[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

AGRICULTURAL PROGRAM AUDIT

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

HEARINGS

BEFORE THE

SUBCOMMITTEES ON:
GENERAL FARM COMMODITIES
AND RISK MANAGEMENT;

CONSERVATION, ENERGY, AND FORESTRY;

NUTRITION AND HORTICULTURE;

RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND FOREIGN AGRICULTURE;

DEPARTMENT OPERATIONS, OVERSIGHT, AND CREDIT;

AND

LIVESTOCK, DAIRY, AND POULTRY

OF THE

COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

----------

JUNE 24;
JULY 7, 13, 14, 20, 21, 27, 28;
SEPTEMBER 8, 13, 2011

----------

Serial No. 112-20

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

AGRICULTURAL PROGRAM AUDIT

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

HEARINGS

BEFORE THE

SUBCOMMITTEES ON:
GENERAL FARM COMMODITIES
AND RISK MANAGEMENT;

CONSERVATION, ENERGY, AND FORESTRY;

NUTRITION AND HORTICULTURE;

RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND FOREIGN AGRICULTURE;

DEPARTMENT OPERATIONS, OVERSIGHT, AND CREDIT;

AND

LIVESTOCK, DAIRY, AND POULTRY

OF THE

COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

JUNE 24;
JULY 7, 13, 14, 20, 21, 27, 28;
SEPTEMBER 8, 13, 2011

__________

Serial No. 112-20

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

----------
U.S. GOVERNMENT PRINTING OFFICE

68-336 PDF WASHINGTON : 2012

For sale by the Superintendent of Documents, U.S. Government Printing
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Washington, DC 20402-0001

COMMITTEE ON AGRICULTURE

FRANK D. LUCAS, Oklahoma, Chairman

BOB GOODLATTE, Virginia, COLLIN C. PETERSON, Minnesota,
Vice Chairman Ranking Minority Member
TIMOTHY V. JOHNSON, Illinois TIM HOLDEN, Pennsylvania
STEVE KING, Iowa MIKE McINTYRE, North Carolina
RANDY NEUGEBAUER, Texas LEONARD L. BOSWELL, Iowa
K. MICHAEL CONAWAY, Texas JOE BACA, California
JEFF FORTENBERRY, Nebraska DENNIS A. CARDOZA, California
JEAN SCHMIDT, Ohio DAVID SCOTT, Georgia
GLENN THOMPSON, Pennsylvania HENRY CUELLAR, Texas
THOMAS J. ROONEY, Florida JIM COSTA, California
MARLIN A. STUTZMAN, Indiana TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio KURT SCHRADER, Oregon
AUSTIN SCOTT, Georgia LARRY KISSELL, North Carolina
SCOTT R. TIPTON, Colorado WILLIAM L. OWENS, New York
STEVE SOUTHERLAND II, Florida CHELLIE PINGREE, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas JOE COURTNEY, Connecticut
MARTHA ROBY, Alabama PETER WELCH, Vermont
TIM HUELSKAMP, Kansas MARCIA L. FUDGE, Ohio
SCOTT DesJARLAIS, Tennessee GREGORIO KILILI CAMACHO SABLAN,
RENEE L. ELLMERS, North Carolina Northern Mariana Islands
CHRISTOPHER P. GIBSON, New York TERRI A. SEWELL, Alabama
RANDY HULTGREN, Illinois JAMES P. McGOVERN, Massachusetts
VICKY HARTZLER, Missouri
ROBERT T. SCHILLING, Illinois
REID J. RIBBLE, Wisconsin
KRISTI L. NOEM, South Dakota

______

Professional Staff

Nicole Scott, Staff Director

Kevin J. Kramp, Chief Counsel

Tamara Hinton, Communications Director

Robert L. Larew, Minority Staff Director

(ii)

Subcommittee on General Farm Commodities and Risk Management

K. MICHAEL CONAWAY, Texas, Chairman

STEVE KING, Iowa LEONARD L. BOSWELL, Iowa, Ranking
RANDY NEUGEBAUER, Texas Minority Member
JEAN SCHMIDT, Ohio MIKE McINTYRE, North Carolina
BOB GIBBS, Ohio TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia LARRY KISSELL, North Carolina
ERIC A. ``RICK'' CRAWFORD, Arkansas JAMES P. McGOVERN, Massachusetts
MARTHA ROBY, Alabama DENNIS A. CARDOZA, California
TIM HUELSKAMP, Kansas DAVID SCOTT, Georgia
RENEE L. ELLMERS, North Carolina JOE COURTNEY, Connecticut
CHRISTOPHER P. GIBSON, New York PETER WELCH, Vermont
RANDY HULTGREN, Illinois TERRI A. SEWELL, Alabama
VICKY HARTZLER, Missouri
ROBERT T. SCHILLING, Illinois

Matt Schertz, Subcommittee Staff Director

______

Subcommittee on Conservation, Energy, and Forestry

GLENN THOMPSON, Pennsylvania, Chairman

BOB GOODLATTE, Virginia TIM HOLDEN, Pennsylvania, Ranking
MARLIN A. STUTZMAN, Indiana Minority Member
BOB GIBBS, Ohio KURT SCHRADER, Oregon
SCOTT R. TIPTON, Colorado WILLIAM L. OWENS, New York
STEVE SOUTHERLAND II, Florida MIKE McINTYRE, North Carolina
MARTHA ROBY, Alabama JIM COSTA, California
TIM HUELSKAMP, Kansas TIMOTHY J. WALZ, Minnesota
RANDY HULTGREN, Illinois CHELLIE PINGREE, Maine
REID J. RIBBLE, Wisconsin MARCIA L. FUDGE, Ohio
KRISTI L. NOEM, South Dakota GREGORIO KILILI CAMACHO SABLAN,
Northern Mariana Islands

Brent Blevins, Subcommittee Staff Director

______

Subcommittee on Nutrition and Horticulture

JEAN SCHMIDT, Ohio, Chairwoman

STEVE KING, Iowa JOE BACA, California, Ranking
THOMAS J. ROONEY, Florida Minority Member
STEVE SOUTHERLAND II, Florida CHELLIE PINGREE, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas GREGORIO KILILI CAMACHO SABLAN,
Northern Mariana Islands

Matt Perin, Subcommittee Staff Director

(iii)
?

Subcommittee on Rural Development, Research, Biotechnology, and Foreign
Agriculture

TIMOTHY V. JOHNSON, Illinois, Chairman

GLENN THOMPSON, Pennsylvania JIM COSTA, California, Ranking
MARLIN A. STUTZMAN, Indiana Minority Member
AUSTIN SCOTT, Georgia HENRY CUELLAR, Texas
RANDY HULTGREN, Illinois PETER WELCH, Vermont
VICKY HARTZLER, Missouri TERRI A. SEWELL, Alabama
ROBERT T. SCHILLING, Illinois LARRY KISSELL, North Carolina

Mike Dunlap, Subcommittee Staff Director

______

Subcommittee on Department Operations, Oversight, and Credit

JEFF FORTENBERRY, Nebraska, Chairman

TIMOTHY V. JOHNSON, Illinois MARCIA L. FUDGE, Ohio, Ranking
STEVE KING, Iowa Minority Member
ERIC A. ``RICK'' CRAWFORD, Arkansas JAMES P. McGOVERN, Massachusetts
KRISTI L. NOEM, South Dakota JOE BACA, California

Brandon Lipps, Subcommittee Staff Director

______

Subcommittee on Livestock, Dairy, and Poultry

THOMAS J. ROONEY, Florida, Chairman

BOB GOODLATTE, Virginia DENNIS A. CARDOZA, California,
STEVE KING, Iowa Ranking Minority Member
RANDY NEUGEBAUER, Texas DAVID SCOTT, Georgia
K. MICHAEL CONAWAY, Texas JOE COURTNEY, Connecticut
TIM HUELSKAMP, Kansas TIM HOLDEN, Pennsylvania
SCOTT DesJARLAIS, Tennessee LEONARD L. BOSWELL, Iowa
CHRISTOPHER P. GIBSON, New York JOE BACA, California
REID J. RIBBLE, Wisconsin KURT SCHRADER, Oregon
KRISTI L. NOEM, South Dakota WILLIAM L. OWENS, New York

Michelle Weber, Subcommittee Staff Director

(iv)

C O N T E N T S

----------
Page

Subcommittee on General Farm Commodities and Risk Management, Friday,
June 24, 2011

Boswell, Hon. Leonard L., a Representative in Congress from Iowa,
opening statement.............................................. 4
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 1
Prepared statement........................................... 3
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 5
Prepared statement........................................... 6

Witness

Murphy, William J., Administrator, Risk Management Agency, U.S.
Department of Agriculture, Washington, D.C..................... 7
Prepared statement........................................... 9
Supplementary information.................................... 35
Questionnaire................................................ 37

Subcommittee on Conservation, Energy, and Forestry, Thursday, July 07,
2011

Holden, Hon. Tim, a Representative in Congress from Pennsylvania,
opening statement.............................................. 47
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 48
Prepared statement........................................... 49
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 45
Prepared statement........................................... 46

Witnesses

Nelson, Bruce, Administrator, Farm Service Agency, U.S.
Department of Agriculture, Washington, D.C..................... 50
Prepared statement........................................... 51
Submitted questions.......................................... 99
White, Dave, Chief, Natural Resources Conservation Services, U.S.
Department of Agriculture, Washington, D.C..................... 55
Prepared statement........................................... 60
Submitted questions.......................................... 103

Submitted Material

Huntley, Mark G., President, Irrigation Association, submitted
letter......................................................... 97
U.S. Department of Agriculture, questionnaire.................... 112

Subcommittee on Nutrition and Horticulture, Thursday, July 07, 2011

Baca, Hon. Joe, a Representative in Congress from California,
opening statement.............................................. 198
Prepared statement........................................... 199
Schmidt, Hon. Jean, a Representative in Congress from Ohio,
opening statement.............................................. 195
Prepared statement........................................... 197
Southerland II, Hon. Steve, a Representative in Congress from
Florida, prepared statement.................................... 200

Witnesses

Pegg, Rayne, Administrator, Agricultural Marketing Service, U.S.
Department of Agriculture, Washington, D.C..................... 201
Joint prepared statement..................................... 204
Bech, Rebecca, Deputy Administrator for Plant Protection and
Quarantine, Animal and Plant Health Inspection Service, U.S.
Department of Agriculture, Washington, D.C..................... 203
Joint prepared statement..................................... 204
Supplementary material....................................... 225

Submitted Material

U.S. Department of Agriculture, questionnaire.................... 234

Subcommittee on Rural Development, Research, Biotechnology, and Foreign
Agriculture, Thursday, July 13, 2011

Costa, Hon. Jim, a Representative in Congress from California,
opening statement.............................................. 265
Johnson, Hon. Timothy V., a Representative in Congress from
Illinois, opening statement.................................... 263
Prepared statement........................................... 264

Witnesses

Heinen, Suzanne, Acting Administrator, Foreign Agricultural
Service, U.S. Department of Agriculture, Washington, D.C....... 267
Prepared statement........................................... 268
Supplementary material....................................... 297
Submitted questions.......................................... 298
Questionnaire................................................ 304
Lindborg, Nancy, Assistant Administrator, Bureau for Democracy,
Conflict and Humanitarian Assistance, U.S. Agency for
International Development, Washington, D.C..................... 275
Prepared statement........................................... 277
Supplementary material....................................... 297
Submitted questions.......................................... 298
Questionnaire................................................ 345

Subcommittee on Department Operations, Oversight, and Credit, Thursday,
July 14, 2011

Fortenberry, Hon. Jeff, a Representative in Congress from
Nebraska, opening statement.................................... 441
Prepared statement........................................... 442
Fudge, Hon. Marcia L., a Representative in Congress from Ohio,
opening statement.............................................. 443

Witness

Nelson, Bruce, Administrator, Farm Service Agency, U.S.
Department of Agriculture, Washington, D.C.; accompanied by Jim
Radintz, Assistant Deputy Administrator, FSA, USDA............. 444
Prepared statement........................................... 445
Supplementary material....................................... 459
Submitted questions.......................................... 464
Questionnaire................................................ 464

Subcommittee on Conservation, Energy, and Forestry, Wednesday, July 20,
2011

Fudge, Hon. Marcia L., a Representative in Congress from Ohio,
prepared statement............................................. 488
Holden, Hon. Tim, a Representative in Congress from Pennsylvania,
opening statement.............................................. 487
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 485
Prepared statement........................................... 486
Submitted article............................................ 529

Witnesses

Tidwell, Thomas, Chief, U.S. Forest Service, U.S. Department of
Agriculture, Washington, D.C................................... 489
Prepared statement........................................... 492
Canales, Judy, Administrator, Rural Business-Cooperative Service,
U.S. Department of Agriculture, Washington, D.C................ 497
Joint prepared statement..................................... 501
Garcia, Juan, Deputy Administrator, Farm Service Agency, U.S.
Department of Agriculture, Washington, D.C..................... 499
Joint prepared statement..................................... 501

Submitted Material

U.S. Department of Agriculture, response to submitted questions.. 530
U.S. Department of Agriculture:
Forestry Questionnaire....................................... 556
Energy Questionnaire......................................... 584

Subcommittee on Nutrition and Horticulture, Thursday, July 21, 2011

Baca, Hon. Joe, a Representative in Congress from California,
opening statement.............................................. 620
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 621
Schmidt, Hon. Jean, a Representative in Congress from Ohio,
opening statement.............................................. 617
Prepared statement........................................... 619

Witness

Rowe, Audrey, Administrator, Food and Nutrition Service, U.S.
Department of Agriculture, Washington, D.C..................... 622
Prepared statement........................................... 625
Submitted questions.......................................... 661
Questionnaire................................................ 663

Submitted Material

Davis, Lisa, Vice President of Public Policy, Feeding America,
submitted statement............................................ 655
Stone, Sam, Vice President, Government Relations, Dairy Farmers
of America, Inc., submitted letter and statement............... 659

Subcommittee on General Farm Commodities and Risk Management,
Wednesday, July 27, 2011

Boswell, Hon. Leonard L., a Representative in Congress from Iowa,
opening statement.............................................. 693
Prepared statement........................................... 695
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 689
Prepared statement........................................... 689
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 690
Prepared statement........................................... 692
McGovern, Hon. James P., a Representative in Congress from
Massachusetts, prepared statement.............................. 697
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, prepared statement.................................. 696

Witness

Nelson, Bruce, Administrator, Farm Service Agency, U.S.
Department of Agriculture, Washington, D.C.; accompanied by
Juan M. Garcia, Acting Deputy Administrator for Farm Programs,
FSA, USDA...................................................... 698
Prepared statement........................................... 699
Submitted questions.......................................... 727
Questionnaire................................................ 727

Subcommittee on Rural Development, Research, Biotechnology, and Foreign
Agriculture, Thursday, July 28, 2011

Costa, Hon. Jim, a Representative in Congress from California,
opening statement.............................................. 791
Johnson, Hon. Timothy V., a Representative in Congress from
Illinois, opening statement.................................... 789
Prepared statement........................................... 790

Witnesses

Knipling, Dr. Edward B., Administrator, Agricultural Research
Service, U.S. Department of Agriculture, Washington, D.C....... 793
Prepared statement........................................... 795
Questionnaire................................................ 832
Jacobs-Young, Ph.D., Chavonda, Acting Director, National
Institute of Food and Agriculture, U.S. Department of
Agriculture, Washington, D.C................................... 800
Prepared statement........................................... 801
Questionnaire................................................ 879
Clark, Dr. Cynthia, Administrator, National Agricultural
Statistics Service, U.S. Department of Agriculture, Washington,
D.C............................................................ 804
Prepared statement........................................... 806
Questionnaire................................................ 929
Unnevehr, Ph.D., Laurian J., Acting Administrator, Economic
Research Service, U.S. Department of Agriculture, Washington,
D.C............................................................ 809
Prepared statement........................................... 810
Questionnaire................................................ 935

Submitted Material

Biotechnology Industry Organization, submitted statement......... 826
Van Arsdall, R. Thomas, Executive Director, National Coalition
for Food and Agricultural Research, submitted statement........ 823
U.S. Department of Agriculture, response to submitted questions.. 828

Subcommittee on Livestock, Dairy, and Poultry, and Foreign Agriculture,
Thursday, September 08, 2011

Baca, Hon. Joe, a Representative in Congress from California,
prepared statement............................................. 944
Cardoza, Hon. Dennis A., a Representative in Congress from
California, opening statement.................................. 942
Prepared statement........................................... 943
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, prepared statement.................................. 943
Rooney, Hon. Thomas J., a Representative in Congress from
Florida, opening statement..................................... 941
Prepared statement........................................... 942

Witnesses

Garcia, Juan M., Acting Deputy Administrator for Farm Programs,
Farm Service Agency, U.S. Department of Agriculture,
Washington, D.C.; accompanied by Larry Salathe, Ph.D., Senior
Economist, Office of the Chief Economist, USDA................. 944
Prepared statement........................................... 946
Submitted questions.......................................... 973
Questionnaire................................................ 997
Coale, Dana, Deputy Administrator for Dairy Programs,
Agricultural Marketing Service, U.S. Department of Agriculture,
Washington, D.C.; accompanied by Larry Salathe, Ph.D., Senior
Economist, Office of the Chief Economist, USDA................. 949
Prepared statement........................................... 950
Submitted questions.......................................... 973
Questionnaire................................................ 1011

Submitted Material

National Milk Producers Federation, submitted report............. 974
Supplementary material submitted by the USDA..................... 971

Subcommittee on Rural Development, Research, Biotechnology, and Foreign
Agriculture, Tuesday, September 13, 2011

Costa, Hon. Jim, a Representative in Congress from California,
opening statement.............................................. 1021
Johnson, Hon. Timothy V., a Representative in Congress from
Illinois, opening statement.................................... 1019
Prepared statement........................................... 1020

Witnesses

Adelstein, Hon. Jonathan S., Administrator, Rural Utilities
Service, U.S. Department of Agriculture, Washington, D.C....... 1023
Prepared statement........................................... 1025
Questionnaire................................................ 1073
Canales, Judith A., Administrator, Rural Business-Cooperative
Service, U.S. Department of Agriculture, Washington, D.C....... 1026
Prepared statement........................................... 1028
Supplementary material....................................... 1055
Submitted report............................................. 1056
Questionnaire................................................ 1101
Trevino, Tammye H., Administrator, Rural Housing Service, U.S.
Department of Agriculture, Washington, D.C..................... 1032
Prepared statement........................................... 1034
Questionnaire................................................ 1117

Submitted Questions

U.S. Department of Agriculture, response to submitted questions.. 1065

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF THE FEDERAL CROP INSURANCE PROGRAM)

----------

FRIDAY, JUNE 24, 2011

Subcommittee on General Farm Commodities
and Risk Management,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:02 a.m., in
Room 1300 of the Longworth House Office Building, Hon. K.
Michael Conaway [Chairman of the Subcommittee] presiding.
Members present: Representatives Conaway, Neugebauer,
Schmidt, Austin Scott of Georgia, Crawford, Roby, Huelskamp,
Gibson, Hultgren, Hartzler, Schilling, Stutzman, Lucas (ex
officio), Boswell, McIntyre, Walz, Kissell, David Scott of
Georgia, Courtney, and Peterson (ex officio).
Staff present: Tamara Hinton, Kevin Kramp, Matt Schertz,
Pelham Straughn, Suzanne Watson, Bart Fischer, Liz Friedlander,
Clark Ogilvie, Anne Simmons, John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE
IN CONGRESS FROM TEXAS

The Chairman. We will call the hearing to order. This
hearing of the Subcommittee on General Farm Commodities and
Risk Management entitled, Agricultural Program Audit:
Examination of Federal Crop Insurance Programs, will come to
order. We are pleased to have before us today the Administrator
of the Risk Management Agency Bill Murphy. It is appropriate
that our first farm bill audit hearing focuses on the Federal
Crop Insurance program, because crop insurance has evolved over
73 years to become a cornerstone of U.S. farm policy. It is as
important now as ever. Farmers across the country are dealing
with wild fires, droughts, and I am told, extra water in
Minnesota, floods. It is also important to observe why the
Federal Government is involved in crop insurance. That is
because without Federal involvement, America's farmers quite
simply would not have crop insurance. Without crop insurance,
lenders would not likely make loans to producers. After all,
producers are borrowing more money in a single year than many
Americans borrow in a lifetime. So if there is ever a role for
Federal involvement in what would ordinarily be a private
market activity, this is a prime example.
Still, as essential that Federal crop insurance is to most
producers, it has been a long road to get to where we are, and
we have not yet reached our final destination. Three events
helped farm crop insurance become what it is today. First, 100
percent private sector delivery through a strong agent
workforce; second, the 2000 reform bill that increased producer
access to high levels of coverage at more affordable prices;
and third, the approval of revenue products that help producers
cope with production losses and better market their crops,
while dealing with price volatility. This last improvement was
also a private sector innovation.
With these innovations, participation has more than doubled
over the past 20 years, and total liabilities protected has
increased over 600 percent, reaching an expected total of over
$100 billion in 2011. We have witnessed an increase in risk
management tools available to producers, most notably the
revenue products now on the market.
Despite these successes, there are areas where Federal crop
insurance must move forward to meet the risk management needs
of U.S. producers, and this is especially true in the current
budget climate. Federal crop insurance must be built upon, or
it will wither and die because it will fall behind producer
needs. For example, it is great that we have producers covered
at the 70 to 85 percent coverage levels, meeting deductibles
ranging from 30 down to 15 percent. These high deductibles grow
even larger when coupled with artificially low actual
production histories, or APHs, that further shrink insurable
yields. But for many producers, only low levels of coverage are
cost effective. This is true, despite the introduction of
enterprise units in the farm bill that help producers buy up
higher levels of coverage.
Unfortunately, a lot of time has already been lost. Over
the last 4 years, the Risk Management Agency has taken its
focus off the task at hand in order to implement cuts to the
Federal Crop Insurance program, first made in the 2008 Farm
Bill, roughly a $6 billion reduction. And then in the
renegotiation of the Standard Reinsurance Agreement, which
reduced CBO baseline for ag spending by another $6 billion, all
of which went to deficit reduction. While I was comfortable
with the farm bill, I was not sold on the wisdom behind the
SRA. In any case, we do not yet know the full impact of the
farm bill and SRA will have on crop insurance. This has created
great uncertainty and has preoccupied the time of RMA, and thus
agents and companies, with issues that are not the primary goal
of Federal crop insurance, which is to serve producer risk
management needs. RMA and the industry must pick up where they
left off and focus on meeting the needs of farmers and
ranchers.
In short, this public-private partnership is necessary. The
farmer must pay to play. Risk management tools under Federal
crop insurance are tailored to producer price and production
risks. Lenders require and the Federal crop insurance has
contributed to deficit reduction, and fully complies with the
WTO. This is a good deal for the farmer, the agents, the
companies creating private sector jobs, and economic activity,
and good for the taxpayer.
I look forward to hearing from Administrator Murphy on how
we can make things better.
[The prepared statement of Mr. Conaway follows:]

Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
We are pleased to have before us the Administrator of the Risk
Management Agency, Mr. Bill Murphy.
It is appropriate that our first farm bill audit hearing focuses on
Federal Crop Insurance because crop insurance has evolved over 73 years
to become a cornerstone of U.S. farm policy. It's as important now as
ever. Farmers across the country are dealing with wildfires, droughts,
and floods.
It is also important to observe why the Federal Government is
involved in crop insurance: it's because without Federal involvement
America's farmers quite simply would not have crop insurance. And
without crop insurance, lenders would likely not make loans to
producers. After all, producers are borrowing more money in a single
year than most Americans will borrow in a lifetime.
So, if there was ever a role for Federal involvement in what would
ordinarily be a private market activity, this is a prime example.
Still, as essential as Federal Crop Insurance is to most producers,
it has been a long road to get to where we are--and we have not yet
reached our final destination.
Three events helped Federal Crop Insurance become what it is today:
First, 100% private sector delivery through a strong agent workforce;
second, the 2000 reform bill that increased producer access to higher
levels of coverage at more affordable prices; and third, the approval
of revenue products that help producers cope with production losses and
better market their crops while dealing with price volatility. This
last improvement was also a private sector innovation.
With these innovations, participation has more than doubled over
the past 20 years and total liabilities protected has increased by over
600%, reaching an expected total of over $100 billion in 2011, and we
have witnessed an increase in the risk management tools available to
producers, most notably ``revenue'' products.
Despite these successes, there are areas where Federal Crop
Insurance must move forward to meet the risk management needs of U.S.
producers, and this is especially true in the current budget climate.
Federal Crop Insurance must be built upon or it will wither and die
because it will fall behind producer needs. For example, it is great
that we have producers covered at the 70% to 85% coverage levels,
meaning deductibles ranging from 30% down to 15%. These high
deductibles grow even larger when coupled with artificially low actual
production histories, or APHs, that further shrink insurable yields.
But for many producers, only low levels of coverage are cost effective.
This is true despite the introduction of ``enterprise units'' in the
farm bill that helped producer's buy-up higher levels of coverage.
Unfortunately, a lot of time has already been lost. Over the last 4
years, the Risk Management Agency has taken its focus off of the task
at hand in order to implement cuts to Federal Crop Insurance, first
made in the 2008 Farm Bill--roughly a $6 billion reduction--and then in
the renegotiation of the Standard Reinsurance Agreement, which reduced
the CBO baseline for agriculture by another $6 billion, all of which
went to deficit reduction.
While I was comfortable with the farm bill, I was not sold on the
wisdom behind the SRA. In any case, we do not yet know the full impact
the farm bill and the SRA will have on Crop Insurance. This has created
great uncertainty and has preoccupied the time of RMA, and thus agents
and companies, with issues that are not the primary goal of Federal
Crop Insurance, which is to serve producer risk management needs. RMA
and the industry must pick up where they left off and focus on meeting
the needs of our farmers and ranchers.
In short, this private-public partnership is necessary. The farmer
must pay to play. Risk management tools under Federal Crop Insurance
are tailored to producer price and production risks. Lenders require
it. And, Federal Crop Insurance has contributed to deficit reduction
and fully complies with the WTO. This is a good deal for the farmer,
the agents and the companies creating private sector jobs and economic
activity, and for the taxpayer. I look forward to hearing from
Administrator Murphy on how we can make a good thing even better.
But first I would yield to the Ranking Member of the Subcommittee,
Mr. Boswell, for any opening remarks he may have.

The Chairman. I would like to yield to the Ranking Member
of the Subcommittee, Mr. Boswell, for any comments he may make.

