how the question is targeted towards SNAP, which does not
necessarily fit into ASI's farm bill requests/priorities, we do not
have any qualified response for the question.
______
Supplementary Material Submitted by Kelsey R. Scott, Director of
Programs, Intertribal Agriculture Council
Insert
Mrs. Hayes of Connecticut. I am sorry, my time has expired.
Thank you. And anyone on the panel who has any thoughts on how
we could improve SNAP feeding people, anything we can do for
food security, I welcome your thoughts. Please reach out to my
office. I am sorry, I yield back.
Much of the discussion around SNAP often centers around fraud in
connection with the program, with little attention as to how the
program can be improved in a way that enhances food security by
providing nutritious food options to eligible households, while
simultaneously securing a market for smaller producers to provide their
products direct-to-consumer. With the recommended improvements outlined
below, Congress would strengthen SNAP for both consumers and producers
by securing a market that better supports regional food systems and
economies. Specifically, Congress can improve SNAP by:
Enhancing the products available to eligible households by
incentivizing SNAP participation among small family operations
with products that are eligible for direct-to-market purchase
by:
1. Improving technical assistance available to small family
agriculture oper-
ations around SNAP participation;
2. Scaling producer participation requirements by the size of the
agriculture
operation and authorizing alternative electronic payment
methods that re-
move cost barriers to small family agriculture
operations;
3. Removing the policing burden from small family agriculture
operations that
accept SNAP benefits for the purpose of feeding members
of their commu-
nities;
4. Incentivizing participation by small family agriculture
operations.
Promoting effectiveness and efficiency of SNAP
administration in Tribal communities by:
1. Authorizing the dual use of SNAP and the Food Distribution
Program on
Indian Reservations (FDPIR); and
2. Authorizing Tribal administration of SNAP through 638
contracts.
Enhancing the products available to eligible households by
incentivizing SNAP participation among small family operations
with products that are eligible for direct-to-market purchase
While the Agricultural Act of 2014 authorized ``agricultural
producers who market agricultural product directly to consumers'' as
``retail food stores'' for the purpose of accepting EBT,\1\ * the
framework of SNAP--in its current form--undermines the participation of
small family agriculture operations \2\ ** as retail food stores, and
instead favors large-scale producers and retailers that may not have a
presence in rural or remote communities where many small family
operations do. The application process and rules are onerous for small
family operators, which often have limited staff and income,\3\ to make
the process worthwhile from a business standpoint. Indeed, in its
current form, SNAP can wind up costing a small family operation more
than they make from accepting EBT due to the one-size-fits-all
requirements employed by USDA in implementing SNAP. The consequence is
that the small family agriculture operations that are the backbone of
local and regional food system security forgo participation, and local
economies, alongside eligible households that cannot access local
agriculture products, suffer.
---------------------------------------------------------------------------
\1\ Agricultural Act of 2014, Pub. L. 113-79, 128 Stat. 793,
4012 (codified as 7 U.S.C. 2012(o)(4)) (``(o) `Retail food store'
means--(4) any private nonprofit cooperative food purchasing venture,
including those in which the members pay for food purchased prior to
the receipt of such food, or agricultural producers who market
agricultural products directly to consumers;'') (emphasis added).
** Editor's note: due to references to multiple sections, Pub. L.
113-79, in its entirety, is retained in Committee file
\2\ See generally U.S. Dept. of Agriculture, National Agricultural
Statistics Services, 2017 Census of Agriculture Highlights: Family
Farms (2021), https://www.nass.usda.gov/Publications/Highlights/2021/
census-typology.pdf (USDA defines a small family farm as one with a
gross cash farm income (GCFI)--producer's sales of crops and livestock,
fees for delivering commodities under production contracts, government
payments, and farm-related income-less than $350,000. Further,
``[s]mall family farms account for 88% of all U.S. farms, 46% of land
in farms, and 19% of the value of all agricultural products sold.'').
** Editor's note: references annotated with are retained in
Committee file.
\3\ Id. (``92% of small family farms have two or fewer producers .
. . .'').
