[Senate Hearing 109-639]
[From the U.S. Government Publishing Office]
S. Hrg. 109-639
REGIONAL FARM BILL FIELD HEARING: CAPE GIRARDEAU, MISSOURI
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HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
July 17, 2006
__________
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
Available via the World Wide Web: http://www.agriculture.senate.gov
______
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
SAXBY CHAMBLISS, Georgia, Chairman
RICHARD G. LUGAR, Indiana TOM HARKIN, Iowa
THAD COCHRAN, Mississippi PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky KENT CONRAD, North Dakota
PAT ROBERTS, Kansas MAX BAUCUS, Montana
JAMES M. TALENT, Missouri BLANCHE L. LINCOLN, Arkansas
CRAIG THOMAS, Wyoming DEBBIE A. STABENOW, Michigan
RICK SANTORUM, Pennsylvania E. BENJAMIN NELSON, Nebraska
NORM COLEMAN, Minnesota MARK DAYTON, Minnesota
MICHEAL D. CRAPO, Idaho KEN SALAZAR, Colorado
CHARLES E. GRASSLEY, Iowa
Martha Scott Poindexter, Majority Staff Director
David L. Johnson, Majority Chief Counsel
Vernie Hubert, Majority Deputy Chief Counsel
Robert E. Sturm, Chief Clerk
Mark Halverson, Minority Staff Director
(ii)
C O N T E N T S
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Page
Hearing(s):
Regional Farm Bill Field Hearing: Cape Girardeau, Missouri....... 01
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Monday, July 17, 2006
STATEMENTS PRESENTED BY SENATORS
Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member,
Committee on Agriculture, Nutrition, and Forestry.............. 01
Lincoln, Hon. Blanche, a U.S. Senator from Arkansas.............. 02
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WITNESSES
Emerson, Jo Ann, a U.S. Representative from Missouri............. 07
Pane I
Beetsma, Ron, Representing the National Grain Sorghum Producers.. 16
Bredehoeft, Neal, Representing the American Soybean Association.. 11
Combs, Paul T., Representing the Missouri Rice Council, USA Rice
Producers Group, USA Rice Federation, and USA Rice Producers
Association.................................................... 10
Helms, Allen, Representing the National Cotton Council........... 09
Hilgedick, Terry, Representing the Missouri Corn Growers
Association and Environmental Resources Coalition.............. 13
Thaemert, John, Representing the National Association of Wheat
Growers........................................................ 17
Pane II
Held, Jonothan, Representing WineAmerica......................... 32
Purdum, Larry, Representing the Diary Farmers of America......... 33
Rogers, Ray, Representing the Arkansas Farm Bureau State Forestry
Committee...................................................... 35
Sonnenberg, Dean, Representing the Sunflower Association......... 34
Pane III
Briggs, Mike, Representing the National Turkey Federation........ 47
Hinkle, Jim, Representing the National Wild Turkey Federation.... 48
John, Mike, Representing the National Cattlemen's Beef
Association.................................................... 45
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APPENDIX
Prepared Statements:
Beetsma, Ron................................................. 82
Bredehoeft, Neal............................................. 74
Briggs, Mike................................................. 126
Combs, Paul T................................................ 63
Held, Jonothan............................................... 94
Helms, Allen................................................. 58
Hilgedick, Terry............................................. 77
Hinkle, Jim.................................................. 133
John, Mike................................................... 119
Purdum, Larry................................................ 98
Rogers, Ray.................................................. 115
Sonnenberg, Dean............................................. 113
Thaemert, John............................................... 91
Document(s) Submitted for the Record:
Statement of Forestry in the state of Missouri............... 146
Statement of Jane Williams on the behalf of the Arkansas
Animal Producer's Association.............................. 148
Statement of Max Thornsberry on the behalf of the R-CALF USa. 155
Statement of Missouri Department of Conservation............. 165
Statement of Missouri School Nutrition Association........... 168
Statement of National Campaign for Sustainable Agriculture... 170
REGIONAL FARM BILL FIELD HEARING: CAPE GIRARDEAU, MISSOURI
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JULY 17, 2006
U.S. Senate,
Committee on Agriculture, Nutrition, and Forestry,
Cape Girardeau, MO
The committee met, pursuant to notice, at 9 AM on the
campus of Southeast Missouri State University. The Honorable
Saxby Chambliss, chairman of the committee, presiding.
Present: Senators Chambliss, Talent, and Lincoln.
OPENING STATEMENT OF HON. SAXBY CHAMBLISS, A U.S.
SENATOR FROM IOWA, CHAIRMAN, COMMITTEE ON
AGRICULTURE, NUTRITION, AND FORESTRY
The Chairman. This hearing will now come to order.
First of all, let me welcome everybody to the second field
hearing of the Senate Agriculture Committee. We're very pleased
to be in Cape Girardeau this morning. I want to thank all of
our witnesses for taking time to be here. And they're all busy
and they're all heavily involved in agriculture so for them to
take away from their business at this time of the year, I know
is critical, but we appreciate that very much. And for those of
you who are here to just observe the hearing, thank you for
taking time to be here. This is my second trip to Cape
Girardeau. I'm pretty excited about being here today. My first
trip to Cape Girardeau, I was not all that excited because it
was, unfortunately, for the funeral of my dear personal friend
and former colleague in the House, Congressman Bill Emerson.
Bill was a true friend of mine, a true friend of Senator
Lincoln, with whom he served in the House also, and Bill
certainly was a strong advocate for agriculture. He taught me a
lot about commitment, a lot about principle and a lot about
faith as we worked together chairing the 1996 Farm Bill debate.
And to come back to Bill's home town and have a chance to,
ultimately hear when she gets here, visit with his and
recognize his widow Jo Ann Emerson, who so ably represents this
congressional district now, is certainly a real pleasure for
me.
We're going to be joined by Senator Jim Talent and
Congresswoman Jo Ann Emerson shortly, and when we do--when they
do join us, they will recognize a few other folks who are in
the audience today so we're going to save that until they get
here.
In the meantime, I am joined by my good friend and my
colleague on the Senate Ag Committee, Senator Blanche Lincoln
from the state of Arkansas. We have a number of witnesses from
Arkansas today and I'm sure a number of folks in the audience
from Arkansas. And let me tell you, Blanche and I have been
good friends for many years. This is my twelfth year in
Congress. Blanche was a member of the House when I was elected
to the House in 1994, and because we both have a keen interest
in agriculture and other interests, too, in common, she and I
became very good friends as well as good partners in working
together toward what is in the best interests of American
Agriculture. And I will have to tell you, there is no better
partner for me when it comes to fighting for agriculture and
promoting the interest of agriculture than Senator Blanche
Lincoln. So I am really, really pleased that she could join us
today and I will turn to her in just a minute for some
comments.
I want to thank Southeast Missouri State University and the
people of Cape Girardeau for hosting us today. In particular,
I'd like to recognize Doctor Ken Dobbins, President of the
University, who will also join us shortly with Senator Talent
and Congresswoman Emerson, as well as his assistant Debbie
Bolton. I know they have spent many hours getting ready for
this hearing and we greatly appreciate their hospitality and
all the work that they have done. I also want to thank all of
you for coming today, and I know many of you have traveled
great distances to be here and we very much appreciate your
interest and attendance at this important hearing.
The committee held its first Farm Bill hearing on June 23rd
of this year in Albany, Georgia, and I believe it was a
complete success. As we continue to hear thoughts on the next
Farm Bill from producers around the country, I look forward to
hearing from the farmers and ranchers in this very important
agricultural area. The committee also has hearings scheduled
this week in Pennsylvania and a week from today in Iowa; and
then we will be in Texas, Nebraska, Oregon and Montana during
August. Our goal is to hear from producers in diversified
regions as well as interests as we prepare for the next Farm
Bill. We will hear today from a wide variety of agricultural
sectors, and I especially want to thank our witnesses for
taking time out of their schedules to be with us and providing
their views. You are all extremely valuable to this Farm Bill
Reauthorization process. As we approach the next farm bill, it
is vitally important that farmers and ranchers from around the
country have an opportunity to be on record with not only what
they think of the current Farm Bill, but what they expect out
of the next farm bill, so we look forward to your testimony.
At this time, I would like to turn to Senator Lincoln for
any comments she has before we begin the testimony of our
witnesses.
STATEMENT OF SENATOR LINCOLN A U.S. SENATOR FROM ARKANSAS
Senator Lincoln. Thank you, Mr. Chairman. And I certainly
want to thank the chairman for holding this hearing, but
certainly for his incredible leadership. He is accurate, we are
a good partner when it comes to working hard on behalf of
American Agriculture. It means a tremendous amount to both of
our states, and it's a delight to work with and I'm proud to do
so and look forward to what we've go ahead of us in terms of
working through the issues of a new farm bill. But I do
appreciate his leadership. He is always there for us and always
working hard on behalf of agriculture and the issues of the
committee. I also want to say a special thanks to the Southeast
Missouri folks here for doing such a tremendous job in setting
us up and having a great place for venue. I want to thank all
of our panelists, but I particularly want to thank, and make a
personal welcome, to several of the Arkansans that are here
testifying. Of course Allen Helms is on the first panel. Allen
is with National Cotton Council and he is a neighbor of mine
over there in East Arkansas and I'm proud of all of the
impressive leadership he has provided for production
agriculture and agriculture in general in this country. Mr. Ray
Rogers from Nashville, Arkansas, who does a great job and
will--I think you will see, has a tremendous insight into the
timber and forestry industry in Arkansas and nationally. We're
proud to have him. And my good friend Jim Hinkle, who also will
be here with the Wild Turkey Federation from Mountain View, who
is also a longtime friend and somebody I trust, who has good
common sense and forward thinking in terms of what it is we're
looking for in the nation's capital, that's going to reflect
well on the people we represent in our home state.
I also appreciate the time that everyone has taken to come
here. I think these are very important arenas for us to be able
to discuss the issues. The Chairman has provided us this
opportunity as one that we must seize, and that is to come out
into the country and look at all of the diverse issues that we
deal with in the farm bill. As he mentioned, there will be many
more of these in other parts of the country. We know that
agriculture is essential to our nation's economy. We also know
that it's a part of our way of life. But we also know that it
is different across the country and it is important for all
agriculture to be well understood in the farm bill and
certainly to be given the kind of safety net, as well as other
components in the farm bill that are going to allow our
producers all across this country to continue to provide a safe
and abundant and affordable food supply. So we're excited about
not just today's hearing, but also the ones that will follow
that provide the kind of knowledge and unique insight into our
nation's farm policy that we need as we go into performing that
task of redoing the 2007 Farm bill.
I am a farmer's daughter. I come from a seventh generation
Arkansas farm family in East Arkansas. My dad was a rice farmer
in the Arkansas, Mississippi delta. But I'm also a United
States Senator and I'm proud to be able to bring those two
things together in a way that I hope to be productive for
Arkansas and for our country. I certainly take a tremendous
amount of pride in telling others about the farmers that I
represent in Arkansas, and what American farmers provide this
nation and the world. I think today we enjoy the opportunity to
hear firsthand, certainly farmers and those involved from my
state and across the mid-south about the importance of the farm
safety net and the role that it plays in their ability, and all
of our ability, to provide a safe and abundant and affordable
food supply that all Americans really depend on and sometimes
take for granted. And that's why it's so important that we have
these types of hearings where we can really, you know, better
understand what it is we need to provide producers in order for
them to continue to do the incredible job that we know that
they can do and have been doing.
So as we gear up for the next farm bill, I hope all of you
will keep in close contact with me, and certainly with the
committee and my colleagues on the Senate committee. We have a
task ahead of us. It's going to be filled with a lot of
different types of issues as we go into much of the trade
initiatives that are out there, as well as the safety net
programs and some of the things that we want to see ourselves
meeting as we go into those trade talks. And so I'm excited
about that opportunity but definitely with the understanding of
knowing that without the input from you all, we cannot be as
productive as we possibly should be and could bee.
So with that, Mr. Chairman, I'd like to welcome our
colleagues here, Senator Talent and my good friend Jo Ann
Emerson. Jo Ann and I served as co-chairs of the Delta Regional
Authority Caucus and a whole host of other things. She is a
delight to work with, as is Senator Talent, and I will mention,
as Saxby did, how wonderfully I was received by Bill Emerson
when I first came to the Congress in 1992. He was just
wonderful. We had a conversation on the phone for 45 minutes
the first time I called Bill, and I told him, I said, ``You
know, in my part of the country when you move into the
neighborhood, you take somebody a batch of rolls or a pie or a
cake,'' and I said, ``My cooking is not that bad, I just don't
have a whole lot of time.'' And he was real cute, and we
visited for 45 minutes and when we hung up, he said, ``You
know, I've spoken with you more, or longer, than your
predecessor in 20 years.'' And he said--so Bill and I
immediately initiated the civility caucus.
And we had some wonderful meetings. And maybe--hopefully we
can continue a lot of that, but we certainly do with our
colleagues here in Missouri, and so we're delighted to be here
with them.
Senator Talent. Sometimes that caucus can meet in a phone
booth in Washington.
[Laughter.]
Senator Lincoln. That's true. That's true. Well, Bill and I
certainly made sure we met, and Jo Ann and I meet too. So thank
you, Mr. Chairman. And thanks to all of you all for being here.
Thank you, Blanche, for making the trip out today, too, and
being with us. And we are now joined by, as I said earlier, my
good friends Jim Talent and Jo Ann Emerson. Jim and I served
together in the House. Our offices actually were right across
the hall from each other, during my--during his last couple of
years in the House, and Jim Talent brings a lot of knowledge
about agriculture to the Senate Ag Committee. But what he
mainly brings is a strong work ethic. Jim, again, is one of
those folks that were in your fox--when you're on the foxhole,
you want him in there with you, particularly when it comes to
agriculture. Jim is just a terrific guy. He's a good friend and
we also served on the Senate Armed Services Committee together.
And there are a few interests in Missouri relative to airplanes
and some other military issues that Jim is just as strong an
advocate for as he is for agriculture. So, Jim, thanks for
hosting us here today and allowing us to come to Southeast
Missouri State, and I told him we're going to leave the
introduction of some local officials and whatnot to you, so I
will turn to my dear friend Jim Talent at this point.
Senator Talent. I thank you, Mr. Chairman. Now I want to
thank you and Senator Lincoln for being here. I think Senator
Lincoln's presence shows that this is a regional effort here.
In other words, the hearing of the Senate--the Agriculture
Committee, but we're looking for the input from regional
agriculture. We have a number of great witnesses, and we want
to know what people think needs to happen with the farm bill.
It's an honor to have you here, Mr. Chairman, and you're
going to find out, if you don't already know, that Missouri is
a crossroads of American agriculture, just like it's a
crossroads of the country as a whole. It's a very diverse
state. We have a lot of--a wide range of climates and
topography. I like to tell people we are seventh in both
soybean and watermelon production. Which tells you a little
about the diversity of Missouri agriculture. We're second in
beef cow operations, third in the number of turkeys raised. We
really do have a little bit of everything. And Missouri is a
big part of a national agricultural economy that produces and
we should never forget it's the safest and the most abundant,
the best tasting, least expensive food supply, not only in the
world but in the history of the world. There's a lot of good
people in the production chain who deserve credit for that, but
at the heart of food production in the United States, and also
at the center of our rural communities that produce our food
and fiber, is the American family farmer and rancher. And
that's why I have been assuring everybody, as you have been and
Senator Lincoln has been, that we are going to write a farm
bill that supports our family farming and ranching sector and
it's going to be written by us in the congress, primarily the
House and Senate Agriculture Committee. We're--it's not going
to be written by our trade representatives, it's not going to
be written by our trading partners and it's not going to be
written by the Office of Management and Budget. So that's why
we are here and they are not here to get input in terms of what
ought to be in that farm bill. I'm also a believer that it
would be very unfair of us to change our programs, particularly
to lessen or diminish them, while we're in the midst of ongoing
International Trade Organization. That's why Senator Lincoln
and I co-sponsored legislation to extend the current farm bill
until well after any--the Doha round is completed and any new
agreement has been enforced. We don't want the people we're
negotiating with to believe that we're going to unilaterally
disarm. No matter what anybody suggests, that's not going to
happen. We are going to support our--we're going to support
programs on our family farmers and we're not going to change
those programs unless and until we get a good deal in things
like market access, and that good deal is going to have go
through the Congress to be effective.
I also want to mention, Mr. Chairman, I've done this a lot
around Missouri, what does the safe and inexpensive food supply
cost the Federal taxpayer? Of course it's an enormous boon on
balance to our economy. But the domestic support programs are
three-quarters of 1 percent of the total Federal budget. For
that, we sustain an agriculture industry that produces 25
million jobs, three-and-a-half trillion dollars in economic
activity, and more important, gives us the security of knowing
that we can feed our own people no matter what. We're never
going to be at the mercy of foreign countries with regard to
food as we currently are, at least to some extent, with regard
to energy.
George Washington wrote in 1796 that agriculture is of
primary importance in proportion to the nation's advance in
population and in other circumstances, and in Missouri, this
truth becomes more apparent and renders the cultivation of the
soil more and more an object of public patronage. I think he
saw that we were going to be the storehouse and granary for the
whole world, which is what we've become, and we're all
committed to that and we know that part of that bottom is the
family farmer and rancher. And I certainly would agree with
Senator Lincoln. I think that this is one of the great things
about serving on this committee is that we do--try and do
things in a pretty bi-partisan fashion. We have our
disagreements, but they're honest disagreements; we get them
out on the table; and we resolve them.
I get to introduce Jo Ann Emerson, but before I do that, I
want to acknowledge several local dignitaries who I understand
are here. I know Ken Dobbins is here. Ken is the President of
Southeast Missouri University. Ken, thank you for being here.