OPENING STATEMENT OF HON. LEONARD L. BOSWELL, A REPRESENTATIVE
IN CONGRESS FROM IOWA

Mr. Boswell. Well, thank you, Mr. Chairman, and I
appreciate you having this hearing. I certainly concur with
much of what you have just said. Pay to play, that is a pretty
good little term, and I think it rings very true. We will
probably talk about some of that.
I also would like to thank everybody for joining us here
today, as I look around the gallery and see who is here and the
interest level seems to remain high. Mr. Murphy, welcome back,
too. We have had a few conversations. It has been a little
while, so maybe this is a chance for us to catch up.
But anyway, I come from a state where we have, as you know,
92,000 farms and more than 30 million acres in production. It
sounds like we are having an interruption, doesn't it? I
understand challenges of farmers and those in agricultural
business face today. It is high risk, as you well know.
When I retired from the Army and returned home to farm, I
quickly realized that farming had greatly changed over the 20
years that I was away. Back then, I had always said that in
order to farm, a producer needs to have access to a bank and a
place to buy and sell product, and the inputs. Of course, we
have gotten much more sophisticated over the last years. I got
caught right in the farm crisis of the late 1970s, early 1980s.
After surviving it, which I did, and I also was chairing my
local place to buy and sell, the cooperative, I realized how
important a good crop insurance agent was to help me manage my
risk. I worked with my agent, sure that I was never put in the
position that I was during the 1980s farm crisis, because I had
an opportunity to do it.
I share that story because I understand the importance of
the crop insurance industry, not only in the State of Iowa, but
across the country. In 2010, 255 million acres were enrolled in
crop insurance. Sign up and buy up levels for crop insurance
have proven that farmers appreciate having additional options
to help them manage risks; however, certain regions and certain
crops are underrepresented, we have found. Looking ahead, we
need to see how we can make the program work for more
producers.
Additionally, I have to say that I am opposed to cutting
funding to the program. Budgets are tight, but tight budgets do
not mean we must jeopardize the risk management tools that we
have today, or put in question when improvements can be made in
the future.
On that note, this Committee has gone a long ways in
previous years to address sound fiscal management, and the USDA
has decreased costs through the renegotiation of the Standard
Reinsurance Agreement, SRA. I have been concerned with these
cuts and the effects this negotiation may have on the
relationship between farmers and their agents. We must
acknowledge that the crop insurance industry is a business, and
both the companies and the agents need to make a reasonable
profit in order to stay in the market.
Just yesterday, I had an unexpected conversation with a
senior agent in a small town surrounded by agriculture. I won't
name the place, but I could if we have a conversation about it.
He is concerned. It is time to start thinking about passing the
business on, and with all the questions, whether it is to
family or somebody, to keep, it is a vital part. It is as
important as having the bank and the place to buy and sell.
That agency is important in that community, is my point.
So with that in mind, at this hearing I will be submitting
a question when we get into question time to you, Mr. Murphy,
with the request for a written response on this issue. The
renegotiation of the SRA has left insurance agents in my state
and many others perplexed, worried sick, I guess, by a direct
cap in the SRA on commissions private companies are allowed to
provide. To me, this is arbitrary and neglects the principle of
a free market and the expertise and hard work of insurance
agents our farmers rely on. So I look forward to the response
and working with you to further enhance the crop insurance
industry so it provides maximum benefits to producers and
consumers alike.
One of the many farm programs we support are highly valued
crop insurance and must be structured to ensure a free
marketplace for insurers and agents across the nation. We are
making great strides to help the American farmer, and I look
forward to hearing more about the crop insurance program today.
I thank you again for your testimony, which will be an
essential means for us to continue to move forward on the next
farm bill.
So thank you, Mr. Chairman. I yield back.
The Chairman. Thank you, sir. I recognize the Chairman of
the full Committee for any comments he might have.

OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA

Mr. Lucas. Thank you, and I would like to thank the
Chairman and the Ranking Member for holding this first in a
series of audit hearings to examine programs authorized in the
farm bill.
My goal with these hearings is two-fold. First, I want the
Department to present a spending snapshot of farm programs. Our
Subcommittees will examine spending trends, confirm whether the
purposes and goals of the programs we authorize are being met
successfully. We will look for duplication within issue areas
to determine program overlap. We will also examine program
eligibility and whether those eligibility criteria meet the
needs of our constituents. We will scrutinize waste, fraud, and
abuse, and look for ways to build on the success the Department
has already achieved in this area of program integrity. In
essence, this is what I mean by an audit of farm programs.
The second purpose of these audits is educational in
nature. I think it is important that our Committee learn just
how many programs we authorize in the farm bill, and the amount
of money we dedicate in each area. I want the Members of our
Committee to have a holistic view of farm policy before we move
forward. Too often in the past, Congress has considered a
piecemeal approach to farm programs, adding layer upon layer
while not looking at the overall picture to see how these
programs interact. We are starting with comprehensive audits so
we can examine each program within the broader context of farm
policy. These audits ensure that we are operating from the same
base of knowledge. We represent states ranging from Alabama to
Oregon, and the diverse constituencies that come with that, so
we all have unique priorities for farm policy. But while our
priorities may differ, our facts cannot. So these audits give
all of us the same data to use in decision making.
Having the best available data will help us better
understand farm programs so we can navigate the tough, and I
mean tough, road ahead. I hope that today we can start a
dialogue on how to root out inefficiencies so we can continue
supporting our farmers and ranchers while spending, yes, fewer
taxpayer dollars.
It is also important for all of us to understand our
priorities from the last two farm bills. Before we move forward
with new policies, we should understand how we got to where we
are today. Some of the circumstances that shaped past farm
bills are still relevant today. Others have changed. We all
know that this farm bill will be developed under a very
different fiscal climate than the 2008 Farm Bill. The simple
truth is, we must make some difficult decisions. There are no
sacred cows, so to speak, and during these tough fiscal times,
every program, every title will be on the table. This farm bill
gives the Committee an excellent opportunity to prioritize the
programs that are working, fix the programs that are broken,
eliminate the programs that are duplicative. We will make these
determinations with the help of these audits, along with the
input from our constituents. We will start this process today
by taking a serious look at crop insurance to ensure that our
funds are utilized economically, and the program delivery is
efficient for farmers and ranchers.
As we begin the process of developing the 2012 Farm Bill, I
know the challenge of doing more with less will be foremost in
our minds. I believe that we can meet this challenge and
develop thoughtful policies to keep American agriculture
productive and competitive in the 21st century.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress
from Oklahoma
Good morning.
I'd like to thank Chairman Conaway for holding the first in a
series of audit hearings to examine programs authorized in the farm
bill.
My goal with these hearings is two-fold. First, I want the
Department to present a spending snapshot of farm programs.
Our Subcommittees will examine spending trends and confirm whether
the purpose and goals of the programs we authorize are being met
successfully.
We will look for duplication within issue areas to determine
program overlap. We will also examine program eligibility and whether
those eligibility criteria meet the needs of our constituents.
And we will scrutinize waste, fraud and abuse, and look for ways to
build on the success the Department has already achieved in this area
of program integrity. In essence, this is what I mean by an ``audit''
of farm programs.
The second purpose of these audits is educational in nature. I
think it is important for our Committee to learn just how many programs
we authorize in the farm bill and the amount of money we dedicate to
each area.
I want the Members of our Committee to have a holistic view of farm
policy before we move forward. Too often in the past, Congress has
taken a piecemeal approach to farm programs, adding layer upon layer
while not looking at the overall picture to see how these programs
interact.
We are starting with comprehensive audits so that we can examine
each program within the broader context of farm policy.
These audits ensure that we are operating from the same base of
knowledge. We represent states ranging from Alabama to Oregon--and the
diverse constituencies that come with that--so we all have unique
priorities for farm policy. But while our priorities may differ, our
facts cannot. So these audits give all of us the same data to use in
decision making.
Having the best available data will help us better understand farm
programs so that we can navigate the tough road ahead.
I hope that today, we can start a dialogue on how to root out
inefficiencies so we can continue supporting our farmers and ranchers
while spending fewer taxpayer dollars.
It is also important for all of us to understand our priorities for
the last two farm bills. Before we move forward with new policies, we
must understand how we got where we are today.
Some of the circumstances that shaped past farm bills are still
relevant today. Others have changed. We all know that this farm bill
will be developed under a very different fiscal climate than the 2008
Farm Bill.
The simple truth is that we must make some difficult decisions.
There are no ``sacred cows,'' so to speak, and during these tough
fiscal times, every program, in every title, will be on the table.
This farm bill gives the Committee an excellent opportunity to
prioritize programs that are working, fix programs that are broken, and
eliminate programs that are duplicative. We will make those
determinations with the help of these audits, along with input from our
constituents.
We will start that process today by taking a serious look at crop
insurance to ensure that our funds are utilized economically and
program delivery is efficient for our farmers and ranchers.
As we begin the process of developing the 2012 Farm Bill, I know
that the challenge of doing more with less will be foremost in our
minds.
I believe that we can meet this challenge and develop thoughtful
policies to keep American agriculture productive and competitive in the
21st century.

The Chairman. Thank you, Mr. Chairman. We have one vote,
and I thought we would just try to do a rolling vote, but it
came quicker than I thought it was going to. After--do you have
any comments, Ranking Member? Okay.
Why don't we take a quick break, run across the street,
vote, and come back? Then all of us will have access to hear
you talk, and it won't be as disruptive that way. So we will
take--the meeting will recess, subject to call of the chair.
[Recess.]
The Chairman. I have one piece of administrative duty, the
gentleman from Indiana, Mr. Stutzman, is not a Member of the
Subcommittee, but has joined us today or will join us in a
moment. I have consulted with the Ranking Member, and am
pleased to welcome him in joining in questioning of the
witness.
So at this point in time, Mr. Murphy, you have the floor
for your opening comments. Thank you for being here.

STATEMENT OF WILLIAM J. MURPHY, ADMINISTRATOR, RISK MANAGEMENT
AGENCY, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, D.C.

Mr. Murphy. Chairman Conaway, Ranking Member Boswell,
Members of the Subcommittee, as Administrator of the Risk
Management Agency, I am pleased to meet with you today to
discuss the latest developments in RMA, and the progress and
challenges of the Federal Crop Insurance Program. Along with
Secretary Vilsack's leadership, I have the goal to administer
the Federal Crop Insurance Program in a manner that provides
effective risk management services to all farmers and ranchers,
regardless of their location or the size of their operation.
The Secretary and I are aware that in today's economy, it
is important that the program be cost effective and give a fair
value for taxpayers' dollars. I am proud that I can confidently
say that we are doing just that.
Crop insurance has become an integral part of the business
life of the large majority of American farmers and ranchers.
They would find it difficult, if not impossible, to continue
without the protection provided by this part of the farm safety
net. Many lenders now require crop insurance coverage in order
to make operating loans to crop and livestock producers. Many
producers use crop insurance as collateral for loans, as well
as provide support for forward pricing their crop.
Today, over 250 million acres of farms and ranches are
covered by Federal crop insurance, for an overall participation
rate exceeding 80 percent for the major crops. The value of
insured crops is at a record high. In 1994, program liability
was less than $14 billion. This year, it will exceed $100
billion. More producers buy higher levels of insurance now, and
more specialty crop producers participate in the program than
ever before.
Our unique and successful relationship with our private
partners, 15 insurance companies, and the agents who deal
directly with farmers and ranchers is the foundation of this
program. Producers purchase crop and livestock insurance from
an insurance agency operating and living in their communities.
This relationship levers the respective strengths of the public
and private sectors. The 2011 crop year, with widespread
flooding in some areas and record drought in others, has been a
true test to the crop insurance program. My staff and I are
closely watching all developments to ensure that producers get
all the protection provided by their policies.
The preventive planning coverage available in most policies
has been of extreme importance this year in areas where
standing water and water-logged soils have prevented producers
from getting into their fields. In drought-stricken areas, the
compensation provided for reduced yields will be extremely
important in helping producers to survive until next year. In
years like this one, the value of this critical safety net is
made clear.
The $6 billion in savings credit created through the
renegotiated Standard Reinsurance Agreement in 2010 went
towards reducing the Federal deficit and supporting high
priority risk management and conservation programs. By
containing program costs, these changes also ensure the
sustainability of the crop insurance program for American
farmers and ranchers for years to come.
RMA's Comprehensive Information Management System, CIMS, is
of clear importance to producers. Working with the Farm Service
Agency, RMA began in 2007 to provide access to over 12,000
users of RMA, FSA, and crop insurance companies as the single
source of RMA and FSA program information for producers, crop
acreage, and production. The next stage of this information
sharing is now underway, and the Department's efforts with
cross functional representation from RMA, FSA, NRCS, and NASS
one-stop reporting for farmers, and standardizing programs
across the Department is our goal.
As those of you acquainted with the dairy farmers may be
aware, the Livestock Gross Margin dairy plan of insurance ran
out of funding this year. Congress makes $20 million available
a year for all livestock programs, and the popularity of a
newly-designed dairy program exhausted these funds in March,
halfway through the fiscal year. We look forward to again
funding LGM dairy in the new fiscal year.
RMA continues to make significant progress in preempting
fraud, waste, and abuse through the expanded use of data
mining. RMA, FSA, and the crop insurance companies have
preempted tens of millions of dollars of improper payments
through quality control, data mining, and other measures. RMA
is constantly identifying ways to balance competing needs to
make our product less susceptible to fraud, while seeking to
provide responsive, useful risk protection tools for farmers.
Again, thank you for the opportunity to participate in this
important hearing. I look forward to discussing the Crop
Insurance Program with you, and to responding to any questions
you may have.
[The prepared statement of Mr. Murphy follows:]

Prepared Statement of William J. Murphy, Administrator, Risk Management
Agency, U.S. Department of Agriculture, Washington, D.C.
Chairman Conaway, Ranking Member Boswell, and Committee Members, I
am pleased to meet with you today to discuss the latest developments in
the Risk Management Agency (RMA), the progress and challenges of the
Federal crop insurance program, and the status of the Standard
Reinsurance Agreement (SRA) and its benefits to the agricultural
community and the American taxpayer. My staff and I work daily to
validate the utility of current insurance products--making certain we
offer the best risk management protection possible for all of America's
farmers and ranchers. The agency, along with our fifteen approved crop
insurance companies, provide risk management tools that are compatible
with international trade commitments, create products and services that
are actuarially sound and market driven, harness the strengths of both
the public and private sectors, and reflect the diversity of the
agricultural sector.
Crop insurance is a vital part of the farm safety net and has
become an integral part of business life for a large majority of
American farmers and ranchers. They would find it difficult to continue
providing the United States and the world with an abundant supply of
food, fiber and fuel without the protection provided by this part of
the farm safety net. Many lenders now require crop insurance coverage
in order to make operating loans to crop and livestock producers, and
many producers use crop insurance as collateral for the loans.
There is a unique and successful relationship between RMA and our
private partners, the 15 approved insurance companies, and the agents
who deal directly with farmers and ranchers. Producers purchase Federal
crop or livestock insurance from insurance agents operating in their
communities, who sell the insurance on behalf of the 15 insurance
companies. This relationship leverages the respective strengths of the
public and private sectors. The insurance companies provide Federal
crop insurance under reinsurance agreements with the Federal Crop
Insurance Corporation (FCIC), administered by RMA.
The 2011 crop year, with widespread flooding in some areas
accompanied by severe drought in other areas, has been a test of the
crop insurance program. My staff and I are closely watching all
developments to insure that producers get the protection provided by
their policies. The Prevented Planting coverage available in most
policies has been of extreme importance this year in areas where
standing water or waterlogged soil prevented producers from getting
into their fields until past the time for planting. In drought stricken
areas, the compensation provided for reduced yields will be extremely
important in helping producers to survive. In years like this one, the
value of this critical safety net is made clear.
Brief History
Participation in the crop insurance program increased significantly
following changes enacted in 1994 by Congress. For example, fewer than
100 million acres of farmland were insured under the program in 1994.
Today, over 250 million acres of farm and ranch lands are covered by
Federal crop insurance, for an overall participation rate exceeding 80
percent for the major crops.
As the amount of insured acreage has increased, so too has the
liability, or value of the insurance in force. In 1994, program
liability was less than $14 billion. Industry estimates suggest 2011
program liability could exceed $100 billion. The crop insurance program
has seen sustained growth as demonstrated by the increasing proportion
of acres insured at buy up levels over the last decade. Today, over 90
percent of all policyholders purchase buy-up levels of coverage. Of
note is the significant level of participation by specialty crop
producers. The overall participation rate for specialty crop producers
is about 75 percent, which is fairly comparable to the 83 percent
participation rate for the major program crops. Important fruit, nut
and vegetable states California (71%), Florida (91%), and Washington
(68%) each score well in Federal crop insurance program participation.
This growth has been accomplished in an actuarially sound manner as
required by Congress and the program is working well. Over the last 2
decades, premiums (producer premiums added to premium subsidies) have
been sufficient to cover the indemnities paid to producers plus a
reasonable reserve, as directed by the Federal Crop Insurance Act.
In 2000, Congress enacted the Agricultural Risk Protection Act
(ARPA) that expanded the role of the private sector allowing entities
to participate in conducting research and development of new insurance
products and features. With the expansion of contracting authority, RMA
can enter into contracts for research and development of new and
innovative insurance products. Private entities may also submit
unsolicited proposals for insurance products to the FCIC Board of
Directors (Board) for approval. If approved by the Board, these
unsolicited insurance products are eligible to receive reimbursement
for research, development and maintenance costs, in addition to any
approved premium subsidies and reinsurance.
ARPA also removed restrictions on the development of insurance
products for livestock. Authority was added to allow the Board to
create an expert review panel to provide assistance to the Board and
RMA in evaluating proposed insurance products for feasibility and
actuarial soundness. Premium subsidies to farmers were increased to
encourage producers to purchase higher insurance coverage levels and to
make the insurance program more attractive to prospective producers.
Throughout all of this, RMA has implemented many innovations to keep up
with industry advances as well as customer demands.
Standard Reinsurance Agreement
On June 10, 2010, USDA released the new reinsurance agreement and
announced that $6 billion in savings were created through this action.
Two-thirds of this savings went toward paying down the Federal deficit,
and the remaining \1/3\ was used to support high priority risk
management and conservation programs. By containing program costs,
these changes also ensure the sustainability of the crop insurance
program for America's farmers and ranchers for years to come.
CIMS & ACRSI
The 2002 Farm Bill required the Secretary of Agriculture to develop
a Comprehensive Information Management System (CIMS) to be used by the
Farm Service Agency (FSA) and RMA in the farm programs they administer.
CIMS was made available for use in September 2007. It provides access
for over 12,000 users from RMA, FSA and the crop insurance companies as
a single source of RMA and FSA program information for producers, crop
acreage and production. The next stage of information sharing is now
underway with the Acreage/Crop Reporting Streamlining Initiative
(ACRSI). This is a Departmental effort with cross functional
representation from RMA, FSA, Natural Resources Conservation Service,
andNational Agricultural Statistics Service.
The objective of ACRSI is to establish a common USDA framework for
producer commodity reporting in support of USDA programs and to
establish common data standards of information used for producer
commodity reporting. ACRSI and CIMS will facilitate `one-stop'
reporting of producer information and greater data sharing of data
among government agencies. This will provide for greatly improved
integrity and accuracy of the data collected and reported to USDA. RMA
and FSA will be able to efficiently identify discrepancies, cases of
misreporting, and potential fraud, waste, and abuse, thus reducing the
potential for improper payments. Furthermore, these efforts will save
time and money for the government, producers and companies by reducing
reporting and data management burdens.
Livestock Products
ARPA authorized RMA to offer insurance products for livestock
producers and provided $20 million in funding to cover administrative
and operating (A&O) and premium subsidy costs for pilot livestock
insurance plans each fiscal year. RMA currently reinsures eight
livestock products, all of which were developed and submitted by
private parties through the authorities contained in Section 508(h) of
the Federal Crop Insurance Act. There are two basic insurance models
used to offer livestock insurance: Livestock Risk Protection (LRP) and
Livestock Gross Margin (LGM). LRP provides protection against
unexpected declines in the price of certain livestock--feeder cattle,
fed cattle, lamb, and swine. LGM provides protection to livestock
producers against unexpected increases in feed costs or unexpected
declines in prices for the insured livestock product. Gross margin is
the market value of the insured livestock product minus feed costs. As
we have noted previously, the $20 million in annual funding for all
livestock programs was exhausted in March because of the increased
popularity of LGM-Dairy. Thus, none of the livestock programs are
currently available. They will be offered again in Fiscal Year 2012
when an additional $20 million in funding becomes available.
Program Integrity and Data Mining
In conjunction with the improved quality control requirements in
the new SRA, RMA Compliance has revised its work plans to reflect a
more balanced approach between quality assurance and investigating
program abuses. In a time of declining resources and increased
responsibilities, effective internal controls provide a significant
cost-benefit compared to identifying and prosecuting program abuse
alone. RMA is reviewing company operations and internal controls to
determine the success of their efforts to address crop insurance
program vulnerability concerns.
RMA continues to make significant progress in preempting fraud,
waste and abuse through the expanded use of data mining. ARPA directed
RMA to employ data mining technologies to program compliance and
integrity efforts, and provided the funding necessary to support these
activities. ARPA also provided a role for FSA to assist RMA in further
program compliance and integrity. RMA subsequently entered into a
contract with the Center for Agribusiness Excellence (CAE) at Tarleton
State University to develop and maintain appropriate data warehousing
and data mining capabilities. Annually, CAE produces a spot-check list
of producers engaging in questionable behaviors which is provided to
FSA for further investigation. With the assistance of FSA offices, RMA
and the insurance companies conduct growing season spot checks to
ensure that claims for losses are legitimate.
These efforts have been highly successful as the cumulative cost
avoidance from data mining and related activities from 2001 through
2010 is estimated to be almost $840 million, based on our analysis of
the changes in loss experience for those people placed on the spot-
check list. In light of the success of the spot-check program, the new
SRA broadens the use of data mining to help direct company efforts at
detecting and investigating suspect behaviors. We believe the targeted
company reviews enabled by data mining will be more effective and
efficient than the random review process of previous years.
While RMA, FSA and the crop insurance companies have preempted tens
of millions of dollars of improper payments through quality controls,
data mining, and other measures, RMA is constantly identifying ways to
balance competing needs to make our products less susceptible to fraud
while seeking to provide responsive, useful risk protection to farmers.
We still have work to do and improvements to make, but we are making
good progress in our fight against waste, fraud and abuse in the
Federal crop insurance program.
Premium Rates
One of the most important considerations for the Federal crop
insurance program is the premium cost for producers. If premium rates
are too high, producers will not participate in the crop insurance
program. If premium rates are too low, actuarial performance will
deteriorate. RMA continually seeks to improve its premium rating
methodology and maintain actuarial balance. RMA recently commissioned a
comprehensive review of its rating methodology by a panel of outside
experts. A preliminary draft of the review was posted for public
comment. The final draft, as well as the response to public comments,
is available on RMA's website. The review supported RMA's overall
approach to generating premium rates based on historical loss
experience, and provided a number of recommendations for potential
improvements that RMA is pursuing. The most critical of these
recommendations is for RMA to determine if all historical losses should
be given the same weight in determining current premium rates. Work on
the reweighting of historical loss experience is currently ongoing.
Concept Proposals
The 2008 Farm Bill provided an alternative for producers and
private entities to submit to the FCIC Board, proposals for insurance
coverage for agricultural commodities not traditionally served, and to
improve current insurance coverage. Private entities are authorized to
submit Concept Proposals for plans of insurance to the Board for
approval of an advance payment of up to half of their estimated
research and development costs to assist them in developing a completed
508(h) insurance product. Completed 508(h) products receive
reimbursement of the balance of their research and development costs
and up to 4 years of maintenance expenses if approved by the Board. To
date, the Board has received 23 Concept Proposals and approved 11 for
advance payments totaling approximately $1.7 million.
Combination Policies (COMBO)
On March 30, 2010, RMA published the final rule for the Common Crop
Insurance Policy, commonly known as the COMBO policy, to be effective
for the 2011 crop year. The COMBO policy combines five plans of
insurance into a single plan of insurance. This new policy makes risk
management decisions simpler for the producer and enhances program
efficiency by reducing inconsistencies, duplication, and paperwork.
Furthermore, by combining the previous five plans of insurance into a
single plan RMA eliminated a primary source of confusion and error in
the administration of the Federal crop insurance program. Another
benefit of the COMBO policy is the use of a single rating and pricing
component so all coverage is consistent in terms of protection and
cost. Similar efforts are underway to combine RMA's area-based programs
(Group Risk Plan--GRP, and Group Risk Income Protection--GRIP) into a
single plan of insurance.
Information Technology Modernization
The Information Technology Modernization (ITM) project, RMA's
technology reengineering initiative, began in earnest in FY 2008, based
on funding received in the farm bill. Phase I was completed in FY 2010,
and included significant achievements to deploy the majority of the
actuarial tools required to generate 2011 insurance offers and provide
for validation of detailed policy data received from crop insurance
companies that is used as the basis for calculation of expense
reimbursement and risk sharing between RMA and the companies in
accordance with the SRA. Accepted data is also used for future rating
and publicly generated reports. Rollover of the 2011 crop year
actuarial data was accomplished and the first filing for the 2012 crop
year took place on April 30, 2011.
Phase II development continues and focuses on corporate reporting
providing data reporting and analysis capabilities. On-demand analysis
and standardize reporting will be available on multiple years of
actuarial, policy, and financial data. The analytical environment has
been set up and development has begun on standardized reports. ITM
Phase II also includes Regional Office Exceptions (ROE) written
agreement processing. ITM Phase II is progressing towards scheduled
operations in July 2011. Enhancements to the ITM production system have
been implemented for actuarial processes, policy processing, premium
calculations, and other Phase I capabilities.
RMA supports many information technology functions using private
contractors. The contract for IT services is generally for 5 years and
is due to expire in 2011. In January 2011, RMA competitively awarded a
new contract for IT services until 2015. Accounting and other corporate
reporting capabilities will be implemented in the new system as part of
this contract, and is scheduled to be complete at the end of the
calendar year.
Organic Crops
RMA continues to move forward in improving crop insurance coverage
for organic producers so they will have viable and effective risk
management options like many of the conventional crop programs.
Consistent with the 2008 Farm Bill, RMA contracted for research into
whether or not sufficient data exists upon which RMA could determine a
price election for organic crops, and if such data exists, to develop a
pricing methodology using that data. Also included in the contract was
research into the underwriting, risk and loss experience of organic
crops as compared with the same crops produced in the same counties
during the same crop years using nonorganic methods. Three reports have
been completed from this study.
The first report outlined research into data that exists today that
could support price elections for various organic crops. The second
report outlined a proposed methodology for development of a price
election for organic cotton, corn and soybeans. The third report
presented the results of the contractor's comparative analysis of loss
experience for organic crops and conventional crops that were produced
in the same counties during the same crop years.
RMA intends to establish dedicated price elections for organic
crops where supported by data and sound economic pricing principles.
The first of these organic price elections became available for the
2011 crop year. In addition, RMA will continue to capitalize on
improved data collection and sharing of organic production and price
data occurring throughout USDA, an initiative to better leverage the
resources of all of our agencies to address this important segment of
agriculture.
RMA will continue to evaluate the loss experience of both organic
and conventional practices to ensure that premium rating is
commensurate with the level of risk for each. This includes revising
surcharges for those areas or situations that merit such consideration.
Quality Adjustment
Another area of continued challenge to the program involves
providing coverage for reduced quality in a harvested crop. RMA
provides quality adjustment for many crops, based primarily on
standards contained in the Official United States Standards for Grain,
such as test weight, kernel damage, etc. Wheat, for example, is
eligible for quality adjustment when poor quality results in a grade
worse than U.S. No. 4. While producers and the crop insurance companies
have been generally supportive of RMA's quality adjustment provisions,
in some instances producers would like to see quality adjustment begin
when their grain quality loss is not as severe as current rules
require. Additionally, producers contend that quality adjustments in
the program do not always reflect what they are actually discounted in
the market place. This is most often heard earlier in the harvest
season when the extent of poor quality is not fully known and grain
buyers tend to have more severe discounts.
One of the challenges for RMA's organic program is to assure that
the availability of Federal crop insurance does not inappropriately
affect market dynamics, such as buyers imposing larger quality
discounts and relying on Federal crop insurance to make producers
whole. Similarly, crop insurance is not meant to provide coverage for
the marketing errors of producers or for a general deterioration in
market conditions--unless, of course, such deterioration is a covered
cause of loss. RMA continually strives to provide standard quality
discounts that apply to all producers nationwide so everyone is treated
equitably and the crop insurance program does not promote or become
subject to abusive market practices. RMA has continued to work with
grower associations and others to continually improve the effectiveness
of its quality adjustment provisions.
* * * * *
Mr. Chairman, this concludes my statement. Thank you for the
opportunity to meet with you today. We look forward to working with you
and Committee Members and will be pleased to provide whatever
assistance you may request. I would be pleased to answer any questions
you and other Members of the Committee may have.