---------------------------------------------------------------------------
1. Improving technical assistance available to small family agriculture
operations around SNAP participation and the application
process
According to USDA, ``[a]pplying to the Supplemental Nutrition
Assistance Program (SNAP) as a retailer is a simple, online process
that costs you nothing. You can complete an online application in as
little as 15 minutes.'' \4\ Step 1 of this online process is
registering for a USDA eAuthentication account, which requires a
producer to select one of the three following user types: Customer;
USDA Employee/Contractor; or Other Federal Employee/Contractor. From
the outset, no explanation is provided as to how a direct-to-market
producer interested in being a SNAP ``retail food store'' fits within
any of these user types. Thus, a producer must then proceed with
hunting down guidance as to what constitutes a specific user type,
decreasing the likelihood that the producer will complete the
application in 15 minutes. Couple this with the fact that the
overwhelming majority of small family agriculture operations have two
or fewer producers,\5\ a less than intuitive application--from the
first step--becomes a barrier to many small family producers wishing to
accept EBT for their direct-to-market products.
---------------------------------------------------------------------------
\4\ U.S. Dept. of Agriculture, How to Apply and Accept SNAP
Benefits (Dec. 18, 2017), https://fns-prod.azureedge.us/sites/default/
files/snap/SNAP-application-educational-notice.pdf.
\5\ U.S. Dept. of Agriculture, Supra note 3.
---------------------------------------------------------------------------
At a minimum, technical assistance and guidance specific to small
family agriculture operations offering direct-to-consumer products
should be readily available to small family operators. These
agriculture operations are more likely to navigate this process on
their own, while larger-scale operations and retailers have greater
flexibility to hire or direct staff to understand and complete this
process. Considering that small family agriculture operations represent
just under half of all agriculture lands in the United States,\6\
failing to actively engage these producers around SNAP EBT reflects a
significant gap in strengthening food security within the very
communities where these producers live and operate.
---------------------------------------------------------------------------
\6\ U.S. Dept. of Agriculture, Supra note 2.
---------------------------------------------------------------------------
2. Scaling producer participation requirements by the size of the
agriculture operation and authorizing alternative electronic
payment methods that remove cost barriers to small family
agriculture operations
The implementation of SNAP EBT is not designed, much less scaled,
to accommodate small agriculture producers offering direct-to-market
products. To participate as a retail food store, small agriculture
producers with direct-to-market products must navigate the same
regulatory process as other, larger and/or more traditional retail food
stores. While this process may represent a common interaction for
larger business entities, such as retail chains that have the legal and
technical guidance of executive-level employees capable of navigating
these processes, that is not the case for small family operations. In
these instances, the agricultural producer themselves is sitting down
to the computer to navigate this process; typically without any prior
experience or legal insight guiding them. Requirements that present
confusion for small agricultural operations include SNAP EBT
application's reference to a permanent storefront, stringent
requirements around necessary equipment for processing benefits without
reference to how to procure such technology, and pointed directives
around the need to police the use of benefits or face repercussions
with the Federal Government. This process is less than user-friendly
and serves to discourage small family producers from participating as a
``retail food store'' with their own products, thereby removing a
community food source that could otherwise be available. Because small
agriculture operations are not reflected in the regulations that
implement SNAP EBT, these same operations may deem their retail
business unfit to become certified as a SNAP EBT vendor (retailer).
As an example, after being approved as a SNAP EBT vendor
(retailer), I--a small family agriculture producer--had to procure the
software that allows me to accept SNAP EBT payments. USDA did not
provide any guidance to me as to where to procure these services. Even
so, within 6 hours of receiving my SNAP EBT vendor authorization
notification, private companies were soliciting my business. Thus, they
had access to my information as an approved SNAP EBT vendor, but I did
not have the same, easy access to resources that would support me in
making an informed decision about the software and company that would
be right for my business. After a week of my own, independent
research--which was a confusing and convoluted process--I decided to
procure the services of TotilPay. This particular platform required an
up-front cost of a couple hundred dollars, an annual subscription and
monthly platform fee, as well as a per transaction processing cost.