And Doctor Randy Shaw, who is the Dean of the School of
Polytechnic Studies. Where is Randy? I'm told he--thank you for
being here, Randy. We also have two of our great state
senators, Jason Crowell and Rob Mayer are here. Jason is from
Cape Girardeau and Rob is from--Yeah, we just came from--we
just came from a ribbon cutting for the Show Mobile, which is a
great--it's going to be a great touring rural health care
facility. We're going to bring a wellness care, as well as a
primary care, to people all around Southeast Missouri.
Also--I don't know if he's here or in the Show Mobile, but
Nathan Cooper is the state representative of Cape Girardeau,
and Billy Pat Wright, Billy Pat from Dexter is here. Thank you
for coming.
And I know Jo and I want to mention, Mr. Chairman, we had a
loss yesterday--in Plains we had a loss yesterday. Ott Bean, a
great state representative--you knew him, I think, Blanche,
lost his long battle with cancer.
It was yesterday, wasn't it, Jo?
Ms. Emerson. No, this morning.
Senator Talent. This morning. And we don't--I think Ott
would probably want us to get on with the hearing and not be
preoccupied with him, but I wanted to mention that to those who
did not know and ask that you would keep his family in your
prayers.
It's a great pleasure for me to introduce a really, really
great lady, a classy congresswoman, a woman who fights for
Southeast Missouri like a tiger in the congress, and is also a
great and good friend of mine, and all of us here, really. She
just does a fantastic job, including on agriculture, and I know
she wants to make a few comments. And it's a sign of how--how
highly thought of Jo Ann Emerson is that she is--here we are at
a Senate Agriculture Committee Hearing and she is sitting here
at the table with us.
Senator Lincoln. And I'll say, we initiated it, that they
didn't give her a subpoena.
[Laughter.]
Senator Talent. A Senator is voluntarily giving up time to
a House member. It just goes to show you.
[Laughter.]
STATEMENT OF JO ANN EMERSON, A U.S. REPRESENTATIVE FROM
MISSOURI
Ms. Emerson. I want to thank you, Jim. Thank you all very
much. I really appreciate this moment of time to be an honorary
Senator I don't relish the work that you all have to do in the
Senate, just given your lack of rule that----
[Laughter.]
Ms. Emerson. Anyway, I do want to say, first of all, Jim
and Senator Chambliss and Senator Lincoln, I greatly appreciate
this opportunity. Just--I have to take a couple of minutes.
You know, Jim has come--we go together on farm tours every
summer, and really learn so much from all of our producers,
whether they are row crop, livestock, dairy, you name it, and,
seriously, when you don't grow up on a farm, Like Blanche did,
we have to learn from our producers, and I can't begin to tell
you how much we have learned from all of you and I want to
thank you for it, and I'm just so thrilled that we can have
Senator Talent on the Ag Committee, because agriculture is the
most important part of our Missouri economy and I'm very proud
of the fact that we, in Southeast Missouri, the 8th District,
have the most diverse agricultural district in the state and
one of the most diverse in the country, growing everything but
citrus and sugar. I also want to say, about Senator Lincoln,
that she----
Senator Talent. And we're open to that, by the way.
[Laughter.]
Ms. Emerson. And so--do you know how much it costs to
convert sugar beets to ethanol, right? And Senator Lincoln and
I have worked a long time together, both in Agriculture on the
Delta regional--our Delta Regional Caucus, on the Mississippi
Valley Flood Control Association issues, and there is really no
better friend that we could have from the other party, but I
really don't think of her as of the--of the other party at all
because, as Jim says, and we all say, on agriculture issues, we
work as a team and it's very much more regional in nature. And
Blanche's successor, Marion Berry, who represents her old
congressional district, and I pretty well introduce every bill
-- AG bill together just like Bill and Blanche did, just like
Jim and Blanche do as well. And then let me say about Senator
Chambliss, whom I have known for many, many, many years, what
an enormous opportunity we have having him as chairman of the
Senate Agriculture Committee. You all probably don't remember,
or maybe you do, that back in 1996 when we were writing the
Farm Bill of 1996, it was Saxby, Bill Emerson, Richard Baker
and Larry Combest who was the past House Ag Chairman, who
actually held out and we would not have ever had the concept of
an LDP in place had it not been for the four of them. And I
can't tell you how important that has been to the sustaining
our agriculture here in Southeast Missouri. But even more
importantly, I have to say--and I realize that we have media
here so I am on record saying this, I am so pleased that we
have the Senate actually taking the lead on writing the farm
bill this year, because when you have the nexus of the Midwest
and the Mid-south, if we don't have folks who understand
southern agriculture and rice and cotton, then we just get
policies that will be not good. And so with you all at the
helm, and Senator Talent there fighting for us, I mean, we're
just blessed and I want to thank you all so much. I'm just glad
that it turned out that way this year that the Senate takes the
lead on that. You know, I have these prepared remarks and I
know that for the record you're supposed to give them, but
certainly all of our Senate colleagues very well understand
that--how critical it is, No. 1, that agriculture not be taken
hostage in any kind of budget reconciliation legislation we do.
They have been in the forefront. I think we've all worked
really well together in making sure that our negotiators at the
World Trade Organization understand, as Jim says, that we will
not unilaterally disarm. I'm very pleased that we had a really
good effort in the Senate like we did in the House, in trying
to extend the farm bill. Certainly that's my position, and it
wasn't as popular in the House as it was in the Senate, you
all, but needless to say, I think we understand what is at
stake here, but I think--I'm hopeful that, again, that you all
will hear in this hearing, and I apologize for having to leave,
we have votes tonight so I actually have to head back to Saint
Louis to catch a plane, but we all have a lot of challenges and
we know we have a lot of challenges in drafting the next farm
bill. Obviously not knowing exactly what kind of money we're
dealing with is one thing, but I know that you all will do the
great job that you always do on this front to ensure that the
hopes and dreams and desires of out producers and our
constituents will take the lead in writing the next farm bill.
And certainly, as I said, the Senate--I can count on you
all more, I think, than the House side to make that happen. And
so I just look forward to--and I want to thank you all for
coming to Cape Girardeau, Missouri, my home town, to conduct
this very, very important hearing for the future of
agriculture.
The Chairman. Well, thank you, Jo Ann, for joining us.
And we wouldn't dare come to Cape Girardeau without you
being here. I've already told these folks I'm much more excited
about being here this time than I was at Bill's funeral last
time. He was such an inspiration to so many of us and to have
you follow in his footsteps is really a lot of fun for us
because you bring a lot of Bill Emerson to--he was not just a
great inspiration, but a great friend to me and you bring so
much of him to the table. So thanks for being here this
morning.
All right, we're going to start with our first of three
panels this morning. And I will introduce this panel and,
gentlemen, the way I introduce you is the way that you will
give your opening remarks, and Allen, we're going to start with
you.
Allen Helms is from Clarkedale, Arkansas. He represents the
National Cotton Council.
Paul T. Combs from Kennett----
Ms. Emerson. Kennett.
The Chairman. In South Georgia, it would be pronounced
Kennett--representing the Missouri Rice Counsel, USA Rice
Producers Group, USA Rice Federation, and US Rice Producers
Association.
Mr. Neal Bredehoeft, Alma, Missouri--now we have an Alma,
Georgia, I know I'm not going to mess that one up,
representing the American Soybean Association.
Mr. Terry Hilgedick, from Jefferson City, Missouri,
representing the Missouri Corn Growers Association and the
Environmental Resources Coalition.
Mr. Ron Beetsma, Chillicothe, Missouri, representing the
National Grain Sorghum Producers.
And Mr. John Thaemert, Sylvan Grove, Kansas, representing
the National Association of Wheat Growers.
Gentlemen, welcome this morning and Allen, we'll start with
you.
STATEMENT OF MR. ALLEN HELMS, NATIONAL COTTON COUNCIL
Mr. Helms. Mr. Chairman, members of the committee, thank
you for holding this hearing and providing the opportunity to
present testimony on current and future farm policy.
My name is Helms. I operate a diversified farming operation
and gin in Clarkedale, Arkansas. I also serve as Chairman of
the National Cotton Council. There are several key reasons for
the stability of cotton production in Missouri, West Tennessee
and Arkansas. They include the successful boll weevil
eradication, stable and effective farm program and new cultural
practices and technology. Unfortunately, the US textile
industry has not fared as well. Cotton farmers are deeply
concerned with the loss of our manufacturing customer base. We
are committed to work with them. Manufacturers have indicated
strong interest in making revisions to our Step 3 import policy
and developing a possible WTO compliant replacement for Step 2.
Rapid decline in raw cotton consumption by domestic mills
has created challenges for cotton farmers who must identify
export markets to replace domestic consumption. This adjustment
places added pressure on our infrastructure including surface
transportation and port facilities. While the cotton fiber is
our principal product, cottonseed and its products account for
12 percent of the value of the crop. As ethanol production
increases, one of the by-products, dried distillers' grain, has
depressed the value of cottonseed and meal, a not intended
consequence that adversely affects farmers, cottonseed
processors and merchants.
Mr. Chairman, thank you for your efforts to develop and
maintain a sound agricultural policy which is so important to
this area and to the nation. I also want to acknowledge the
work by Senators Talent and Lincoln in--that they have devoted
to maintain sound policies. We believe the current farm law
provides a stable and effective national farm policy, a
combination of direct and counter-cyclical payments provide an
effective means of income support without distorting planting
decisions. Direct payment provides financial stability required
by our lenders and suppliers, those who would promote
replacement of counter-cyclical payment with a higher direct
payments risk taking land out of producers hands, so it is
important to maintain a balance. Also, higher direct payments
would cause unexpected problems with payment limits. We
strongly support continuation of the marketing loan. Marketing
loans respond to low prices, it does not cause low prices. It
is effective because it triggers when necessary, and it ensures
that US cotton farmers are not residual suppliers. It is also
critical that all production remain eligible for the marketing
loan. Arbitrary limits signal our competitors that we are
willing to be competitive on only a part of our production.
Frankly, most cotton farmers in the majority of the
industry would be satisfied with an extension of current laws,
the provisions in the legislation authored by Senators Talent
and Lincoln. They want more US--we are increasingly concerned
over the Doha Negotiations. Other countries cannot match the US
level of market access. We should either withdraw or reduce our
effort or offer our domestic support. I also want to emphasize
that the agreement that singles out US cotton for additional
inequitable trade will not be accepted by US cotton producers.
I am pleased to assure you and your colleagues that the
cotton industry is prepared to continue to work with all
interests to develop and support continuation of a balanced and
effective policy for all US agriculture. Thank you for this
opportunity to testify today and I will be pleased to respond
to question at the appropriate time. Thank you.
[The prepared statement of Mr. Helms can be found in the
appendix on page 58.]
The Chairman. Thank you. Mr. Combs.
STATEMENT OF PAUL T. COMBS, CHAIRMAN, USA RICE PRODUCERS GROUP
Mr. Combs. Good morning, Mr. Chairman, Senator Talent,
Senator Lincoln. I'm Paul T. Combs, a rice producer and
farmer from Kennett, Missouri. I serve on the Missouri Rice
Council and I'm chairman of the USA Rice Producers Group and my
testimony today is on behalf of both USA Rice Federation and
the US Rice Producers Association. As Congress prepares for the
next farm bill, the US rice industry supports maintaining an
effective farm safety net that includes a marketing loan
program as well as income support payments and planting
flexibility. At this time, rice producers and others in
production agriculture face an uncertain farm policy due to
repeated proposals to cut our farm programs and the ongoing
Doha Agreement. For these and other reasons, the US rice
industry supports extension of the 2002 Farm Bill in its
current form until such time as the WTO provides a multilateral
trade agreement that has been approved by Congress.
There are a number of key factors that support extending
the 2002 Farm Bill until a final WTO agreement is in place.
One, any reduction of current programs and spending levels
on the farm bill results in unilateral disarmament by the US
and ultimately weakens our negotiating position with other
countries.
And, two, writing a farm bill in advance of a final WTO
agreement could result in a very short-term bill that must be
rewritten when new trade bills are in place.
No. 3, the 2002 Farm Bill was a fiscally responsible
approach too farm policy and provides a safety net when needed.
As you know, my Senators Jim Talent and Kit Bond, along
with Senator Lincoln and other Senators have introduced a
measure in the Senate to extend the current farm bill through
the crop year after Congress approves a WTO agreement and we
support such practical legislation.
To be a viable family farm, we must use economies of scale
to justify the large capital investment costs associated with
farming today. Payment limits have the negative effect of
penalizing viable family farms the most when crop prices are
the lowest and support is the most critical.
The US rice industry opposes any further reduction in the
payment limit levels provided under the current bill, and we
appreciate the efforts of the Chairman and the members of this
committee to cut through the rhetoric of those who apparently
would like to see reductions in support of rice and other farm
families, and for your efforts in continuing to focus on the
realities of the US food and fiber production system.
Forty to fifty percent of the annual US rice crop is
exported, so trade is clearly good for our industry, and
despite the continuing trend toward market liberalization, rice
outside the United States has remained among the most protected
agricultural products. In addition, US policies intended to
punish foreign nations to encourage regime change,
disproportionately hurt US rice producers. Unilaterally imposed
US trade sanctions have played a key role in destabilizing the
rice industry at certain times and restraining its long term
market potential in countries such as Cuba, Iran and Iraq. In
conclusion, US farm policy must provide a stabilizing balance
to markets and reliable planning horizon for producers. We urge
you to recognize how well the current farm bill is working for
US agriculture and to consider ways to maintain its structure
as we begin the debate on the next farm bill. In the interim,
however, the US rice industry supports an extension of the 2002
bill.
Mr. Chairman, we thank you for holding this hearing in
Missouri today and the opportunity for the US rice industry to
express our views on our nation's farm policies.
[The prepared statement of Mr. Combs can be found in the
appendix on page 63.]
The Chairman. Thank you. Mr. Bredehoeft.
STATEMENT OF NEAL BREDEHOEFT, BOARD OF DIRECTORS, AMERICAN
SOYBEAN ASSOCIATION
Mr. Bredehoeft. Good morning, Mr. Chairman, Senator Lincoln
and Senator Talent. I'm Neal Bredehoeft, soybean, corn and hog
farmer from Alma, Missouri and a member of the American Soybean
Association Board of Directors, and until last week, served as
SA's chairman. I very much appreciate the opportunity to appear
before you today.
Mr. Chairman, soybean producers in the Midwest, as well as
other regions of the country, support the safety net we now
have under the 2002 Farm Bill. Most soybean farmers would also
support extending current programs when Congress considers new
farm legislation next year. Unfortunately, the current budget
baseline for farm program spending declines over the next ten
years and will probably not accommodate the expected outlays
based on current support levels. We would need additional
funding, as was made available in 2001 for the 2002 Farm Bill,
in order to extend existing programs. Given the outlook for
Federal budget deficits, as opposed to surpluses in the coming
years, we will be fortunate to keep the funding level we have.
And after facing cuts in the agriculture budget last year,
we can expect Congress to consider further reductions in
spending after the elections this fall. So budge factors alone
are likely to force Congress to look at changing the current
farm bill in this year's--in next year's farm bill.
The second reason we need to look at alternatives to the
current farm program is the potential for additional WTO
challenges of current programs. We are familiar with the
results of the Brazil's case against the US cotton program last
year. In order to avoid sanctions, the US will need to change
the Direct Payment program to eliminate the planting
restrictions on fruit and vegetable crops. Also, both the
Marketing Loan and Counter-Cyclical Programs were found to
cause serious prejudice and could be subject to other crops,
including soybeans.
We're also watching the current negotiations on WTO
agreements. Last October, the Administration offered to make a
60 percent reduction in outlays permitted under the most
production and trade-distorting programs, including the
Marketing Loan and dairy and sugar price supports, and a 53
percent overall reduction in all trade-distorting programs. ASA
and other farm organizations are insisting that importing
countries make equally aggressive reductions in their tariffs,
including on soybean and livestock products. If an agreement is
reached and approved by Congress next year, we will need to
make major changes in current farm programs.
Given these uncertainties, ASA's policy on the 2007 Farm
bill is that, No. 1, there be no further cuts in the CCC budget
baseline for agriculture spending; No. 2, that farm programs
not distort planting decisions between crops; and that, three,
that future programs be WTO compliant to avoid challenges like
the cotton case. To explore alternatives, ASA organized a Farm
Bill Task Force last year, which has been working with other
farm organizations to look at so-called Green Box programs that
would be considered non-trade distorting under the WTO.
The result of this analysis indicate a variety of options
that would guarantee 70 percent of historical income and would
still be WTO compliant. These options include basing the
guarantee on whole farm versus specific commodity income,
looking at using either net or gross income, and guaranteeing
income for only program crops, for program crops and
horticulture crops, and also livestock. The cost of these
options range from 3.3 billion dollars per year to up 10
billion dollars per year for a 70 percent guarantee.
Neither ASA nor any other organization participating in
this analysis has endorsed the revenue guarantee concept.
Instead, we are now working with other groups to see how
revenue guarantee could be combined with one or several other
farm programs to create a more effective safety net for
producers.
Mr. Chairman, ASA is also very supportive of proposals to
strengthen conservation, energy, research and trade titles for
the 2002 Farm Bill. We are particularly interested in looking
at programs that would support soybeans as a source of
renewable energy and to promote domestic biodiesel production
through the Commodity Credit Corporation. The CCC has operated
a bio-energy program since 2001, providing payments to
biodiesel producers who utilize domestic feed stocks such as
soybean oil. This program has facilitated expansion of domestic
biodiesel production, but the program sunsets after 2006.
Therefore, ASA urges Congress to authorize and fund a biodiesel
bio-energy program. With regard to conservation and research,
we are concerned by recent actions that have depleted funding
for these programs in order to pay for disaster assistance or
to cover budget reduction commitments. ASA supports increasing
funding for conservation payments to producers on working lands
such as through the Conservation Security Program. We also
believe that a significant number of acres currently locked up
in the Conservation Reserve Program could be farmed in an
environmentally sustainable manner, given the enormous increase
in no-till farming practices that have been implemented over
the past 10 or 15 years.
Finally, we strongly support maintaining funding for trade
promotion activities under the Foreign Market Development and
Market Access Programs, and for international food aid.