The Chairman. Well thank you, Mr. Murphy, being under the
wire at the 5 minute mark. I appreciate that.
The chair reminds Members they will be recognized for
questioning in order of seniority of Members who were here at
the time of the start of the hearing. After that, Members will
be recognized in order of arrival. I appreciate Members
understanding.
I will now recognize myself for 5 minutes. In my opening
statement, and Mr. Boswell, in yours as well, you talked about
the importance of the private-public partnership for delivery
of crop insurance. From time to time, we hear rumors of--that
partnership may need to go just totally public, and with the
public delivery of the system. Are you and your staff committed
to this public-private partnership, because it sure looks like
it works to us.
Mr. Murphy. Yes, indeed. In fact, the Secretary reiterated
that when meeting with one of the trade groups a couple weeks
ago in his office. There is no doubt in my mind that we are
enjoying this participation level today, due to that unique
relationship with private agents and their companies.
The Chairman. All right. You mentioned the importance of
your information technology improvements. Will you be able to
finish all of that under the existing budget authorities?
Mr. Murphy. We will do the best we can, sir. It is moving
along. We are having some very good success. I am glad to see
we had it up and running. We were able to bring the COMBO
product up this year. So it is functioning. I am concerned for
the out-years. Next year, we don't have the funding anymore
that was provided in the farm bill. I am sure I will be up here
asking for additional funding for that project, but that is of
great concern to us.
The Chairman. Well, I think it is going to be important,
Mr. Murphy, that you lay that out for us specifically because
we have choices to make, and those need to be informed choices.
That information has an impact on that, and the Committee needs
to understand that.
Mr. Murphy. I would like to add that also the more complex
our programs become, we really need that IT capacity in order
to deliver these programs to farmers.
The Chairman. Well, also the impact on this budget on FSA
and their ability to deliver their side of the house is in the
same way impacted by that.
At one point in time, speaking of data mining, there were
some barriers between RMA and FSA data so that the folks at
Tarleton could not fully exploit everything available. Have
those barriers been taken down? Is there anything left that we
need to do?
Mr. Murphy. No, actually we are making a lot of progress.
There are--continues to be problems between the data between
RMA's data and FSA's. We are actually working through the SURE
Program. We are fixing a lot of that data. I think as CIMS
comes up and running, it will be extremely helpful in
identifying where we have differences between the two
programs----
The Chairman. But in terms of legal barriers?
Mr. Murphy. Oh, no, we are working through that. In fact,
FSA is just about prepared to publish their new rule, which
will provide us the flexibility we need.
The Chairman. Okay. So there is something in that regard to
fully exploit that, it benefits all of us.
Mr. Murphy. Right.
The Chairman. Can you walk us through a little bit about
how the 508(h) program is working, and maybe some examples
currently in the pipeline?
Mr. Murphy. Okay. Actually, we have three different ways
that we can develop programs. One of them is that we can go out
and contract ourselves for the development. The other way is
where the private sector actually comes into the board of
directors and presents a program. They can go the 508(h) route,
which is that they bring a fully developed program to the board
of directors for approval. Another route with the last farm
bill was the concept proposals where folks can actually come
into the board of directors, explain what they would like to
develop, and then we can get partial funding for that
development, and then it follows the 508(h) procedure after
that.
It seems we are getting new programs out in the street.
That seems to be working well to that effect. There are some
issues or some concerns being raised about some other programs
that are higher priority that should be done first, but that is
just the way the system is established. But we are working
along at it.
The Chairman. All right. The Members know that there is a
questionnaire that asks about each of the major components. You
sent yours in. I would like to go to the question on page 5,
number 10. It says Utilization (Participation) Data. If you
could walk us through that, the number of policies stayed
exactly the same for 10 years. Can you just walk across that--
those columns and help us understand what each one of them
means?
Mr. Murphy. Okay. I think--actually, I think the next chart
is much better for looking at the changes over years.
The Chairman. Well just tell us what that means. What is
the--we talked about $100 billion in coverage out there, but
that bottom line for--just says $71 billion.
Mr. Murphy. Okay, yes. Well that's actually in 2010 it was
in the $70 billion range, $78 billion I think is what it is at
right now. But with the increase in commodity prices between
2010 and 2011 is where we expect to see the increase to over
$100 billion.
The Chairman. Well, we have talked about participation, but
the number of policies has stayed dramatically the same for
that----
Mr. Murphy. No, it is actually--well, there hasn't been a
lot of variation since 2001.
The Chairman. Okay. And then the loss ratio and the loss
cost columns, can you explain them to us real quick?
Mr. Murphy. Okay. Loss ratio is just the experience of the
program. That is the ratio of premiums to indemnities paid. The
good story here is that you can see the 10 year average, we are
at .837. That means for every dollar in premium, we pay out
83 cents, so that the program is actually performing very
soundly at this time. In fact, if you go back 20 years, you are
still under a dollar loss ratio. So we are very proud of the
changes in that.
Loss cost ratio is just a measure of how much of the
indemnity--how much of the liability is being used by the
indemnity. We actually use both of these ratios in order to
come up with the rates for the program.
The Chairman. All right, thank you, and I will yield back.
Mr. Boswell, 5 minutes.
Mr. Boswell. Thank you.
Again, going to our continuing or running conversation, Mr.
Murphy. We found, in our hearings across the country a month
ago, what we need out there, available to our producers, is
affordable, and viable crop insurance. I think you are trying
very hard to do that. I am not--this is extremely important.
You think of the high cost inputs, and out in cotton country,
wheat country, and so on, but you know, they like to talk about
the price per bushel of corn when it is doing well. You never
hear any conversation about the cost of input, and I think it
has become important for all of us on this Committee that we
ought to be making an issue of that. The public out there
doesn't really get the idea of what it costs to put that crop
in. It is capital intensive and this crop insurance is terribly
important.
So anyway, I want to ask you this question that we referred
to, and then I will leave it with you. The Risk Management
Agency has redefined the definition of agent compensation
relative to the release of the 2011 Standard Reinsurance
Agreement. The restrictions outline the acquisition section of
the manager's bulletin on agent compensation are very troubling
because they restrict an agent's ability to sell his agency or
her agency at the full market value. In many instances, the
sales of these family-owned crop insurance agencies are relied
upon for retirement income and for future financial planning.
In addition, such restrictions will also hinder a company's
ability to grow. The only option for company expansion will be
through the acquisition process, which favors large companies
over small companies, and will lead to less choice for
consumers.
So how does the agency acquisition provision in the 2011
SRA improve the Federal Crop Insurance Program and strengthen
the safety net for farmers and is the RMA willing to revisit
this provision to address these concerns? I will give you this
in writing as well after this is over with, but I would like
for you to comment on it.
Mr. Murphy. Actually, that provision is not in the SRA
itself. That provision is actually in follow-up procedures that
we provided after the----
Mr. Boswell. Well, let us address the point then.
Mr. Murphy. Right. There is nothing in there that restricts
the sale of an agency. What they are talking about there, and
where this becomes an issue is if a company buys an agency and
then employs the principle of that agency and continues to pay
the agents--all we are saying there is that that sale, if the
principle stays involved in that agency as it becomes part of
the company, is that that counts toward compensation. There is
a great concern that that particular scheme was being utilized
to evade the caps on each commission.
So you know, I want to make clear that there is nothing
that restricts it.
Mr. Boswell. Well, at least----
Mr. Murphy. Okay, that----
Mr. Boswell. It limits----
Mr. Murphy. It limits potential sales. You could say that.
Mr. Boswell. Okay.
Mr. Murphy. You could say that. Now this is in a procedure
that we actually got--we just finished getting comments from
the agents. We sent it out to the agents to get their comments
as well. We are incorporating all of that now. We have not
issued it yet as a final procedure, but----
Mr. Boswell. I hope we can have some conversation on that.
I would look forward to that. Seriously, when I share with you
the person that I talked to, I didn't call him. He called me. I
talked to him for--at any other time during this whole process
we have not had conversations.
Mr. Murphy. I am sure it is because of----
Mr. Boswell. But anyway, he comes in with this concern, and
coming from this individual, as I am sure many others, it is a
genuine concern and we need to talk to him about. So I would
trust you to do that, and if you might give us a few points on
how--what you might have to say about the pilot program,
concerning livestock.
Mr. Murphy. The livestock programs?
Mr. Boswell. Yes.
Mr. Murphy. Actually, the big news has been the dairy gross
margin coverage. Historically, we get $20 million a year for
the livestock program since ARPA, since 2000. We have actually
only been spending about--of that $20 million, about $3 or $4
million a year. What changed this year is that the dairy
industry requested through the developer of that program to
make two changes. One of them, to provide a subsidy, which was
not in there before and is not really in any livestock
programs. We do have a small one in some of the others, but
that is just to offset some additional costs. So there is no
true subsidy like we see in the crop programs. They requested a
subsidy and they also requested that the premium payment be
changed from the beginning of the insurance period to the end,
like the rest of the Crop Insurance Program. The developers
agreed to that and we sent it--we put it out just 4 months ago.
Growers were extremely interested in the program. Like I said,
they have used up all of the funding that we had available for
dairy, which was about 75 percent of that $20 million.
Mr. Boswell. Thank you. I will do a follow-up later.
I yield back.
The Chairman. Thank you, Mr. Boswell.
Mr. Neugebauer, 5 minutes.
Mr. Neugebauer. Thank you, Mr. Chairman.
Administrator Murphy, this will come of no surprise to you.
I want to talk about something that has been a big concern of
mine for a number of years, and that is shallow losses. For
some of my colleagues that are new to the Committee, basically
a lot of producers can purchase an APH policy and get 65, 70
percent coverage, but in many cases if they want to buy up that
coverage, when you get above that level, the premium becomes
extremely expensive. In fact, it is almost a 1:1, a dollar of
premium for a dollar of benefit. Obviously that makes the
economics--so what in many cases can happen for our producers,
they can have anywhere from a 25 to 30, 35 percent loss, and
not receive any coverage from their policy. You know, obviously
there are very few businesses I know that can sustain a 30, 35
percent loss in their margin and be profitable.
So there are a lot of potential solutions to that out
there, and some have said to offer additional premium support
for APH to make it more cost effective to buy up. Others have,
as you know, I have a plan that would provide a supplemental
opportunity, based on area yield or county yield.
So what are your thoughts? Do we stick with the APH, or do
we look at some of these supplemental opportunities?
Mr. Murphy. Well, I know the SURE Program that was
instituted with the last farm bill was actually supposed to
address that, and basically utilizing the crop insurance
indemnity for an additional payment under--as a disaster
payment. I have not gotten too involved in SURE. Anecdotally I
understand there are concerns in different parts of the
country, whether it is achieving what it was intended to do.
You know, how it is actually working day-to-day, I really am
not the best person to talk to, but I would be very happy to
work with you towards the farm bill and look for some----
Mr. Neugebauer. Yes, I think part of the SURE Program is it
is triggered on a state-wide basis, and you know, Texas is a
pretty big state, and so you can have one condition in one area
of our state and others. Well, I think that is going to be an
important part of that, because I think as we begin to look at
the basket of safety net for producers, price, it doesn't do
you any good to have any price safety net if you don't produce
a crop.
Mr. Murphy. I think also it requires a disaster declaration
in the county and the adjacent counties. So if only a small
percentage of farmers gets hit with a problem, it potentially
is not going to trigger the county.
Mr. Neugebauer. Absolutely, and I want to go on to another
area. I know that Plains Cotton Growers initiated an effort on
cotton seed, pilot program, and I guess this was the first year
of that program. Can you kind of give us a little thumbnail of
how that program has worked and the results of that?
Mr. Murphy. We haven't gotten the acreage information in
yet. That is probably going to be another couple months away,
but I can tell you anecdotally from our offices down there and
the companies there, it is extremely popular. This is something
that those growers are very interested in. That seed is
becoming--especially when the prices drop, that seed becomes a
bigger part of their revenue for the year. So it is critical to
not only have the lint, but the seed as well, get the offset
for the seed.
So from what I understand, the growers are very happy with
it. We worked with the developers and we actually made it
extremely simple to administer the program, so I think the
agents are happy with it. So overall, I think it has been a
success.
Mr. Neugebauer. You know, recently when they renegotiated
the SRA, I think RMA kind of divided the country into three
groupings. Group one was Illinois, Indiana, then group two was
Alabama, soon to be some of the other states, and group three
was kind of the hodge podge, all the way from Alaska to Nevada
to Vermont.
Can you kind of give me some perspective of how those were
grouped?
Mr. Murphy. Okay. The reason we had done that--and that was
something new we introduced for the first time with this array.
In the past, the underwriting--the ability to make underwriting
gains or loss were equal across the country. What we tried to
do this time, as an effort to try to get that same high level
of service we see in the Midwest and other parts of the
country, we reduced the company's ability to make underwriting
gains in the five--what normally are referred to as the I
States in the Midwest. Actually, we increased the opportunity
to make underwriting gains in other parts of the country, and
what--so we just--for the first year in 2011 we are going
through it. I think, from the modeling we have so far, it seems
to be working. We have talked to agents who were saying that
actually in some of the parts that historically had low
commissions--that this is actually making it--more companies
are becoming interested in getting into these other parts of
the country, and that is what we wanted to do. So we wanted to
spread that competition as well.
Mr. Neugebauer. Were the premiums different in the
groupings?
Mr. Murphy. Pardon?
Mr. Neugebauer. Were the premiums different in those----
Mr. Murphy. Only by nature of whatever the experience was
for those crops, yes.
Mr. Neugebauer. Nothing to do with groups?
Mr. Murphy. No, not from the grower's standpoint. No, no
difference at all.
Mr. Neugebauer. Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. Mr. Courtney, from
Connecticut.
Mr. Courtney. Thank you, Mr. Chairman. Thank you for
holding this hearing.
Mr. Murphy, I wanted to go back to the dairy pilot program
that you were talking about earlier. Obviously, the high demand
is an interesting signal that the interest is there. You know,
one of the farms in my district that was one of the subscribers
to the insurance was sharing with me his experience with it,
which you know, he has a moderate-sized herd farm. He signed up
for it kind of as a test run, because looking out on the
horizon, it is pretty clear that risk insurance is going to be
part of the world of that industry.
His concern obviously was cost, a little bit, which I think
a lot of the smaller farms are nervous about, but the other
issue was the complexity of the product. I mean, he was
describing to me the system for calculating the monthly
premiums, and you know, we are pretty comfortable in
Connecticut with insurance products----
Mr. Murphy. Right.
Mr. Courtney.--as you can imagine, but this one was pretty
sophisticated. The message was that they got to run a farm. I'm
trying to sort of calculate what their payments are. It took
some fairly difficult and time consuming efforts.
I wonder if you could walk through about whether that is a
complaint that you are hearing, and whether there are ways to
address it. You know, simplicity is always a good thing.
Mr. Murphy. Yes, indeed. You know, I haven't heard too many
complaints about that, but it does not surprise me, because it
is a great Gilmore complex and our normal Crop Insurance
Program for corn or soybeans or something like that. Because
what you are actually doing, you are looking forward into the
next 11 months and you are comparing the prices of the feed
versus the price of the milk itself using the futures contract,
and that is what makes the margin. So you are insuring that
margin month to month in the out-years.
So instead of looking at--if I was a corn grower, I am
looking at one insurance period. When you are actually a dairy
farmer, you are looking at potentially 11. They have to go out
there, so it has a great deal of complexity.
The program has not been evaluated yet. That will probably
occur within the next couple years. What I encourage is they
can either send comments in to us and we can share them with
the developer, or we can get the address of the developer and
the grower can go directly to them. But like I said, these--
they instituted a major change just this year, so I believe
they will be open to looking at comments that growers might
have, but I think the very nature of that type of a program is
going to be more complex than something like the corn the guy
probably insures already.
Mr. Courtney. I mean, is it too soon to say whether people
have been actually filing claims?
Mr. Murphy. Yes, it is.
Mr. Courtney. Okay.
Mr. Murphy. Yes, it is too soon now, definitely. But I
think it certainly shows their concern with the volatility that
they have been seeing in pricing for the product. And I
understand that the industry has put forward something very
similar, something that they would like to see potentially in
the farm bill. I have not seen what they are suggesting, but I
know they have been working on a product.
Mr. Courtney. Right. Thank you, Mr. Chairman. I yield back.
The Chairman. I thank the gentleman. Before we move to our
side, the Ranking Member of the full Committee has slipped in.
Do you have any comments?
Mr. Peterson. Yes, thank you, Mr. Chairman.
I guess what I would like to know, we made these
significant changes in the farm bill and the SRA. When are you
going to have solid information about how this actually sorted
out? You probably don't have that yet, I assume.
Mr. Murphy. No, no. We are already seeing some of the
effects, Congressman, especially in the area of agent
compensation. This has been a bit tricky for the companies who
try to get through. We are doing it new for the first time at
cap and how it is implemented. We are exceeding the cap, as no
surprise for 2011, with the way the commodity prices are going.
We are seeing areas like California, where commissions had
dropped a good deal more than we thought they would. The
industry, the companies themselves have expressed some concern
here, so we are going to take a look at that to try to even out
the pain of reducing the A&O overall in the program. Some of
the companies are interested in having that discussion.
On the underwriting gains side, all I have seen is some
studies that have been done on the new underwriting gain
potential, underwriting loss potential, and they have not been
bad at all, especially with the prices we are seeing this year.
Now we are getting off to a bad start, and so I guess--I
imagine that has the companies nervous. But it is probably
going to be, I would say, November or December before we have a
good handle on what the impacts would be on underwriting, gains
or losses.
Mr. Peterson. Okay. And then how about on the agent
situation, the same timeframe?
Mr. Murphy. Yes, we are already hearing the concerns from
the agents on it, and we are already talking to some agents.
They are coming up with some ideas. We are getting questions,
can anything be done since this is sort of locked in place?
Basically, as long as we don't increase the costs, we do have
some flexibility, all right, but it would require all the
companies to agree to make the change. And those discussions
will probably just get started within the next couple months.
Mr. Peterson. So you know, depending on when we actually
write the farm bill, but say it is next year, we will probably
have pretty good information?
Mr. Murphy. Certainly on the A&O side, yes, the
administrative and operating expense side that would provide
the companies, and we will have some preliminary information on
the underwriting gain potential, underwriting loss potential as
well.
Mr. Peterson. Okay. Thank you, Mr. Chairman.
The Chairman. Thank you, Mr. Peterson.
Mr. Austin Scott, of Georgia, for 5 minutes.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and
Administrator Murphy, thank you for joining us today.
Thinking back to when I was a child, I can remember quite
vividly my grandfather, who was a producer, telling me that he
thought the insurance program was the most important thing that
the Federal Government did for the farmer, and was, quite
honestly, maybe the only thing that we would have to do for the
farmer if we had it right. I also majored in risk management
and insurance at the University of Georgia, which is the best
school on the face of the Earth, I might add.
But my question gets back to this. One is I would say, and
you can check these numbers, while the average loss ratio is
83.7 percent, the total loss ratio over 10 years is even a
little better and closer to 77 percent, is that----
Mr. Murphy. Yes.
Mr. Austin Scott of Georgia. So our total loss ratio is
even a little better than our average loss ratio, because of
the years where we got hit so hard. I also remember my
grandfather talking about people who had learned to game the
insurance system, if you will, and so as we work forward with
this insurance program, I want to make sure that we have the
best program possible for the good farmer. It gets back to
something you have talked about a little bit before and I would
like you to expand on. Is somebody whose claims ratio--and I
know you have talked about it more from the standpoint of a
discount for consistently good producer----
Mr. Murphy. Right.
Mr. Austin Scott of Georgia.--but virtually every insurance
product out there in America is risk-adjusted, based on the
conduct of the individual. And so, as we go forward with that,
would you talk with us about your ideas for having somebody who
makes multiple claims versus somebody who is not making those
claims, someone whose loss ratios are out of line, if you will,
consistently. How do you intend to handle them paying more into
the system, the risk adjustment there?
Mr. Murphy. Okay. Overall, first I will just say that from
a standpoint of integrity, it is actually imbedded in every
function for the program. It is critical that we continue to
try to do the best we can to combat fraud, waste, and abuse. We
have some very advanced tools, data mining, which has been very
successful, which has helped us identify schemes going on. We
have some very large cases occurring right now with tobacco in
North Carolina as a result of the findings of data mining. That
is an important tool, so that will help us, but you are
absolutely right. When you get down to the county level of this
program, if somebody is abusing that program, that county is
paying for it. The neighbors are paying for it. We rate on a
crop county basis in this program, and so as a result, next to
data mining, probably the most important tool that we have in
identifying and fighting fraud are neighbors who do not want to
see their premiums go up because of something somebody is
doing.
We keep working more and more. We work very closely with
FSA on a spot-check list that we use to identify anomalies
through data mining. FSA spot-checks those through the year.
That has been extremely effective. And so I think as long as we
try to keep up with the new schemes, because as you tighten
things up, a certain group of people will always look for ways
to get money for doing little. We will keep addressing that,
going forward.
Mr. Austin Scott of Georgia. I think you are right, I mean,
with what you said. I think my FSA agents could probably
predict for you who was going to file the claim.
Mr. Murphy. Who you need to watch.
Mr. Austin Scott of Georgia. And so could the majority of
the farmers in the community. And so I guess I hope that we
will work towards an adjustment in that, and make sure that we
are creating the program that works for the good producer. And
I understand that a good producer is going to have some losses.
That is just the facts of life, but I just hope that you will
keep moving down that path and keep us informed. And I do,
again, want to point out the importance, I believe, in the
private-public partnership here where we are the insurer, but
we have private agents out there actually handling the
insurance product.
Thank you, I yield back the rest of my time.
The Chairman. Thanks, Mr. Scott.
Mrs. Roby for 5 minutes.
Mrs. Roby. Thank you, Mr. Chairman, and thank you, Mr.
Murphy, for being with us today.
Just to build upon what Mr. Scott was talking about, in
preparation for this hearing we heard from our folks back home
who shared similar concerns, that we should be rewarding
farmers for good performance history with crop insurance,
either through lower premiums or increased coverage levels.
More consideration needs to be given to the individual
experiences that would not disadvantage good producers in a bad
county experience situation.
I want to ask you a specific question about the group risk
insurance program. It was very, very popular throughout the
South and was used pretty heavily in Alabama. And the RMA stops
the program in many counties, due to insufficient data. So I
want to know is RMA currently exploring any avenues that would
allow reintroduction of this program, or a similar program in
areas that previously lost access to those products?
Mr. Murphy. Right. I think there is a two-part answer. One
of them is I think NASS is working harder with farm groups,
realizing the importance of getting this data into NASS. So I
think there is an emphasis on growers of making sure that
everybody in the county reports to NASS the correct numbers.
The second thing we are doing is we are looking at our
group risk plan, as well as a few other changes to the actual
production history basis of the program. One of the things we
will be looking at is perhaps having area group plan
participants provide their yields every year, that way we would
be able to use our own data instead of having to rely on NASS's
program alone. So we are looking at that as a way to address
that.
Another thing we could do is look at combining districts.
That gets a little tricky if you have a lot of changes in the
geography of the area, but that is another thing we can take a
look at. But we are very aware of that and we are looking at
ways that we can bring the program back into those counties, as
well as expand into other counties.
Mrs. Roby. Good. Thank you for that.
I just want to make this as a comment. You can respond if
you want, but right now under the current rules, in some
situations a farmer is required to carry a failed crop to
harvest, and you know, this comes from our groups back home, so
they spend more money to actually harvest the crop than the
crop is going to bring. I just want to point that out, that
that needs to be addressed. It is detrimental in some
situations.
But I want to go back and--let me see, I have a little bit
more time. You mentioned in your testimony that lenders now
require crop insurance coverage in order to make operating
loans, and many producers use collateral for loans. Can you
tell us why crop insurance has become so important to the
producers in securing financing?
Mr. Murphy. I think it is because the grower knows up front
what his protection is going to be, and the banker knows up
front that the production is there. It is not only their
knowledge of the crop insurance, but bankers have become
extremely knowledgeable of the actual mechanics of the
programs, and so they will suggest certain types of products
that they want the grower to purchase.
Another thing that they can do is that they can have the
indemnity sent to the bank, or make the indemnity payable to
both the bank and the grower. Now the grower does not always
like that, but if it helps secure a loan, I think it is a good
thing. So it has just become something the bank can depend on.
Now with the advance of revenue coverage as well as yield
coverage, I mean, for a grower to be able to go into a banker
and say I am guaranteed to make this much money per acre, that
is pretty powerful source of collateral for that bank. So I
believe that is why it has become--we don't need Congress to
take any action during the year. We don't need the Secretary to
take action. The program just works, and if a grower has a
loss, he gets paid.
Mrs. Roby. Thank you so much, Mr. Chairman. I yield back.
The Chairman. I thank the gentlelady.
Mr. Schilling for 5 minutes.
Mr. Schilling. Thank you, Mr. Chairman.
What I wanted to just address--thank you for coming out--
duplication and overlapping of services, basically. One of the
concerns about the duplication of the acreage reporting,
including the cost of administering and the frustration that it
causes our producers. Given that many of the producers have
multiple farms with differing acres and crop rotations on each
farm, it seem the process drastically increases the margin of
error and creates twice as many opportunities for the mistakes.
Why can't we just avoid--I think you know where I am going with
that.
Mr. Murphy. Yes, I understand your point exactly, sir, and
I am very pleased to tell you we are making progress in this
area. Through the Comprehensive Information Management System,
the CIMS Program, we are pulling together the acreage reporting
dates for both FSA and RMA. I think next year, spring crops
2012, will see the first dates of that, and they will be in the
northern tier of the country. That has always been a source of
angst to growers out there.
We are working toward, through that same project, a single
port reporting. If the farmer wants to go to his FSA county
office and report, why can't the agent download that
information and use it himself, and vice versa? If it is a
rainy Thursday afternoon, why can't the grower sit and certify
at home and have it sent to both programs? That is the end goal
of the CIMS project. Under Secretary Scuse is the primary
proponent of it in the Department, and I am happy to say that
we are moving very quickly toward that.
Mr. Schilling. Very good. And then just my last--have there
been any issues in reconciling a crop insurance reduction? We
talked a little bit about that, so I am going to pass on that.
One of the things I am a big proponent, like Mr. Scott had
indicated, is the public-private partnerships. I think those
are huge. One of the things in the Illinois 17th District where
I am from, that is the one thing I continue to hear from the
farmer is leave our insurance alone. But with that, I
appreciate your time, sir.
Mr. Murphy. Thank you.
The Chairman. I thank the gentleman.
Mr. Crawford, from Arkansas, for 5 minutes.
Mr. Crawford. Thank you, Mr. Chairman, and thank you, Mr.
Murphy, for being here.
Can you provide any insight into differences in
participation rates between crops and/or regions? For example,
in 2010, according to RMA data about 68 percent of rice,
particularly in Arkansas, acres were insured. By contrast,
nearly all of Texas cotton acres were insured. Are there unique
concerns with certain crops or regions?
Mr. Murphy. Actually, there is indeed. I am happy to report
that we are seeing increases. One of the concerns we often get
is between major program crops and specialty crops. We are at
83 percent participation on the major program crops. We have
come up to 75 percent for specialty crops, so we are seeing
progress there.
I think the introduction of the additional subsidy for
enterprise units has also been extremely helpful, especially in
your area, for both rice and cotton down there. It reduces the
premium tremendously. Growers have flocked to those programs
and we are seeing increases there. That alone is not going to
solve it. We are seeing probably Arkansas, Mississippi,
Alabama, that area is where we are seeing lower participation
than other parts of the country. We are actively working with
commodity groups down there to try to improve the programs. We
are looking at the dates in the program to make sure that they
are the correct dates we should or should not be using, such as
planting dates, reporting dates, end of insurance dates. We are
taking a look at that. We are even getting into the policies
themselves. We have been having great meetings with the rice
growers and working at some additional coverage the growers
would like to see for downed rice, which results when
hurricanes come through the area and they have to deal with the
additional costs of harvest. Hopefully that is going to see
some progress in the next couple years. It has been very
successful work between us and the group down there.
So we are using multiple ways to do it. I think it is
slowly coming along, I just think we have to keep working with
it. Program integrity is another big issue. There have been
issues with program integrity in the past. Farmers have to be
convinced that their premium dollars that they are paying out
is going only to the legitimate losses. Our compliance office
is putting extra effort into that area to show that.
So we are doing a number of things, going forward, and as
we get into the farm bill, I would be more than happy to work
with you and your staff in additional ways we could look at
increasing participation.
Mr. Crawford. Excellent. I have just got half of my time
left here, so let me ask you this. Is that flooding that has
resulted from the Army Corps of Engineers breaching levies
along the Mississippi and Missouri Rivers an insurable cause of
loss under the Federal Crop Insurance Program?
Mr. Murphy. Yes, it was, and there was some consternation
at the beginning when the Corps first had decided to
intentionally breach some of those levies. We worked with the
Corps. They provided us with some information of what would
happen if they did not breach the levies where they did.
Additional damage would occur to crops downstream, uncontrolled
damage where they couldn't tell us what additional damage would
occur, especially in the northern part, the Missouri levy. The
water was actually topping the plugs at the point that they
blew them. If a levy is topped, the integrity of that structure
is compromised severely and will probably fail anyway. As we
moved further down along the Mississippi, the Corps was able to
show that actually if they did not breach those levies where
they did, the potential for the levies alongside with more
intensive cropping, higher value cropping would be compromised.
We were able to make the determination up and down the
Mississippi River that they were insurable events. The
companies have been informed. They tell me that they are moving
loss adjusters in now to start working with the growers there.
Yes, we were able to address all those concerns.
Mr. Crawford. Excellent. Okay. Real quick, back to rice.
You covered that pretty well, but I just want to ask, what is
the current participation rate of rice and buy-up coverage and
levels of protection, and how does this participation rate
compare to other major crops like corn, soybeans, wheat, and
cotton?
Mr. Murphy. I don't have that information right with me. I
can tell you it is lower than you see in the major crops. I
will get that to you, though.
[The information referred to is located on p. 35.]
Mr. Crawford. Any ideas what we can do to increase that?
Mr. Murphy. Again, I think it is working with the growers
and seeing how we can improve that program. I mean, it was the
development of revenue coverage that brought in the corn and
soybean growers to the levels we have seen, so program
improvements will bring in growers, once they believe their
risks are being addressed by our programs. So I think it is a
matter of just continuing to work until we get it right.
Mr. Crawford. Excellent. Thank you, Mr. Murphy. I
appreciate it, and I yield back.
The Chairman. I thank the gentleman.
Mr. Huelskamp, for 5 minutes.
Mr. Huelskamp. Thank you, Mr. Chairman. I appreciate your
appearance here today, Mr. Murphy, and I come from a fairly
large district, and doing town halls across the district, you
learn not to complain about certain things. You complain about
water, in my area it is a drought, and in the other end of the
district it is flooding. We had both of those. But here
consistently is the important piece, crop insurance and the
product you produce and we will be watching that very closely.
As one proponent noted, that given the situation, this is
really going to test the program and we are really going to
have to perform like we never have before.
With that in mind, particularly with the--not only the
currently higher but much more volatile commodity prices, how
does that impact, in your mind, and how do you adjust for that
and maintain the solvency of a program with the type of changes
we have seen and are likely to see in the next 6 months.
Mr. Murphy. Right. Actually, there is a lot of data
available for us to go back and stress test our rates against
historic results of the futures market, which we do. In 2008, I
think we saw the biggest drop ever for the major commodities on
the futures market from the beginning of the year to the end of
the year. We actually ended up with a positive loss ratio
nationwide, even though the companies probably did a claim on
just about every corn or soybean policy out there that had
revenue. And so we ended up with a positive price.
We continue to work with--have others review our actuarial
rating methods, so we have outsiders look at what we are doing
and validate or suggest changes, which is done and we
incorporate the changes. It is a constant work in progress, and
I am very happy that it has been successful to date. With the
commodity prices we are seeing today, if a farmer goes ahead
and forward contracts his price, he has a massive risk and crop
insurance is just necessary to protect that grower in the event
that the price is to drop or go considerably higher.
Mr. Huelskamp. I appreciate that. How much room for margin
of error do you have? I mean, there are suggestions out there
with the current economic environment with items--whether it is
in this building or the Federal Reserve, that impact
volatility. How much margin of error--I mean, 2008 was a year,
2011 might be one for the books as well.
Mr. Murphy. Yes, indeed. We take volatility into account
when doing the rating of the program. That is what--in 2008,
that is what led to such large premium bills for farmers. It
wasn't the yield portion of the risk, it was the volatility
factor associated with the revenue portion of the risk that
they saw. So I think we have well-addressed the margin of
error. Only experience will let us know, but like I said, we
have a lot of data we can go back and take a look at, and
again, stress test the program, which we do.
Mr. Huelskamp. I appreciate that, and 2008 is a good year--
an appropriate year to talk about. I think 2011 might be one we
talk about for many years as well.
The second question would be--and I had looked through the
materials closely and didn't see this--but as far as taxpayer
costs and other programs, how does that vary across the crops,
and is that in the information you provided us?
Mr. Murphy. We can provide more information on that. The
taxpayer costs of the program changes dramatically on the
experience that we have for that year. For the last 10 to 20
years, except for a little blip in 2002, we have had positive
loss ratios, so I think the program is well worth the money.
The subsidy--the premiums are subsidized and average between 60
or 70 percent--60 and 65 percent. So if we have $10 billion in
premium this year, well the subsidy is going to be up about $6
billion in the program. So the cost goes along with the
commodity prices as well. There are a lot of variables in the
program, the loss ratio, the losses that the companies pick up
versus the government, so----
Mr. Huelskamp. And the high cost over the last decade would
have been how much in what year?
Mr. Murphy. As far as the total cost of the program? I
would have to pull that together for you. I can do that, the
last 10 years.
[The information referred to is located on p. 35.]
Mr. Huelskamp. Okay, I appreciate that.
Thank you, Mr. Chairman. I yield back my time.
The Chairman. Thanks, Mr. Huelskamp.
Mr. Gibson, 5 minutes.
Mr. Gibson. Thanks, Mr. Chairman, and I appreciate, Mr.
Murphy, you being here today.
I represent a district in upstate New York, and your agency
enjoys a good reputation up there for how quickly you process
claims and--so given the current climate, the natural disasters
that have hit across the country, including in my district, we
have had flooding along the Hudson River. It mentioned in your
assessment whether or not you will be able to keep up with the
timeliness of the pay-outs and is there something about that
program that I should carry back? I am about ready to meet with
all my farmers; I have a quarterly panel. So if you want to
give me some assessment as to how you think that is going to
go, and if there are any best practices that you think I should
carry back, I would welcome them.
Mr. Murphy. Okay. Because of the nature of the losses we
are seeing this year, just about every part of the country is
dealing with something this year. I don't think I have ever
seen anything like it, and I have been with the program for 30
years. A lot depends on how the rest of the year goes, the
total amount of claims that will have to occur. I have talked
to the companies. They feel very confident that they have an
adequately trained workforce. They are moving people around the
country, which they routinely do to be able to address
situations like this. I do believe we will be able to make the
30 day turnaround required, once the insured signs the claim to
the payment of the claim. The companies have told me that they
feel good about it, so I am confident going through we will be
able--the companies will be able to provide that same level of
service that growers have become accustomed to.
Mr. Gibson. That is encouraging. Is there anything that in
this period that would be helpful for me to convey to the
farmers in terms of best practices?
Mr. Murphy. If they have a loss, notify their company
immediately. That is probably the most important thing you
could bring back. You don't want to get into a situation where
the company is notified late in the year and they don't have
the ability to look at that crop. That becomes extremely
problematic, so I would say stay in touch with your company,
stay in touch with your agent.
Mr. Gibson. Thanks very much.
The second area I would like to cover is, like every place
else around the country, our dairy farmers and beef farmers,
the beef industry in the 20th, we are having issues with input
costs. I am curious to get your assessment as the ongoing
activities in the Senate with regard to ethanol. Your
assessment, how significantly that would impact input costs?
Mr. Murphy. Okay. Again, that is a little bit out of my
area of expertise. I usually look toward economists for their
advice on it, and I will continue to do so. I am happy to
report that we do have programs for livestock that are gross
margin. Basically you are insuring that margin between the
price of the finished product and the price of the input cost.
It has been a slower uptake in cattle than we have seen in
dairy, but it is an excellent program for times like these, so
I would encourage growers to take a look at that, if they are
concerned about both input and future price for their
commodity.
Mr. Gibson. Thanks very much, Mr. Murphy, and I appreciate
your being here.
I yield back.
The Chairman. I thank the gentleman.
Mrs. Hartzler, for 5 minutes.
Mrs. Hartzler. Thank you, Mr. Chairman. Thank you, Mr.
Murphy, and I would like to echo the comments that have already
been said here by my farmers. Your part of the farm bill is
probably the most popular part, and everyone, all of us--I am a
farmer, too--appreciate what you do.
I wanted to ask regarding the cost--of course, we are
looking at budget issues now. In Fiscal Year 2010, it says the
crop insurance costs were $4.7 billion. I just wondered, can
you give me kind of a rough breakdown of how much of that went
to claims and how much went to the administrative costs and
operating costs?
Mr. Murphy. Actually, we are a very small agency. We have
less than--we have about 500 employees overall, so when you are
talking discretionary costs of the program, we are only talking
$78 million to $80 million being the overall cost of the
program of discretionary.
The major costs that we see in the program are the
producer's subsidy that they get paid, the potential
underwriting gains that the companies can make on a good year,
and then the administrative and operating expense that we
provide to the companies in order to deliver the program. Crop
insurance, unlike private property and casualty insurance, you
don't--the farmers don't pay that in their premium bill. We
provide a separate payment to the companies to deliver the
program for it. In the negotiation of the Standard Reinsurance
Agreement, we actually reduced both the potential underwriting
gains for the companies, as well as the administrative and
operating costs provided to the companies, so we are certainly
going to see a reduction. Probably the wildcard in the whole
thing is the premium subsidy, going forward. Like I said, as we
have seen these record commodity prices, that brings up the
producer premium subsidy payment.
Mrs. Hartzler. But in Fiscal Year 2010, how much money for
those various things, or maybe you could get that to me later?
Mr. Murphy. I can provide that to you on a year basis. I
will break it out for 2010 and get that up to your office.
The information referred to is located on p. 36.]
Mrs. Hartzler. Yes, that would be fine.
Another question, we have about an 80 percent crop
insurance participation, right, on your major crops, and Fiscal
Year 2009, about $79 billion worth of crops were insured, but
yet, the overall value of crops in the U.S. that year was $169
billion. So in other words, about 53 percent of the value of
crop production was actually insured. So how does that
reconcile that 80 percent participation rate, and given the
price volatility and extreme weather, does that concern you?
Mr. Murphy. Yes, it always concerns me. There are quite a
few crops we haven't reached yet. That is a priority with the
Agency, to figure out how we can expand coverage to the
remaining crops out there. Another thing to keep in mind is
that our yield guarantees are based on a 10 year average, all
right, so that basically makes the APH guarantee lower than
expectations. If you have seen some of the modeling on how
yields have been increasing, especially over the last 10 years,
so you are going to see a lag with the guarantee compared to
what expectations of the crops are today. I think that adds a
lot to it.
Mrs. Hartzler. Definitely, that is true. Your testimony
states there is only $20 million available annually to cover
administrative and operating costs and premium subsidy costs
for the pilot livestock insurance plans, so can you tell me a
little bit about that? Are there pilot livestock insurance
plans generally available, are they limited geographically now?
How are they--given the finite resources, are they based on a
first come, first served principle to sign up? How much would
livestock insurance plans cost the government if it was widely
available, given its popularity? Three questions there.
Mr. Murphy. Well, I think there are a couple issues
available here. I wouldn't look at livestock programs that we
have, such as the revenue programs and the dairy program being
the only--we have a pasture range land forage program out there
now, that is widely available. We are expanding it as we have
the funding to do so. That is something I think livestock folks
generally participate in. A lot of livestock farmers also grow
corn, alfalfa, soybeans. They can insure those.
We only got the authority to actually start insuring
livestock in the ARPA Act in 2000, so it has been a slow ramp-
up. I think Congress wanted to limit how much we wrote until
they could see the experience of the programs. I think that
impacts--that is why they limited it to $20 million. That is
something I think I would be very interested in discussing with
the Committee as we get into the farm bill, taking a look at
that and seeing if that is realistic anymore.
I think cattle guys have been slow to come into the program
overall. Cattle folks are very independent, as I am sure you
are aware, if you work with cattle guys out there. It is a
different breed. I think that is maybe a barrier as well.
Mrs. Hartzler. Okay. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Thanks, Mrs. Hartzler.
Mrs. Schmidt, 5 minutes.
Mrs. Schmidt. Thank you, Mr. Chairman, and thank you, Mr.
Murphy, for coming today.
In the last few years of higher commodity prices, and given
the flooding and drought across the country this year,
including the flooding in my own district, how do you ensure
that farmers claims are adjusted, processed, and reviewed in a
timely manner, and are there ways to speed up that process?
Mr. Murphy. Well, the companies themselves who reentered
into the reinsurance agreement, they are responsible for that
part of the program. They keep a core of well-trained
individuals in claims adjusting on board. When we have a year
like this, they bring others in the community who have worked
in the past on loss adjustment, have been farmers themselves or
farm managers. They bring them on to help to bring their
numbers up, and they get it done. Rarely do I hear, even in
2008, do I hear concerns that it has taken too long to get a
claim paid.
There are some concerns that the audits that have to go on
in some of these claims, that has been voiced in the past. What
I do to address that is I do what I can to inform farmers that
this whole program is predicated on you having records to
support your yields. Please make sure you have those together,
and that way the audit will go quicker in the event that the
grower is chosen.
So I think overall the industry is well geared up to
address these challenges across the nation. I think things will
go smoothly, as they have in the past.
Mrs. Schmidt. Thank you. Along the same lines, I understand
that risk sharing between the USDA and the private insurance
companies is spelled out in the Standard Reinsurance Agreement.
However, can you please give a general explanation of the risks
borne by the government and those borne by the insurance
companies, and do you think the current arrangement is an
appropriate balance of risk sharing?
Mr. Murphy. Yes, I can do my best. We take a look at, of
course, the lower the loss ratio of the year, the lower the
claims, the more the companies assume the risks; the higher it
gets, the more the government assumes the risks. That is why
the government is involved in this program. If there wasn't a
need, we would not be here. The industry would be able to
handle the problem. They are concerned that such a systemic
loss would occur in the Midwest and the high plains that they
would not be able to address it, that is why we are here. So
that is where we put the majority of our protection on the
higher levels, once you get above $1.20 loss ratio where we are
paying $1.20 for every dollar we get in.
What we have seen over the last 10 years, the companies
have been picking up most of those losses because it has been
very good loss ratios nationwide. It is a very complex formula
in the program, but I think generally as the higher the loss
ratio is, the more the government assumes, the more risk the
government assumes.
I think it is also important that the private reinsurance
market worldwide participates in this program by taking some of
that residual risk after it passes through the SRA, so we
actually have some of that being sent off into the worldwide
international market.
Mrs. Schmidt. Thank you. For several crops, while a large
percentage of planted acres are insured, they are insured at a
minimum CAT or buy-up coverage levels. Cotton and rice are good
examples of this. What can be done to increase coverage for
these crops?
Mr. Murphy. Yes. I think, especially if you look at
geographical areas, that is where you see the lower amount of
coverage. Rice growers, especially in the central South, they
have wells to get their water so they are always going to be
able to get water. It is a perception of risk. Their big
concern is hurricane or disease that comes through, and how
often that occurs? It is all in perception of risk. I think it
is just continuing working with the growers, that is what we
can do? We have not always had high participation in corn,
soybeans and wheat. It is only by making changes to the
program, ensuring that the program addresses their risks that
they have to deal with that we have seen the participation
increase. I think it is the same with these other crops. It is
just constantly working with them.
Mrs. Schmidt. Thank you, and one final--and this is more a
personal view. Some of the critics back home that are fiscal
hawks think that all of this is nonsense and it is not needed.
How would you address that?
Mr. Murphy. I think this year is an excellent example of
how important the farm safety net is to farmers out there. Food
security is a priority with this country. I would say all these
programs are extremely important.
Now, I agree the cost of government has gotten high. I
think everybody does. We are looking for ways to become
efficient and ways to reduce the costs to taxpayers, but the
farm safety net is critical. I would hate to be put in a
position where we do not have these programs available, and
there would be widespread losses across the country.
Mrs. Schmidt. Excellent answer, thank you.
The Chairman. I thank the gentlelady.
Mr. Murphy, on the statutory loss ratio is one, I guess,
which would mean we lose a dollar for every dollar of a premium
we put in. Right now, it comes to average 83 cents on every
dollar. If we push that 83 cents up to a dollar, do you think
that would increase--would that have an impact on
participation, getting other people into the program by
lowering the costs?
Mr. Murphy. You mean if you get----
The Chairman. Lower the premium down to that 83 cents----
Mr. Murphy. Yes, I think once you get under--our target
loss ratio now over time is $1. Once you start getting below
that as your target, it starts getting very complex.
The Chairman. How do you push it up? How do you get to that
dollar?
Mr. Murphy. You--there are a number of different ways,
participation, working with the rate itself. Now, we also have
a reserve in there, okay, because the law requires we keep a
reserve. So even though the 83 cents is there, that means we
have a 20 cents reserve for future years.
The Chairman. Well, let me ask if the--I get that, because
you are going to have a year like 2 years ago when it was
$1.40. If your loss ratio was closer to the dollar, would you
have greater participation in the program because the premiums
would be lower?
Mr. Murphy. Yes, I think generally you can say that.
The Chairman. Okay.
Mr. Murphy. But again, you have to look at the length of
time you are looking at to do that analysis. When we do rate
making, we actually use about 30 to 35 years of data.
The Chairman. Okay. The reserve is pegged at what?
Mr. Murphy. The reserve is just required by statute that we
have so much money----
The Chairman. How much? Is that per----
Mr. Murphy. It doesn't actually say in the law. We try to
stay around 10 to 20 percent.
The Chairman. Of premium?
Mr. Murphy. Of premium reserve in there, yes. That means
you want to be around 90 cents loss ratio. Once you start
getting up above 90 cents, then we would be concerned that we
had the correct----
The Chairman. All right. You never ever hardly hear about
actual production histories, I bet. What are you doing to try
to--given how long it takes those to move and the impact it
has, and continued droughts in our part of the world, pushing
those down. What is on the table?
Mr. Murphy. Okay. We are doing a number of different
things. We are taking a look at the rating itself, and how we
weight the years. Like I said, we use 30 years of data to rate
the program. There has been a big issue we have had, especially
with soybean and corn growers, is how you rate those individual
years. I think we all now are on the same page, and that is
probably the most recent years need to be weighted more than
the earlier years. We are working in that direction. We are
trying to adjust the yield drag on individual yields. If I am a
corn grower in Illinois, 10 years ago my yield and my APH, is
that really relative to what the expectations are this year? We
have movement going on in that, and hopefully growers will see
some of that progress in 2012.
So we are doing things like that to try to address it. We
are also working with growers, manufacturers, how we can
incorporate some of this GPS technology to improve some of the
efficiencies in the program. For instance, as a farmer is
planting, why can't that information not be sent directly to
the agent and start populating the acreage database? As I am
harvesting and I have a loss, why can't that data start
populating a claims form for me? So it is looking at
efficiencies like that in the program to make it more--a better
product for farmers out there.
The Chairman. This may sound a little self-serving. Earlier
Mr. Scott made some unfounded specious comments about some
small university in Georgia. Tarleton State has the data mining
program. Do you know off the top of your head what that value
gets pushed back to the taxpayers as a result of that work?
Mr. Murphy. Sure. We are looking at cost avoidance, since
the inception, to now of about $840 million.
The Chairman. Versus the cost of----
Mr. Murphy. Probably--we are $4 million a year, probably
$40 million at the most.
The Chairman. Okay. I guess the point being that as we move
into these austerity programs, I am hopeful that programs that
actually--I don't want to say make money--you say cost
avoidance.
Mr. Murphy. Exactly.
The Chairman. Exactly. Most of the folks out there want to
do it right, and there are a few that don't. And so as you--as
we trim your budget, so to speak, I am hopeful that the data
mining issue is one that we see value in. It won't score that
way necessarily, because of the way our complex rules work, but
that data mining program, wherever it is, is fully exploited,
not only in this part of the farm bill, but I suspect there is
some applications in food stamps or SNAP and other programs in
which that data mining concept could be used and exploited.
Mr. Murphy. Yes, indeed.
The Chairman. Mr. Boswell, do you have any further
questions?
Mr. Boswell. No further questions.
The Chairman. Mr. Murphy, thank you. This is one of those
rare circumstances where we actually got the entire hearing
done in a reasonable time, in spite of a vote. I have some
official words to read here somewhere.
All right. Before we go on, I want to ask the Ranking
Member if he wanted to say anything. Under the rules of the
Committee, the record of today's hearing will remain open for
10 calendar days to receive additional materials, supplementary
written responses, a couple of questions that were asked, from
the witness to the questions posed by a Member.
This hearing on the Subcommittee on General Farm
Commodities and Risk Management is adjourned.
[Whereupon, at 11:38 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Supplementary Material Submitted by William J. Murphy, Administrator,
Risk Management Agency, U.S. Department of Agriculture
During the June 24, 2011 hearing entitled, Agricultural Program
Audit: Examination of Crop Insurance Programs, requests for information
were made to William J. Murphy. The following are the information
submissions for the record.
Insert 1
Mr. Crawford. Excellent. Okay. Real quick, back to rice. You
covered that pretty well, but I just want to ask, what is the
current participation rate of rice and buy-up coverage and
levels of protection, and how does this participation rate
compare to other major crops like corn, soybeans, wheat, and
cotton?
Mr. Murphy. I don't have that information right with me. I
can tell you it is lower than you see in the major crops. I
will get that to you, though.