From my vantage point, TotilPay does not offer a unique technology
beyond that which other small business purchasing platforms, such as
Square Up, do, yet the processing costs are much more exorbitant. USDA
should reduce or eliminate this barrier to ensure that small family
agricultural operations are able to process SNAP EBT payments without
hidden or inflated fees.
It seems the 2014 Farm Bill attempted to address some of the
hurdles small family agricultural operations offering direct-to-market
products encounter, but these provisions have not been made readily
accessible at USDA. In addition to authorizing agricultural producers
who market agricultural products directly to consumers to accept EBT,
the 2014 Farm Bill also ``require[s] participating retail food
stores . . . to pay 100 percent of the costs of acquiring, and arrange
for the implementation of, electronic benefit transfer point-of-sale
equipment and supplies, including related services.'' \7\ Importantly,
however, the subsequent section authorizes the Secretary--at their
discretion--to exempt ``farmers' markets and other direct-to-consumer
markets'' from paying the 100 percent of costs associated with EBT
equipment, supplies and services.\8\ Even so, it remains unclear, if
not altogether elusive, as to how this exemption might be obtained
today. Without clear guidance, this keeps many small family agriculture
operations from accepting EBT due to the costs associated with doing
so. The House Conference Report that accompanied what would become the
2014 Farm Bill noted that, while these provisions were intended to
reduce fraud, the House also deemed it ``imperative that the Secretary
work with SNAP-approved retailers to ensure there are no additional
costs or burdens that are duplicative or inconsistent with common
commercial practices'' and ``acknowledge[d] that many small businesses
and direct-to-consumer retailers continue to face challenges related to
the cost of utilizing EBT and advanced technologies.'' \9\ These same
challenges remain today, to the detriment of small family agriculture
producers, local and rural economies, and this nation's overall food
security.
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\7\ Agricultural Act of 2014, 4002(b)(2)(A) (codified as 7 U.S.C.
2016(f)(2)(A)).
\8\ Id. at 4002(b)(2)(B) (codified as 7 U.S.C. 2016(f)(2)(B)).
\9\ H.R. Rep. No. 113-333 (2014) (Conf. Rep.).
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Improving SNAP to work better at feeding people and shoring up food
security cannot occur without addressing the source of food and
providing options around food. Small family agricultural operations are
the heart of food production, and the process for direct-to-market
producers to participate as vendors (retailers) in SNAP EBT must
reflect this to support greater participation among small agricultural
operations. And the laws governing SNAP must do the same. This can be
accomplished, in part, by modernizing the application process to be
more directly inclusive of the ways that a small family operation sells
to their community; embracing reference to vendor locations such as pop
up shops, market stands, farm stands, seasonal sales venues, etc., as
the point of sales for small family operations often needs to be
mobile. Additionally, the mobile nature of small agricultural producers
offering direct-to-market products has worked against their
participation as SNAP EBT vendors. SNAP vendors are required to produce
a printed receipt for the customer, which requires internet connection
and electrical access beyond what most of the typical sales locations
for small operations can accommodate. Typically, the majority of
customers I serve do not want a receipt, especially with their ability
to login to their account online and verify their balance. Outdated
requirements like these not only prohibit family operations from
pursuing/maintaining SNAP vendor certification, they limit economic
opportunities in remote locations that do not have the same level of
access to technology and services required by this program.
3. Removing the policing burden from small family agriculture
operations that accept SNAP EBT for the purpose of feeding
members of their communities
Rules for maintaining SNAP eligibility can be especially
intimidating for smaller family operations that are offering direct-to-
market products. In addition to the inputs required for producing a
market-ready product, smaller producers accepting SNAP EBT are also
required to navigate SNAP policing requirements--often among their own
community members. This creates a stigma with consequences that include
eligible households avoiding transactions with small family operations
and producers having to turn people away from nutritious, locally-
produced food when their benefits do not align with the producer's
product. Smaller producers in more remote communities often accept SNAP
as a means to try and help feed their own communities, but the current
framework creates barriers for local producers and SNAP-eligible
households alike.