Thank you again, Mr. Chairman, for the opportunity to be
here today.
[The prepared statement of Mr. Bredehoeft can be found in
the appendix on page 74.]
The Chairman. Thank you. Mr. Hilgedick.
STATEMENT OF TERRY HILGEDICK, PRESIDENT, MISSOURI CORN GROWERS
ASSOCIATION
Mr. Hilgedick. Thank you, Mr. Chairman. On behalf of
Missouri's 15,655 corn farmers, thank you for the opportunity
to testify this morning. My name is Terry Hilgedick. I'm a
farmer from Central Missouri. I also serve as president of the
Missouri Corn Growers Association and a board member of the
Environmental Resources Coalition. Before discussing MCGA's
recommendation for the Farm Bill, allow me to show a bit of our
environmental success story right here in Missouri. While data
shows most corn growers are good stewards of the land, MCGA is
working with producers to help them do an even better job of
protecting the environment by accelerating the adoption of
farming practices that improve water quality while maintaining
or improving profitability. With those goals in mind, the MCGA
has assembled a partnership of businesses, as well as
governmental organizations, to proactively address water
quality and environmental issues. It's known as the
Environmental Resources Coalition. This coalition is dedicated
to maintaining, improving and enhancing land and water
resources.
In order to accomplish such a mission, ERC partnered with
such governmental agencies as the Environmental Protection
Agency, the United States Department of Agriculture, the
Missouri Department of Natural Resources, Missouri Department
of Agriculture and Agriculture Research Service, as well as
industry groups such and Syngenta and Bayer.
MCGA and its affiliate ERC, are committed to quality
agricultural stewardship. This is evident in many agricultural/
environmental projects which we are currently involved in.
One of those projects, our first project, is called the
WRASP program. The WRASP program dealt with the scientific
discovery of how atrazine and its metabolites move throughout
the entire watershed, including losses at field level and
transport through the stream and river basins. Essential Best
Management Practices for atrazine were developed that allow
farmers to continue to use the product while limiting its
exposure to the environment. WRASP was the second--was the
largest automated collection project of its kind in the
country.
The scientific results were very positive and are currently
being prepared for publication.
The Stewardship Implementation Project will be viewed as
the second stage of WRASP. It's the implementation of a lot of
the lessons learned from the WRASP research. It seeks to take
the management practices developed by WRASP and disseminate
them throughout key watersheds by engaging farmers in a
friendly on- farm demonstration. A key goal for the SIP project
is the fair implementation of the TMDL process, the total
maximum daily load requirement. Additionally, data acquired in
the SIP project has been used successfully to remove four
water-bodies from the state 303d list, which is a list of
impaired water bodies compiled by the Missouri Department of
Natural Resources.
Generally speaking, MCGA and ERC support the Conservation
Title of the current farm bill. We seek to maintain current and
future funding levels at their maximum level. The general
consensus of corn farmers is that direct payments in the
commodity title of the bill should not be sacrificed by
replacing them with increased conservation funding. That being
said, we do have thoughts and suggestions we would like to
offer on the Conservation portion of the Farm Bill.
The 2007 Farm Bill should reinforce the original commitment
of the Conservation Reserve Program to soil conservation rather
than wildlife habitat. With that focus in mind, we should
continue to enroll and give deference to taking the most
environmentally fragile acres out of production. CRP management
practices should be broadened to be more flexible to those with
land enrolled in the program. For instance, if soil
conservation is the primary focus of the program, allowing
farmers to periodically mow CRP acres makes more sense than
requiring tillage of those acres.
We need to collectively evaluate the future of the vast
resources of the nearly 40 million acres in the CRP program. Do
we have a long-term plan for this resource? Where are we going
with the resource? Will this be maintained as a land bank?
Will it be returned to production? Can the less fragile
acres be developed as a cellulosic ethanol reserve bank?
The Conservation Security Program. The current
implementation is not streamlined and consistent from county to
county. We need forward-looking programs that the CSP will
require more specially trained staff than before, not less. A
better, more uniformly applied process for application, coupled
with properly trained technical assistance providers, would go
a long way toward improving this valuable program.
The current program does not seem to adequately reward
growers for past conservation practices implemented, such as
terracing. There is a disproportionate incentive to encourage
new conservation practices. That scenario seems to set up a
double standard as those who have been stewards of the land for
a long time and do not receive the same reward as those spurred
to implement such practices by incentives provided by CSP.
Recently atrazine received full re-registration from the
EPA. Our WRASP data played a role in proving that farmers can
successfully manage atrazine in an environmentally friendly
manner. Atrazine is a valuable tool used in corn production and
its loss would have cost producers billions of dollars per year
to find alternatives. In spite of this, the CSP program takes a
dim view of atrazine in the pest management section. The
pesticide management component is based on an outdated Window
Pesticide Screening tool standard for a herbicide's
environmental impact. Under this standard, any crop using any
amount of atrazine does not qualify for payments under CSP. Our
WRASP project directly contradicts the standard by proving that
atrazine can be a benefit to the environment and farmers
through prudent and responsible application and use.
On to the Commodity Title. We believe that American
producers are best served by an extension of the commodity
title of the 2002 Farm Security and Rural Investment Act until
a WTO agreement is reached. It is nearly impossible to
formulate a comprehensive new policy with an unknown farm
subsidy and trade variables hanging over our head. While the
satisfaction level with the current bill is high, the 2002 bill
is not perfect. In a given year, large crops at low prices
allow raiding of the marketing loan program while growers in
short crop areas in the same year are largely left out of the
safety net. Since loan deficiency payments are based on current
year production, revenue suffers from the reduced production as
well as overall farm program benefits.
Recommendation for the Energy Title of the Farm Bill. A
wave of renewable fuel growth has been a God-send for rural
America. Expansion of the farmer-owned ethanol industry can be
considered one of the brightest spots on rural economies today.
We attribute these successes to the entrepreneurial spirit
of American farmers and the assistance of the Farm Bill. Any
new farm bill must have an energy title to continue the
revitalization of rural America.
As significant as the WTO is, it is not nearly as important
as an energy component in the 2007 bill. The demand for corn
created by the ethanol industry will influence corn prices more
substantially than will any increased exports resulting from
the WTO agreement. More needs to be done to foster domestic
market access rather than dealing with all too fickle foreign
markets which may or may not materialize from a WTO agreement.
The Federal Renewable Fuel Standard was a monumental
accomplishment which provides a baseline for renewable fuel
usage nationwide. We are open to a wise and prudent upward
adjustment to the standard as needed to help foster the
renewable fuels industry out of its infancy and into maturity.
As our farmers move closer to providing the energy needs of
our nation through ethanol and biodiesel production, an
expansion of the RFS will ensure that our homegrown products
have a position in the marketplace.
One final point deals with crop insurance. The Federal crop
insurance program can be improved with a modification to the
program what would offer better protection to farmers without
substantial cost increases. High risk designations all too
often exclude growers that would otherwise participate in crop
insurance. A subject close to the hearts of many Missouri
farmers is crop insurance for losses caused by the man-made
spring rise on the Missouri River. Farmers in the Missouri
River valleys are being put into an impossible position. The
level of risk that they are being asked to withstand is
unconscionable. The inflexibility of the US Fish and Wildlife
Service, US Army Corps of Engineers and the USDA through this
whole process has been monumental. Although we have made it
through one spring rise without substantial harm, do not assume
that government imposed flowing and crop damage will not happen
in future years.
In summation, we believe the 2002 Farm Bill is, for the
most part, is meeting the needs of American agriculture by
acting as an effective safety net for our food, fiber and fuel
producers. We support policies that enables American farmers to
be globally competitive, responsive to markets and
environmentally responsible. We look for programs to provide
producers with access to global markets, access to capital,
advances in technology and risk management. As mentioned, there
are modifications that should be made to enhance some programs
and we look forward to working with our partners in Missouri
agriculture and the US Congress to make any necessary changes.
Thank you.
[The prepared statement of Mr. Hilgedick can be found in
the appendix on page 77.]
The Chairman. Thank you. Mr. Beetsma.
STATEMENT OF RON BEETSMA, DELEGATE, NATIONAL SORGHUM PRODUCERS
Mr. Beetsma. Thank you, Mr. Chairman. I would like to thank
you for the opportunity to express my views on the next farm
bill and the impact the farm bill will have on our family
farming operation. I am Ron Beetsma. I serve as a delegate to
the National Sorghum Producers. I am a partner in our family
farm operation near Chillicothe, Missouri, where I farm with my
two sons and a brother and operate 6500 acres. Planting sorghum
is ergonomically smart--is an ergonomically smart thing for me
to do on my farm. Sorghum is a profitable crop that uses fewer
inputs than other crops, helping me hedge my risk against
summer heat and drought. Our farm also produces corn and
soybeans, and we are involved in a farmer-owned ethanol,
biodiesel and food processing cooperatives and a farm-run
Identity Preserves venture. I understand that foreign policy
may look extremely different 5 years from now because of a
potential WTO agreement and the current budget situation. If
that is the case, I ask that you keep in mind the cyclical
nature of the agricultural economy. Any new farm programs need
to be available to the family farm operations like mine when
the agricultural economy slows down. Looking at the current
farm programs, direct payments and marketing loan programs
provide our operation with the most protection. If Congress is
to change our current programs, I ask that the committee
preserve the equitable relationship between commodities. Also I
would like to ask, if we do have a WTO agreement and we change
our farm program, that those changes be vetted with the ag
industry.
I am more concerned about having good policy than I am in
rushing to change the current programs because our farm laws
are expiring. Regarding conservation programs, sorghum is a
water sipping crop and it uses less water than other crops in
my rotation. If a greener farm bill is to be developed, I ask
that those programs reward crops that use less water and need
fewer inputs. For example, the EQIP Program works well, but I
am told by fellow sorghum farmers that they have seen overall
water use actually increase rather than decrease.
Finally, ethanol production is also making sorghum
producers money. Fifteen percent of the sorghum crop is made
into ethanol. But that's about the same percentage as the corn
crop. I receive better prices for my crops with the ethanol
plants in my area. The next farm bill needs to expand the role
of the energy market and strengthen those prices for my
operation and my neighbors.
You have a great challenge rewriting our nation's farm
laws. Mr. Chairman, the sorghum industry will work with you as
you develop these farm programs.
Thank you for your time and I'll be glad to answer any
questions you may have.
[The prepared statement of Mr. Beetsma can be found in the
appendix on page 82.]
The Chairman. Thank you very much. Mr. Thaemert.
STATEMENT OF JOHN THAEMERT, PRESIDENT, NATIONAL ASSOCIATION OF
WHEAT GROWERS
Mr. Thaemert. Thank you, Mr. Chairman and members of the
committee. My name is John Thaemert. I'm a wheat farmer from
Sylvan Grove, Kansas, and currently serve as the First Vice
President of the National Association of Wheat Growers. I thank
you for this opportunity to discuss our members' concerns about
the current Farm Bill and our thoughts on the 2007 Farm Bill.
The 2002 Farm Bill has some strong points and the wheat
growers that I represent believe the next farm bill should
build on these strengths. But while wheat growers generally
support current policy, much of the safety net provided by the
2002 bill has not been effective for wheat farmers.
Since 2002, wheat growers have received little or no
benefit from two key components of the current bill, the
counter-cyclical program and loan deficiency program. Severe
weather conditions for several consecutive years in many wheat
states have led to significantly lower yields or total failure.
The loan program and the LDP are useless when you have no
crop.
Also, the target price for wheat is set considerably lower
than market projections indicated and short crops due to
weather disasters have led to higher prices. As a result, there
have been very little support from the counter-cyclical program
As you can see by the chart in my testimony, the support level
for wheat compared to other commoditi4es for the 2002 through
2005 crop years is relatively low. We are not, in any way,
suggesting that other crops receive too much support, we are
simply stating that wheat producers need a viable safety net
also. Undoubtedly America's farmers would rather depend on the
markets than the government for their livelihoods. The current
economic and trade environments do not offer a level playing
field in the global marketplace. This fact, coupled with
escalating input costs and devastating weather related crop
losses, have been especially troubling for many of our members.
These issues, and a potential change in the WTO rules have
led us to begin looking at other options for the 2007 bill. We
are examining the impact of increasing the direct payment. This
component provides the most reliable cash-flow and, as such,
greatly aids in securing operating credit. We are also studying
an increase in the wheat target prices more in line with
today's market conditions while leaving the current structure
of the loan program as is. Another concept involves altering
the counter-cyclical program to be based on revenue rather than
price alone. I expect our full board will be looking closely at
the effects of these options and others for the Commodity Title
in the near future, and will soon recommend specific proposals.
Also, our members would like to see conservation programs
continue as presently authorized but be fully funded. We also
believe strongly in the pursuit of renewable energy from
agricultural sources and support additional incentives for
further research and development of renewable energy,
specifically cellulosic ethanol.
In closing, I must state that we are firmly committed to
developing an effective 2007 farm and food policy and welcome
the opportunity to work with you to do so.
Thank you for this opportunity and I welcome any questions
you may have.
[The prepared statement of Mr. Thaemert can be found in the
appendix on page 91.]
The Chairman. Thank you very much. Let me begin this by
noting that the comments that each of you made relative to your
specific crop is exactly what we're looking for as we get
around the country. Some of the testimony we heard in--this
morning was similar to testimony we heard in South Georgia.
Some of it will be similar to what we'll hear in Iowa next
week. But there are other parts of the country that--it's going
to vary a little bit, so what you've had to say this morning is
keenly important to us. We have a series of questions that I'm
going to ask, and again, I want to go right down the panel,
Allen, and we're going to start with you on this first one,
because we want to establish a record everywhere we go relative
to these particular questions.
How would you prioritize the programs of the farm bill
generally and the Commodity Title specifically? How would you
rank the relative importance of the direct payment program, the
marketing loan program and the counter-cyclical payment
program?
Mr. Helms. Of course within the farm bill, I think there's
no question we would prioritize the commodity programs as far
as the market loan would be our No. 1 priority, and I think
that we would certainly put the conservation program with a
high priority, but the commodity programs would be the No. 1
priority within the commodity programs, we certainly think that
the market loan is--is our best part of the program and it's
absolutely necessary for us to be viable producers. And then
the counter-cyclical program is certainly a very strong section
in that as well. And the direct payment program certainly are
important, too. We feel that the whole package is important to
us. If I had to prioritize it, that's the way I'd do it.
The Chairman. Mr. Combs?
Mr. Combs. Mr. Chairman, the commodity title is by far the
most important title for the rice producers, and that would be
the highest priority for us, and that would probably be
followed by conservation and then research and trade. And
within the commodity title, the marketing loan program is by
far the most important and it's even more so that way in
Missouri because we have several thousand acres of rice that
are not covered by---- they're not in the base program payments
because our rice acreage has expanded so much in Missouri.
We've got thousands of acres of rice that are covered by the
marketing loan program but are not covered by the direct or
counter-cyclical payment system.
The Chairman. Mr. Bredehoeft.
Mr. Bredehoeft. From our viewpoint, as far as the commodity
title, it's important that we have a strong safety net as far
as the soybean industry is concerned, but when you look at the
other titles, when you look at research and conservation, of
course the energy title is very important. Trade is very
important. All four of those are about equally important. If we
have a good safety net, then we can fund these other titles
appropriately. I think there's where you can look into the
future, so to speak, and you do that research then it does
promote new--you can find new uses. You can find the trade, you
can find new markets, to make that commodity title it becomes
important to the future. So I think when you have---- when
you're looking at it, the commodity title in the short term is
the--it's important to have a strong safety net but those other
areas, we need to get into the research, energy, trade and
conservation, those are the ones that will help us long term.
The Chairman. And Mr. Hilgedick:
Mr. Hilgedick. Senator, I would look at the commodity title
as the most important section, followed by the energy title.
We've seen a lot of benefit out in the ethanol industry and the
corn growers in general would be assisted by the bio- energy
program. Get jump started with the ethanol plants going into
production. The third most important would be the conservation
section. As far as rating the commodity programs, given the
current price forecast, I would probably have to choose direct
payment as the most important portion, followed by marketing
loan and by counter-cyclical.
The Chairman. Mr. Beetsma.
Mr. Beetsma. As far as the commodity title is concerned, I
would rank the direct payment--depending on your area, the
direct payment would be probably the most important in the
semi- arid areas where you--maybe not raise a crop, but for us,
the areas that we're in, the LDP is probably--would be real
important. To those two are interchangeable. And then the
counter-cyclical payment would be definitely a distant third.
The Chairman. Mr. Thaemert.
Mr. Thaemert. As far as which type of a farm bill we would
prioritize as top, no doubt, everybody here was testifying, to
commodity title, the boom and bust cycle of production
agriculture, we're all aware of, if we could keep that safety
net in place, everything else would fall into place behind it.
We've got to keep our producers on the land. We've got to
keep our agricultural infrastructure in place, otherwise the
trade title and conservation title, we need those stewards on
the land working. All those other things are irrelevant if you
don't have that safety net and provide that, that economic
safety for those producers on the land. So the commodity title
is by far the most important for our members. As far as the
relative importance of the various components of the farm bill
as is, by far, you gather that from my testimony, the direct
payment.
It's pretty hard to go to a lender and say, ``Well, I think
I might get an LDP this year,'' or ``I think Japan is going to
increase their trade with us and prices might go up.'' But when
you've got a direct payment, you can show that to the lender.
They know that you're going to get cash-flow and they know
that you're going to be a good credit risk. So the direct
payment is by far our favorite tool. I think the direct payment
is what you can build a lot of things into, too. I think direct
payment should be looked at as possibly stacking, maybe say
coupling that with an increased direct payment if you--if you
go up a risk management account and put some money into cover
that top tier of losses, those shallow losses that just eat
away at a producer after--year after year after year of losses,
if you could have a direct payment in a farm savings account, a
risk management account that you can draw on through tough
times, you get an increased direct payment as a result of
establishing one of those in a local financial institution.