For information on program participation by crop, see spreadsheet
entitled, Largest Crops Insured by Federal Crop Insurance, Reinsurance
Year 2010, follows.

Largest Crops Insured by Federal Crop Insurance, Reinsurance Year 2010
----------------------------------------------------------------------------------------------------------------
Share of Share of Share of
Crop Liablilty Liability Premium Premium Subsidy Subsidy
----------------------------------------------------------------------------------------------------------------
Corn $31,673,245,782 41% $2,854,569,648 38% $1,748,845,970 37%
Soybeans $17,968,268,248 23% $1,746,840,208 23% $1,068,744,370 23%
Wheat $6,426,634,955 8% $1,123,672,475 15% $685,193,684 15%
Cotton $2,986,974,144 4% $488,627,636 6% $319,399,594 7%
Nursery $2,310,476,269 3% $49,806,802 1% $40,080,416 1%
Citrus $2,053,384,518 3% $64,728,939 1% $44,317,648 1%
Rice $1,226,342,119 2% $69,298,862 1% $50,108,540 1%
Grapes $1,049,323,716 1% $46,628,400 1% $33,311,279 1%
Potatoes $962,357,453 1% $81,774,552 1% $54,825,864 1%
Other $10,949,219,926 14% $1,066,169,977 14% $663,500,752 14%
----------------------------------------------------------------------------------------------
Total All Crops $77,606,227,130 $7,592,117,499 $4,708,328,117
----------------------------------------------------------------------------------------------------------------

Insert 2
Mr. Huelskamp. I appreciate that, and 2008 is a good year--an
appropriate year to talk about. I think 2011 might be one we
talk about for many years as well.
The second question would be--and I had looked through the
materials closely and didn't see this--but as far as taxpayer
costs and other programs, how does that vary across the crops,
and is that in the information you provided us?
Mr. Murphy. We can provide more information on that. The
taxpayer costs of the program changes dramatically on the
experience that we have for that year. For the last 10 to 20
years, except for a little blip in 2002, we have had positive
loss ratios, so I think the program is well worth the money.
The subsidy--the premiums are subsidized and average between 60
or 70 percent--60 and 65 percent. So if we have $10 billion in
premium this year, well the subsidy is going to be up about $6
billion in the program. So the cost goes along with the
commodity prices as well. There are a lot of variables in the
program, the loss ratio, the losses that the companies pick up
versus the government, so----
Mr. Huelskamp. And the high cost over the last decade would
have been how much in what year?
Mr. Murphy. As far as the total cost of the program? I would
have to pull that together for you. I can do that, the last 10
years.

See worksheet ``Program Expenditures Table'' that follows. As
regards program costs by crop, in general those would be roughly
proportionate to their share of program liability/premium/subsidy, as
provided in the worksheet ``Largest Crops Table.'' It is otherwise
difficult number to obtain as only premium subsidy is calculated and
directly available on a by-crop basis. We do not directly calculate A&O
by crop. Underwriting gains/losses are based solely on a state's
underwriting performance, not on that of any individual crop.

Other Program Expenditures, Fiscal Years 2001 to 2010
------------------------------------------------------------------------
ARPA & FCIA Interest & Other
Fiscal Year RMA A&O Initiatives *
------------------------------------------------------------------------
(Million Dollars)
------------------------------------------------------------------------
2001 $65.60 $43.78 $0.00
2002 $73.73 $40.68 $0.95
2003 $70.22 $48.61 $0.00
2004 $70.99 $46.22 $35.59
2005 $70.48 $45.23 $0.00
2006 $75.94 $37.51 $0.00
2007 $75.44 $39.61 $0.00
2008 $75.17 $47.79 $0.00
2009 $76.83 $53.37 $0.00
2010 $79.99 $53.05 $0.00
2011 ** $78.84 $68.50 $0.00
------------------------------------------------------------------------
* Related to the dissolution of American Growers Insurance Company.
** Estimated.