4. Incentivize participation by small family agriculture operations
Another route for improving the function of SNAP and overall food
security is to incentivize small family agriculture operations to
participate in SNAP by offering incentives that, at a minimum, minimize
the out-of-pocket costs they incur in order to participate. This could
be accomplished through a set-aside fund for grants to small family
agriculture operations that are authorized to accept SNAP EBT; allowing
SNAP EBT vendors access to a greater number of Small Business
Administration loan portfolio offerings; and increasing the funding
towards farmers' market SNAP Support Grants, while simultaneously
eliminating purchasing requirements inflicted upon SNAP recipients.
Influencing how a SNAP recipient purchases foods should not be the
program's primary focus, especially when the foods the recipient is
trying to procure are fresh, local, and grown by a family operation in
their community.
Promoting effectiveness and efficiency of SNAP administration in Tribal
communities
As a member of the Cheyenne River Sioux Tribe who lives and ranches
within the reservation boundaries of my Tribe, food security issues are
always present. Tribal members across Indian Country live in the most
remote regions of the United States. This presents significant food
access challenges when Tribal members, both food program recipients and
producers, are expected to access resources in the same manner as those
with easier access to more readily available options. There are common
sense proposals that would not only serve to better address food
security, but would also improve the efficiency of SNAP in Tribal
communities.
1. Authorizing the dual use of SNAP and FDPIR
In a 2022 report, the Native Farm Bill Coalition outlined an
opportunity to improve food security among Tribal members by removing
the prohibition currently in place that bars qualifying Tribal members
from utilizing the Food Distribution Program on Indian Reservations
(FDPIR) and SNAP in the same month.\10\ As reported in Gaining Ground:
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\10\ Parker, Erin, and Griffith Hotvedt, Carly, et al., Gaining
Ground: A Report on the 2018 Farm Bill Successes for Indian Country and
Opportunities for 2023 50 (Sept. 2022), https://
www.nativefarmbill.com/_files/ugd/
8b3589_763e8879ac2842c0baa45c586ddfd83a.pdf.
This creates an administrative headache for certification of
anyone who chooses to move between programs. It also is not
representative of any other food program combination.
Individuals who qualify for both TEFAP and SNAP may use both,
or WIC and SNAP, and on and on. Removing this statutory
prohibition would improve food access and opportunities for
Tribal citizens to feed their families. If enacted in
combination with Tribal administration of SNAP, this provision
could also be a powerful tool to not only improve food access
in Indian Country but also provide market opportunities for
Native-produced foods. It is important to note, however, that
both FDPIR and SNAP remain vital parts of the food security
landscape for Indian Country and Tribal citizens. Removing this
barrier does not indicate that the need for either program has
ended.\11\
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\11\ Id.
In a modern and mobile society, there are Tribal members who may
spend time in more urban areas for job and educational opportunities,
while going back to their homes on the reservation in between. The
current prohibition against using FDPIR and SNAP within the same month
forces people to choose a program that means they may not have access
to food at another point in time within the same month.
2. Authorizing Tribal administration of SNAP through 638 contracts
Government programs administered at the local level are best suited
to be responsive to the needs of local community members and more
effective in identifying eligible participants. The same is true for
SNAP and supports the need for Congress to authorize federally
recognized Tribes to administer SNAP pursuant to the Indian Self
Determination and Education Assistance Act of 1975 (ISDEAA), Pub. L.
93-638--more commonly referenced as ``638'' contracts.
The Native Farm Bill Coalition, in Gaining Ground, notes:
``Expanding `638' authority to the SNAP program would allow for a more
robust Tribal option than programmatic administration and be a
significant acknowledgment of Tribal sovereignty in food systems. `638'
has been shown to reduce programmatic costs and produce cost-savings in
other arenas and could do so here as well.'' \12\
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\12\ Id.
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In the 2018 Farm Bill, Congress authorized a 638 pilot program for
Tribal authority over the procurement of food for the Food Distribution
Program on Indian Reservations (FDPIR). Participating Tribes
administered the programs within their communities with great success--
providing fresher, locally procured food items, while building Tribal
economies. While every Tribe may not choose to exercise 638 authority,
for those that do, it is an option--within SNAP and FDPIR--to build
food security and local economies.
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