That's a thought that I think we could look at. Also, there are
some private sector insurance companies that may look at
insuring that level of loss that, again, creates those back-to-
back shallow losses that are so devastating to producers. I
think a direct payment could be used to fund some of that in
the way of, say, an insurance type of payment for--for that
type of program. But direct payment is by far. And as you guys
on the committee probably know, we haven't gotten, as wheat
producers, much benefit from the counter-cyclical or loan
deficiency. So it really is somewhat irrelevant to the wheat
industry.
The Chairman. Mr. Combs, we'll start this second question
with you. Payment limits are always being shot at. Do we need
to change payment limits in the next farm bill?
Mr. Combs. Payment limits should not be reduced in the next
farm bill.
[Laughter.]
As we talk about in our statement, they're already plenty
restrictive when it comes to the high cost of production crops
like rice and cotton. We don't think they should be limited and
we think that all production should be eligible for the
marketing loan program.
The Chairman. Mr. Bredehoeft.
Mr. Bredehoeft. I think Mr. Combs probably covered it well.
From my viewpoint, too, we're--ASA is opposed to payment limits
and, you know, with the increased cost of production, why we're
happy with that and we'd just as soon they not reduce it
anymore.
The Chairman. Mr. Hilgedick.
Mr. Hilgedick. I would agree with Mr. Bredehoeft. Our
position is that we see no reasons to lower payment limits from
the current level.
The Chairman. Mr. Beetsma.
Mr. Beetsma. I am in agreement with the group. We've had
to--over the years, we've had to restructure our own ownership
of our farming operations so it would be possible to use the
payments that were available to us. And to--to drop it would
be--farms are getting larger. They're not getting smaller.
And we need to keep these payments where they're at or
increase them.
The Chairman. Mr. Thaemert.
Mr. Thaemert. The National Association of Wheat Growers is
officially against any type of reduction in payment
limitations.
But if we do look at an increase in the direct payment, of
course we'll have to increase that payment limit. There's a
$40,000.00 direct payment, $65,000.00 for counter-cyclical and
$75,000.00 for market loan at this time. I would again point to
the fact that many producers have not used those higher tiers
of payments. So it would make sense if they had some
flexibility to switch between those, whichever tier you needed
that flexibility. But the direct payment is something we really
focus on. If we're going to increase the direct payment, then
we need to increase that payment limitation. I like the way you
phrased that question. We can expect to further reduce the
payment limitations. Gosh, I hate to hear that. But we are
officially opposed to that. So I know there's going to be some
attack on those payment limitations, but we, again, stand
completely opposed.
The Chairman. Mr. Helms.
Mr. Helms. Well, I think I'd probably come right out and
say we'd like to see them raised. We certainly don't feel that
there should be any reduction. As we see what's happening
within agriculture with a lot of rising--our input costs are
constantly rising, it just makes it that much--much more
difficult to be--to be able to work with any kind of lower
payment limits. And also, we're concerned with any rules of
eligibility that might with the payment limits.
The Chairman. Mr. Bredehoeft, the Doha Round of
negotiations seeks to provide additional market access for US
agriculture goods in exchange for cuts--forced cuts in domestic
farm payments. How important are exports to the future of
farmers?
Mr. Bredehoeft. Well, from the soybean industry viewpoint,
they're very important because we export 45 percent of our crop
every year, not counting the soybean and meal destined for the
livestock industry. I mean, that does get supported, too. So
the exports are--trade is a very key part of our policy, that
we increase that trade, increase those exports. Since we have
96 percent of the world's population living outside of the
United States, and we're looking at new markets, new avenues to
sell our soybeans and soybean products, naturally that's where
it's going to go. Thus we're going to have more options there
than we are in the United States. So exports are very important
to the soybean industry.
The Chairman. Mr. Hilgedick.
Mr. Hilgedick. Exports are important. But in contrast to
the growth of the renewable fuels industry and our domestic
demand that has been so richly enhanced by it, legislation and
by the entrepreneurs and various growers, we see that as
probably the largest potential growth sector in corn demand is
to provide some sort of energy security for the country. What
has gone on the last few days, it's been getting more and more
and more important every day. So we see the need for exports--
-- increasing exports, but at the same time, demands driven by
our own needs here at home outweigh those export possibilities.
The Chairman. Mr. Beetsma.
Mr. Beetsma. Nearly half the sorghum crop is exported. And
according to the factory, if we have a Doha Agreement, we will
actually see exports decrease. You couple that with the fact
that we would be giving up domestic support to get that market,
Doha would not be a good deal for the sorghum industry.
The Chairman. Mr. Thaemert.
Mr. Thaemert. We, as you know, export probably more than
any other titles or any other commodity. This weighed heavily
in our discussions. We discussed the adoption of biotechnology
to wheat production and--and have struggled mightily with that
and just recently come to agreement that we should adopt it
halfway. We have a dependence on trade for wheat. Wheat is
heavily dependent on exports. We do not, however, want to see
any cut in domestic support. Just as I stated earlier, it
doesn't make sense to cut infrastructure, cut our--cut our
producers and--just for the sake of maybe having trade. Trade
is a fickle political tool. We've seen that and we've seen that
many times, one country may say, ``Well, now we're not going to
trade with you because of this, that or the other thing.'' And
that's not very--that's not very reliable for income for our
producers. So we take care of our domestic support first. But
the trade--trade is important. It's one of the tools. It's one
of the tools that we need to keep in mind.
The Chairman. Mr. Helms.
Mr. Helms. Yes, we've seen our domestic textile industry
decline. US cotton has become more and more relying on trade.
We're exporting over two thirds of our crop currently and
that will most likely continue to get to be a larger and larger
percentage. So market access is very important to us. Effective
market access into certain countries, particularly China, is
very important to us. China is importing more cotton than our
domestic industry is buying. So we--we particularly are
interested in market access, and particularly in China and
Southeast Asia, the Indian sub-continent, that area.
The Chairman. Mr. Combs.
Mr. Combs. Mr. Chairman, we export about 40 to 50 percent
of the rice grown, and our concern is that any additional
market access be full and meaningful. And, you know, if there's
going to be an offset in domestic support, let's be sure we
have access. Rice tends to be treated as a sensitive commodity
by other countries and we don't need to be caught in that trap.
Another thing we would observe is there is a market for a
billion dollars worth of agriculture is to Cuba and it wouldn't
cost a dime to US taxpayers if we start trading with them.
The Chairman. Mr. Hilgedick, some organizations have
explored the possibility of a revenue based approach for the
commodity title. What are your thoughts on a revenue based
approach to a safety net as a replacement for the current
commodity program?
Mr. Hilgedick. Senator, I've seen brief snapshots of some
of those proposals that are out there. I think that's
worthwhile to have a look at and arrive at an opinion. We have,
however, those sorts of--that sea of change is going to take
time to enact. There are some concerns from myself particularly
with the depth of mass data that--that the data base is deep
enough and broad enough to provide the sort of coverage and
sort of revenue assurance, that the data is not flawed and it
is fair and equally applied across the country. I can see
border--a border concern between counties as far as cost and as
far as revenue, that that could be an issue there. Also, for
anything to work like that for us, as far as the corn growers
association in Missouri, those sorts of coverages need to be at
the farm level so that an individual farmer has the sort of
true safety net that he needs to continue to farm. County level
support, particularly in Missouri, we have tremendous
variability within the counties. And farmers could be left out
of the safety net entirely, should a county not be hit. So we
see some value in some of those things. I haven't seen anything
that I would be particularly prepared or ready to support at
this time. I think that at least a transition period with an
extension all the more important. It seems to make a lot of
sense that we can evaluate those sorts of programs as they come
along if they need to be evaluated because people's livelihood
is going to depend upon those programs.
The Chairman. Mr. Beetsma.
Mr. Beetsma. Most of the research that's been done on this
revenue insurance has been done in the Mid-west on the corn and
soybeans. In the sorghum growing areas, it--the--the risk of
production is much greater and so it's very possible not to
have a crop in those areas. And if you have a 70 percent--70
percent of zero is zero, so revenue insurance would not be good
in those areas.
The Chairman. Mr. Thaemert.
Mr. Thaemert. You know, the devil is always in the detail.
It would depend on how this thing is worked out. But as you
heard my testimony, right now everything you've got is on price
alone. If you've got no crop, price doesn't mean anything. You
can't get a loan made on something you don't have. LDP is----
you can't get a loan on something you don't have and LDP is
worthless. Revenue definitely, I think, considers--or, needs
some--deserves some consideration. Again, the devil is in the
details. If we put something together and try to push it and
it's not been fully researched and it's not something that's
beneficial, of course, you know, we would be opposed to that.
But we are looking at--wheat growers are looking at some
revenue based approaches. You know, I--one thing that I--I like
to make the analogy of the farm bill, or--any other good policy
is like a tool box that a farmer has. If you want good tools,
there's various components that you use. You want good
components and you want components that you can use, that are
effective. Many of the components that we've had in the
counter-cyclical and the LDP are not any good for wheat
producers. But we don't want to replace that with a substandard
tool either. It's something that we want to be very careful
about having to do. One thing I think that if we do go for a
base program, that we look at a net revenue program. We've
dealt with an 2002 bill based on prices and projections from
2002.
We all know what the input costs have done in the last
three years. It's been horrendous for fuel and fertilizer, for
steel.
Those costs have really been a burden on the producers. So
that's something we need to look at. If we do something along
those lines, maybe a net revenue program of some sort we can
build on.
The Chairman. Mr. Helms.
Mr. Helms. We would be very concerned at this point in time
to move into some type of revenue based program, you know.
We don't think you can live up to the protection--risk
protection that we have currently with the marketing loans and
counter-cyclical programs. That we just don't feel that it's
ready to--that there's anything there to--we've seen that would
even come close to being as good for our risk as the programs
we have, plus the fact that we're not sure that it---- it's
fiscally responsible.
The Chairman. Mr. Combs.
Mr. Combs. Mr. Chairman, we don't see it even minimally
replacing the commodity program. There may be a role with some
revenue insurance in addition to the commodity program, but we
don't see it replacing it unless producers spend hundreds of
dollars to develop their land to be able to irrigate and spends
thousands of dollars a year on fuel or--or energy sources to
keep the water on so as not to suffer production losses. So we
really have to see a specific program. It would be hard to
envision them working.
The Chairman. Mr. Bredehoeft, your association has done a
lot of work on this, what are your current thoughts?
Mr. Bredehoeft. Well, we started, like I said earlier, with
a task force put together a year ago. We started looking at a
couple of things, the WTO and also the budget constraints, so
we started looking at this type of a program, revenue
insurance, and of course we--we're still--and someone mentioned
the devil is in the detail, and we still got a lot of details
to work through on, on how that would affect, you know, from
one area of the country to the other area, from one county to
the other county as far as producers and how their costs, of
course, align and, you know, whether it needs to be based on
net or gross or however it needs to be based. You know, our
viewpoint is probably--there's probably going to have to be
something done different than we've done in the past, and this
is just one option that we're looking at right now. And you
know, like I said, we're not to the point that we've got all
the details worked out and it's just now that we've got other
commodities that we're working with to see how this would work
out as a program for everyone concerned. So a lot of work to do
but I think it's truly an option that we need to take a look
at.
The Chairman. Mr. Beetsma, you must show an increase in
conservation and energy programs coming to the expense of the
commodity programs.
Mr. Beetsma. I believe energy should be considered a
national security issue. We should not cut the commodity
program as a transition to agriculture changes to food and
fuel.
Sorghum--as far as conservation goes, sorghum is basically
the poster child for conservation, and many of these programs
that have been implemented have not been successful in the
sorghum producing areas.
The Chairman. Mr. Thaemert.
Mr. Thaemert. Short answer. No. Again, the commodity title
is very important to the survival of that rural infrastructure
of the producers on the land. Those producers on the land have
been stewards of that property. Energy, by far, is one of the
brightest spots, new spots, that production agriculture has. We
should focus on that. But do we want to shift away from
energy--or, shift away from food and focus on energy, I think
not. I think food is very, very, very, very important and is
the keystone of production agriculture. Energy is a vital and
very important bright spot for the future of production
agriculture. Conservation is something that farmers have always
been proud of and work very hard to make sure their farms are
in compliance, if not over and above compliance. I know there's
a lot of emphasis from outside groups for conservation. Looking
at how that might impact, I would like to emphasize that public
funds does not equal public access.
Property rights are still very important to the viability
of rural agriculture on the world economy. I think that's
something that I would hope you keep in mind as you go forward.
The Chairman. Mr. Helms.
Mr. Helms. I would answer what Mr. Thaemert down there did,
no. You know, it--we feel that it would be--that it----
removing funds from commodity programs, for the conservation
and energy programs would result in what we would think would
be a very inequitable distribution of funds between different
parts of the country, different commodities. It's something
that we don't, in cotton, feel that we probably reap the full
benefit of the program. We would hate to see monies moved to
that energy type program.
The Chairman. Mr. Combs.
Mr. Combs. No. It should not be moved from commodity
programs for conservation. They're apart. I mean, they're
important. You know, the rice industry is unique in our ability
to provide conservation habitat for waterfowl. And we
participate in the conservation security program, which is a
good program for the wetlands. But it's a supplement to the
commodity program, not a replacement for it, as well as energy.
The Chairman. Mr. Bredehoeft.
Mr. Bredehoeft. No, I don't believe that those programs
should be replaced with a commodity programs, but I--I think
what we need is a strong safety net in the commodity program.
And like I said earlier, when you look at the conservation
title, when you look at the trade title and when you look at
the energy title, I think those are--need to be funded, you
know, and--but they need to be funded and--and completely
funded.
Those--a lot of times they do take money out of
conservation for some other priorities, but like I said
earlier, those are the things--those are the titles that will
maintain US agriculture in the future. I look at the commodity
title as a safety net, a short term safety net. But when we can
increase trade and increase research, we can increase energy,
then that's where we have long term stability on the family
farm in US agriculture.
The Chairman. Mr. Helms.
Mr. Helms. I would say no, but a qualified no. As I'm
representing the Missouri corn farmers, I feel that I also
represent a youthful but exuberant ethanol industry. And the
energy portion of the farm bill will be very important to the
ethanol industry, and a continuation of the bio-energy program
which I spoke about earlier, is key to helping get those plants
up and started. The ethanol industry is owned by farmers and
locally owned and those are long term projects that are
expected to be there for decades. So the value of that is
large. And secondly, we can do it cheaper than the oil
companies. We can produce ethanol cheaper than they can. And a
little help at the start, particularly the bio-energy program
and some other programs that are scattered throughout the farm
belt, is very key to getting those off the ground because they
are such long term. It's not 1 year, it's a reward, a dividend
long term.
So a no, but a qualified no.
The Chairman. Senator Talent.
Senator Talent. Thank you, Mr. Chairman, and I appreciate
you so thoroughly covering the ground. You've covered several
subjects that were of great interest to me, so I think it
allows me maybe to step back and check with the panel on a
couple of things. We talked some about the WTO. And if I just
said yes or no to you, how strongly do you feel that no deal is
better than a bad deal? We'll start with you.
Mr. Helms. Strongly. Strongly.
Mr. Combs. Very strongly.
Senator Talent. In other words, you're not hungry. They
don't want you--you would not want our trade representatives to
push the margin to come home with some kind of deal?
Mr. Helms. Right.
Senator Talent. That's what I thought. And I--another point
that is very interesting, Mr. Chairman, how you asked them to
rank the existing programs. Now just tell me if you're
concerned about this because it's a concern that I have. Most
of you said that marketing loan program was the most important,
or one of the most important. Not everybody. Most said that.
It is also I think probably one of the ones that I am the
most concerned about given the current trend of the WTO
decisions.
Do you have concerns about that? What can we do, those of
you who really felt this was the most important, what do you
think we can do, or should do in trying to protect that program
from the WTO? What can we do? Do you have any ideas? You might
be the most appropriate to comment, Mr. Helms.
Mr. Helms. Well, we're aware that we very likely will get
some reduction in our loan rates if in fact what talk is out
there becomes a reality. What an agreement might be, I don't
know that--you know, and we all still realize that there will
probably be a--additional to go with those reductions, and
maybe a counter-cyclical payment.
Senator Talent. I meant vulnerable as an Amber box program,
not in terms of what we negotiated, but just challenged under
in a WTO suit of some kind. Not what we might negotiate away,
but what might be taken away from us.
Mr. Helms. Of course to lose--to lose an effective
marketing loan, I honestly don't have a good answer to replace
it. That's why I think this is absolutely necessary that we not
lose it.
Mr. Combs. Yeah. Let me offer one thing. I think it's
important that we continue the program. We lost--we lost a case
on step two, so let's not just throw up our hands and say,
``Well, they're going to get the loan now and then they're
going to get this and that.'' I mean, let's fight this thing.
And if, you know, the WTO trade rules are not written
necessarily clear and some of their procedures we don't agree
with, but for our government to just unilaterally say we're
going to throw up our hands and expect to lose, that's wrong
and we would urge the government to vigorously defend our
program.
Senator Talent. Right. It would be good to win a WTO case.
Mr. Combs. It would.
Senator Talent. I'm beginning to feel like our guys are
Hamilton Burger and theirs are Perry Mason. Anyone that laughs,
that dates you.
Mr. Combs. If you think you're going to lose, you're going
to lose.
The Chairman. Before you leave that, though, Jim, I mean
it's--this is a critically important question, folks, and all
of you all know how hard I fought during the budget
reconciliation to extend the farm bill and I--I still have some
strong feelings about that, but one problem with extending the
farm bill is that we don't want to expose any of our
commodities to potential liability under the WTO. We don't want
to go through the cotton--Brazil cotton case again. We want to
feel comfortable as to where we are. And we know that the
market loan issue on every commodity is a problem, or a
potential problem. We don't know whether that's a problem or
not, but a potential problem. And you're right, we thought that
in 2002 that we were WTO compliant, but we also thought that we
were WTO compliant in step two. So Jim's question is--and you
may not have the answer today and we understand that, but it is
an extremely important question, particularly if we do wind up
extending the farm bill. How can we make sure, if we have to
tinker with the farm bill in any way to extend it, how can we
tinker with it to make sure that we're compliant.