Insert 3
Mrs. Hartzler. Thank you, Mr. Chairman. Thank you, Mr.
Murphy, and I would like to echo the comments that have already
been said here by my farmers. Your part of the farm bill is
probably the most popular part, and everyone, all of us--I am a
farmer, too--appreciate what you do.
I wanted to ask regarding the cost--of course, we are looking
at budget issues now. In Fiscal Year 2010, it says the crop
insurance costs were $4.7 billion. I just wondered, can you
give me kind of a rough breakdown of how much of that went to
claims and how much went to the administrative costs and
operating costs?
Mr. Murphy. Actually, we are a very small agency. We have
less than--we have about 500 employees overall, so when you are
talking discretionary costs of the program, we are only talking
$78 million to $80 million being the overall cost of the
program of discretionary.
The major costs that we see in the program are the producer's
subsidy that they get paid, the potential underwriting gains
that the companies can make on a good year, and then the
administrative and operating expense that we provide to the
companies in order to deliver the program. Crop insurance,
unlike private property and casualty insurance, you don't--the
farmers don't pay that in their premium bill. We provide a
separate payment to the companies to deliver the program for
it. In the negotiation of the Standard Reinsurance Agreement,
we actually reduced both the potential underwriting gains for
the companies, as well as the administrative and operating
costs provided to the companies, so we are certainly going to
see a reduction. Probably the wildcard in the whole thing is
the premium subsidy, going forward. Like I said, as we have
seen these record commodity prices, that brings up the producer
premium subsidy payment.
Mrs. Hartzler. But in Fiscal Year 2010, how much money for
those various things, or maybe you could get that to me later?
Mr. Murphy. I can provide that to you on a year basis. I will
break it out for 2010 and get that up to your office.

See worksheet Program Expenditure table.

Federal Crop Insurance Program Expenditures, Reinsurance Years 2001 to 2010
----------------------------------------------------------------------------------------------------------------
Company
A&O+LAE Paid Premium Cost Share Premium Program Share of Cost of Crop
Reins. Year to AlPs Subsidy Subsidy Discount Underwriting Gains & Insurance
Gain or Loss * Losses Program
----------------------------------------------------------------------------------------------------------------
(Million Dollars)
----------------------------------------------------------------------------------------------------------------
2001 $635.87 $1,781.22 $0.42 $2.81 ^$10.99 $346.00 $2,755.33
2002 $625.89 $1,737.94 $0.38 $0.00 $1,150.42 ^$47.31 $3,467.33
2003 $733.66 $2,044.94 $0.37 $0.00 ^$174.68 $377.85 $2,982.15
2004 $889.42 $2,472.26 $4.22 $0.00 ^$893.62 $689.43 $3,161.71
2005 $829.25 $2,334.66 $4.11 $0.00 ^$1,604.41 $914.97 $2,478.58
2006 $958.58 $2,779.01 $0.00 $0.00 ^$1,167.48 $818.85 $3,388.95
2007 $1,332.53 $3,812.23 $0.00 $0.00 ^$3,082.33 $1,572.47 $3,634.89
2008 $2,009.25 $5,678.56 $0.00 $0.00 ^$1,112.57 $1,095.14 $7,670.38
2009 $1,618.51 $5,424.16 $0.00 $0.00 ^$3,732.14 $2,297.77 $5,608.30
2010 * $1,367.74 $4,708.61 $0.00 $0.00 ^$3,409.89 $1,930.38 $4,596.84
----------------------------------------------------------------------------------------------------------------
Reinsurance Year = July 1 to June 30 of following year.
* Negative number = program underwriting gain, positive number = program underwriting loss.

______

House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
The Federal crop insurance program is managed by the Risk
Management Agency (RMA) which is under the Farm and Foreign
Agricultural Services mission area of the United States Department of
Agriculture.
2. Subprograms/Department Initiatives
None.
3. Brief History
FCIC was created in 1938, under the Federal Crop Insurance Act
(Act), to carry out the crop insurance program to help agriculture
recover from the combined effects of the Great Depression and the Dust
Bowl. The program was started as an experiment and was delivered by the
FCIC until 1980. During the formative years of the program,
participation was low and crop insurance activities were limited to
major crops in the main producing areas.
The crop insurance program continued to evolve and the Federal Crop
Insurance Act of 1980 expanded the program and introduced the public-
private partnership whereby private insurance companies would sell and
service Federal crop insurance policies reinsured by FCIC. To encourage
participation in the expanded crop insurance program, the Act
authorized a premium subsidy be paid on behalf of insured producers. In
1994 the Federal Crop Insurance Reform Act of 1994 was enacted, which
introduced the catastrophic risk protection (CAT) level coverage.
Producers did not pay a premium for CAT coverage and instead paid a
small per crop, per county administrative fee. The Federal Crop
Insurance Reform Act of 1994 introduced the concept of linkage within
the program. Linkage required a producer to purchase crop insurance at
least the CAT level of coverage in order to qualify for the benefits of
another farm safety net program in an effort to increase participation
and eliminate the need for competing ad hoc disaster programs. The
linkage requirement was eliminated after 2 years, though there have
since been numerous ``linkage'' requirements for disaster assistance or
other farm safety net programs. The Federal Crop Insurance Reform Act
of 1994 also introduced higher subsidy rates for ``buy-up'' coverage
(insurance coverage above the CAT level for which producers pay some
portion of the premium), as well as providing authority for revenue
insurance products. Further, the Federal Crop Insurance Reform Act of
1994 expanded the role of the private sector, allowing entities to
participate in research and development of new insurance products and
features. A process was also created to allow private entities to
submit unsolicited proposals for insurance products to the FCIC Board
of Directors (Board) for approval. This allowed the introduction of the
first revenue products.
In 1996, the Risk Management Agency (RMA) was created to administer
FCIC programs and other non-insurance-related risk management and
education programs that help support U.S. Agriculture. In 2000,
Congress enacted legislation that allowed private entities to be
eligible for reimbursement of research, development and operating costs
for their private submitted products approved by the Board. This
legislation also removed restrictions on the development of insurance
products for livestock; provided authority for the FCIC Board to create
an expert review panel to assist the Board in evaluating new insurance
products for feasibility and actuarial soundness; and significantly
increased premium subsidies, by more than 50 percent, to encourage
producers to purchase higher insurance coverage levels, and to make the
insurance program more attractive to prospective producers.
4. Purpose/Goals
Federal crop insurance serves America's agricultural producers
through effective, market-based risk management tools and solutions to
strengthen the economic stability of agricultural producers and rural
communities and provides world class agricultural risk management
products, tools, education, and outreach.
5. Success in Meeting Programmatic Purpose/Goals
In the 2010 crop year, Federal crop insurance was available for
approximately 350 commodities, in over 3,141 counties, covering all 50
states and Puerto Rico. Insured acreage in the program exceeded 256
million acres. As the amount of insured acreage has increased, so too
has the liability, or value of the insurance in force. In 1994 program
liability was less than $14 billion. Industry estimates suggest that
for 2011 program liability could exceed $100 billion. Of special
significance is the level of participation in specialty crops programs.
Seventy-five percent of producers are participating, which compares
well to the 83 percent participation levels for the major program
crops. Important fruit, nut and vegetable states like California (71%),
Florida (91%), and Washington (68%) each score well in Federal crop
insurance program participation.
Many banks now require or at least encourage crop insurance
coverage in order to make operating loans to producers. Federal crop
insurance has become a fact of life for many farmers--without which
American farmers would find it difficult to continue providing America
and the world with an abundant supply of food, fiber and fuel. The crop
insurance program has seen sustained growth as demonstrated by the
increasing proportion of acres insured at buy up coverage levels over
the last decade to a record-high of 90 percent.
The type of coverage being purchased is also shifting to the more
comprehensive revenue coverage. In 2010, revenue coverage accounted for
65 percent of the insured acres, compared to just 33 percent in 2000.
In addition, the average coverage level (percent of the total crop
covered) for buy up insurance has increased to approximately 73 percent
for 2010, compared to 68 percent in 2000. Improvements to the program
have been accomplished in an actuarially sound manner. Over the last 2
decades, premiums (producer premiums added to premium subsidies) have
been sufficient to cover the indemnities paid to producers plus a
reasonable reserve. For example, the program's loss ratio from 1994
through 2010 has averaged about 0.82.

6. Annual Budget Authority (FY 2002-FY 2011)
(dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
A&O $74,232 $70,248 $71,001 $71,468 $76,278 $76,658 $76,121 $77,177 $80,325 $78,842
FCIC Fund $2,820,926 $2,910,966 $3,366,433 $2,242,167 $3,295,458 $4,379,256 $4,145,091 $6,765,663 $6,898,215 $6,992,896
----------------------------------------------------------------------------------------------------------------------------------
Total Authority.... $2,895,158 $2,981,214 $3,437,434 $2,313,635 $3,371,736 $4,455,914 $4,221,212 $6,842,840 $6,978,540 $7,071,738
--------------------------------------------------------------------------------------------------------------------------------------------------------
The FCIC fund includes Budget Authority only. It does not include carryover balances or offsetting collections.

7. Annual Outlays (FY 2002-FY 2011)
(dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
A&O $83,801 $75,849 $71,482 $66,739 $73,824 $79,091 $76,254 $72,799 $78,002 $82,000
FCIC Fund $2,946,551 $3,254,184 $3,197,568 $2,883,272 $3,371,615 $3,471,225 $4,074,814 $7,888,892 $4,706,125 $6,989,000
----------------------------------------------------------------------------------------------------------------------------------
Total Outlays...... $3,030,352 $3,030,033 $3,269,050 $2,950,011 $3,445,439 $3,550,316 $4,151,068 $7,961,691 $4,784,127 $7,071,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlay amounts differ from Budget Authority due to timing. The general rule of thumb for FCIC outlay spend rates (current year/past year) is 90/10 for
ARPA, Delivery Expenses, and Underwriting Gains/Losses and 35/65 for Indemnities. For the A&O Account, RMA currently estimates a 90/10 split.

8. Annual Delivery Cost (FY 2002-FY 2011)
See [following tables] from Explanatory Notes provided to the
Congress in recent years as part of the President's annual budget
proposal. The pages provided display information on program costs
including costs associated with program delivery. Note that in each
case, the earliest fiscal year shown is an actual amount and the other
2 years are estimates.

Explanatory Notes, President's Budget Proposal for RMA (FY 2009), p. 22-
25
Risk Management Agency
Full Cost By Strategic Objective

Strategic Objective 2.3: Provide Risk Management and Financial Tools to
Farmers and Ranchers
FY 2007 FY 2008 FY 2009
($000) ($000) ($000)Program
Program ItemsFederal Crop Insurance
Corporation Fund Research and Development $40,000 $40,000 $40,000
Program
Pilot Programs $21,000 $21,000 $21,000
Policy Consideration and $3,500 $3,500 $3,500
Implementation
Premium Program $2,727,720 $3,846,559 $4,100,446
A&O Expenses/Delivery $1,110,750 $1,479,566 $1,471,876
Expenses
Risk Management Assistance $5,000 $5,000 $5,000
Program
Excess Crop Losses $466,286 ($1,250,534) $936,123
---------------------------------------
Total $4,374,256 $4,145,091 $6,577,945Administrative and Operating
Expenses Administrative Costs $58,369 $62,332 $63,461
(direct)
Information Technology 17,075 13,716 13,716
---------------------------------------
Total $75,444 $76,048 $77,177 Performance measure:
Increase the normalized
value of FCIC risk
protection coverage
provided through FCIC
sponsored insurance (in
billions) Performance target: $50.7 $53.7 $54.8
Unit Cost: N/A N/A N/A
=======================================
Total Program $4,449,700 $4,221,139 $6,655,122
Total FTEs 488 553 553

Explanatory Notes, President's Budget Proposal for RMA (FY 2010), p. 19-
22
Risk Management Agency
Full Cost By Strategic Objective Strategic Objective 2.3: Provide Risk Management and Financial Tools to
Farmers and Ranchers
FY 2008 FY 2009 FY 2010
($000) ($000) ($000)Program
Program ItemsFederal Crop Insurance
Corporation Fund Agricultural Risk $42,791 $68,500 $68,500
Protection Act
Initiatives
Premium Program $4,377,350 $6,892,983 $8,837,530
A&O Expenses/Delivery $1,994,615 $1,621,679 $1,545,767
Expenses
Risk Management Assistance $5,000 $6,000 $6,000
Program
Excess Crop Losses $1,577,759 $967,415 $914,732
---------------------------------------
Total $7,997,515 $9,556,577 $11,372,529Administrative and Operating
Expenses Administrative Costs $61,863 $63,606 $66,754
(direct)
Information Technology $13,303 $13,571 $13,571
---------------------------------------
Total $75,166 $77,177 $80,325 Performance measure:
Increase the normalized
value of FCIC risk
protection coverage
provided through FCIC
sponsored insurance (in
billions) Performance target: $53.7 $54.8 $50.7
Unit Cost: N/A N/A N/A
=======================================
Total Program $8,072,681 $9,633,754 $11,452,854
Total FTEs 480 553 568

Explanatory Notes, President's Budget Proposal for RMA (FY 2011), p. 23-
24
Risk Management Agency
Full Cost By Strategic Objective Department Strategic Goal: USDA will assist rural communities to create
prosperity so they are self sustaining and economically thriving.
FY 2009 FY 2010 FY 2011
Amount Amount Amount
($000) ($000) ($000)Program
Program ItemsFederal Crop Insurance
Corporation Fund Agricultural Risk $47,371 $68,500 $68,500
Protection Act
Initiatives
Premium Program $8,416,173 $7,669,250 $9,040,243
A&O Expenses/Delivery $1,601,807 $1,567,145 $1,683,633
Expenses
Risk Management $6,000 $6,000 $6,000
Assistance Program
Excess Crop Losses $1,962,597 $1,167,759 $1,204,771
Projected Savings from -- -- ^$782,000
Negotiations of SRA
-----------------------------------------
Total Costs $12,033,948 $10,478,654 $11,221,147Administrative and Operating
Expenses Administrative Costs $63,606 $66,754 $67,493
(direct)
Information Technology $13,571 $13,571 $15,571
-----------------------------------------
Total Costs $77,177 $80,325 $83,064
FTEs 481 568 568 Performance measure:
Increase the normalized
value of FCIC risk
protection coverage
provided through FCIC
sponsored insurance (in
billions) BY Performance $53.7 $54.8 $50.7
Cost per measure (unit N/A N/A N/A
cost)
------------------------------------------------------------------------
Total for Department Strategic Goal 1
------------------------------------------------------------------------
Total Costs for $12,111,125 $10,558,979 $11,304,211
Department Strategic
Goal
FTEs 481 568 568

Explanatory Notes, President's Budget Proposal for RMA (FY 2012), p. 23-
24
Risk Management Agency
Full Cost By Department Strategic Goal Department Strategic Goal: Assist Rural Communities to Create Prosperity
so They Are Self-Sustaining, Repopulating, and Economically Thriving.
FY 2010 FY 2011 FY 2012Program
Program ItemsFederal Crop Insurance
Corporation Fund (FCIC) Premium Subsidy $4,089,811 $4,600,900 $3,082,875
Delivery Expenses $1,567,145 $1,325,000 --
Underwriting Gains $1,167,759 $999,496 --
Federal Crop Insurance $74,500 $68,500 $59,500
Act Initiatives
Other Authority ($2,352,096) -- --
Withdrawn
-----------------------------------------
Total Costs $4,547,119 $6,993,896 $3,142,375Administrative and Operating
Expenses Administrative Costs $66,045 $66,045 $66,045
(direct)
Information Technology $14,280 $14,280 $16,280
-----------------------------------------
Total Costs $80,325 $80,325 $82,325
FTEs 501 568 568 Performance Measure:
The normalized value
of: BY Performance Dollars Dollars Dollars
Cost per measure $51.9 $52.4 $52.9
(unit cost)
------------------------------------------------------------------------
Total for Strategic Goal
------------------------------------------------------------------------
Total Costs for Priority $4,627,444 $7,074,221 $3,224,700
(program, direct, indirect)
FTEs 501 568 568
9. Eligibility Criteria
In general, anyone producing a crop or livestock for which premium
rates have been published in the counties actuarial documents is
eligible to purchase crop insurance. Basic requirements such as legal
competency and being of legal majority apply. The person purchasing
crop insurance must also have an insurable interest in the crop and
must provide the required identification number and other required data
to the agent from whom the policy was purchased.
Any farmer or rancher can become ineligible to participate in the
program. Circumstances that may cause a person to become ineligible
include having a delinquent debt, such as unpaid premium or failure to
timely repay an indemnity that was overpaid. That person again becomes
eligible when the debt is resolved. Persons who are disqualified,
suspended, or debarred under the Act and applicable regulation, are
ineligible for crop insurance for the period of disqualification,
suspension or debarment. Any person who is convicted of violating the
controlled substance provisions of the Food Security Act of 1985, as
amended, is ineligible for crop insurance from the beginning of the
crop year of conviction and the 4 subsequent consecutive crop years.
There are no carve-outs in the Federal crop insurance program.

10. Utilization (Participation) Data
Additional Coverage Only
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of
Reinsurance Year Policies Insured Acres Liability (Value) Premium Claims Payments Loss Ratio Loss Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2001 1.1 million 170.5 million $30.1 billion $2.7 billion $2.9 billion 1.069 0.097
2002 1.1 million 176.6 million $30.5 billion $2.7 billion $4 billion 1.485 0.131
2003 1.1 million 183.8 million $34 billion $3.2 billion $3.2 billion 1.003 0.095
2004 1.1 million 189 million $39.5 billion $4 billion $3.2 billion 0.811 0.081
2005 1.1 million 217.7 million $37.2 billion $3.7 billion $2.3 billion 0.609 0.061
2006 1 million 213.7 million $45.4 billion $4.4 billion $3.5 billion 0.782 0.077
2007 1 million 243.3 million $59.8 billion $6.3 billion $3.4 billion 0.544 0.057
2008 1 million 242.2 million $81.1 billion $9.5 billion $8.6 billion 0.909 0.107
2009 1.1 million 242.5 million $71.6 billion $8.6 billion $5.2 billion 0.597 0.072
2010 1.1 million 236.2 million $71 billion $7.3 billion $4.1 billion 0.565 0.058
Maximum 1.1 million 243.3 million $81.1 billion $9.5 billion $8.6 billion 1.485 0.131
Minimum 1 million 170.5 million $30.1 billion $2.7 billion $2.3 billion 0.544 0.057
Ten-year average 1.1 million 211.6 million $50 billion $5.2 billion $4 billion 0.837 0.084
--------------------------------------------------------------------------------------------------------------------------------------------------------

Catastrophic Coverage Only
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of
Reinsurance Year Policies Insured Acres Liability (Value) Premium Claims Payments Loss Ratio Loss Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2001 236,669 41 million $6.9 billion $247.7 million $48.9 million 0.197 0.007
2002 208,563 38.2 million $6.8 billion $229.5 million $78.7 million 0.343 0.012
2003 175,393 33.7 million $227 million $44.1 million 0.194 0.007
2004 156,004 31.7 million $241.3 million $95 million 0.394 0.013
2005 138,464 28.1 million $236.4 million $81.3 million 0.344 0.012
2006 125,786 28.3 million $261.2 million $64.5 million 0.247 0.007
2007 120,100 28.3 million $268.4 million $50.6 million 0.188 0.007
2008 120,405 30 million $332.7 million $80.4 million 0.242 0.010
2009 93,099 22.3 million $305 million $59.3 million 0.194 0.008
2010 79,687 20.3 million $262.2 million $39.6 million 0.151 0.006
Maximum 236,669 41 million $332.7 million $95 million 0.394 0.013
Minimum 79,687 20.3 million $227 million $39.6 million 0.151 0.006
Ten-year average 145,417 30.2 million $261.1 million $64.2 million 0.249 0.009
--------------------------------------------------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
The public-private partnership between RMA and private crop
insurance companies for the delivery of subsidized crop insurance is
unique. The Federal crop insurance program is different from disaster
funding because farmers are contributing to the costs of the program
through the payment of premium for an actuarially sound program.
12. Waste, Fraud and Abuse
Waste--The crop insurance program is currently reporting a 4.7
percent average error rate in accordance with the Improper Payments
Information Act. This rate is consistent with the program's
historically reported error rates of between four to six percent. While
the goal is to continue to reduce crop insurance program errors, the
closely related private Property and Casualty lines of insurance
typically report error rates of all types, intentional and
unintentional, between 15 and 20 percent. RMA recently renegotiated the
Standard Reinsurance Agreement (SRA) to include targeted quality
control reviews to assist in identifying and correcting individual and
program errors. RMA also is completing an Information Technology
Modernization project that has new built in internal controls and
checks of data to identify and correct data errors before indemnities
are paid. Advances in technology will continue to provide opportunities
to improve the way we assign insurance guarantees and assess loss
events that will continue to improve RMA's ability to limit program
errors.
Fraud and Abuse--RMA is in its eleventh year of conducting annual
spot checks of producers identified through Congressionally authorized
data mining as being anomalous when compared to their neighbors. Once
identified, these producers are notified that they will be checked
during the year by the Farm Service Agency (FSA). RMA has documented
that this effort reverses the observed anomalous behavior resulting in
a reduction of expected indemnity payments of almost $840 million to
date. The 2011 SRA includes an expansion of this effort to include
checks of an additional tier of producers by their insurance company.
RMA also dedicates significant resources to assisting USDA's Office
of Inspector General (OIG) in investigating and prosecuting criminal
program violations and imposing administrative sanctions when
indicated. Although RMA continues to believe the percentage of
producers engaged in criminal behavior is relatively small, these
producers create a negative impression of the program with the public
and as such RMA believes the aggressive identification and prosecution
of those who abuse the program is essential to maintaining program
integrity. Currently, RMA is assisting OIG and the Department of
Justice with identifying violations in the tobacco insurance program
that includes criminal activity by a significant number of producers,
agents, and loss adjusters across several states. The termination of
the tobacco quota program created vulnerabilities in the tobacco
marketing system that left the insurance program exposed to abuse. RMA
is working to correct these vulnerabilities, while identifying those
who have taken advantage of them in the interim and prosecuting and
sanctioning those persons to the fullest extent of the law.
13. Effect of Administrative PAYGO
In 2005, the Office of Management and Budget released Memorandum M-
05-13 (``Budget Discipline for Agency Administrative Actions'')
requiring that for ``any proposed discretionary agency administrative
action that would increase mandatory spending, the agency must include
one or more proposals for other administrative actions to be taken by
the agency that would comparably reduce mandatory spending''. This is
commonly referred to as ``PAYGO.''
There have been a number of Administrative PAYGO actions in the
crop insurance program. For example, last year's renegotiation of the
Standard Reinsurance Agreement generated a significant amount of
budgetary savings, $2 billion of which was applied to Administrative
PAYGO (the remainder was applied to debt reduction). Conversely, a
number of crop insurance products have been added or expanded, like the
Pasture, Rangeland, and Forage product--a critical product for
livestock producers--using Administrative PAYGO offsets.

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF CONSERVATION PROGRAMS)

----------

THURSDAY, JULY 7, 2011

Subcommittee on Conservation, Energy, and
Forestry,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:04 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Glenn
Thompson [Chairman of the Subcommittee] presiding.
Members present: Representatives Thompson, Goodlatte,
Gibbs, Southerland, Roby, Huelskamp, Hultgren, Ribble, Noem,
Lucas (ex officio), Holden, Schrader, Owens, McIntyre, Walz,
Pingree, Fudge, and Peterson (ex officio).
Staff present: Brent Blevins, Tamara Hinton, Josh Maxwell,
Debbie Smith, Lauren Sturgeon, Suzanne Watson, Nona S. Darrell,
Liz Friedlander, Anne Simmons, John Konya, and Jamie Mitchell.

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

The Chairman. Well, good morning, everyone. This hearing of
the Subcommittee on Conservation, Energy, and Forestry
entitled, Agricultural Program Audit: Examination of
Conservation Programs, will come to order. I will start out
with my opening statement.
I want to welcome everyone to this Subcommittee hearing to
examine the farm bill conservation programs. This is one of a
series of hearings the six Subcommittees of the House
Agriculture Committee will be holding to audit farm bill
programs in advance of writing the next farm bill. Though the
current farm bill doesn't expire until September of 2012, it is
important that we begin the review process now. I believe it is
imperative that we have a sound knowledge base from which to
make responsible decisions as we address these programs.
Now, I don't think I need to remind anyone in this room
that we face many challenges in drafting the next farm bill. In
the current fiscal environment, we will be faced with some
difficult decisions regarding the fate of programs in all parts
of the farm bill, including Title II. Moreover, Title II
programs, including the Wetlands Reserve Program and the
Grasslands Reserve Programs do not have a budget baseline
beyond the expiration of the current farm bill. Given the
challenging decisions ahead of us and a number of new faces on
the Subcommittee, I think this is an excellent opportunity for
everyone to ask questions about specific programs, as well as
general program delivery and familiarize themselves with
programs under the Subcommittee's jurisdiction.
Congress offered the first conservation programs for
farmers and ranchers in the 1930s and we have seen a tremendous
growth in programs since then. The conservation title was first
introduced in the farm bill in 2002 and the Title was further
revised and expanded in the 2008 Farm Bill.
Today, USDA offers more than 20 separate active land and
land retirement programs that account for billions in spending
annually. This hearing gives us the chance to hear directly
from those at USDA who are responsible for the implementation
of conservation programs, and we have a chance to learn about
these programs and to ask questions about how they are
implemented and in what manner we could improve the delivery in
the future. When the time comes to make decisions about
conservation programs, we will all be better placed to do so if
we have a thorough understanding of how each program operates.
Our witnesses today will provide information about these
various programs that we need to move forward in a legislative
process. We will learn about basic information about the amount
of money that is being spent on each program, program
participation, as well as examples of duplication with other
programs, and examples of waste, fraud, and abuse.
I want to welcome Chief Dave White of the NRCS and Mr.
Bruce Nelson, the Administrator of FSA. It is good to see you
both. I am certainly eager to hear your testimony on these
programs. And I look forward to working with you both in the
months ahead to draft aa conservation title that fulfils its
core goals while utilizing taxpayer dollars in a responsible
manner.
[The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good morning. I want to welcome everyone to the Conservation,
Energy, and Forestry Subcommittee hearing to examine farm bill
conservation programs.
This is one of a series of hearings the six Subcommittees of the
House Agriculture Committee will be holding to audit farm bill programs
in advance of writing the next farm bill.
Though the current farm bill does not expire until September of
2012, it is important we begin the review process now.
I believe it is imperative we all have a sound knowledge base from
which to make responsible decisions in how we address these programs.
I don't think I need to remind anyone in this room that we face
many challenges in drafting the next farm bill.
In the current fiscal environment, we will be faced with some
difficult decisions regarding the fate of programs in all parts of the
farm bill, including Title II.
Multiple Title II programs, including the Wetlands Reserve Program
and the Grasslands Reserve program, do not have a budget baseline
beyond the expiration of the current farm bill.
Given the challenging decisions ahead of us and the number of new
faces on this Subcommittee, I think this is an excellent opportunity
for everyone to ask questions about specific programs as well general
program delivery and familiarize themselves with programs under the
Subcommittee's jurisdiction.
Congress offered the first conservation programs for farmers and
ranchers in the 1930s and we have seen a tremendous growth in programs
since then.
The conservation title was first introduced to the farm bill in
2002. The title was further revised and expanded in the 2008 Farm Bill.
Today, USDA offers more than 20 separate active land and land
retirement programs that account for billions in spending annually.
This hearing gives us the chance to hear directly from those at
USDA who are responsible for the implementation of conservation
programs.
We will have a chance to learn about these programs and to ask
questions about how they are implemented and in what manner we could
improve their delivery in the future.
When the time comes to make decisions about conservation programs,
we will all be better placed to do so if we have a thorough
understanding of how each program operates.
Our witnesses today will provide information about these various
programs that we need to move forward in the legislative process.
We will learn basic information about the amount of money that is
being spent on each program, program participation, as well as examples
of duplication with other programs and examples of waste, fraud and
abuse.
I want to welcome Chief Dave White of NRCS and Mr. Bruce Nelson,
Acting Administrator of FSA. It is good to see you both and I am eager
to hear your testimony on these programs.
I look forward to working with you both in the months ahead to
draft a conservation title that fulfills its core goals while utilizing
taxpayer dollars in a responsible manner.
I now yield to my friend, the Ranking Member from Pennsylvania, Mr.
Holden, for his opening statement.

The Chairman. And I will yield to my friend, the Ranking
Member from Pennsylvania, Mr. Holden, for his opening
statement.

OPENING STATEMENT OF HON. TIM HOLDEN, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA

Mr. Holden. Thank you, Mr. Chairman. I would like to thank
our witnesses and guests for being here this morning.
This hearing presents an important and timely opportunity
for Members of this Subcommittee to review the state of USDA
conservation programs. The Natural Resources Conservation
Service and the Farm Service Agency, through the authority of
this Committee and the farm bill, currently administer over 20
programs to assist producers and landowners who wish to
practice conservation on agricultural lands.
These conservation practices have expanded over the years
from early efforts to reduce high levels of soil erosion and
address water quality and quantity issues to address other
natural resources concerns such as wildlife habitat, air
quality, wetlands restoration and protection, and energy
efficiency. As the economic and regulatory pressures have
increased in recent years, agriculture producers and private
forest landowners have come to rely on these farm bill
conservation programs to help them stay in business.
I am concerned that recent reductions in conservation
program funding is resulting in USDA having to deny producers
the tools they need to combat these burdens effectively due to
insufficient funding. Lack of assistance to meet regulatory
requirements imposes an unfunded mandate on producers and harms
our landowners' ability to run their businesses and efficiently
implement conservation practices on their land.
Bottom line, access to funds is vital and so is the
delivery of these funds. Whether it is through FSA, NRCS, or a
technical service provider, a consistent message we are hearing
across the country is that more people are needed in the field
to assist producers in making land-management decisions and
implementing conservation practices.
As we focus on deficit reduction and the streamlining of
Federal programs, it is important that we ensure USDA remains
able to deliver effective conservation programs with fewer
resources and respond to the demand for those landowners who
depend on them. Farmers and ranchers have always been the
original stewards of the land and continue to be the best
advocates for research conservation.
I look forward to today's expert testimony and the
opportunity to listen and learn and ask questions of those
responsible for ensuring that that remains true in the future.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. We are also joined in
the hearing by the Chairman of the Agriculture Committee. I now
recognize Chairman Lucas for an opening statement.

OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA

Mr. Lucas. Thank you, Chairman Thompson and Ranking Member
Holden for holding today's hearing to examine conservation
programs.
During the past two farm bills, I served as Chairman and
Ranking Member respectively of the Subcommittee with
jurisdiction over the Conservation Title. My, aren't free
elections a wondrous thing? Both in 2008 and in the 2002 Farm
Bill saw exponential growth in conservation programs. In 2002,
we increased conservation spending in the 2002 Farm Bill by $17
billion over 10 years, an 80 percent expansion that created one
of the greenest farm bills in history. This legislation
increased our commitment to important programs like CRP, EQIP,
and helped multiply participation in conservation practices.
In the 2008 Farm Bill, we built upon the historic
Conservation Title by adding $4 billion over 10 years. That
Conservation Title included new regional and cooperative
partnership programs, as well as reauthorization and increased
funding for existing programs. These programs have created many
new ways for producers and conservation organizations to
achieve shared goals. Farmers and ranchers, with the assistance
of these programs, have worked voluntarily to help reduce soil
erosion, increase wetlands, improve water quality, and preserve
farmland and wildlife habitat.
However, as we work towards the next farm bill, this
Committee will be faced with a very different budget situation.
Not only will the Agriculture Committee have to do our part
within the overall deficit situation, but as all of us know, we
literally have dozens of programs, as has been alluded to by
the Chairman and the Ranking Member, with no baselines, many
under the umbrella of conservation. Conservation is an
important element of farm policy. Farmers and ranchers make
their living off the land and they are committed to preserving
and protecting it for future generations.
As lawmakers, we have a responsibility to ensure that
conservation policy is effective without being duplicative or
too costly. This is especially important in the current fiscal
environment. Today's audit will help us evaluate our current
policy so that we can determine what is working, what needs to
be adjusted, and what can be eliminated. This is a critical
step in the process of developing the next farm bill.
I thank all of you for being here and participating today,
and I can only say that I have the greatest of confidence in
the gentlemen from Pennsylvania when we make those tough
decisions in the coming days, months, and year.
I yield back the balance of my time, Mr. Chairman.
[The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress
from Oklahoma
Good morning.
I'd like to thank Chairman Thompson for holding today's hearing to
examine conservation programs.
During the past two farm bills I served as the Chairman and Ranking
Member, respectively, for the Subcommittee of jurisdiction for the
conservation title. Both the 2008 and 2002 Farm Bills saw exponential
growth in conservation programs.
In 2002, we increased conservation spending in the 2002 Farm Bill
by $17 billion over 10 years--an 80 percent expansion that created the
greenest farm bill in history. This legislation increased our
commitment to important programs like CRP and EQIP and helped multiply
participation in conservation practices.
In the 2008 Farm Bill, we built upon the historic conservation
title by $4 billion over 10 years. That conservation title included new
regional and cooperative partnership programs as well as the
reauthorization and increased funding of existing programs.
These programs have created new ways for producers and conservation
organizations to achieve shared goals. Farmers and ranchers, with the
assistance of these programs, have voluntarily worked to help reduce
soil erosion, increase wetlands, improve water quality, and preserve
farmland and wildlife habitat.
However, as we work towards the next bill, this Committee will be
faced with a very different budget situation. Not only will the
Agriculture Committee have to do our part within the overall deficit
situation, but as all of us know, we literally have dozens of programs
with no baselines, many under the umbrella of conservation.
Conservation is an important element of farm policy. Farmers and
ranchers make their living off the land, and they are committed to
preserving and protecting it for future generations. As lawmakers, we
have a responsibility to ensure that conservation policy is effective
without being duplicative or too costly. That is especially important
in the current fiscal environment.
Today's audit will help us evaluate our current policy so that we
can determine what is working, what needs to be adjusted, and what can
be eliminated.
This is a critical step in the process of developing the next farm
bill, and I thank you all for being here today to participate in that
process.

The Chairman. Thank you, Mr. Chairman.
We are also joined by the Ranking Member for the full
Agriculture Committee. Mr. Peterson, any opening remarks, sir?
Okay. Very good.
The chair requests that the other Members submit their
opening statements for the record so that the witnesses may
begin their testimony and ensure that there is ample time for
questions.
And I am very pleased to welcome our panel of witnesses to
the table today. And we have Mr. Dave White, Chief of the
Natural Resource Conservation Services, Department of
Agriculture; and Administrator Bruce Nelson, Administrator of
Farm Service Agency with the Department of Agriculture.
Gentleman, you are the only two witnesses for this panel, so I
encourage you to take the time that you need. We are not going
to be using any lights today for your testimony, so I encourage
you to take the time that you need to cover the information so
that we will all benefit.
And Mr. Nelson, please begin when you are ready.

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY,
U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

Mr. Nelson. Mr. Chairman, thank you very much. I am new to
this so I have to learn how to punch the buttons.
Mr. Chairman, Ranking Members, Members of the Subcommittee,
thank you for the opportunity to discuss the conservation
programs administered by the Farm Service Agency here today. My
testimony will focus on FSA's conservation programs and our
collaboration with our conservation partners in ensuring high-
quality, cost-effective program delivery. And I am especially
glad to be here on my first occasion with Dave White, who did
an outstanding job as State Conservationist in my home State of
Montana before becoming Chief of NRCS.
Let me begin by talking about FSA's largest conservation
program, the Conservation Reserve Program, or CRP. CRP is a
voluntary program that provides a cost-effective means to
address conservation concerns on environmentally sensitive
lands. Currently, CRP contains more than 31 million acres and
FSA issues about $1.7 billion annually in rental payments to
CRP participants.
USDA recently announced the results of general Signup 41,
which was held this past spring. Of the 3.8 million acres
offered, 2.8 million acres were accepted. With 4.4 million
acres of contracts expiring on September 30 this year,
enrollment is anticipated to total 29.9 million acres on
October 1.
The Conservation Reserve Enhancement Program, or CREP, is a
component of the CRP continuous signup and is a partnership
among USDA, the tribes, states, and in some cases, private
groups. CREP agreements address high-priority conservation
issues, and in total, FSA has 45 CREP agreements in 33 states.
Another newer component of CRP is a Transition Incentives
Program. TIP provided $25 million through 2012 to provide
additional CRP payments for retiring owners or operators who
transition land to beginning farmers or socially disadvantaged
producers. In turn, the new operator must return some or all of
the land to production using sustainable farming techniques. As
of June 30, there were 506 approved TIP contracts accounting
for nearly 73,000 acres. I would note for the Committee that
those numbers are an update from my testimony submitted for the
record because 20 additional contracts were established in the
last 3 weeks of June.
FSA works closely with NRCS to administer the Emergency
Conservation Program, which provides emergency cost-share
funding and technical assistance to farmers and ranchers to
rehabilitate damaged farmland. Approximately $90 million has
been allocated nationwide under ECP for this fiscal year, about
$2 million remains available to fulfill an anticipated $134
million in requests, leaving a projected shortfall of $132
million. This estimate is also a minor update from my testimony
submitted for the record.
FSA also administers several other new conservation
programs that were created in the 2008 Farm Bill. The Voluntary
Public Access and Habitat Incentive Program provides grants to
states and tribal governments to encourage private landowners
to make their land available for recreation. Earlier this
month, USDA announced additional grants under this program,
bringing in the total number of states and tribes participating
to 26.
FSA and NRCS also jointly administer a Grassland Reserve
Program, or GRP. GRP participants limit cropping while
retaining the right to conduct grazing practices and
operations. Applications may be filed with either NRCS or FSA.
Generally, FSA implements rental contracts and NRCS administers
the easement program. Currently, 1.1 million acres are enrolled
in GRP at an annual cost of approximately $10 million.
FSA and NRCS are working hard together to make sure farmers
know their options and have the right technical assistance. I
am proud to report that the average government cost per
enrolled acre in inflation-adjusted terms is significantly
lower now than in the late 1980s, while at the same time, more
environmental and conservation benefits are being generated. We
have streamlined tasks and reduced signup costs by about 30
percent per contract for general signup and 18 percent per
contract for continuous signup.
In closing, we are committed to ensuring that our
conservation program benefits the agricultural sector as
intended by Congress. And we look forward to working closely
with you to ensure sustainable conservation for agriculture in
rural areas. Mr. Chairman, this concludes my statement, and I
would be happy to answer any questions you or Members of the
Subcommittee might have. Thank you very much.
[The prepared statement of Mr. Nelson follows:]
Prepared Statement of Bruce Nelson, Administrator, Farm Service Agency,
U.S. Department of Agriculture, Washington, D.C.
Mr. Chairman, Ranking Member, and Members of the Subcommittee,
thank you for the opportunity to discuss the conservation programs
administered by the Farm Service Agency (FSA).
FSA's largest conservation program, the Conservation Reserve
Program (CRP), which was first authorized by the 1985 Farm Bill, has a
long record of accomplishment. CRP is a voluntary program that provides
a cost-effective means to address many conservation concerns on
environmentally-sensitive lands (such as clean air, clean water, and
wildlife habitat). Currently, CRP contains more than 31 million acres
of grass, trees, riparian buffers, filter strips, restored wetlands,
and high-value wildlife habitat. The experience of the 1930's and
economic and societal impacts of the ``Dust Bowl'' demonstrates the
importance of protecting our nation's most environmentally sensitive
lands.
The Transition Incentives Program (TIP) provides up to two
additional CRP annual rental payments to a retired or retiring owner or
operator of land under an expiring CRP contract if the land is sold or
leased to a beginning or socially disadvantaged farmer or rancher for
the purpose of returning some or all of the land to production using
sustainable methods.
FSA also implements several programs that provide emergency
conservation assistance to producers. For example, the Emergency
Conservation Program (ECP)--which has been in existence for several
decades--provides emergency funding to farmers and ranchers to
rehabilitate farmland damaged by natural disasters and for carrying out
water conservation measures in periods of severe drought.
FSA administers several new programs created by the 2008 Farm Bill.
For example, the Voluntary Public Access and Habitat Incentive Program
(VPA-HIP) provides grants to states and tribal governments to encourage
owners and operators of privately held farm, ranch, and forestland to
voluntarily make their land available for public access for hunting,
fishing, and other wildlife-dependent recreation. These grants provide
funds to programs administered by state and tribal governments
FSA and the Natural Resources Conservation Service (NRCS) jointly
administer the Grassland Reserve Program (GRP), which is a voluntary
conservation program that emphasizes support for grazing operations,
enhancement of plant and animal biodiversity, and protection of
grassland under threat of conversion to other uses.
FSA also implements non-Conservation Title programs that have
conservation effects such as the Biomass Crop Assistance Program (BCAP)
and the Emergency Forest Restoration Program (EFRP) both of which
require that participants have a conservation plan.
For FSA's conservation programs, the agency relies on technical
assistance from NRCS, the Forest Service, the Fish and Wildlife
Service, state fish and wildlife agencies, state Forestry agencies,
state agricultural and environmental departments, conservation
districts, non-governmental organizations, and the private sector.
These partners help us with numerous activities, including technical
determinations, conservation plan development, engineering design,
outreach to farmers and ranchers, and monitoring the impacts of
conservation programs.
Today, I will not only discuss these conservation programs in more
detail, but will also discuss how we work with our many conservation
partners, and indicate how we are moving forward to ensure high-
quality, cost-effective program delivery.
Conservation Reserve Program
CRP was authorized by the 1985 Farm Bill with a strong commodity
supply control connection. CRP has evolved into a conservation program
that increasingly targets environmental need by ranking offers in a
general signup according to their environmental benefit and through a
continuous signup that focuses on relatively small acreages that
protect much larger areas such as buffer strips, riparian buffers and
grass waterways.
CRP also created the Conservation Reserve Enhancement Program
(CREP) which leverages scarce Federal dollars with state and non-
government organization funds to better meet local environmental needs.
Under CREP, CRP helps to protect the Chesapeake Bay, salmon in the
Pacific Northwest, Mammoth Cave in Kentucky and Hawaiian coral reefs.
More recently, CRP has targeted enrollment of lands to achieve the
goals of initiatives focused on the conservation of priority fish and
wildlife resources such as wetlands, quail, ducks, and longleaf pine.
CRP provides cost-share assistance and annual rental payments to
farmers and ranchers to establish long-term (10 to 15 years)
conservation cover (such as grass or trees) on eligible farmland.
Numerous conservation practices are available including filter strips,
riparian buffers, wetland restoration and high-value wildlife habitat.
Annual rental payments are based on the agricultural rental value of
the land, and cost-share assistance is provided for up to 50 percent of
the participant's costs in establishing approved conservation
practices. FSA issues about $1.7 billion annually in rental payments to
CRP participants.
USDA recently announced the results of Signup 41, which was held
this past spring. Of the 3.8 million acres offered, 2.8 million acres
were accepted. Signup 41 acceptances have no impact on this year's
crop; accepted land currently in crops can be harvested normally. For
next year, the price impacts of Signup 41 enrollment on the price of
corn, soybeans, and wheat are estimated to be very modest. With 4.4
million acres expiring on September 30, 2011, enrollment is anticipated
to total 29.9 million acres on October 1, 2011 (contracts for the
recently-accepted 2.8 million acres begin on that date).
A Fiscal Year (FY) 2012 general signup is assumed in the
President's Budget; however, no signup dates have been announced. The
Secretary is committed to a strong CRP program and feels the best way
to keep it strong is to accept acres with the highest environmental
benefit.
A conservation plan is required for each CRP contract. FSA partners
with NRCS which makes certain technical eligibility determinations and
develops conservation plans. FSA is responsible for all program
activities, makes compliance determinations, and consults with other
Federal agencies such as the U.S. Fish and Wildlife Service. FSA also
partners with the Forest Service to provide conservation planning for
participants installing tree practices under CRP and also the Emergency
Forestry Conservation Reserve Program (EFCRP).
The environmental benefits of CRP are substantial. Since the
beginning of the program, USDA estimates CRP has reduced soil erosion
by more than 8 billion tons, including an estimated 325 million tons in
2010. On fields enrolled in CRP, nitrogen and phosphorus losses were
estimated to be reduced by 607 million pounds and 122 million pounds,
respectively, in 2010. In addition, CRP acreage reduces the impacts of
downstream flood events and recharges groundwater aquifers.
There are two primary ways for farmers and ranchers to participate
in CRP: the general signup provisions, such as Signup 41, and
continuous signup provisions. Under the general signup, producers
compete nationally for enrollment during specified periods. Under
continuous signup, landowners and operators with eligible lands may
enroll certain high priority conservation practices, such as restored
wetlands, filter strips, and riparian buffers, at any time during the
year without competition. In addition to annual soil rental payment and
cost-share assistance, many continuous practices are eligible for
additional annual and one-time up-front financial incentives.
Continuous Signup
The Conservation Reserve Enhancement Program (CREP) is a component
of CRP continuous signup and is a partnership among USDA, tribes,
states and, in some cases, private groups. Partners (generally states)
generally provide 20 percent of estimated total project costs. CREP
agreements address high-priority conservation issues of both local and
national significance, such as impacts to water supplies, loss of
critical habitat for threatened and endangered wildlife species, soil
erosion and reduced habitat for fish populations such as salmon.
Enrollment in a state is limited to specific geographic areas and
practices. In total, FSA has 45 CREP agreements with its partner states
and organizations spanning areas in 33 states.
Most CREP agreements are designed to target assistance toward a
critical need or issue. Iowa's CREP agreement, for example, focuses on
constructed wetlands in the Mississippi River basin. These constructed
wetlands reduce nitrogen loadings in watersheds dominated by tile-
drained cropland. They consist of a treatment pool and grass buffer,
and range in size from 16-70 acres. Monitoring data from the Iowa
project indicate that these wetlands remove 40-90 percent of the
nitrate flowing into the wetlands. The cost to reduce nitrogen load by
a pound in such situations is projected to be less than $1.38 per year
for 50 years.
As another example, we have CREP agreements with all the states
that drain into the Chesapeake Bay watershed. Pennsylvania's CREP
agreement, which has the most acreage enrolled, provides financial and
technical assistance to voluntarily restore wetlands, riparian areas,
and grasslands; reduce erosion; and prevent sediment, nitrogen, and
phosphorus from reaching the Chesapeake Bay. The Conservation Effects
Assessment Program (CEAP) of the Chesapeake Bay estimates that nitrogen
loss is reduced by 79 pounds per acre per year from acreage enrolled in
CRP.\1\
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\1\ United States Department of Agriculture, Natural Resources
Conservation Service. 2011. Assessment of the Effects of Conservation
Practices on Cultivated Cropland in the Chesapeake Bay Region. Final
Draft. http://www.nrcs.usda.gov/technical/nri/ceap/chesapeake_bay/
index.html.
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Farmable Wetlands Program
The Farmable Wetlands Program (FWP) is another component of CRP
that is designed to restore up to one million acres of farmable
wetlands and associated buffers by improving the land's hydrology and
vegetation. Eligible producers in all states restore wetland benefits
by planting long-term, resource-conserving covers to improve the
quality of water, control soil erosion, and enhance wildlife habitat.
Participants must agree to restore the hydrology of the wetlands and to
establish vegetative cover, which may include planting bottomland
hardwoods, cypress and other appropriate tree or wetland species. FWP
practices receive the same benefits as other continuous practices such
as filter strips and riparian buffers.
CRP Initiatives
CRP further targets limited Federal funds by focusing on specific
goals such as wetlands, longleaf pine, or wildlife. CRP initiatives
include:

Wetlands Initiative. This initiative was created to restore
wetlands located within the 100 year floodplain, restore playa
lakes and wetland complexes located outside the 100 year
floodplain, and restore floodplains by establishing bottomland
hardwood trees. The initiative provides vital habitat for many
wildlife species, filters runoff, improves water quality, and
reduces downstream flooding.

Quail Initiative. This initiative was created because
Northern bobwhite quail populations have declined due to
habitat loss. The 350,000 acre initiative creates early
successional grass buffers along agricultural field borders in
the 35 states that encompass the historic ranges of the
bobwhite quail. The buffers also benefit many other species,
such as, grasshopper sparrow, dickcissel, and Henslow's
sparrow.

Longleaf Pine Initiative. The 250,000 acre longleaf pine
initiative was developed to address the decline of longleaf
pine in the Southeast. Its goal is to re-establish longleaf
pine stands to benefit wildlife species and protect water
quality.

Duck Nesting Habitat Initiative. This 150,000 acre
initiative was designed to restore wetlands and wetland
complexes that are located outside the 100 year floodplain in
the Prairie Pothole Region. It will provide critical habitat
and nesting cover for ducks, sandhill cranes and other wildlife
species, while filtering runoff, and reducing downstream
flooding.

State Acres for Wildlife Enhancement. This 850,000 acre
initiative is designed to target high priority wildlife
objectives on a state and/or regional level. The projects were
targeted to create habitat for threatened and endangered
species, species of special concern, and species of economic
interest such as sage-grouse, lesser prairie-chicken, and ring-
necked pheasant.
Transition Incentives Program
Another component of CRP is TIP which was created in the 2008 Farm
Bill and provides $25 million through 2012 to promote the transition of
expiring CRP land from a retired or retiring owner or operator to a
beginning or socially disadvantaged farmer or rancher to return some or
all of the land to production using sustainable farming techniques.
Under TIP, the retired party is eligible to receive annual rental
payments for up to 2 additional years beyond the contract expiration
provided that the land is not transitioned to a family member. Certain
conservation and land improvement work may begin on the transitioned
land during the last year of the CRP contract.
A retired or retiring CRP participant may apply for TIP beginning
one year before the date of the expiration of the CRP contract through
the end of the contract. TIP sign-up began on May 17, 2010, and as of
June 9, 2011, there were 486 approved TIP contracts accounting for
nearly 73,000 acres for expected outlays of $6.5 million.
Emergency Conservation Program
The Emergency Conservation Program (ECP) provides emergency cost-
share funding (generally, up to 75 percent) and technical assistance to
farmers and ranchers to rehabilitate farmland damaged by natural
disasters and for carrying out emergency water conservation measures in
periods of severe drought. For land to be eligible the natural disaster
must create new conservation problems that, if untreated, would impair
or endanger the land or materially affect the land's productive
capacity and for rehabilitation matters must be unusual damage for
which Federal assistance is required to return the land to productive
agricultural use. County FSA committees determine land eligibility
based on on-site inspections of damage. Funding for this program is
appropriated by Congress.
Timing of ECP assistance is critical to producers facing disasters
and FSA and NRCS employees work closely at the state and county level
to provide efficient and timely service. For instance, FSA and NRCS
employees in Alabama are working to provide assistance to farmers
affected by recent tornados. Approximately $67 million has been
allocated under ECP in FY 2011. FSA currently has approximately $9
million available with more than $167 million in pending or soon to be
submitted requests.
FSA provides technical assistance regarding debris removal, fence
restoration, and grading and shaping of damaged land and FSA has an
agreement with NRCS for it to provide technical assistance for
practices requiring greater conservation expertise, including
restoration of conservation structures and installations as well as
drought emergency measures. FSA also has an agreement with the Forest
Service to provide technical assistance for hurricane disasters that
affect tree stands.
Voluntary Public Access_Habitat Incentive Program
VPA-HIP provides grants to states and tribal governments to
encourage owners and operators to voluntarily make land available for
public access for wildlife-dependent recreation. Funding may be used to
expand existing, or create new, public access programs, or provide
incentives to improve wildlife habitat on enrolled lands. USDA
announced additional participating states earlier this month, bringing
the total number of states participating in the program to 25 (plus the
Yakima Nation). With the expanded participation in FY 2011, the program
is expected to have a total cost of $50 million.
Grassland Reserve Program
FSA and NRCS jointly administer GRP. GRP participants voluntarily
limit future development and cropping uses of the land while retaining
the right to conduct grazing practices and operations related to the
production of forage and seeding, subject to certain restrictions
during nesting seasons. Applications may be filed for a rental contract
or an easement with NRCS or FSA. Generally, FSA implements rental
contracts and NRCS administers easements. NRCS provides all on-the-
ground technical assistance for easements and rental contracts.
Currently, 1.1 million acres are enrolled in GRP, at an annual cost of
approximately $10 million.
Moving Forward
As you can see, FSA's programs cover a wide variety of conservation
and other related needs that have evolved over time. For example, CRP
has been very effective at enhancing habitat for lesser prairie-chicken
and sage-grouse both of which are candidate species for listing under
the Endangered Species Act. CRP also helps producers comply with
regulatory actions such as the Chesapeake Bay's total maximum daily
load requirements. CRP participation not only promotes the protection
of environmentally-sensitive land, but can also help reduce the need
for additional regulatory burdens on agricultural producers.
We are committed to ensuring that conservation programs benefit the
agricultural sector as intended and protect land, improve water and air
quality, and promote wildlife habitat. We are also committed to
ensuring that we efficiently and effectively manage stewardship over
our natural resources. In addition, we work with our partners including
NRCS and the Forest Service, to ensure compliance with the law by
thoroughly reviewing producer and land eligibility and needs.
We are working hard to innovate and improve program efficiency. The
average government cost per enrolled acre, in inflation-adjusted terms,
is significantly lower now than in the late 1980's while, at the same
time, more environmental benefits are being generated. Further, FSA and
NRCS have significantly reduced technical assistance costs over the
past 10 years. We have made changes that allow the automation of
eligibility determinations and further streamlined the tasks necessary
to implement technical assistance for CRP. Because of these changes,
the costs of signup activities have been reduced by about 30 percent
per contract for general signup and 18 percent per contract for
continuous signup.
We are also committed to evaluating CRP outcomes to ensure that we
best target assistance as we move forward. We undertake monitoring and
evaluation work with Federal, state, university, and other partners,
which provides the sound science to effectively administer CRP and
other conservation programs. These analytical results have been used to
develop new conservation initiatives and resulted in the Iowa CREP
findings noted earlier. These results are also used to develop
environmental goals for the FSA strategic plan and to guide other USDA
decision-making.
Final Thoughts
In an era of reduced resources, we look forward to working closely
with Congress to identify and meet critical conservation needs. We also
look forward to working more closely with not only our inter-agency
partners within USDA, but also with the private sector and other
government agencies. By doing so, we aim to better leverage resources,
share ideas, and deliver programs that ensure sustainable conservation
activities and programs for agriculture and rural areas.

The Chairman. Thank you, Mr. Nelson.
Chief White, begin when you are ready.

STATEMENT OF DAVE WHITE, CHIEF, NATURAL RESOURCES CONSERVATION
SERVICES, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, D.C.