Senator Talent. That's exactly right. Let's all get our
lawyers together, and we know what they've been holding, let's
find a way to sustain that program, or maybe tinker with
something that will give us a better argument. And then you're
right, Paul, let's push the government to be aggressive for
once and stand up. That's what the Chairman's--got at and what
I was getting at with that. What--is there anything you could--
one thing I want to keep in mind as we do this, it seems like
whenever we implement a new farm bill, we have this really
terrible transition period. And we've all been through this
where, you know, our constituents are calling up and they don't
understand it and that doesn't seem ready, and keep in mind----
if you have any comment now, fine, and if you don't, keep in
mind if we ever end up tweaking this, how we might write this
in a way, or--or signal to you all or the administration in a
way that enables us to make this transition a little bit
smoother.
And keep timing in mind also. Do you have any questions or
comments about that? But I wanted to--that's something I wanted
to do as far as this process. Timing certainly gets smoother
after implementation. Yes, Mr. Holmes.
Mr. Holmes. We would just offer that a short term bill that
you write and then have to rewrite with the WTO doesn't help
that process. In other words, nothing an ag banker likes worse
than uncertainty. And if you've got a farm bill that's got a 2-
year horizon, or a 1-year horizon instead of a five year
horizon, that's a bad deal and that's why we would favor what
you propose was an extension and then a long term farm bill.
Mr. Bredehoeft. From my viewpoint, I would take it more
down to the local level. When you implement a new farm bill, I
know going into the last farm bill, there was a lot of
uncertainty in the local offices, and even sometimes in the
state offices, as we implemented that. And that's probably,
Senator Talent, that's probably why you got the phone
calls.
People went to the office and, ``Well, they're not ready
yet.''
Or if they thought they were ready and they'd get halfway
through it and something comes up and they can't make a
decision. And so I think there needs to be a substantial amount
of training, I guess, before--long before we--before it's put
out to the local office so they know exactly what needs to be
done.
Senator Talent. One other point I wanted to make, Mr.
Chairman and then you've covered the ground so well, I
don't----
I'll defer to Senator Lincoln. A couple of you mentioned
surface transportation issues, the transportation issue. And
yes, this is a hearing on the farm programs, but I don't want
to let that pass. We could do an enormous service to the
American farmer by investing in our transportation
infrastructure so we can get product to the market. We're going
to vote in the Senate this week on where to--to fund where we
can get the rivers back under the control of--or, back in
operation and we need to build roads and the highways. And I
think Mr. Hilgedick mentioned the Missouri River, Mr. Chairman.
I just want to flag something for you. We have been working for
a long time to keep the Missouri River open and the Corps is
insisting on having the right to do two spring rises in
appropriate seasons, producing water problems twice in the
spring, which will eventually result in floods. We are going to
get the crop insurance so that it covers those floods, so you
may--if we don't get this reversed, you may be reading the
story sometime about how the government flooded these farmers
and then paid them for the lost crops. And when that happens,
don't say we didn't warn you.
Senator Bond and I have been trying to do something about
it because this idea of releasing all this water in the river
in the spring is sure counter-intuitive and makes no--doesn't
make any sense in terms of good old Missouri logic.
Mr. Bredehoeft. Just for the record, I'm downstream from
it.
Senator Talent. Thank you.
The Chairman. Senator Lincoln.
Senator Lincoln. Thank you, Mr. Chairman. You know, the
discussion of what's most important, food production, energy,
conservation, I just don't think they're mutually exclusive. I
think that these are three points that we can bring together
and dovetail beautifully as priorities of this farm bill and I
hope we will. I think we will. They all support one another.
They can support one another to the--to the degree that, you
know,
I think we can reflect that we can minimize the risk in all
of them if we marry them together and bring them together. And
I hope that we will. We touched on an awful lot of things here
and I just want to reiterate that--what Mr.----
Mr. Thaemert. Thaemert.
Senator Lincoln. Thaemert. What he had to say briefly, has
reiterated a couple of times and that is unless farmers are
allowed to remain the stewards of the land, the rest of these
programs really don't matter. And that's what we continue to
see is the loss of those family owned farms and the family
businesses that are out there. And that's truly important.
Just a couple of questions. Mr. Helms, you pointed out the
importance of the counter-cyclical program and the marketing
loan programs, you know, protecting us against some of the low
crop prices. And, you know, some people look at forms of
support to farmers as a catchall safety net, even in the event
of natural disasters, prolonged droughts that are coupled with
rising input costs. I know Mr. Combs mentioned it, too, that
your crops, which are predominate in my state, are definitely
capital intensive crops. These are crops that you're--you know,
you're having to go to your bankers and ask for a sizable
investment to even be in the marketplace or to--in anticipation
of being in the market. Others point to crop insurance. And I'd
just like to kind of see if they see that as a sufficient
mechanism to farmers of all sizes to recover potential losses.
And of course if we got the same mitigation of risk for the
price that other farmers paying for their crop insurance, we
would probably love it too. But unfortunately when you do have
a capital intensive crop, you just don't get the same return on
your dollar. The insurance industry doesn't provide you that.
It's unfortunate but it's reality. Maybe you might just
elaborate on the hesitation among farmers, certainly cotton
growers particularly, I suppose in our part of the country, to
rely on crop insurance. Is it really a viable option? You know,
given our concern and our trouble with convincing the
administration to provide disaster relief to farmers this year,
you know, should we, as lawmakers, be considering including a
permanent disaster program as a part of the next farm bill? How
do we bring all that together in order to allow all of our
commodities to be able to mitigate their risk in the market
place?
Mr. Helms. Well, let me start with your last point first.
You know, I think it would be a wonderful thing if we could
have a permanent disaster program written into the farm bill. I
think we understand the reality of that, that it would--where
the offset, but that--you know, the offset is obviously going
to be from some commodity programs that we would certainly not
agree with. As far as farm--as far as crop insurance, for
cotton farmers in this part of the--in this area, this part of
the country, has not been a very viable option. The premiums
that are--the premiums have been very excessive. The coverage
still leaves us woefully short of recovering our expenses. So
that currently, as it is now, and anything that we see any time
soon is--is woefully inadequate to us. We can still lose the
farm and have a huge claim. So it's--it is inadequate. And
obviously this counter-cyclical program through the marketing
loan, or--you know, we believe in them totally because they
don't cover--they don't cover us in the case of any type of
natural disaster or any type of weather disaster.
Senator Lincoln. Anybody else? Yes.
Mr. Hilgedick. If I might make a comment. With regard to
crop insurance, I happen to fall in with them high risk
category on our own farm and Senator Talent brought out the
crop insurance situation along the Missouri River, and I farm
within a stone's throw of the river where we are. The fact that
people sometimes will point out that we just ought to up our
crop insurance as somehow a policy of risk avoidance, for me
that doesn't work and for a lot of growers it doesn't work.
There are huge regional differences within the country as far
as, you know, effective crop insurance really isn't reducing
your risk, and in my part of the country, it's not very
effective.
Senator Lincoln. Well, I think that's important that it's
not a ``one size fits all'' across the country. And I had
noticed that Mr. Bredehoeft had mentioned in your testimony
that we need--you talked about the group and what you're
working about in terms of looking at a revenue guarantee, you
do mention that it is combined with one or several other
different types of farm programs as you're looking at it. I
think that that's important to note that, you know, a revenue
based system is not something you're looking at just solely to
replace everything you have in conjunction with most of your
other programs that already exist.
Mr. Bredehoeft. Combinations.
Senator Lincoln. And, Mr. Combs, as you know, I grew up on
a rice farm and it's near and dear to my heart. And I think,
like all of us, we've been closely monitoring the WTO talks and
if there's anything my father taught me, it was that we cannot
circle our wagons and sell our widgets and gadgets and
hamburgers and rice to each other and survive. We know how
important each one of you all has indicated a tremendous
percentage of production that is traded on the global
marketplace and how important that is. And I know that there
are a lot of sensitive issues that still remain in and--even
if--I mean, we certainly mean ``if'' we are able to convince
the EU and others to substantially improve the market access
offer in the coming weeks. And it's kind of starting to get
down to the wire. But maybe you might further elaborate on the
concerns in the rice industry from the tone of the talks in
regard to those designation of sensitive product lines and our
trading partners. We know that rice is a tremendous world
commodity.
Mr. Combs. That's the real issue is just the whole
sensitive product issue, you know, where we--for example, is
treated as a sensitive product and so we gain access over 15,
18 years. Well, if the president's proposal, which was a 60
percent cut in domestic support occurred in year one and you
don't get access until year 16, then in year 16, you're
fighting that government because of some phytosamitary issue
and we haven't gained anything. We've lost. And that's the real
danger of a trade agreement, is to get treated as sensitive and
you get real long term access and real short term coverage in
the tradeoff.
Senator Lincoln. Well, Mr. Chairman, in the interests of
time, I think I could converse with these gentlemen all day
long, because definitely my heart is in this and I do think
that there are some real solid solutions that we can come up
with working with you, but we got to keep farmers in business.
Because if they're not in business, they're not going to be
producing energy or food products and they're not going to be
conserving the land. And I'll tell that to the panel. My dad
was a farmer and he loved being a farmer but he sure loved to
turkey hunt, too.
The Chairman. Well, gentlemen, I thank you all very much.
I think all three of us could sit here and dialog with you
because you are the heart and soul of the farm bill from all of
our perspectives. And I would say that all of us are concerned
about this issue of trade. It is sort of hanging over our heads
as we go into this and all of you are aware of that. But I
mentioned it in--to hear your comments, for the most part,
you're all very supportive of trade agreements and fair and
balanced trade agreements. And I'll have to say that we have a
strong attitude and our current trade advisor Susan Schwab is
working very hard to make sure that agriculture is treated
fairly. That's one of the main reasons, frankly, that we don't
have an agreement to this point is because the folks that we're
negotiating with have not been willing to be fair and balanced
in their proposal like we have in the United States' proposal.
She and I talk regularly. I'm sure that there's probably an
e- mail waiting on me right now because she is in Saint
Petersburg with the president and there will be some back door
discussions relative to Doha, but just know that while trade is
important and is something that we have got to continue to move
down the road from appositive standpoint, that all of us, as
members of the Senate Ag Committee, understand that the heart
and soul of the farm bill is the commodity title and we're
going to make sure that you're treated fairly and it is a
balanced farm bill as we go forward the next time.
Thank you very much for being here today. Thanks for your
testimony. We look forward to staying in touch.
We're going to have our next panel come down. We're not
going to officially stop because we're--and take a break,
because we want to make sure that we stay on time. So would the
next panel come forward? (Panel I departed and Panel II was
seated.)
The Chairman. Now we move to our second panel, Mr.
Jonathan Held from Hermann, Missouri, representing Wine
America;
Mr. Larry Purdum from Purdy, Missouri, representing the
Dairy Farmers of America; Mr. Dean Sonnenberg from Fleming,
Colorado, representing the National Sunflower Association;
and Mr. Ray Rogers from Nashville, Arkansas, representing the
Arkansas Farm Bureau State Forestry Committee.
Gentlemen, welcome to our hearing today. Thanks again to
you also for taking time to come and be with us. We look
forward to your presentation and to have you answer a few
questions. So, Mr. Held, we'll start with you.
STATEMENT OF JOHNATHAN HELD, OWNER, STONE HILL WINERY, HERMANN,
MO
Mr. Held. Thank you, Chairman Chambliss, Senators Talent
and Lincoln. I appreciate being able to be here today. My name
is Jonathan Held. Along with my parents and two siblings, we
own and operate Stone Hill Winery in Hermann, Missouri, and
farm 145 acres of wine grapes. We are part of the thriving
national grape wine industry. Grapes are the sixth largest farm
gate value crop in the US at 3.5 billion dollars. In a recent
economic study, it is estimated that in 2004, the production of
wine and wine grapes and their related industries produced more
than 90 billion dollars of value to the US economy. The
industry accounts for 514,000 full-time jobs. It pays 4.3
billion dollars in Federal taxes and almost 5 billion dollars
in local and state taxes. Wineries are some of the best
examples of ongoing viable small family farms. According to a
Gallup poll last year, wine recently passed beer as the
preferred alcoholic beverage in the United States. As a nation,
we consume only about three gallons of wine per capita, and
roughly 25 percent of this is imported. With the strong
international competition, the American wine and grape growing
industry must lead in the production of wines with superior
quality, excellence and value.
Over the past 2 years, the grape products industry has come
together to form the National Grape and Wine Initiative, known
as NGWI. The goal of NGWI is to triple the economic impact of
the US grape and wine industry by the year 2020. The target is
an economic impact of 150 billion dollars annually within 15
years. To accomplish this goal, we want to establish a private-
public effort to fund research that will make us the No. 1
producer of quality grape products in the world. A modest
increase in the Federal investment for viticulture research is
justified based on the industry's contribution to the national
economy and its importance as the sixth largest crop in the
United States. The industry has created a national strategic
research plan that identifies clear priorities for research
that can help us triple our national economic impact in 15
years. It is imperative that we increase Federal research
dollars to improve the science of making US grape products.
Such a partnership with the Federal Government would help us
level the playing field with our foreign competitors. I request
that the 2007 farm bill include the following: Provide a
mechanism to support industry-government research partnerships
such as the National Grape and Wine Initiative; Authorize in
the farm bill mandatory funding of 5 million dollars a year
from the Commodity Credit Corporation to establish the National
Clean Plant Network of clean plant material; provide
significantly increased funding to APHIS for the prevention of
the introduction of plant diseases and pests; expand the State
Block Grants for Specialty Crops Program, originally authorized
in the Specialty Crops Competitiveness Act of 2004; provide
continued support for the Market Access Program; and provide a
thorough review of all farm programs to ensure that specialty
crops producers have access to benefits comparable to other
farmers. The grape and wine industry is faced with tremendous
growth opportunities both in the US market and abroad, but we
need your help and consideration in the Farm Bill to realize
the growth potential and stay competitive with our foreign
competitors.
Thank you for this opportunity to be here today and thanks
for your work on behalf of American agriculture.
[The prepared statement of Mr. Held can be found in the
appendix on page 94.]
The Chairman. Thank you. Mr. Purdum.
STATEMENT OF LARRY PURDUM, POLITICAL ACTION COMMITTEE CHAIRMAN,
DAIRY FARMERS OF AMERICA
Mr. Purdum. Thank you for inviting me here, Senators
Chambliss and Talent and Lincoln.
I'm Larry Purdum, a dairy farmer from Purdy, Missouri. My
wife Alice and I milk from 135 cows. We've been in the dairy
business for 45 years. I serve on the corporate board of the
Dairy Farmers of America and I am chairman of our Dairy
Political Action Committee and chairman of the Missouri Dairy
Association.
I have also a written testimony that I would like to leave
with you that will detail a little more than what I hit on
there.
First of all, we do support the continuation of the Federal
Milk Marketing Order Program, but we feel like it's something
that regulates something heavy needs to occasionally be changed
and brought up to date under current marketing conditions.
Based on a national supply and demand situation, which are
largely influenced by areas of the country that have large
surpluses of milk, the national situation does not necessarily
reflect the needs of the Class I market. Therefore, we feel the
need for a separate pricing system that allows all Class I milk
to be priced differently than the current. And because of this
situation, we are suggesting a policy change that would
establish a floor for the Class I mover at no lower than $13.00
per hundredweight. This solution would be market based and have
no additional government cost. And we do think a safety net
such as price supports is important. MILC, which I thank you
people for, has been a big help in the past few years to the
family dairy farm. But a Class I mover would also--of the
$13.00 floor would be very helpful for us. We are, however,
becoming very frustrated in our attempts to get the order
systems, the Federal Milk RT Order System to recognize the
increasing cost of transporting milk to the market, the very
real impact of fuel costs and what they play in the
transportation equation, and the manner in which these costs
are not equitably shared among all producers in the Federal
order system. The transportation cost issues have become
increasingly important because of, No. 1, the transportation
cost increases of diesel fuel, and No. 2, the flattening of the
Class I price which was in the process of implementation of the
``Order Reform'' by Congress in the year of 2000. Furthermore,
the large increases in production nationally seems to cloud the
view of what is needed in the Southeast and Eastern parts of
the United States. The national price surface no longer
recognized the cost to transport milk adequately. This is a
problem when we attempt to source milk for the Southeastern
consumers from out of the market or to transport it from my
area to others of the Southeast.
The dairy farmers who supply the Southeast markets we call
the Southern Marketing Agency, have all banded together to try
to be more efficient in our transportation costs. Specifically,
we have asked that the existing transportation credit system be
adequately funded. This system has been in place since the late
1990's and helps to share the cost of bringing milk into--milk
supplies from outside the Southeast into our market area. In
June of 2005, the Southeast had to source 58 percent of its
sales from outside sources outside the Southeast, milk brought
in. Outside purchases in August 2005 were exactly double of
August 2000. The over-the-road hauling cost in 1997 when the
credit was implemented was $1.75 a mile. In 2005, they have
increased to $2.35. I'm sure you're familiar with those kinds
of costs. In 1997, this particular program would offset 95
percent of the cost of bringing in surplus milk In 2005, the
reimbursement rate, or what we could charge, covered only 40
percent. So we need to bring that up to date and we need some
current receipts. The numbers we're working off through the
margin administrators are 10 years old and we need some cost
adjustments on it. So our proposal is to update this 1997
program is something we need your help with, we need to push on
it, to get USDA interested in it. Some other things that we are
very interested in, is we are interested in what ends up in the
WTO negotiations. You know, we're familiar with what you've
been talking with the gentlemen on the grain panel were talking
about. We also are very interested in what happens in our
immigration labor laws.
And I will stop there, and Senator, you can ask me any
questions that you have.
[The prepared statement of Mr. Purdum can be found in the
appendix on page 98.]
The Chairman. Thank you. Mr. Sonnenberg.
STATEMENT OF DEAN SONNENBERG, PRESIDENT, NATIONAL SUNFLOWER
ASSOCIATION
Mr. Sonnenberg. Thank you, Mr. Chairman and members of the
committee. I appreciate the invitation to testify before you
about this farm bill. I am president of the National Sunflower
Association and I am here today on their behalf. I farm near
Fleming, Colorado, where we raise sunflowers, corn, millet and
wheat.
Sunflower is one of the minor oilseed program crops. It is
a high oil seed crop that is produced on two-and-a-half million
acres from the Canadian border to the south of Texas. Most of
the sunflower is used in the manufacture of salty snacks such
as potato and corn chips. Another segment of our industry is
the in-shell sunflowers that are very popular with baseball
players and to many of the rest of us Americans.
The Federal farm program income support in the event of low
prices or crop failure is the single most important part of the
farm program for sunflower growers. The safety net provided by
the 2002 farm bill, as with other oilseeds, relies primarily on
the Marketing Loan Program. There is strong interest among the
growers and the NSA to keep the Marketing Loan a viable option
in the new farm program. If the Marketing Loan were to diminish
or be eliminated, a similar provision such as revenue assurance
would need to be developed.
The NSA further believes that the benefits provided by the
next farm bill must be equitable among eligible crops to
prevent planting distortions, to prevent planting to harvest
the highest maximum value for Federal dollars rather than
marketplace. We also support continuation of the planting
flexibility provisions that has been in place since 1996.
The NSA supports the development and inclusion of a
permanent disaster provision in the next farm bill. Such a
provision would help mitigate the shallow losses that producers
incur when crops do not exceed the standard 30 percent loss
threshold that most crop insurance provides.
While the NSA understands that the crop insurance program
is authorized under separate legislation, we feel compelled to
note that the overall policy provisions need to be strengthened
in those regions of the country where multiple disasters have
eroded farm yield history. Other provisions that need review
include the cost of harvesting marginal yielding crops damaged
by weather as well as the ability to expand crops into non-
traditional growing areas.
The NSA supports a stronger Energy Title in the next farm
bill. As a part of this title, we also encourage that you
develop and include options to grant Class I and II CRP in the
Conservation Security Program acres back into bio-energy
production.
In closing, I want to again thank the committee for the
opportunity to testify, and we understand that the WTO
negotiations, as well as budget deficits, may limit farm
program options. However, we are prepared to think outside the
box and work with you to develop a new farm bill. Thank you
very much.
[The prepared statement of Mr. Sonnenberg can be found in
the appendix on page 113.]
The Chairman. Thank you very much. Mr. Rogers.
STATEMENT OF MR. RAY ROGERS, CHAIRMAN, ARKANSAS FARM BUREAU'S
STATE FORRESTRY COMMITTEE
Mr. Rogers. Thank you, Mr. Chairman and members of the
committee. My name is Ray Rogers and I'm a poultry farmer and
have a cattle operation and I own and operate Rogers Timber
Company in Nashville, Arkansas. I'm currently serving as
Chairman of the Arkansas Farm Bureau's State Forestry
Committee.
By any measure, agriculture is the backbone for the
nation's economy, and an invaluable component to our national
security. I believe the main purpose of the national
agricultural policy is to maintain a stable, high quality
affordable food and fiber supply for our nation. With that
being said, I would like to address four issues in the farm
bill that I think is critically important to the forestry
industry.
First, I strongly believe--No. 1, I strongly believe it is
time that we increase our efforts into the area of bio- energy
in order to reduce our dependence on foreign oil. Let me say it
where I think we can all understand it. This high energy cost
in fuel is killing me in my small business and the farmers
that's out there trying to make a living that's buying any kind
of fuel and energy right now. The Farm Bureau, and we support
full research and development for the increased production of
all forms of renewable fuels both from agriculture resources
for energy use, including bio-mass, which includes waste-wood
products. We favor bio-diesel incentives with tax credits of at
least 10 years in duration, and through other appropriate
measures such as a renewable fuel standard.
Farm Bureau also supports the 25-25 vision which calls for
25 percent of America's energy needs to be produced from
working lands by the year 2025.
Second, the environmental quality incentive program, known
as EQIP, is a beneficial program provision. The Farm Bureau
supports farmers and ranchers in their effort to voluntarily
develop private resource management plans to manage their
agricultural resources while meeting their production, economic
and environmental objectives. EQIP provides forest landowners
critical financial support on conservation practices to help
maintain a healthy forest.
Funds should continue to be prioritized and distributed on
a local level, with the primary emphasis being on water quality
and soil conservation. And I would like to see this program
continued within the 2007 farm bill, though with price
adjustments included so that the escalating prices of materials
are accounted for.
Third, the Forest Land Enhancement Program, known as FLEP,
is under Title VII of the Forestry Program, totaling $100
million. Arkansas was allocated $500,000 a year and, as you all
know, the first year we were funded at a rate of $473,000. In
2004, we received no funding. And down now to 2005, this past
year, it was $112,000. Now, the main advantage that FLEP has in
the farm bill is, it is giving--provides assistance to the
small landowners. And when I'm talking about small landowners,
I'm talking about landowners out there that own 31 acres or
less, or 40 acres or less. It allows them to do reforesting
practices and improve their forestry stands and provide for our
natural resources. So that--that is an important program if we
can get it funded fully. Which it hasn't been as of yet.
The fourth thing that I would speak of, and I'm not an
expert on this, but as you know new international rules and
disciplines on domestic support programs currently are being
abated as part of the Doha Round of trade negotiations in the
World Trade Organization, I believe personally that the
negotiations will not be concluded before the 2007 Farm Bill.
If that's the case, I don't--you know, I don't believe we
need to make a commitment of any kind on--until we know the
market asset. As it sits, we must be able to take into account
the agricultural policies that are developed through those
negotiations for the future.
The Farm Bureau does support the concept in the 2002 Farm
Bill for the inclusion in the 2007 legislation. It is important
that the negotiations on market access and domestic support be
clearly defined before we draft a new farm bill or accept
significant budget reductions.
I would just like to close with, I know that the budget
situation is drastically different going into the 2007 Farm
Bill debate in comparison to the 2002 Farm Bill. And I also
understand, and I know that you all know this, that the United
States spends less than 1 percent of the total budget on
agricultural policies and the programs which support it are
funded as safe food and fiber supply in the Unites States. And
I would just ask that you all fight hard and work with us to
try to keep that funded, as much of it as we can, because it is
important to all parts of our farm and production agriculture.
Thank you again for the interest.
The Chairman. Well, thank you. Those were very informative
presentations. Mr. Held, let me start with you.
There has been proposals to provide more money to the
specialty crop industry in the next farm bill. What ideas would
benefit your industry the most, and what ideas do you have for
the funding of the proposals?
Mr. Held. Obviously research is what we're after more than
anything. Particularly we're looking to the State Block Grants
for specialty crops. There's a huge diversity in our industry
across the country. A lot of diversity of research is what we
really need to remain competitive. We're really concerned about
foreign competition. Many of these foreign competitors are
investing heavily in research, particularly Australia. As far
as where the funding goes, I'm no expert on how you work the
budget out in Washington, D.C. I have all the respect in the
world for you and the job you have to do. But the need is
there. We see a huge tremendous potential, triple the economic
impact of this industry. To do it, we need your help with
research.
The Chairman. Mr. Purdum, we've got a dilemma that we're
dealing with with respect to dairy. And that is that the
aggregate measure of support for dairy is almost four and a
half million dollars. If the WTO negotiations are successful,
the United States is going to be restricted to 7.6 billion in
our Amber Box. Those reductions would require proportional cuts
in all commodities including dairy. So if we have to reduce the
measure of support for dairy, is dairy going to be able to
adjust to that kind of scenario, to fit--allow us to fit that
number within the Amber box?
Mr. Purdum. Senator, I don't know exactly how those numbers
would fall yet, but I would point out that dairy has been quick
to take steps, such as the CWT. We just increased that to a
dime a hundred. This is funded completely out of the dairy
farmers pockets. We have bought and exported several tons--
metric tons of cheese and butter and powder to other countries.
We think we're really trying to help ourselves that way.
Unfortunately, only 70 percent of the dairy farmers pay into
that. See, it's voluntary and--and I wish that number would be
a hundred percent. It probably never will be. There's always a
few who want to ride on the shoulders of the rest. One of the
programs, like I mentioned, has a $13 floor on Class I milk. It
would be a straight pass through from the processors to the
consumer. There is no cost there to the government.
There is programs there that if we could work together, I
think that we could get these programs that would help. And one
of the reasons we need that, all three of you senators are from
an area that is very deficient in milk. And we know that
there's milk in abundance in the western sector of the United
States.
But for the processor in Little Rock, Arkansas, or Saint
Louis,
Missouri or Springfield, Missouri, or Georgia or
Mississippi, the cheapest milk for that consumer is the milk
that's close by.
When you add the transportation cost, the cheapest milk is
nearby. And we have a real dilemma in your part of the world,
Mr. Chairman, because there just isn't enough milk and the
dairies are going out, exiting the business, at a rapid pace
because of the prices of feed and energy and things and the
price of milk in those areas.
The Class I isn't--it doesn't--it's flattened out in
comparison to the Class III cheese prices to what it was
several years ago. And there needs to be--we need to price
Class I milk, the top quality milk we have that goes into the
bottling plants, needs to be priced, in my opinion, off of
something other than Class III cheese, which we have an
abundance of it in certain areas of the United States, and yet
it sets our milk price for Class I, our movers, to Class I
prices. So I think we need to look at that, and as I said, I
think the Federal orders are a very important part of our
system but, you know, markets change and times change. And if
we don't move that and change with it, then it's a broken
system. And right now, we're very frustrated in trying to get
help to make them realize what it costs in transportation that
we have had in trying to move milk from west--areas out west
into the South and Southeast so that we have enough milk for
the consumer down there. A lot of times, dairy farmers in all
three of your states have had to dig into their own pockets,
40, 50 and 60 cents a hundred out of their milk pool to make
sure the consumers had milk brought in from other areas. Again,
as I say, the cheapest milk is the milk that's maintained local
and sometimes we have to have new innovative ideas to keep that
local milk where it's needed.
The Chairman. Speaking of innovative ideas, you mentioned
in your testimony, in the 2002 Farm Bill, we had a milk income
loss contract program which it's been somewhat controversial.
As you know, I have a lot of friends at DFA. I also have a
lot of friends in the dairy industry around Guthrie. Some of
them support this program and some of whom don't. What is--is
there an official position from DFA relative to whether or not
we ought to continue the MILC program or are there any ideas
that you might have out there that it might be a subsidy
program relative to the benefits that are provided to farmers
from this program?
Mr. Purdum. Well, our corporate board unanimously passed
this $13 floor and that included dairy farmers from all parts
of the United States. Now, we officially stand that we are for
the MILC payment with no cap. That's the official stance of
DFA.
But again, we did officially also pass the $13 floor as the
DFA, what we--what we would hope for.
The Chairman. OK. Currently only dairy producer
cooperatives have the ability to forward contract with their
members. Does forward contracting provide producers with an
additional risk management tool to manage price and income
volubility in the marketplace? And should this option remain
available only to cooperatives, or should processors and non-
cooperative dairy producers also be able to utilize this risk
management tool?
Mr. Purdum. Well, we have a stance, again, at DFA where
the--we want the co-op, I guess, to have that. And actually
they're just a pass through. They're just helping me when I
want to make a forward contract, they want me get in touch with
the right people, or help handle it for me. And one of our
problems there, Mr. Chairman, is, it's hard to educate our
producers to knowing how and when to use those. At times you
may--it's going to take time for that pass on. If they--the
grain farmers are way ahead of us on understanding how to use
futures to help. But we have--we want that option, you know,
for our farmers. But I'm not sure that they're prepared to take
enough advantage of it to--they think they still need some
safety net of some kind, but I think there are ways of having
it we can still do it within the budget.
The Chairman. Mr. Sonnenberg, your testimony, I notice your
support for a stronger energy title in the next farm bill and I
think we all agree with that. Should an energy increase--should
an increase in conservation or bio-energy programs come at the
expense of the commodity programs?
Mr. Sonnenberg. I don't think that it can be afforded for
it to be. The energy programs are primarily ending up being
owned by Wall Street and not at the farm level. If the support
goes into the energy program, it's going to benefit us
indirectly in the form of higher commodity prices, which will
reflect in lower costs to the Federal Government. I don't think
that we can set out a formula in front that says we're just
going to reduce the farm support in order to have an energy
policy.
The Chairman. Some organizations have explored the
possibility of an energy based approach for the commodity
title.
What are your thoughts on a revenue based approach to a
safety net as a replacement for our current commodity programs?
Mr. Sonnenberg. I certainly think that there's a place for
it. I think it has to be well thought out. One problem that we
do have is that we're trying to expand the acreage base because
we have an increased demand for sunflower oil. And we have a
small pocket of sunflower production here in Missouri. It's
primarily been for the birdseed base. You go someplace outside
of that area if you want to add sunflower production, you can't
get the insurance coverage until you have 3 years of production
history. And so to come up with a full based coverage that
would allow somebody to fall under protection of the insurance
as soon as they add the crop rather than having a three year
period where they're assuming all of the risk would be
beneficial for us.
The Chairman. Mr. Rogers, given the budget constraints,
what would be the most helpful program for private forest
landowners?
Mr. Rogers. For private forest landowners, I believe the
most important thing that the agriculture sector could do is
equip the--funding fully like EQIP or maybe increase it,
because I think any time you cut 40 acres of timber, there's a
lot of people out there that just don't replant it. And if
there's some money available to help do that, and some
assistance there for the Arkansas Forestry Commission, or
whatever commission oversees that, I think it's a very
important tool because of--it is a renewable resource but it
takes several years to renew. And so I think any time you've
got land that's not being put in production, it needs to--to be
in some kind of timber production instead of just sitting idle.
The Chairman. Is Arkansas a beneficiary of the CRP program
with respect to pine tree planting?
Mr. Rogers. Yes, they are. In fact, you see a lot of CRPs
that's went from grass to pine tree production just because----
you know, I believe 58 percent of Arkansas is forested, has
trees on it, and 50 percent of those trees are owned by the
private sector, so it's a big help.
The Chairman. Senator Talent.
Senator Talent. Mr. Held, you mentioned APHIS. Elaborate on
that a little bit. Do you think APHIS is under funded and if
so, what concerns does that pose for the industry.
Mr. Held. I do believe APHIS is somewhat under funded.
When you're dealing with permanent horticultural crops such
as grapes, we have a huge investment to plant. We're looking at
10,000 acres--or, $10,000 an acre to establish a vineyard, and
three to 4 years to get it into production.
Clean plant material is of utmost importance, and viruses
coming in from overseas on new cultures are an issue.
Introduced pests that we initially thought were beneficial and
later proved had side effects, these are a huge issue. The
economic impact is tremendous. Right now in the Midwest, we're
dealing with the multi-colored Asian lady beetle introduced as
a beneficial insect on soybean crops. The downside of this is,
once the soybean crop is over, they migrate into vineyards.
Just a couple of these bugs in a lug of grapes basically ruins
the resulting grape juice or wine. You get a product that
smells like peanut oil that's gone rancid. We need to really
work on keeping these types of pests out of the country. It's
vitally important to expensive, permanent crops such as grapes.
Senator Talent. When we look at what we're investing to
upgrade an industry, you think it can all go down the tubes if
you've got a virus or a pest in from abroad. It makes sense to
fund APHIS. We appreciate what you and your family is doing in
particular for Missouri's economy and for being here.
Mr. Held. Thank you, sir.
Senator Talent. Larry, talk a little bit more about your
attempt to update the marketing order system to reflect
transportation costs and how important that is even within the
regions. And this is something I don't think we all understand.
Mr. Purdum. Well, as I said a while ago, you know, if you
go back to 2000, you know, through the market administrator,
what they allowed us to collect and what was there, we were
able to spend--we were able to cover 95 percent of the cost of
bringing in supplemental milk. And by the year 2005, it had
fallen under 40 percent. So that's 60 some percent to make sure
we have milk in all the areas in the Southeast and South where
it's needed, is actually being funded by the local producers to
make sure it's there. I mean, it's--it's on our back. It's
become on our back. Now there's a few independents and a few of
the people that don't have to pay that. I have neighbors that
sell not to a coop but otherwise, and they always have a better
milk check than I do. That's because they don't get the 30 or
40 or 50 cents taken out of their milk check to make sure the
plants down there--processing plants have milk. And I don't
know the answer to including them, but what I'm saying is, the
market administrator in Washington, we--we--we have filed in
January to get some help and we've heard nothing yet. But we
need these numbers updated on transportation costs, Mr. Talent,
because it's really hard on the producers in all states that
these percentages represent. We're all in the same deal. The
whole--actually, there's just two major production regions in
the United States, East and West. And we've got an abundance of
milk in the West looking for homes and you have a deficiency of
milk, and particularly Class I milk, in the East. And I know
it's hard to hold milk for--you know, maybe the industry is
slowing down, but still, any encouragement to keep milk in that
area, keep family farms in business, is the cheapest milk that
can be had by the consumers.
Senator Talent. And they're supposed to update those orders
to reflect this sort of thing. I'm tired of having to do
legislatively what they're supposed to be doing.
Mr. Purdum. But I would request all three of your help,
because we've tried--we've gone as far as we can go.
Senator Talent. One other thing, Mr. Chairman--I'll ask
this to Larry, what would the impact be if CERCLA was--if the
EPA interprets CERCLA as--to cover animal waste, what is the
impact on the industry if you become super fund sites?
Mr. Purdum. I don't know how to answer that question.
Senator Talent. It's pretty self-evident.
Mr. Purdum. It could be some really big numbers, but I
don't--I don't have numbers for that. But I know there is a
bill and it's being circulated in the house to remove manure,
which we consider a fertilizer, from the super waste fund. And
certainly we hope that that happens for all--all--not just
dairy, all the livestock industry.