Mr. White. Thank you, Mr. Chairman, Mr. Ranking Member, Mr.
Lucas, Mr. Peterson, Mr. Goodlatte, distinguished Members of
this Subcommittee. I am starting to feel a little bit
intimidated. I wasn't expecting quite this many Members here.
Anyway, you have asked me to talk about 15 programs, and I
have to tell you, I have been studying like a first-semester
freshman right before the exam time. Fifteen of them, I am
going to break them down into three categories for you. One, we
are going to have the mandatory-funded cost-share programs;
then, we will have a group of four, the mandatory easement
programs; and then we will have three discretionary.
So the eight mandatory cost-share programs, we will just
call this the big eight. The first one is EQIP, Environmental
Quality Incentives Program. This is the workhorse. This is the
big kid on the block. This is the most lushly funded. This is
the main bricks-and-mortar conservation cost-share program we
have in the United States of America. Since 2005, about \1/4\
million contracts have been written with farmers, ranchers, and
forest landowners in the United States of America--\1/4\
million since 2005. It has several components to it, some of
them I am going to address separately. So EQIP is really the
biggest program we have.
The Conservation Stewardship Program is the up-and-coming
kid. The Conservation Stewardship Program can enroll 12.7
million acres a year. We have had two enrollments. We are in
the tail end of the third enrollment. As of yesterday, the CSP
now has about 35 million acres. We are probably going to get
another 3 million acres in there. So it is going to be 38
million acres here in a month or so. So it is now
geographically the largest program. It is a completely
different program from the one it replaced, the Conservation
Security Program; Stewardship has a nationwide signup. It has a
focus on additionality.
Third cost-share program in the big eight, Wildlife Habitat
Incentive Program, $85 million a year baseline, frankly, it is
very, very similar to EQIP in how we operate it. It does have a
couple of distinct differences. One, it allows you to have a
higher cost-share rate for long-term enduring contracts. And
the second thing that is somewhat unique about it is that it
has a specific directive in there where we are to prioritize
the funding for state and national strategic objectives and
which we have done. And I will probably go into that later on.
Fourth program in the big eight, the Agricultural
Management Assistance, this was actually in part of the credit
title. It is only in 16 states. Sixteen states that have
historically low participation in crop insurance is where AMA
is offered. Again, it is very similar to EQIP. It does have a
couple of differences that I would bring forward to your
attention. This is a program that is really targeted towards
smaller specialty crop organic farmers. It has a baseline. It
is not in the Conservation Title, but it has its own baseline.
The funding is statutorily split between three agencies. Ten
percent of the funding goes to the Agricultural Marketing
Service, and they use that to help pay to transition to organic
farming. Forty percent of the funding goes to the Risk
Management Agency. They use that funding to help specialty
crops small farmers pay for crop insurance. Fifty percent comes
to NRCS and we help develop on-farm conservation systems. Two
things it does that really are fairly unique: one, you can use
the funding to install new irrigation systems, which is rather
unique; and second, you can use the funding to build irrigation
reservoirs, which, if you are in a drought, it is a pretty big
thing.
Fifth team in the big eight conference is the Agricultural
Water Enhancement Program, fondly called AWEP. AWEP is a
component of EQIP. It has its own distinct, separate baseline,
which at the end of the farm bill will be $60 million. AWEP is
focused on water conservation, water quality. There are some
specific instructions in the manager's report that gives us
targeted areas like the Ogallala Aquifer, Red River, Upper
Mississippi, Eastern Snake Plain Aquifer in Idaho, Bay Delta,
California, Puget Sound. And we have put funding in all of
those areas. A unique thing at AWEP is if you are in like an
exceptional drought area--I think that is a D3/D4--you can use
AWEP funds to build irrigation reservoirs. And some of you may
remember Mr. Everett from Alabama, that was a provision that he
really wanted to see in this 2008 Farm Bill.
Number six in the big eight, Conservation Innovation
Grants, this is a subcomponent of EQIP that does not have a
separate funding stream. All funding for this comes out of the
overall EQIP allocation. There are two components to
Conservation Innovation Grants. CIG A, which is really a grant
program, a 50 percent matching grant program, and it is
designed to take a research finding that is found in the lab
that shows promise and how do you get that to on-the-ground
application in a practical manner for farmers and ranchers.
This divide between discovery and application is called Death
Valley. So the Conservation Innovation Grants, Section A, is
designed to help you bridge that Death Valley and take
promising research results and put them on on-the-ground,
reasonable, technical applications that farmers can use around
the country.
The second part of CIG, Section B is air quality: $37.5
million is designated for this subsection and it is to be used
around the country in areas in air quality attainment areas.
There are several of them. I was detailed to Senator Harkin in
the 2008 Farm Bill process. This was brought forward on the
Senate side by Senators Boxer and Feinstein. Members of this
Committee, some of you may remember, Mr. Costa, Mr. Cardoza
brought it forward. This is designed to help producers
upgrade--part of it was to upgrade their engines. And when I
first heard about it, I scoffed at it. I mocked it. I laughed
at it. I thought this was the goofiest thing I have ever heard
of. And then I saw how it was working and I was wrong. I was
dead, flat, slap wrong.
I have been to California where the bulk of this funding
has gone. Central Valley, California, there is not one area in
the United States of America where farmers are more regulated
than they are in the Central Valley. And if you like peaches,
plums, grapes, raisins, broccoli, carrots, onions, lettuce, it
is very important for us to keep those producers in business.
The Central Valley is like a big bowl. Everything that comes in
there stays in there. Their air quality concerns are huge. And
these guys are going out of business. I was on a producer's
farm. His name was Don Cameron, and he had 30 irrigation pumps
lined up right behind his barn, 30 of them. Every single one of
them had a hole cut in the block. I was looking at a million
dollars of irrigation pumps that could maybe be sold for scrap
metal because they were too polluting for the California Air
Resources Board. And with this particular section of EQIP, we
are able to cost-share on a 50-50 basis. They are going from
Tier 0 to Tier 3 engines in the last 2 years. This is
astounding.
And farmers, they are putting in this money, too, where we
have done about 40 in EQIP; they have done about 40. It has
reduced emissions with the net effect of removing over 400,000
cars from the road in California every single year. We may be
at the point if we carry this on for a couple more years, we
will obviate the need for any further regulation of these guys
in the Central Valley.
Number seven in the big eight, Chesapeake Bay Watershed
Program, $50 million baseline, I had been up here before
talking about it. Many of you are extremely familiar with that.
Chesapeake Bay is ground zero for agriculture and regulation.
This is often viewed as the canary in the coal mine. I am much
more bullish on our chances than other people, and the
Chesapeake Bay Watershed Program is really equipping us with
some of the resources we need in this critical area.
Rounding out the big eight is not really a program per se,
but it is a mechanism. It is the Cooperative Conservation
Partnership Initiative. It is an authority which allows us to
use three different programs--EQIP, the Wildlife Habitat
Incentive Program, and the Conservation Stewardship Program--
for outside entities like universities and agricultural groups
and other partners to designate areas where they identify a
problem and we focus EQIP, WHIP, and CSP resources to solve
that identified problem. Right now, we have about 164 projects
around the country. There is a statutory limitation of no more
than six percent of EQIP, WHIP, and CSP that can be used in
CCPI. We are right now at 5.9 percent. So there probably won't
be a whole lot more. So that rounds out the big eight.
Now, the big 12, these are all four easement programs. The
big kid on the block is the Wetlands Reserve Program. In my
opinion, it is the single biggest reason this country has
achieved no net loss of wetlands. If you remember George
Herbert Walker Bush, Bush I, he announced it was going to be
the policy of the United States, no net loss of wetlands. This
program is one of the main reasons why that has occurred. There
are over 2 million acres right now. It is mostly marginal crop
land that guys have a hard time making money on anyway. And
that is one, Mr. Chairman, that you mentioned does not have a
baseline, going forward.
Second one is the Farm and Ranch Lands Protection Program.
I know that that is critical to Mr. Holden and other Members of
this Committee. This is a working lands easement program.
Essentially, you are purchasing development rights. So this
farm, this ranch is going to stay in agriculture forever. It is
not going to be an airport; it is not going to be subdivided;
it is not going to be little ranchettes. It is going to be in
agriculture. A lot of changes made in 2008 that have made this
program better, it will have a baseline of about $200 million,
going forward.
Third program, Grassland Reserve Program, this is kind of a
hybrid. It blends a little bit of WRP and a little bit of FRPP,
but again, it is a working lands program. Mr. Nelson very ably
described that, so I won't go into it. And it is jointly
administered between our two agencies.
Number 12 of the big 12 is the Healthy Forests Reserve
Program. This is actually located in the Forestry Title. It is
a permanent easement program--30 year contract for tribes--to
aid in the recovery of threatened and endangered species. What
is different about this is no-year money. We have to work with
Fish and Wildlife Service to get people who enrolled into Safe
Harbor Agreements. This is really focused on recovery of
endangered species. Very small, $10 million a year for the last
3 years and will not have a baseline, going forward.
All right. That leaves us with three more programs you
wanted me to talk about. That would take us to 15. I couldn't
think of a sports analogy for that so I am going to give you a
bonus program to take us to the Sweet 16 shifting from football
to basketball.
Number 13 is Resource Conservation and Development created
in the early 1960s. RC&D really created 501(c)(3) nonprofit
organizations whose mission was rural development broadly--
natural resource-based rural development. I worked with them
all of my career. I have a lot of respect for them. They have
done some tremendous work around the country. In the last Bush
Administration, OMB made an analysis and said it was
duplicative, and the last few years of the Bush Administration,
the Administration recommended it be zeroed out. That was
carried forward in the Obama Administration and Congress
adopted it this year. There is zero funding for this program.
We are in the process of doing an orderly closeout of that. It
is a very good program, but I recognize the necessity of the
hard choices that are being made.
Number 14 is the Small Watershed Program, which actually is
two other programs--P.L. 78-534 and P.L. 83-566. These date
from the 1940s and 1960s. Over that period of time, essentially
these were flood-control structures. There is also water
supply. These are the dams that are really flood control. There
have been about 1,800 projects over that amount of time, over
11,000 structures have been built. Now, when you go back to the
1940s and 1950s, fast-forward to today, we are in a bit of a
fix. These dams, structures if you will, most of them were
built with a 50 year life-span. That is not to say that at 51
years they fall down. They are perfectly good but they had a
design life of around 50 years. These structures are reaching
the end of their design life. In fact, every day for the next
20 years somewhere in the United States of America a watershed
dam will reach the end of its design life. That is not to say
that they are bad at that point in time; it just to say their
design life is over.
Which leads me into number 15, which is the Watershed
Rehabilitation Program. And I will give a nod to Chairman
Lucas, who has recognized this and acted very forcefully to
establish this particular program. What do you do with these
structures? These structures are providing about $2 billion in
prevented damages every year across America. What do you do
when they reach the end of their design life? What do you do
when they need rehabilitation? What do you do when there is a
safety issue? And this is a mechanism where we can go in and
fix these older structures. And they don't have to be at the
end of their design life either. In this country, urban
development has occurred where we have put a little dam out in
a farm field. It might be in a city now. A good example of that
is Atlanta. We have several watershed projects and Atlanta, as
of 2011, is not the Atlanta of 1950.
So when something like that occurs, we go in and we upgrade
those structures to high-hazard classifications so adding in
those extra safety features. There is not one earmark in this
program. This program is a cost-share 65-35. And NRCS has a
little criteria where we decide where to work. Number one on
the list is human health and safety. This had $100 million in
the farm bill and I think it has $18 million, going forward, in
this particular ag budget.
Bonus program number 16 is another easement program. This
is a discretionary easement program. This falls under the
Emergency Watershed Protection Program. It is for flood plain
easements. It allows us after a flood to go in and purchase
easements on these flood plains where guys are getting washed
out all the time. Actually, if you look at it, it really saves
us a lot of money because you are not paying disaster
assistance on that land or crop insurance year after year. And
if there is flooding in the future, the water can spread out,
be filtered, ground water recharged, good for wildlife. There
is a lot going for that program.
I have talked enough. One thing I would ask you, this is
your watch. This is going to happen under your control. Forty
years from now, nine billion new people will be in this world.
I have seen all kinds of projections for what it is going to
take. I have seen 50 percent increase of production, 70
percent, double production. Any way you slice it, we are going
to have to increase production. And conservation is one of the
key ways that we can ensure the future that those little
Americans who come after us will have the same bounty that we
enjoy today.
Thank you, Mr. Chairman.
[The prepared statement of Mr. White follows:]
Prepared Statement of Dave White, Chief, Natural Resources Conservation
Services, U.S. Department of Agriculture, Washington, D.C.
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to appear before you today to discuss conservation programs
administered by the Natural Resources Conservation Service (NRCS).
The NRCS conservation portfolio contains a broad mix of authorities
providing programs for conservation technical assistance, environmental
improvement, stewardship, easements, and water resources. These
conservation investments, designed by Congress and implemented by USDA,
have a proven track record. They are good for farmers, ranchers and
private forest landowners and they work for all Americans--helping to
secure a high quality environment in concert with food security for our
nation and the world.
Last year we celebrated 75 years of service to the nation's
farmers, ranchers, and other land owners and managers, we looked back
at the landmark achievements, and continued to make some history of our
own. Before providing the Subcommittee with details about our
conservation programs, I would like to share a few of the benefits that
these programs delivered through our long, strong partnership with
America's farmers, ranchers, and private forest landowners.
Last year (Fiscal Year 2010) was a record year in conservation
program delivery. Of special note is the Wetlands Reserve Program
(WRP). A nationwide emphasis on wetlands conservation resulted in a
record-setting WRP enrollment of nearly 273,000 acres, exceeding the
next-highest yearly total by more than 58,000 acres and nearly doubling
our average annual enrollment. And while much work remains to be done
in completing restoration work associated with these record
enrollments, more than 129,000 acres of wetlands were created, restored
or enhanced in FY 2010. While acreage numbers are impressive, the more
important outcome is that these wetlands are now providing essential
habitat for at-risk species, such as the threatened Louisiana Black
Bear and the endangered Whooping Crane. The better job we do in
assisting in keeping candidate and other at-risk species off the List
of Endangered and Threatened Wildlife, the greater flexibility our
producers have in providing food, feed, and fiber for the nation and
the world.
Voluntary conservation on private lands works! USDA established the
Conservation Effects Assessment Project (CEAP) in 2003 to develop a
scientific understanding and methodology for estimating the
environmental effects of conservation practices on agricultural
landscapes at national, regional, and watershed scales. CEAP is built
on partnerships and working collaborations involving Federal agencies
inside and outside of USDA, land-grant universities, state agencies,
and nonprofit organizations.
The first CEAP assessments of the effects of conservation practices
on cultivated cropland were released in FY 2010. Two of the planned 14
regional reports, the Upper Mississippi River Basin (UMRB) and the
Chesapeake Bay Region CEAP Cropland Reports, quantify the great
progress farmers have made in reducing sediment and nutrient losses
from cropland, while emphasizing a continuing need for conservation
efforts to focus on nutrient management. A few key highlights from the
UMRB assessment include:

Voluntary, incentive-based conservation works. Reduced
tillage is used on 95 percent of the cropland--sediment losses
are reduced by an estimated 69 percent as compared to a
scenario where full conventional tillage is used.

Nutrient management is the greatest need. Much can be done
through expanded adoption of existing practices. About 60
percent of the cropland needs improved nutrient management;
Timing, rate and method of application are important factors in
managing nutrient application.

Targeting can greatly enhance program effectiveness.
Treating the most critical acres can have three to five times
the effect on sediment and nutrient reduction as compared with
treating acres with less serious problems.

Comprehensive conservation planning is essential. Suites of
practices that address multiple resource concerns are more
effective than single practices.

In FY 2010, NRCS used landscape-scale initiatives to address
priority resource concerns in working landscapes and watersheds
nationwide. Two of these initiatives began prior to FY 2010--the
Chesapeake Bay Watershed Initiative, supported by the statutory
Chesapeake Bay Watershed Program in the farm bill and the Great Lakes
Restoration Initiative, supported by financial assistance transferred
from the U.S. Environmental Protection Agency and the Great Lakes
Restoration Action Plan. The other initiatives are the Sage-Grouse, the
Longleaf Pine, California Bay-Delta, Lesser Prairie-Chicken,
Mississippi River Basin Healthy Watersheds, New England Forestry, and
the Migratory Bird Habitat. These initiatives reflect a common
objective of using targeted conservation assistance in addressing
priority natural resource concerns that are broader than a single state
and that will help to keep working lands working.
The Sage-Grouse Initiative (SGI) is a great example of how
landscape-scale conservation delivers broad benefits for agriculture.
SGI focused conservation delivery within habitat core areas to help
maintain large and intact grazing lands--important for the sage-grouse
and for the rancher. NRCS identified practices that can be implemented
through the Environmental Quality Incentives Program, the Wildlife
Habitat Incentive Program, the Grassland Reserve Program and the Farm
and Ranch Lands Protection Program to increase and protect grouse
habitat and populations on 640,000 acres in 11 western states. In FY
2010, NRCS contracted with 223 ranching operations for a total $18.5
million in financial assistance to remove sage-grouse threats and help
sustain working ranches. As a result, over 180 miles of high-risk
fencing near breeding sites were marked or removed, which prevented an
estimated 800 to 1,000 mortalities through fence collisions in just the
first year.
The SGI also resulted in a landmark agreement that provides
regulatory certainty to ranchers who take actions to improve sage-
grouse habitat on their land. In early 2010, the U.S. Fish and Wildlife
Service (FWS) determined sage-grouse to be a ``candidate'' species
under the Endangered Species Act (ESA), which means listing is
warranted but precluded by higher listing priorities and positive
management actions that address threats to the species need to be taken
to prevent listing. NRCS and FWS negotiated a first-of-its kind
regional agreement that lets landowners know the investments they make
today to benefit this declining species and the sustainability of their
ranching operation by implementing NRCS conservation practices
according to the SGI Conference Report can continue should sage-grouse
be listed at a future date.
This new conservation approach prioritizes assistance to ensure
that the best conservation practices are implemented in the right
landscapes for a positive sage-grouse population-level response. The
SGI is a perfect example of how conservation programs can respond to
critical natural resource issues by merging science and program
delivery, and targeting practices and geography to make a real
difference on the landscape for natural resources and for America's
farmers and ranchers.
NRCS Conservation Programs
This testimony provides an overview and status for 15 of NRCS'
conservation programs and authorities:
Environmental Quality Incentives Program
The Environmental Quality Incentives Program (EQIP) provides
financial and technical assistance on working lands to help producers
address environmental challenges. To meet these challenges, EQIP
provides incentives for the application of farming and other land use
practices that maintain or improve the condition of soil, water, air,
and other natural resources. The program assists agricultural and
forestland users in identifying natural resource issues and
opportunities to improve their agricultural operations and provides
technical and financial assistance to address them in an
environmentally beneficial and cost-effective manner. EQIP-promoted
practices meet a variety of environmental and natural resource
challenges.
In FY 2010, EQIP financial assistance obligations by states reached
almost $840 million in 36,500 contracts covering an estimated 13
million acres. In addition to regular EQIP projects, these funds also
supported projects in resource based initiatives such as air quality,
on-farm energy audits, migratory bird habitat, and the Mississippi
River Basin Initiative, and projects that emphasize environmental
protection and agricultural production as compatible goals such as
organic production and seasonal high tunnels.
In FY 2010, NRCS provided $37.5 million in financial and technical
assistance to 12 states through the national Air Quality Initiative to
help producers meet requirements of the Clean Air Act. Through this
initiative, NRCS provides assistance to farmers and ranchers to reduce
air pollution generated from agricultural operations in areas
designated by the U.S. Environmental Protection Agency as non-
attainment areas for ozone and particulate matter. During FY 2010, over
950 contracts supported some 3,800 practices on more than 220,000
acres. In the Central Valley of California alone, we estimate that
these air quality projects over the past 2 years have had the
equivalent impact of removing the NOX emissions from 400,000
vehicles from the area's roads each year.
In FY 2010, NRCS worked to provide financial assistance to more
than 240 producers for on-farm energy audits by offering the
Agricultural Energy Management Plan through EQIP. In partnership with
the private sector and other organizations, NRCS is developing
technical tools and training to evaluate and reduce agricultural energy
consumption through implementation of on-farm energy audit
recommendations and to help producers adapt plans and practices for
better energy efficiency and on-farm energy production.
The Organic Initiative is a nationwide special initiative within
EQIP to provide assistance to organic producers as well as producers in
the process of transitioning to organic production. In FY 2010, NRCS
obligated nearly $24 million in financial assistance to treat 148,000
acres in organic production or in transition to organic production. The
most often recommended practices include nutrient management, cover
crop, pest management, conservation crop rotation, and prescribed
grazing.
The FY 2012 President's budget includes $1.408 billion in mandatory
funding for financial and technical assistance for the Environmental
Quality Incentives Program.
Agricultural Water Enhancement Program
The Agricultural Water Enhancement Program (AWEP) is a component of
EQIP. The purpose of AWEP is to promote improved ground and surface
water conservation and water quality by leveraging the Federal
Government's investment in natural resources conservation with services
and resources of other eligible partners. The AWEP program was
specifically created to address serious surface and ground water
shortages as well as water quality concerns in many agricultural areas.
The security of the nation's food supply is dependent upon the
continued delivery of clean, reliable irrigation water to farms and
ranches.
This is the second year in which AWEP has been implemented and
interest from the agricultural sector has remained steady. In FY 2010,
NRCS obligated $60.8 million in 1,489 new contracts to implement
conservation practices on nearly 271,000 acres of agricultural land.
The ability to leverage funding through partnership agreements has also
remained strong. Partners provided approximately $50.5 million in
technical and financial assistance in FY 2010, nearly matching NRCS'
AWEP investment. Through AWEP, the agency approved 28 new partner
project areas during FY 2010, and continued to provide support for 63
existing project areas approved during FY 2009. Over \1/2\ of the
projects approved in FY 2010 are located in the high-priority water
quantity concern areas, where conservation practices will be applied to
conserve scarce water resources.
The FY 2012 President's budget includes $60 million in mandatory
funding for financial and technical assistance for the Agricultural
Water Enhancement Program.
Conservation Innovation Grants
Conservation Innovation Grants (CIG) is a component of the
Environmental Quality Incentives Program (EQIP) that is intended to
stimulate the development and adoption of innovative conservation
approaches and technologies while leveraging Federal investment in
environmental enhancement and protection, in conjunction with
agricultural production. CIG provides grants of up to 50 percent of the
total project cost on a competitive basis to non-Federal governmental
or non-governmental organizations, federally-recognized Indian tribes,
or individuals. Applicants must provide non-Federal funding for at
least 50 percent of the project cost, of which up to \1/2\ (25 percent
of the total project cost) may come from in-kind contributions.
CIG has two major components: National and State:

(1) The National Component emphasizes projects that have a goal of
providing benefits over a large geographic area. These projects
may be watershed based, regional, multi-state, or nationwide in
scope.

(2) The State Component provides flexibility to NRCS State
Conservationists to target CIG funds to individual producers
and smaller organizations that may possess promising
innovations, but may not compete well on the larger scale of
the national grants competition.