Senator Talent. You mentioned it in your testimony and I
want to go over that. Thank you, Mr. Chairman.
The Chairman. Senator Lincoln.
Senator Lincoln. Thank you, Mr. Chairman. I just want to
call on Mr. Purdum. Keeping you in business is probably the
best way to mitigate the risk of things that happen outside of
our control like the cost of transportation often times. I
think the cost of fuel, and the cost of whatever, you know, as
you said, keeping you in business is really the best way to
mitigate this and not having to make sure that we're not
hurting those types of additional commodities across the
country.
Mr. Purdum. Milk is a very perishable product.
Senator Lincoln. You're right. I got to tell you, from our
school programs to those of us who go through two or three
gallons a week, our boys are growing and it's an important
issue. We appreciate your being here. Mr. Rogers, as I've said
before, I do appreciate how much you being here representing
the forestry industry in Arkansas. Your testimony talks about
the pulp paper industry in our state as being our largest
manufacturer. It's certainly enormously critical that we make
every effort to sustain the facilities that often provide the
primary source of jobs in our rural areas. But I'd also like to
compliment you on making sure that people understand that as
far as energy is concerned and renewable sources can be used,
our pulp wood and paper industry cannot only continue to
provide paper as a product, but it can also provide energy and
other work is being done about using the leftovers on the
forest floor, cellulosic conversion as well as the energy
production that's being talked about and some of the projects
that the entire pulp and paper industry are--are coming
together to test and to put it out there as an energy
production. I met with some of the workers from one of our
plants down in McGee that said, you know, ``We love producing
paper and we've been doing it for 25 years, but if we could
produce energy, too, we're glad to do that.'' So we appreciate
the fact that renewables are a very important part of what we
need to focus on. I also want to highlight something else that
you mentioned, and I think it is critically important as we go
forward not only with the farm bill but also in the other
committee I sit on, the Senate Finance Committee when we talk
about tax initiatives in the Senate to encourage a lot of the
things that we want to see happen. Renewable fuels, we've got
to give industry at least some certainty of how long they can
expect to get those incentives. Because to make those major up
front investments without--with just having a tax incentive
from 1 year to the next, is not enough. I mean, they've got to
know that they've got a certain amount of time to be able to
use those incentives to be able to recoup some of their costs
in that major investment that they made. And I noticed that
your testimony mentioned that, looking at a 10-year window as
opposed to a two year window is worlds of difference in terms
of what you can make as an investment. You've also mentioned
the EQIP program an awful lot. I think my first question
pertains to the impact of rising energy prices and the input
cost that our forest landowners have seen. Obviously everyone
has seen that--the increase in those costs, transportation
costs, whether you're a commodity grain, milk, forest products
or what have you. It has a devastating effect particularly--on
all different areas, but some more than others because you
don't have the ability to increase your prices to the consumer
because your prices are regulated a different way. But if you
could just elaborate on yours or anybody else's that you know
of, experience with those rising fuel costs, and USDA's cost
adjustments for EQIP, and to improve forest management
practices, that might be helpful.
Just maybe tell us your own story.
Mr. Rogers. OK. Yeah, thank you for asking that question.
I'm a small timber producer as it goes, but I still produce
about 15,000 tons of fiber a year. Now, it takes me----
I use around 2500 gallons of farm diesel, or red diesel, a
month just to run the skidders and cutting machines and
loaders. In 2004, I could buy that red diesel for 99 cents a
gallon. Last week, or the week before, when I ordered my
monthly fuel supply,
I paid $2.59 for that same red diesel. That's 161 percent
increase in a 2-year period. I don't--the timber producers or
the grain haulers I believe are--are--a lot of our agriculture
people that get the product to the mill or the processing plant
don't have the luxury of putting a surcharge on their fuel. Now
once that product, like wood or plywood or pulp and paper--or
paper is produced, when it goes out the back end and it's
hauled to California or hauled to New York, then those long
haul companies do add a surcharge which takes care of their
diesel increase. But we don't have the luxury of doing that.
We're kind of at the mercy of what those mills want to pay
us.
And so we're just--you know, we just have to come up with
an increase somehow ourselves. And it comes off of my bottom
line like it comes off of all of the other farmers and
ranchers. And then in the logging business it's especially
critical because----
I'm just talking about the production side of it. I run
seven contract truckers. We may haul that wood 100 miles. Our
average haul probably is around 60 to 70. But you're looking at
a truck that gets five to six miles a gallon of diesel. You
know, I--there's truckers, contract log haul truckers, chip
haulers, they're dropping like flies down in Southwest Arkansas
because they just can't stay in business. As far as EQIP, I
believe there has been some energy adjustments made in that at
a rate of about 15--15 percent, I believe, Senator, but none of
the forestry practice that I know of--and I may be wrong, but
none that I know of in the EQIP program has got that 15 percent
increase. It's been given to, you know, the other conservation
projects. So I feel like, you know, at least give us some help
to adjust the 15 percent across the board on any kind of----
because you know, you go to dragging a ripper and a dozer
across 40 acres to get you ready for--the land ready to plant
trees, you know, you're going to spend, I mean, the cost is--
it's just an astronomic cost. So that's kind of the dilemma
we're in. And I have three small logging crews but, you know,
we employ about 23 to 25 people, and that's families that
depend on my operation to make a living. So we're kind of
struggling right now with this energy cost.
Senator Lincoln. Well, just to follow up on that very
briefly, and do any of you all have comments about what our
first--you know, some of the first steps we need to take in
terms of renewable fuel, but Mr. Sonnenberg, you mentioned that
you can't sacrifice a commodities program for an energy program
because we're seeing so much of the investment for renewable
energies coming from Wall Street. And that's not a bad thing.
I know some of my colleagues do think it's a bad thing, but
we can't do it all by ourselves out in rural America to get us
domesticated or non-dependent on foreign imports. What's is the
best next step in terms of renewable energy? Anybody got ideas
on those? Gets us closer to the production of renewable fuel
something in the farm bill?
Mr. Sonnenberg. I think that we need submitting new acres
to really make it viable. We're already competing among
ourselves for acres. I think that some of the high quality land
that's been under the conservation reserve program needs the
opportunity to come back out in an orderly fashion to expand
the acreage base again. We can achieve conservation by other
means than just completely setting it aside to where it's
unusable for this generation and future generations.
Mr. Rogers. I'd like to speak to that, if I could. Now I
think somebody in this first group mentioned that there were 40
million acres of land set aside in the United States under the
conservation project. The USDA did an assessment of the
potential payoff from expanding production of this--to create a
biomass as an industry on that 40 million acres. And the demand
on that 40 million acres, a larger biomass industry would
depend on bio-user crops, that is crops that produce
specifically for the use of biomass for energy production, this
acreage would be drawn from existing crop land, idle acres and
conservation research acres, and manages to avoid any
environmental damage that we could do--would do with crops
ranging from switch grass to poplars to bio-energy crops, and
that it's possible that that bio-mass energy, that 40 million
acres, could possibly come to the fourth most important crop
produced in the United States if we could turn around and make
energy, ethanol or something out of that. That would be fourth
in line with wheat, corn and soybeans. And it would also
generate higher commodity prices because the farmers would have
more land that they could farm, more markets. The estimation by
the USDA is that it would be 14 percent higher with bio-energy
crops using the 40 million acres, and that would boost farm
incomes from three to six billion dollars a year. So I think
that's a win, win situation if you could help the farmers by
producing biomass energy on some of these acres set aside. And
I don't think you have to cut commodity prices, and I'm not in
favor of doing that because I would get hung out to dry by some
of the rice farmers up there, Miss Lincoln, that you know if I
said that. I don't think you ever benefit by robbing from Paul
to pay Peter. That you need to attack both situations and I
think we have a means. We do the best job in agriculture
production of anybody in the world, and sometimes I think we
forget that. When you give these farmers a chance to produce
some kind of energy that we can use and get us away from so
much dependency on foreign oil, that's got to be a better deal
than what we're looking at now, in my opinion.
Senator Lincoln. Thank you.
The Chairman. Of course, my reaction to the initial comment
there, Mr. Rogers, is I've got a--found a place to pheasant
hunt, too. Make sure we don't put all them 40 million acres
in----
Mr. Rogers. We've got a place and I like to hunt, too.
The Chairman. All of you raised very good points relative
to a number of issues. But this issue of alternative fuels and
the opportunity we've got in agriculture is just fascinating to
me. It's something that we're going to look to take advantage
of. We don't know yet how we're going to be able to do it
because if we--if we put a lot of money into it in the farm
bill, obviously it's got to come from somewhere. But there's
got to be other things that we can do. And one reason I asked
you about your pine trees and CRP, that's primarily our CRP
land in Georgia is planting the pine trees. There's some
restrictions on you, I know, once you put it in that CRP. We're
doing some research right now, as I'm sure other folks around
the country are, maybe some at the University of Arkansas, but
both Georgia Tech and the University of Georgia are doing a lot
of research right now relative to the utilization of the--what
we've always referred to as the trash that we leave in the
woods, those tops and those limbs, and they're gathering those
now and looking to utilizing those both from an energy
production, as well as an alternative energy production. So I
think there are a lot of things that are on the table as we
move into this farm bill that you all have brought up today
that can be of significant help to us and hopefully we can take
advantage of. Mr. Held, I did have one question I wanted to ask
you. I just want you to give me a definition of what you mean
by a clean plant?
Mr. Held. With horticultural crops, we plant a rooting that
has been grown in either a nursery row or a greenhouse for
roughly a year. If that plant has a virus infection or some
other root rot disease or anything like that, we've gone to all
this expense to put it in the ground and start growing it and
establish the trellis and we're wiped out within a few years.
We need to eliminate these viruses and diseases, organisms in
the plant before we put it in the ground.
The Chairman. Is that where most of the research is done in
your industry? Like that?
Mr. Held. It's not most of the research, but it's one of
our big priority areas. And currently, in the Midwest, the
vines or cultivar that we grow, we have no source of clean
plant material.
Senator Lincoln. What's the longevity of a grapevine?
Mr. Held. It depends on the variety. The grapes that we
grow in Missouri and Arkansas, a lot of the native American
species, 50, 75 years. Some of the more tender cultivar, such
as the hybrids, 35. If you attempt to grow some of the European
grapes or the vines that have been brought in from California,
they might not last but a couple of years because of our severe
winters. There's a few of these in Arkansas.
Senator Lincoln. OK.
The Chairman. Well, gentlemen, again, thank you very much
for being here. Thanks for your testimony. We look forward to
staying in touch and dialog with you as we're writing this farm
bill, and we're going to continue to call on you all as a
resource. Thank you. (A brief recess was had.)
The Chairman. All right, we'll continue with our third
panel. First of all, we have Mr. Mike John from Columbia,
Missouri, representing the National Cattlemen's Beef
Association; Mr. Mike Briggs from Springfield, Missouri,
representing the National Turkey Federation; and Mr. Jim Hinkle
from Mountain View, Arkansas, representing the National Wild
Turkey Federation.
[The prepared statement of Mr. Rogers can be found in the
appendix on page 115.]
Gentlemen, thanks to all of you for being here. We look
forward to your testimony and to dialog with you about some of
these critical issues. Mr. John, we'll start with you. We look
forward to your testimony.
STATEMENT OF MIKE JOHN, PRESIDENT, NATIONAL CATTLEMEN'S BEEF
ASSOCIATION AND MEMBER, MISSOURI CATTLEMEN'S ASSOCIATION
Mr. John. Thank you very much, Mr. Chairman, Senator
Lincoln, Senator Talent. My name is Mike John. I'm a cattle
producer from Huntsville, Missouri, and am a proud member of
the Missouri Cattlemen's Association and I'm also currently the
President of the National Cattlemen's Beef Association.
Ranchers are an independent lot who are focused on working
towards an agricultural policy which minimizes direct Federal
involvement in our operations, achieves a reduction in Federal
spending, preserves the right of individual choice in
management of land, water and other resources, provides an
opportunity to compete with foreign markets and does not favor
one producer or commodity over another.
There are many areas we can work on together to truly
ensure the future of the cattle business in the United States,
including conservation and environmental stewardship. Ranchers
are a partner in conservation. Our livelihood is made on the
land, so being good stewards of the land not only makes good
environmental sense, it is fundamental for our industry to
remain strong.
The goal of conservation and environmental programs is to
achieve the greatest environmental benefit with the resources
available. Programs such as EQIP are extremely popular with
cattlemen and we hope to see this type of cost share program
expanded to include more producers. Cost share and working land
programs serve to protect both the environment and the
taxpayers' money. As we continue to look at this farm bill, we
anticipate renewed attacks by activist groups such as PETA and
the Humane Society of the United States who use extreme
measures to try and force their views of vegetarianism and
extreme environmentalism on others. Every person has a right to
their own views, but to force them on others using questionable
means is unacceptable. It's no secret that these activist
groups want to put the US cattle industry out of business and
the farm bill should not be a platform for their agenda.
Outside of conservation and activist issues, there are several
other issues that have the potential to impact the long-term
health of the beef industry. One such area is trade. US
cattlemen have been and continue to be strong believers in
international trade. We support aggressive negotiating
positions to open markets and to remove unfair trade barriers
to our product. We supply government--we support programs such
as the Market Access Program and the Foreign Market Development
Program which help expand the opportunities for US beef, and we
urge sustained funding for these long term market development
efforts. We appreciate the committee's help in working to
reopen foreign markets that were closed to US beef after the
discovery of BSE.
To grow our business, we have to look outside the US
borders to find 96 percent of the world's consumers. We
encourage the committee's continued strong and vigilant
oversight of the enforcement of any trade pact to which
American agriculture is a party.
As with the 2002 Farm Bill, we fully expect to deal with
several marketing issues. When looking at these issues, it is
important to note that we support the critical role of
government in ensuring a competitive market through strong
oversight. This includes the role of taking the necessary
enforcement action when situations involve illegal activities
such as collusion in anti-trust and price fixing. However,
government intervention must not inhibit the producer's ability
to take advantage of new marketing opportunities and strategies
geared toward capturing more value for our beef. A ban on
packer owner--on packer ownership or forward contracting has
been a farm bill debate for years. We are strongly opposed to
those efforts because we feel that Congress is trying to tell
cattle producers how and when to market their cattle. This
strikes at the very basis of our business, which is utilizing
the market to improve our returns and make a living. Each
producer should be able to make their own marketing decisions
whether they market their cattle through traditional channels
or new and progressive channels. The market provides many
opportunities and cattlemen should be allowed to access all of
those.
As you can see, we are not coming to you with our hands
out. Like I mentioned before, America's cattlemen are proud and
independent and we just want the opportunity to run our ranches
the best we can to provide a high quality product to the
American consumer, and even more importantly, provide for our
families and preserve our way of life.
The open and free market is powerful and as beef producers,
we understand and embrace that fact. Cyclical ups and downs of
the market can be harsh, but the system works and we remain
steadfastly committed to a competitive and free market system.
It is not in the nations farmers or ranchers best interest
for the government to implement policy that sets prices,
underwrites inefficient production or manipulates domestic
supply, demand, cost or price.
We are coming to you in an effort to work together to find
ways to use the extremely limited funds available in the best
way possible to conserve our resources, build our industry and
provide for individual opportunity and success. We ask for
nothing more than a Federal agricultural policy that helps
build and improve the business climate for cattlemen.
We look forward to working with you on the 2007 Farm Bill,
thank you.
[The prepared statement of Mr. John can be found in the
appendix on page 119.]
The Chairman. Thank you. Mr. Briggs.
STATEMENT OF MIKE BRIGGS, CHAIRMAN, NATIONAL TURKEY FEDERATION
Mr. Briggs. Good morning, Mr. Chairman, Senator Talent and
Senator Lincoln. Thanks for this opportunity. My name is Mike
Briggs. I'm currently the chairman of the National Turkey
Federation, which basically represents all facets of the turkey
business except for the wild turkeys. The turkey industry today
is very vibrant. We produce about 270 million turkeys, which is
about five million pounds of ready to cook weight worth roughly
$8 billion in value. I should also mention, as Senator Talent
did, is that Missouri is currently the third largest turkey
producing state. The key to our industry's profitability is
access to an affordable supply of feed. About 70 percent of the
cost to produce a turkey is in the feed, and primarily what the
bird eats is soybean and corn, with the corn being the most
critical. The demand for corn worldwide has risen, primarily
due to the fact of being used as a fuel source, and also the
fact that China has now become a net importer of corn as
opposed to an exporter.
As you write the next farm bill, we would like you to
remember that the singular most important thing that you can do
to help the traditional feed consumer is by keeping up the
support payments and allowing farmers the maximum amounts of
flexibility to meet this growing demand. In writing the next
farm bill, we ask that you do two things, one is maintain the
payments so that farmers have maximum payments and also expand
the aerable land available for production by ensuring that only
truly environmentally sensitive land is enrolled in the
conservation reserve program.
Another major challenge is in the environmental area. We
accept our agricultural environmental laws as part of our
responsibility as good stewards of the land. Many of you are
also aware that some are trying to extend the industrial
environmental laws into agriculture and we thank those who have
worked to prevent it. Whatever the environmental rules are on
the books, the poultry and livestock producers will need to
be--will need some help with compliance. In writing the next
farm bill, we would urge you to, one, increase environmental
quality incentive programs to the maximum extent possible.
Second, consider increasing the percentage of EQIP funds
that are reserved for livestock and poultry. And last, examine
ways the EQIP funding could be used to facilitate projects that
help turn animal waste into fuel.
Finally, I'd like to mention two other matters, trade and
research. Foreign markets are our fastest growing markets. The
foreign market development program and market access program
are vital to increasing value added poultry products, and we
would look to have the new farm bill maintain that program
funding at 2002 funding levels.
Finally, Federal agriculture research is vital to our
ability to provide safe and wholesome food. One example is the
work that's being done in Georgia in regards to avian
influenza.
USDA researchers have played a vital role in helping not
only those of us in the United States to protect ourselves from
the Asian form of avian influenza, but also other countries
throughout the world. And we urge you to maintain, if possible,
increased research funding, especially in the areas of food
safety and animal disease control.
Again, I'd like to thank you for this opportunity and I
appreciate it and look forward to answering your questions.
[The prepared statement of Mr. Briggs can be found in the
appendix on page 126.]
The Chairman. Thank you. Mr. Hinkle.
STATEMENT OF JIM HINKLE, BOARD SECRETARY, NATIONAL WILD TURKEY
FEDERATION
Mr. Hinkle. Mr. Chairman, before I start on my text, I
might mention that I had an opportunity to hear you speak at
the national convention in front of several thousand people and
you did a very excellent job of combining agriculture to
farmers and ranchers and hunters of this country being the
first conservationists, and I very much appreciate that speech
and how you represented all of us in this country. I might also
note that I noticed Senator Lincoln's influence on this panel
here today, that, in fact, I am the last one and she saved the
largest turkey for last.
[Laughter.]
Mr. Hinkle. I am Jim Hinkle, board secretary of the
National Wild Turkey Federation and former commissioner of the
Arkansas Game and Fish Commission. NWTF is dedicated to
conservation of the wild turkey and the preservation of the
hunting tradition. We worked to bring the turkey population
from 1.3 million in 1973 to 7 million today, thanks to state
and Federal wildlife agencies, NWTF volunteers and partners,
and your committee's efforts. Together, we spend more than $224
million on conservation projects, helping landowners, producers
and wildlife. Most important for NWTF in the next farm bill is
an increased focus on forest management within the conservation
programs. Our forests supply more than 50 percent of the
freshwater flow for the lower 48 states. NWTF's greatest
frustration regarding forestry conservation programs is with
the Forest Land Enhancement Program. FLEP is a well intentioned
program that this committee created, yet its funding was
diverted to other uses despite strong support. One example
where this program could help. NWTF's Operation Oak Program
with funding support from Senators Lincoln and Chambliss, NWTF
provided over 15,000 native oak seedlings to private landowners
in Arkansas last year, impacting over 25,000 acres of wildlife.
If this program had been funded as authorized, we could
have done 50 times this amount of work. The forest--excuse me,
the Forest Stewardship Program is one of the best programs to
help forest landowners. Through this program, natural resource
professionals has developed more than 260,000 management plans,
improving almost 30 million acres of land. The EQIP program
promotes agriculture production and environmental quality as
compatible. In Missouri, approximately $1 million is spent
annually on forestry and wildlife practices through EQIP.
However, only 1 percent of EQIP's $1.1 billion is spent on
forest management, and only about 5 percent of funds are for
wildlife. The NWTF recommends at least minimal increases in
EQIP funding and more targeting of funds to wildlife activities
in our forests.
Finally, we recommend that EQIP require more contribution
agreements to allow NGO's to assist private landowners outside
the cumbersome technical service provider process. The CRP has
an excellent track record of providing landscape level
conservation of soil, water and wildlife habitat. In Missouri,
about 50 percent of the accepted acres occurs within a 30
county wildlife, quail and prairie chicken priority area. Also
54,000 new acres of prairie registration and 180,000 new acres
of native grasses have been planted. We recommend requiring
more wildlife friendly plantings of CRP land such as hardwood,
long leaf pines and native grasses and forests. We also
recommend that the WHIP Program broaden the number of target
species and place more focus on long term benefits or practices
and that it is totally funded.
Hunting is an American tradition, as you well know, with
18.5 million participants that contribute over 30 billion
annually to our economy. To increase the benefit of
conservation programs, we would recommend adding additional
points to the CRP environmental benefits index for landowners
which will, of course, help open up lands to public hunting.
Thank you again for this honor and opportunity.
[The prepared statement of Mr. Hinkle can be found in the
appendix on page 133.]
The Chairman. Well, thank you, gentlemen, very much. We--
obviously, from a conservation standpoint, the greener we
become farm bill-wise, why the more compliant we become with
WTO, so a lot of folks are pushing us to expand our
conservation title. And let me just ask you, each of you, if
you will, tell me what's the No. 1 conservation program that
your folks take advantage of? What improvements could we make
to that particular portion of the program?
Mr. John. Well, I'd say, Senator, that the EQIP obviously
is primary and improvements would be greater access--more----
more dollars and greater access to the program.
The Chairman. As far as the program itself, do you think
it's working pretty good?
Mr. John. I think so. I mean, any kind of a working land
program where you can still utilize and have activity on the
ground and utilize a conservation program to help manage that,
that process, those are all good programs. But EQIP
specifically, since it already exists, is a good example of
that type of program.
The Chairman. Mr. Briggs.
Mr. Briggs. I think I would agree also, Mr. Chairman. I
think any time we can put--as we say in conservation, we put
sunlight on the ground, anytime we can put money on the ground,
I think these programs are very good and they're working, but I
think we need more opportunities to get directly to that land.
We need to reduce the red tape every place we possibly can.
For example, in some of the programs, we have to have an
engineer come out onsite to approve a project. There's a big
backlog with that program. So it's not what the problem--it's
not whether the project is good, it's the problem in getting
the money on the ground to effectively be used.
The Chairman. Mr. John, during the last farm bill debate,
there was considerable discussion on competition in the
livestock marketplace. What effect would--you talked a little
bit about this but I want you to expand on it a little, what
effect would bans on packer ownership of cattle and forward
contracting and mandatory country of origin labels have----
labeling have on livestock producers?
Mr. John. Well, it's our opinion and my opinion that those
are almost non-competitive and non-market access type issues.
We believe strongly that producers--progressive producers
today are utilizing all of those tools as a way to either do a
better job of risk management, plan for expenses, or to
actually capture added value from their production. So we
believe strongly that you have to have access and the market
needs to be open and free, and free enterprise needs to take
place and voluntary programs tend to offer those opportunities.
And specifically, when you mentioned COOL, in the last farm
bill, the language is what we're so violently opposed to. It
just didn't create its desired effect. It singled out one basic
enterprise within our whole industry and didn't share that
access equally, not only amongst our own species, but it didn't
put that same burden of cost on our protein competitors that
are sitting at this table, so there were a lot of things wrong
with the language of that bill. But what a voluntary country of
origin labeling allows for producers to differentiate, and if
you can differentiate, then you can capture value. And so we
would--we would--just to reiterate, we're--we don't think we
ought to be restricting market options, we think we ought to be
opening more market options and allow producers the opportunity
to take advantage of those programs.
The Chairman. We have had a difficult time getting----
bringing to a conclusion the reauthorization of the mandatory
price reporting. How important is that to your industry from
your standpoint?
Mr. John. I hope you continue to be successful. It's a----
in our view, it's a bad law, Mr. Chairman, and we sure don't
want it to come to the light of day. Again, having said that, a
voluntary country of origin labeling program that rewards a
producer for meeting some requirement that one of our--one
level of our consumers has, is viewed as valuable. It's very
important, and so we would highly encourage the ability of
producers to participate on a voluntary level if a retailer or
a food service entity or somebody determined that there was a
value--an added value for that product and label them.
The Chairman. I was asking about mandatory price reporting.
Mr. John. Oh, I'm sorry. I'm sorry. I get so--I'm tired of
dealing with the COOL.
[Laughter.]
The Chairman. Somehow I got that message.
Mr. John. We would be in favor of mandatory price reporting
and expanding on it. I think that a transparent open market is
the best for all producers. So we think it needs to be funded
and needs to be completed, and the sooner you can get that done
and the sooner we can move forward, the better.
The Chairman. You know, we, from a legislative perspective,
or a policymaker perspective, we tend to criticize USDA, as
well as other Federal agencies, more often than we pat them on
the back, but I have been very strong in commending USDA, but I
want to also commend the cattle industry for the way that this
BSE issue has been handled. I think after the first initial
case was found, from the time we found the last one, we haven't
seen a blip there and it was handled very professionally by
those in the industry, as well as USDA, and that's what
frustrates me about dealing with the Japanese and some of these
other folks with respect to reopening their markets. But just
so you will know, and you can pass on to your fellow cattle
producers, I think we're very close to resolving this issue
again, and then hopefully we can see the reopening of some
markets soon. And I will say to you, too, Mr. Briggs,
Ambassador Schwab has been in Russia for the last couple of
days, and a part of that has been dealing with the Russians
relative to their accession into the WTO. Two major sticking
points are intellectual property issues plus the sanitary----
bio-sanitary issues that are important to the poultry industry.
And as you know, my state has been a big poultry producing
state, as is Senator Lincoln's and Senator Talent's. And
there's been a lot of frustration. I had a conversation with
her the other day before she left just to make sure that before
any agreement was struck, that there had to be an awful lot of
concessions by the Russians on that particular issue because we
just can't continue down that track of trying to improve our
trade relationship with countries and yet at the same time for
them to have the ability to arbitrarily cutoff that trade for--
on the basis of non-scientific supported issues. So we're
working very hard to try to see if we can't clean up that
particular issue before we wind up those negotiations with the
Russians.
Senator Talent.
Senator Talent. Thank you, Mr. Chairman. Mr. Chairman, I
just want to note that we haven't had anybody from the Missouri
Farm Bureau here and that's because they have a board meeting
that's occupying all the top level people. Otherwise I'm
certain that we would have had probably a witness and certainly
someone in the audience. And they have been usually helpful to
me and Kit as we think about the next farm bill, and I wanted
to mention that.
We covered, Mr. Chairman, a lot of the ground. Let me just
ask Mike John about animal ID. It's a voluntary program and I
certainly support it as such. Tell me where you're at in the
process, how many producers have voluntarily enrolled and what
you see as the potential benefits and what concerns, if
anything, you have?
Mr. John. How much time do we have?
[Laughter.]
Senator Talent. Thirty seconds. No, take as much as you
want.
Mr. John. Thank you, Senator. I appreciate all your help
and support on this bill. I think it's been a little bit
frustrating over time to see the amount of money that's been
spent at APHIS and USDA on some kind of identification program,
and we're--we're frustratingly behind on getting premises
registered. So I'd say, on the first component of the animal ID
system, the registered premises, and I don't think we're
anywhere near where we should be on it. So what's involved with
that is probably more education and more support from the local
and national associations to get people educated and move
forward with that. As far as animal ID and participation, the
people that are participating today are doing so because there
is some market incentive to do so because there is a reason and
some value, source of name verification, added value that
they're getting. And I think you'll see that and continue the
increase at the rate it's been increasing. And I can't--I don't
think anybody can give you a viable estimate or a reliable
estimate on how many numbers that truly is. But I'd say in the
state of Missouri, it could be as high as 10 or 15 percent of
the producers who have actually participated in some
identification program. And the other issue always comes down
to voluntary or mandatory and, again, NCBA's position would be
that, at least initially, it needs to be a market driven, and
to do so then it has to be voluntary. And we also believe that
the data should be held in private hands so that it isn't
something that could be used against us in some manner.
Confidentiality is an issue.
And then you've got to weigh all that against whether it
should be for just animal health disease surveillance or for
more value added participation. And I think that's the stage
that we're at right now. There are some private solutions that
are available out there. USIO has a data base that's capable of
tracking animal movements. But until we get premises
registered, until we have the ability to track animals through
auction markets at the speed of commerce and actually capture
those transactions at some reasonable rate of expense and
effort, it's going to be hard to go down the road where you
have either mandatory or voluntary participation. We're moving
forward. We're doing everything we can to get people interested
and involved. And I think the retail food service and packing
industry are putting quite a bit of pressure on the industry to
start coming through on that. We'll have those market
opportunities.
Senator Talent. That's all I have, Mr. Chairman, except to
add that I've sure appreciated their comments about CIRCLA not
having been intended to cover animal agriculture and I think we
all feel that way and we're going to work to try and get that
resolved.
The Chairman. Senator Lincoln.
Senator Lincoln. Thank you, Mr. Chairman. Mr. Johns, just a
follow up with your animal ID, we talked an awful lot with----
all across the gambit of producers and agricultural commodities
and other things, the input costs that are soaring for all of
our--all of agriculture. In the terms of the ID understanding
that--I don't know from my experience whether it's with animal
disease or whether it's plant disease or what have you, if you
don't eradicate most of it, or all it, you've got a real
problem out there. What does--since it's a self-funded program,
is that correct?
Mr. John. Yes, ma'am.
Senator Lincoln. You put--how much is--are there---- how
much government dollars go into animal ID? Is there any Federal
funding for it?
Mr. John. There was--there's been about 84 million dollars
spent up to the end of this budget year, and----
Senator Lincoln. From the Federal Government?
Mr. John. Yes, ma'am. But----
Senator Lincoln. I guess my question is, is what kind of
handicap does that put on your smaller members, or your smaller
producers, your smaller cattlemen, cattle operations. But, you
know, are you seeing an increase cost of that ID program? Which
it sounds right to me, was it--I guess it was started in
January, is that right? From your testimony, you were saying?
The animal identification?
Mr. John. Right.
Senator Lincoln. But, I mean, what--what kind of a
disadvantage does that put on operators.
Mr. John. I actually don't think it is a disadvantage. In a
voluntary system, they--they--actually the smaller producers
being--being more than the large producers. There's a net
benefit that is probably greater for small producers who don't
have market access opportunity of the larger producers who have
large truckload quantities and contract titles. Most of the ID
process is on a per head basis, whether it's ear tags or data
base management, so if you've got--if the cost is $5.00 a head
and you've got one animal, it's $5. If you have 10 animals,
it's $50.00. It's generally on a per head basis. So I don't
really see it being discriminatory.
Senator Lincoln. Unless it's mandatory.
Mr. John. Exactly.
Senator Lincoln. OK. Mr. Hinkle, welcome. Thank you so much
for being here and----
Mr. Hinkle. Thank you.
Senator Lincoln [continuing]. Representing the hunters of
Arkansas.
Particularly the turkey hunters. But as a conservationist,
do we know--or, in most instances, are conservationists--our
best conservationists are our Ag producers, Ag farmers who
truly do have a tremendous insight about the land. Just a
couple of questions. You mentioned the TSP, the technical
service providers, you're--you referenced a need to do a better
job of involving third party technical service providers, and I
was wondering if you might elaborate on the specific concerns
in that area? What are the main obstacles? How can we as a
committee insure that the technical service providers are
better utilized to help meet conservation goals, and can the
NGO's that you mentioned be a possible third party person?
Mr. Hinkle. Possibly. I think I touched on it briefly just
a minute ago, Senator. In many cases, we like the result.
It's a good program. We like the final answer. We just
don't like everything we have to do to get there. It's--it
takes a lot of time. It takes a lot of red tape. And when
you're---- when you're working with a private landowner, when
you're working with a person out there who would like to try to
get all the benefit that they can for the resource, the more
you boggle them down with red tape, the more they're going to
get discouraged. I think that's the point that we would like to
make today, is that we're not arguing that--at all that there's
anything wrong with the program. It's just that it takes too
long to put the dollar into the ground.
Senator Lincoln. Right. Well, I think that's the practice
of the forestry industry in the Arkansas that's really done
well in terms of including landowners and everybody there, so
we'll keep working at that.
You also--I think you're certainly well aware of the FSA
and how it works closely with the NRCS to administer some of
the conservation programs, the CRP and several others. To
facilitate that, many of our NRCS officers are collocated with
the county FSA offices, and you know, we keep talking about e-
government and how easy it's going to make people's lives. That
is, if they know how to use it or they have access to it. But
most farmers, I think, appreciate and really depend on hands-on
existence from these administrative agencies to implement what
can often be very complex on-farm conservation practices,
whether they've got to meet certain NRCS goals and other things
like that. If--if that is the case, in your view, what would be
the impact on our conservation goals if the FSA offices across
the country are consolidated and closed as has been called for
in the USDA's FSA tomorrow proposal? Cutting it down.
Mr. Hinkle. Well, of course it's a--basically from the NWTS
standpoint, it's a convenience standpoint for us. We might have
a regional biologist or a person out there in the field that
might go to a field office that would be 50 miles away instead
of 20 miles away. That's some concern, but it's not like all
the different landowners having to go 50 miles away. So from
our particular viewpoint, it probably doesn't impact us near as
much as it does the farmer and the landowner.
Senator Lincoln. But that's the person we've got to get on
board?
Mr. Hinkle. Absolutely.
Senator Lincoln. If we're going to see the product and the
response out of conservation.
Mr. Hinkle. I'm sure there's probably some room for some
marrying, some tightening of some of these offices, but the
more you restrict the public's accessibility to that process,
the more red tape you have.
Senator Lincoln. Well, I know as--as--your position on game
and fish, you referenced WRP, a number of wetlands reserve
program is very popular in Arkansas. I think you've rated it
first in enrolled acres nationwide. And but we also had the
highest number of unfunded applications. I guess just maybe in
your viewpoint, from a--you know, a Wabat Commission and
others, is it merely a funding issue or do you think that
there's the same type of changes needed to address backlog. In
other words, red tape and----
Mr. Hinkle. The same--same kind of problems. We do not
believe it's a funding issue.
Senator Lincoln [continuing]. Whistles for wetlands. We'd
like to see a little more funding just because we--we don't
want to take it all in Arkansas, we want to share it with other
states.
But we appreciate you gentlemen being here and thank you so
much for your input.
Mr. Hinkle. Thank you.
The Chairman. Gentlemen, again let me just echo that.
Thank you very much for your valuable testimony and taking
your time to come be with us today, and we look forward to
continuing to dialog with each of you as we move through this
process.
I want to encourage anyone who is interested in submitting
a written statement for the record to visit the committee's
website at agriculture.senate.gov for details. We'll accept
written statements up to five business days after this hearing.
With that, we thank you for your interest in agriculture
policy and this field hearing will now be adjourned.
[Whereupon, at 12:22 PM the hearing was adjourned]
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A P P E N D I X
July 17, 2006
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July 17, 2006
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