Funding for CIG is announced each year through a funding notice.
CIG funds single- or multi-year projects, up to 3 years in length.
CIG projects have resulted in new technologies and opportunities
for producers. A 2005 grant helped to demonstrate that precision
feeding of dairy cows could facilitate reductions in the protein
(nitrogen) and phosphorus being fed to dairy animals while maintaining
or even improving milk production and possibly improving animal health.
Based on the findings from these feeding trials, the Pennsylvania State
University Cooperative Extension developed the ``Dairy Tool'' to help
farmers identify the greatest opportunities to improve profitability on
their farms.
In FY 2010, NRCS received 388 applications requesting more than
$221.8 million. NRCS obligated about $18 million through 61 agreements
representing 43 states and U.S. territories of the Pacific. Grant
recipients provide matching funds to CIG bringing the total value of
the approved projects to more than $35 million.
Wildlife Habitat Incentive Program
The Wildlife Habitat Incentive Program (WHIP) provides assistance
to improve upland and wetland habitats to benefit priority wildlife
species, including threatened, endangered and other at-risk species.
Focused efforts on habitat for fish and wildlife also contribute to
more sustainable use of resources. By prioritizing specific geographic
areas through various efforts at the state level, WHIP is able to
target financial and technical assistance funds to benefit habitats for
specific declining wildlife species such as the sage grouse. For
example, WHIP funds helped to support a project in Somerset County,
Maine, to rebuild a wildlife and nature preserve. Following a dam
breach in 2000, the landowner committed to reclaiming the land. The
project is improving the forest stand, planting cover crops, installing
nesting boxes, among other practices to create open space and nesting,
brooding, and rearing habitat for the American woodcock, a species of
concern, as well as 50 other important wildlife species.
In FY 2010, NRCS obligated almost $63 million in financial
assistance in more than 4,700 agreements to enroll over one million
acres in WHIP. Sixty-eight of these contracts valued at over $3.7
million are with American Indian and Alaskan Natives participants to
benefit habitat for culturally important species. Since the program
began in 1998, national enrollment has included almost 37,000
agreements on over 6.5 million acres.
The FY 2012 President's budget includes $73 million in mandatory
funding for financial and technical assistance for the Wildlife Habitat
Incentive Program.
Agricultural Management Assistance
NRCS administers the conservation provisions of the Agricultural
Management Assistance (AMA) program, which provides financial
assistance to agricultural producers to address water management, water
quality, and erosion control issues by incorporating conservation into
their farming operations. AMA is available in 16 states where
participation in the Federal Crop Insurance Program is historically
low: Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts,
Nevada, New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, Utah, Vermont, West Virginia, and Wyoming.
With AMA funds, producers may construct or improve water management
structures or irrigation structures; plant trees for windbreaks or to
improve water quality; and mitigate risk through production
diversification or resource conservation practices, including soil
erosion control, integrated pest management, or transition to organic
farming. AMA may provide producers a first-time opportunity to address
natural resource concerns on their lands. For instance, producers that
cannot meet Environmental Quality Incentives Program (EQIP) irrigated-
land criterion may receive AMA assistance to install irrigation.
In FY 2010, $6 million was obligated into 429 contracts covering
11,102 acres.
The FY 2012 President's budget includes $2.5 million in mandatory
funding for the Agricultural Management Assistance program.
Chesapeake Bay Watershed Program
The Chesapeake Bay Watershed Program (CBWP) helps agricultural
producers improve water quality and quantity, and restore, enhance, and
preserve soil, air, and related resources in the Chesapeake Bay
Watershed through the implementation of conservation practices. These
conservation practices reduce soil erosion and nutrient levels in
ground and surface water; improve, restore, and enhance wildlife
habitat; and help address air quality and related natural resource
concerns. CBWP encompasses all tributaries, backwaters, and side
channels, including their watersheds, draining into the Chesapeake Bay.
This area includes portions of the states of Delaware, Maryland, New
York, Pennsylvania, Virginia, and West Virginia.
NRCS implements CBWP through the various natural resources
conservation programs authorized by subtitle D, Title XII of the Food
Security Act of 1985. In FY 2010, NRCS implemented CBWP through the
Environmental Quality Incentives Program (EQIP) and the Wildlife
Habitat Incentives Program (WHIP).
In FY 2010, nearly 2,900 agricultural producers submitted
applications to NRCS to participate in CBWP. NRCS approved more than
950 contracts for more than $33.5 million of financial assistance to
treat an estimated 156,700 acres of high priority agricultural land.
The balance of CBWP funds authorized in FY 2010 supported technical
assistance for the program.
The FY 2012 President's budget includes $50 million in mandatory
funding for financial and technical assistance for the Chesapeake Bay
Watershed Program.
Cooperative Conservation Partnership Initiative
The Cooperative Conservation Partnership Initiative (CCPI) enables
the use of certain conservation programs along with resources of
eligible partners to provide financial and technical assistance to
owners and operators of agricultural and nonindustrial private
forestlands. CCPI is designed to encourage investment in natural
resource conservation by non-Federal sources, foster coordination with
other partners, and achieve high-priority natural resource objectives.
Under CCPI, NRCS enters into multi-year agreements with eligible
partner organizations. Partners eligible to enter into a CCPI agreement
with NRCS include federally recognized Indian Tribes, state and local
units of government, farmer cooperatives, producer associations,
institutions of higher education, and other non-governmental
organizations with a history of working cooperatively with producers to
address conservation priorities related to agriculture and
nonindustrial private forestland.
In order to receive CCPI financial assistance, owners and operators
of agricultural and nonindustrial private forestlands must participate
within a project area defined in an approved CCPI agreement and enroll
in the Environmental Quality Incentives Program (EQIP); Wildlife
Habitat Incentive Program (WHIP), or the Conservation Stewardship
Program (CSP).
In FY 2010, about $42.3 million was obligated in 279 contracts with
producers to implement conservation practices on nearly 1.2 million
acres of agricultural lands. Through CCPI, NRCS approved 51 new partner
project areas in FY 2010, and continued to support 110 projects
approved during FY 2009.
CCPI does not receive specific funding. By statute, funding is
limited to no more than six percent of available program funds (EQIP,
WHIP) or acres (CSP). NRCS manages resources and allocations between
all three programs to assure obligations through CCPI will not exceed
funding authority.
Conservation Security Program
The Conservation Security Program was a voluntary program that
provided financial and technical assistance for the conservation,
protection, and improvement of natural resources on tribal and private
working lands. It provided payments for producers who practice good
stewardship on their agricultural lands and provided incentives for
those who wanted to do more. Under the 2008 Farm Bill, NRCS is not
authorized to enter into new Conservation Security Program contracts
but continues to make payments to producers with 5 to 10 year contracts
from prior years.
The FY 2012 President's budget includes $197 million in mandatory
funding for the Conservation Security Program.
Conservation Stewardship Program
The Conservation Stewardship Program (CSP) encourages agricultural
and forestry producers to adopt new conservation measures and maintain
existing conservation activities on their operations. CSP provides
opportunities to recognize excellent stewards and deliver valuable new
conservation. The program helps producers identify natural resource
problems in their operation and provides technical and financial
assistance to go beyond existing conservation and deliver new
environmental benefits in an environmentally beneficial and cost-
effective manner. CSP has helped participants take additional steps in
conservation, adopting new efficient technologies and generating
additional environmental benefits. A Pennsylvania dairy farm was able
to enhance their existing soil improvement efforts based on cover
crops, diversions, waterways, and strip cropping to incorporate a
simple yet effective cover crop mix enhancement to further their
benchmark level of conservation. Their next step was to upgrade to a
high residue vertical tillage implement that will increase surface
residue and further reduce soil erosion. All of these improvements--
increased plant diversity and improved erosion control were made
possible through participation in CSP.
CSP is a voluntary program available through a continuous sign-up
process, with announced cut-off dates for ranking and funding
applications. Applications are evaluated relative to other applications
addressing similar priority resource concerns to facilitate a
competitive ranking process.
In FY 2010, CSP supported conservation by obligating more than $320
million in financial assistance funding. These funds will be used to
treat 25,164,328 acres leading to more productive working lands,
improved water quality and energy efficiency. These are among the many
benefits of addressing the natural resource concerns of agricultural
and forestry producers.
The FY 2012 President's budget includes $788 million in mandatory
funding for financial and technical assistance for the Conservation
Stewardship Program to enroll 12 million acres.
Wetlands Reserve Program
The Wetlands Reserve Program (WRP) provides technical and financial
assistance to enable eligible landowners to restore, protect and
enhance valuable wetland ecosystems, including associated habitats such
as uplands, riparian areas, and forestlands. The goal of WRP is to
achieve the greatest wetlands functions and values, along with optimum
wildlife habitat, on every acre enrolled in the program. WRP addresses
wetland, wildlife habitat, soil, water and related natural resource
concerns on private lands in an environmentally beneficial and cost-
effective manner. The program achieves solutions to local community
issues related to farms, ranches, rural lands, and other areas by
establishing easements and long-term agreements on eligible farmlands
and by establishing 30 year contracts on Tribal lands. This unique
program offers landowners an opportunity to establish, at minimal cost,
long-term conservation and wildlife habitat enhancement practices and
protection.
During FY 2010, NRCS enrolled a total of 272,762 acres in WRP in
1,414 projects. Of these, the majority were in easements (206,094 acres
in 951 permanent easements and 61,935 acres in 30 year easements). Also
during FY 2010, NRCS restored and enhanced 129,082 acres of wetlands
that are part of WRP easements and contracts in prior years.
The FY 2012 President's budget includes $785 million in mandatory
funding for financial and technical assistance for the Wetlands Reserve
Program and NRCS expects to enroll 271,158 acres.
Farm and Ranch Lands Protection Program
The Farm and Ranch Lands Protection Program (FRPP) protects the
nation's highly productive agricultural lands by providing matching
funds to keep productive farm and ranch lands in agricultural uses.
Farm and ranch lands enrolled in FRPP are protected from threats of
conversion to non-agricultural uses, and remain productive and
sustainable sources of food, fiber, and feed for the nation. Keeping
land in agricultural use reduces the amount of urban pollution
(nitrogen, phosphorus and sedimentation) from land that would otherwise
be converted to lawns and impervious surfaces.
FRPP is helping to achieve landscape scale conservation objectives.
In FY 2010, nearly 19,000 acres of historic agricultural land, critical
wildlife habitat and iconic views in Sublette County, WY were protected
through an FRPP agreement. The Sommers-Grindstone Conservation Project
includes four separate conservation easements and public fishing access
on nearly 5 miles of the Green River. The agreement is a partnership
among landowners, the Wyoming Game and Fish Commission, the Wyoming
Stock Growers Agricultural Land Trust, and an extensive list of public
and private funders, including NRCS. The easement will allow the land
to remain undeveloped--benefitting cattle and wildlife--and will ensure
that the ranch passes to another generation of ranchers. The cattle
ranches are comprised of hay meadows, riparian areas, a diversity of
trees, sage-brush, high-grass prairie, and wetlands. The conservation
easements are held by the Wyoming Stock Growers Agricultural Land
Trust, and the ranches remain under the ownership and management of the
landowners. Additionally, FRPP supports the President's America's Great
Outdoors initiative by preserving the natural landscape features of
non-urbanized areas and encouraging the continued agricultural uses of
the lands.
In FY 2010, over 170,000 acres were enrolled in FRPP in 35 states.
The average size easement enrolled in FY 2010 was 423 acres.
The FY 2012 President's budget includes $200 million in mandatory
funding for financial and technical assistance for the Farm and Ranch
Lands Protection Program.
Grasslands Reserve Program
The Grasslands Reserve Program (GRP) helps landowners and operators
restore and protect rangeland, pastureland, and other grassland while
maintaining the land's suitability for grazing. Participants
voluntarily limit future development and cropping uses of the land
while retaining the right to conduct common grazing practices and
operations related to the production of forage and seeding.
Limiting development and providing habitat needed by threatened,
endangered, and other at-risk species, preserves agricultural heritage
and green space, provides for recreational activities and ensures the
nation's ability to produce its own food. For example, five GRP
projects in Phillips County, MT have protected nearly 30,000 acres
since 2009. These projects are preserving rural ranching operations
while protecting critical wildlife habitat for sage-grouse and other
grassland birds. More than 80 percent of the acres in the five ranches
are prime habitat for sage-grouse.
During FY 2010, the program obligated and committed $90.3 million
of the financial assistance funding allocated to the states and
enrolled 335,332 acres in the program. Of the funding provided,
approximately 60 percent enrolled GRP easements and 40 percent enrolled
rental contracts.
The FY 2012 President's budget includes $67 million in mandatory
funding for financial and technical assistance for the Grasslands
Reserve Program to enroll an estimated 203,515 acres.
Healthy Forest Reserve Program
Healthy Forest Reserve Program (HFRP) assists landowners in
restoring, enhancing, and protecting forest ecosystems to: (1) promote
the recovery of threatened and endangered species; (2) improve
biodiversity; and (3) enhance carbon sequestration.
HFRP provides financial assistance for specific conservation
actions completed by the landowner. As funds are made available, NRCS
solicits project proposals State Conservationists have developed in
cooperation with partnering organizations. States selected for funding
provide public notice of the availability of funding within the
selected area.
During FY 2010, NRCS received 164 applications in the 13 states
with approved projects. Fourteen landowners were enrolled, encompassing
5,583 acres, with financial assistance obligations valued over $6
million.
The FY 2012 President's budget includes $9.75 million in mandatory
funding for the Healthy Forest Reserve Program.
Watershed Rehabilitation Program
The purpose of the Watershed Rehabilitation Program is to extend
the service life of dams and bring them into compliance with applicable
safety and performance standards or to decommission the dams so that
they do not pose a threat to life and property. NRCS may provide
technical and financial assistance for the planning, design, and
implementation of rehabilitation projects that may include upgrading or
removing the dams.
Eleven dam rehabilitations were completed in FY 2010, and there are
23 dam rehabilitation projects currently under construction. There is
one dam that is being decommissioned. Additionally, there were 650
ongoing assessments of high hazard dams that provided communities with
technical information about the condition of their dams and
alternatives for rehabilitation for dams that do not meet Federal dam
safety standards.
The FY 2011 Final Continuing Resolution provided for $18 million in
Watershed Rehabilitation funding. The FY 2012 President's budget does
not include funding for the Watershed Rehabilitation Program,
reflecting the many difficult choices that were made in the budget
prioritizing process this year.
Watershed and Flood Prevention Operations Program
The Watershed and Flood Prevention Operations program authorizes
the Secretary of Agriculture to provide technical and financial
assistance to entities of state and local governments and Tribes
(project sponsors) for planning and installing watershed projects. The
Watershed Protection and Flood Prevention Program is available
nationwide to protect and improve watersheds up to 250,000 acres in
size. Currently there are approximately 300 active small watershed
projects throughout the country. The Flood Control Act of 1944 is
available only in areas authorized by Congress; and these areas cover
about 38 million acres in 11 states.
The FY 2011 Final Continuing Resolution did not include funding to
carry out the Watershed and Flood Prevention Operations program for the
remainder of the fiscal year. Further, the FY 2012 President's budget
does not include funding for the Watershed and Flood Prevention
Operations Program, including the Watershed Operations (P.L. 78-534)
and Small Watersheds (P.L. 83-566). NRCS is in the process of
conducting an orderly close-out of these programs, ensuring to the
maximum extent possible that the highest priority projects are
completed with the limited remaining funds.
Resource Conservation and Development
The Resource Conservation and Development (RC&D) Program objective
is to encourage and improve the capability of state and local units of
government and nonprofit organizations in rural areas to plan, develop,
and implement programs for resource conservation and development. NRCS
provided program administration and assistance to RC&D areas and their
volunteer nonprofit RC&D Councils.
The FY 2011 Final Continuing Resolution did not include funding to
carry out the Resource Conservation and Development program for the
remainder of the fiscal year. Further, the FY2012 President's budget
does not include funding for the Resource Conservation and Development
program. NRCS is in the process of conducting an orderly close-out of
its RC&D program operations. The elimination of funding, however, does
not eliminate RC&D Councils, which may continue to operate and compete
for assistance from state, local, and other Federal agencies, private
organizations, and foundations to carry out specific projects.
Conclusion
In conclusion, conservation programs play an essential role in the
nation's food security. Conservation helps to make farms and ranches
more resilient to risks--whether from pests, disease, floods, or
drought--and helps producers adapt to the challenges. Our farmers and
ranchers know better than anyone the value of clean water, clear air
and healthy soil for agricultural production. They know that land
stewardship secures the future, and they have made incredible strides
to protect the land they rely on. Through programs such as the
Environmental Quality Incentives Program and the Conservation
Stewardship Program, NRCS builds partnerships with farmers, ranchers,
and forestland owners to make their operations more sustainable. These
conservation efforts improve soil fertility and reduce soil erosion,
improve fertilizer use and water use efficiency, reduce energy use, and
enhance overall productivity.
These investments in private lands conservation are good for
farmers, ranchers, and forestland owners-reduced input costs directly
help the bottom line, while improved soil and water quality help
maintain and even enhance long-term productivity while minimizing
regulatory pressures. These same investments in conservation work for
all Americans, by contributing to healthy landscapes, healthy
communities, and to the food security of our nation and the world.
Thank you for the opportunity to be here today to discuss the work
of NRCS. I am happy to answer any questions from the Subcommittee
Members.
NRCS Cost-Share Programs
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Agricultural Cooperative Environmental
Management Agricultural Conservation Conservation Chesapeake Bay Quality Wildlife Habitat
Program/Initiative Assistance Program Water Enhancement Stewardship Partnership Watershed Program Incentives Incentive Program
(AMA) Program (AWEP) Program (CSP) Initiative (CCPI) (CBWP) Program (EQIP) (WHIP)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Purpose or Goal Provides cost- Provides Encourages CCPI is a Provides Provides Provides
share assistance financial and producers to conservation financial and financial and financial and
to agricultural technical address resource initiative that technical technical technical
producers to assistance to concerns in a enables the use assistance to assistance to assistance to
address issues agriculture comprehensive of certain agricultural agricultural develop fish and
such as water producers in manner by conservation producers to producers to wildlife habitat
management, water approved project improving, programs along help plan and help plan and on private
quality, and areas to maintaining, and with resources implement implement agricultural
erosion control implement water managing of eligible conservation conservation land,
by incorporating enhancement existing partners to practices that practices that nonindustrial
conservation into activities on ag conservation provide improve water address natural private
their farming land for the activities; and financial and quality and resource forestland, and
operations. purpose of undertaking technical quantity and concerns and for Tribal lands.
conserving additional assistance to restores, opportunities to All private or
surface and conservation owners and enhances, and improve soil, Tribal
ground water and activities. operators of preserves soil, water, plant, agricultural
improving water agricultural and air and related animal, air, and land is
quality. nonindustrial resources. related eligible, unless
private resources on it is currently
forestlands. Tribal land, enrolled in CRP,
agricultural WRP, HFRP, WBP,
land, and EWPP, GRP or a
nonindustrial similar program.
private
forestland. The
program does not
include land
enrolled in CRP,
WRP, or GRP.
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Length of 1-10 years 1-10 years 5 years Partners enter 1-10 years 1-10 years 1-10 years, or a
agreement/ into multi-year minimum of 15
contract agreements. years for
Project start and agreements for
end dates (not essential plant
to exceed a and animals.
period of 5
years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acreage enrollment 11,102 270,667 25,164,327 1,193,967 156,704 13,034,363 1,054,095
level in FY 2010
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Cost of the FY 2011 $7.5 m FY 2011 $74m FY 2011 $600.8 m Funded from EQIP, FY 2011 $72 m FY 2011 $1.24 b FY 2011 $85 m
program FY 2012 $2.5 m per FY 2012 $60 m FY 2012 $787.6 m WHIP, CBWP, and FY 2012 $50 m FY 2012 $1.41 b * FY 2012 $73 m **
President's per President's CSP
budget budget
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2010 Backlog of 767 1,724 6,322 Included in 1,355 39,028 3,788
applications individual
program totals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eligible land AMA is available All private or All private or All private or Private and All private or
in 16 states Tribal land in Tribal Tribal land in Tribal Tribal
where agricultural agricultural agricultural agricultural agricultural
participation in production is land and production is land, including land is
the Federal Crop eligible. nonindustrial eligible. cropland, eligible, unless
Insurance Program Includes private Includes grassland, and it is currently
is historically cropland, forestland is cropland, nonindustrial enrolled in CRP,
low. grassland, and eligible unless grassland, and private WRP, HFRP, WBP,
nonindustrial it is enrolled nonindustrial forestland but EWPP, or GRP.
private in CRP, WRP, or private does not include Participants
forestland. GRP. forestland, but land enrolled in must have
does not include CRP, WRP, or GRP control of land
land enrolled in for the duration
CRP, WRP, or of the contract.
GRP.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Does funding Yes Yes Yes Yes No-year Yes Yes
expire October 1,
2012
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Payments Up to 75% or up to Up to 75% or up Annual payment Financial Financial Up to 75% for
90% for to 90% for based on level assistance to assistance to contracts with a
historically historically of conservation participants for participants for duration of 10
underserved underserved stewardship; the estimated the estimated years or less;
participants participants supplemental costs incurred costs incurred up to 90% for
payment for for performing for performing historically
participants or implementing or implementing underserved
that adopt a conservation conservation participants;
resource practices. Up to practices. Up to and up to 90%
conserving crop 75% and up to 75% and up to for contracts
rotation. 90% for 90% for having a
National average historically historically duration of at
cost not to underserved underserved least 15 years.
exceed $18/ac. participants. participants.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Producer Develop and follow Develop and Implement a In order for a Develop and Develop and Develop and
Responsibilities a plan that follow a plan conservation producer to be follow a plan follow a plan follow a plan
describes the that describes stewardship plan considered for that describes that describes for high quality
conservation and the conservation that encourages financial the conservation the conservation fish or wildlife
environmental and producers to assistance and and habitat.
objectives to be environmental address resource through a CCPI environmental environmental Contribute to
achieved. objectives to be concerns in a partner objectives to be objectives to be the installation
Contribute to achieved. comprehensive agreement, the achieved. achieved. costs and
installation Contribute to manner by land associated Contribute to Contribute to perform
costs. installation installing and with a program installation installation operation and
costs. adopting application must costs and costs and maintenance
additional be located perform perform during the
conservation within an operation and operation and lifetime of the
activities and approved CCPI maintenance maintenance installed
improving, project area. during the during the practices.
maintaining, and Only producers lifetime of the lifetime of the
managing who are eligible installed installed
existing for EQIP, WHIP, practices. practices.
activities. CBWP, or CSP may
receive
financial
assistance.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appeals Process Non-Title XII Title XII Title XII Title XII Title XII Title XII Title XII
--------------------------------------------------------------------------------------------------------------------------------------------------------
Participants are Adjusted Gross Adjusted Gross Adjusted Gross Adjusted Gross Adjusted Gross Adjusted Gross Adjusted Gross
subject to: Income Income Income Income Income Income Income
limitations. limitations. limitations. limitations. limitations. limitations. limitations.
Reporting Reporting Reporting Reporting Reporting Reporting Reporting
requirements of requirements of requirements of requirements of requirements of requirements of requirements of
the Federal the Federal the Federal the Federal the Federal the Federal the Federal
Funding Funding Funding Funding Funding Funding Funding
Accountability Accountability Accountability Accountability Accountability Accountability Accountability
and Transparency and Transparency and Transparency and Transparency and Transparency and Transparency and Transparency
Act of 2006 Act of 2006 Act of 2006 Act of 2006 Act of 2006 Act of 2006 Act of 2006
Highly erodible Highly erodible Highly erodible Highly erodible Highly erodible Highly erodible
land and wetland land and wetland land and wetland land and wetland land and wetland land and wetland
compliance. compliance. compliance. compliance. compliance. compliance.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* EQIP funding authorized in the farm bill is $1.59 b for FY 2011 and $1.75 b for FY 2012.
** WHIP funding authorized in the farm bill for FY 2012 is $85 m.

NRCS Easement Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emergency Watershed
Program Characteristic Wetlands Reserve Program Program--Flood Plain Grassland Reserve Farm and Ranch Lands Healthy Forest Reserve
Easement Program Protection Program Program (HFRP)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Purpose or Goal Restore, protect, or Restore, protect, Restore and protect Assists with the Restore, protect and
enhance wetlands on maintain and enhance rangeland, pastureland purchase of enhance forest
eligible lands. The the functions of the and other grassland conservation easements ecosystems to promote
goal is to achieve the floodplain; conserve while maintaining the to protect the recovery of T&E
greatest wetlands natural values land's suitability for agricultural species; improve
functions and values, including fish and grazing. Program productivity and biodiversity; and
along with optimum wildlife habitat, water emphasis is on related conservation enhance carbon
wildlife habitat on quality, flood water supporting grazing values of the land. sequestration.
every acre enrolled in retention, ground water operations, plant and
the program. The recharge and open animal biodiversity,
program accepts space; reduce long-term and grassland and land
eligible wetlands and Federal disaster containing shrubs or
associated habitats assistance; and forbs under the
such as uplands, safeguard lives and greatest threat of
riparian areas, and property from floods, conversion.
forestlands. drought, and the
products of erosion.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Length of easement/ Easements: Permanent and Permanent easements. Easements: Permanent and Permanent, unless state Easements: Permanent,
contract 30 years and maximum maximum duration under law prohibits a 30 year, and maximum
allowed under state state Law. permanent easement. allowed under state
Law. Contracts: 10 year, 15 law; 30 year contracts
Restoration cost-share year, and 20 year with Tribes; 10 year
agreements: generally rental contracts. cost-share agreements.
10 years; 30 year
contracts with Tribes.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acreage enrollment level 2,347,128 187,876 1,206,953 809,098 691,860
Numbers through FY10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost of the program FY09 $1,065,850 EWP-FPE: $62,567 $147,766 $268,662 $10,143
and FY10 obligations FY11 projection: Recovery: $156,480
(in thousands FA and $611,312
TA)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Backlog of applications 2,715 applications 2,194 applications 401 applications 184 applications 150 applications
as of June 10, 2011 251,915 acres 215,920 acres * 209,058 acres 92,365 acres 24,565 acres
--------------------------------------------------------------------------------------------------------------------------------------------------------
Land valuation Lowest of Geographic Geographic Area Rate Lowest of Geographic Appraisals--Fair market Appraisals--Before and
Area Rate Cap, Cap, appraisals or Area Rate Cap, value less After appraisal
appraisals (seldom market analysis. appraisals conducted by agricultural value. method.
used) conducted by certified, general real
certified, general real property appraisers or
property appraisers, or landowner offer. Value
landowner offer. based on fair market
value less grazing
value.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Landowner eligibility Must be a landowner to Must be a landowner to Must be a landowner for Program is implemented Must be the landowner
participate in the participate in the easement participation through eligible of eligible land for
program. Landowners program. or be a landowner or entities. Eligible which enrollment is
must comply with Highly Landowner does not need have control of entity requirements sought.
Erodible Land and to comply with Highly eligible land for found in 7 CFR part Landowner does not need
Wetland Conservation Erodible Land and rental contract 1491. to comply with Highly
provisions of FSA of Wetland Conservation participation. Must be a landowner to Erodible Land and
1985. provisions of FSA of Must comply with Highly sell an easement to an Wetland Conservation
Adjusted gross income 1985. Erodible Land and eligible entity. provisions of FSA of
provisions apply. Registration and Wetland Conservation Participating 1985.
Registration and reporting requirements provisions of FSA of landowners must comply Registration and
reporting requirements of the Federal Funding 1985. with Highly Erodible reporting requirements
of the Federal Funding Accountability and Adjusted gross income Land and Wetland of the Federal Funding
Accountability and Transparency Act of provisions apply. Conservation Accountability and
Transparency Act of 2006. Registration and provisions of FSA of Transparency Act of
2006. reporting requirements 1985 2006.
7 year ownership of the Federal Funding Adjusted gross income
requirement. Accountability and provisions apply.
Transparency Act of Registration and
2006. reporting requirements
GRP has an option where of the Federal Funding
easements can be Accountability and
acquired through Transparency Act of
eligible entities 2006.
similar to FRPP.
Criteria for
determining whether an
entity is ``eligible''
can be found in 7 CFR
part 1415.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Land Eligibility Marginal, frequently Any floodplain lands Grassland, land that Must be privately owned Eligible land includes
flooded agriculture damaged by flooding at contains forbs or land on a farm or private land that
lands and associated least once within the shrubland where grazing ranch and contain at contributes to the
uplands. previous calendar year, is the predominant use; least 50 percent restoration and
Note, the term or that have a history or land located in an prime, unique, enhancement of habitat
agriculture lands do of repeated flooding area that has been statewide, or locally or otherwise increase
include wooded lands. (i.e., flooded at least historically grassland, important farmland, the likelihood of
twice within the forbs, or shrubland, unless otherwise recovery for a
previous 10 years). and the land could determined by NRCS; selected species under
While NRCS normally provide habitat for contain historical or section 4 of ESA,
purchases floodplain animal or plant archaeological candidate species,
easements on populations of resources; furthers a state listed species
agricultural lands, on significant ecological; state or local policy or one identified by
a case-by-case basis contains historical or consistent with the the Chief for special
NRCS may purchase archeological purposes of the consideration.
floodplain easement in resources, or would program; and is
rural residential areas address issues raised subject to a pending
in lieu of traditional by state, regional, and offer by an eligible
EWP recovery work if a national conservation entity;
sponsor is acquiring priorities. (2) Must be cropland,
the underlying land rangeland, grassland,
rights and the cost of pastureland, or
the recovery work would forestland that
exceed the easement contributes to the
acquisition costs. In economic viability of
such situations, any an agricultural
structures are then operation or serves as
demolished or removed a buffer to protect an
from the easement area. agricultural operation
from development; Must
not include forestland
on greater than \2/3\
of the easement area.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Payments For easement: provides Provides acquisition For easement: provides Provides cost-share For easement: provides
acquisition costs; costs; administrative acquisition costs; assistance to eligible acquisition costs;
administrative costs costs associated with administrative costs entities to acquire an administrative costs
associated with acquiring an easement, associated with easement. associated with
acquiring an easement, and restoration costs. acquiring an easement, Single payment or up to acquiring an easement,
and restoration costs. Easement payments are and restoration costs. five installment and restoration costs.
For 30 year contracts: made as a single Easement payments are payments; first For 30 year contracts:
provides contract payment generally a single payment at closing provides contract
payment. payment however; followed by four payment.
Easement payments are landowners may request annual payments. Easement and contract
generally a single payment for up to 10 payments may be made
payment but may be made years in equal or in a single payment or
in annual payments for unequal amounts. for no more than ten
no more than 30 years. For rental contracts: annual payments of
For restoration cost- provides annual rental equal or unequal size.
share agreement: payment. If restoration For restoration cost-
provides restoration efforts are necessary, share agreement:
cost-share assistance. participant can receive provides restoration
cost-share assistance cost-share assistance.
through a restoration
agreement.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Special provisions for 30 year contract None None None 30 year contracts
Indian Tribes enrollment option
--------------------------------------------------------------------------------------------------------------------------------------------------------
Does funding expire Expires--annual funds No-year funds except for Expires--annual funds Expires--annual funds No-year funds
October 1, 2012 ARRA funds which are 2
year funds
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appeals process Title XII Non-Title XII Title XII Title XII Non-Title XII
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Data is still undergoing quality assurance review.

Attachment 2

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

The Chairman. I thank the gentleman. Thank you both for
your testimony.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. And I appreciate
Members understanding. I am going to reserve my time for
questioning.
I now recognize the Chairman of the Agriculture Committee,
Mr. Lucas, for 5 minutes.
Mr. Lucas. Thank you, Mr. Chairman.
And I do appreciate the presentation you gentlemen have
given. The challenge this Committee faces as we sit here in
preparation for a farm bill next year or perhaps if the grand
discussions between the President and the leadership of both
the House and the Senate come about, a rather quicker process
where the budget realities are going to come to bite very
challengingly. And clearly, it is not just going to be the
Commodity Title. It will be Conservation. It will be all the
programs. So I ask my questions in light of the Committee's
preparation to make some tough, tough decisions.
Administrator, how much are we going to spend on CRP this
year, round numbers?
Mr. Nelson. Congressman, it is $1.7 billion annual rental
payments.
Mr. Lucas. Chief, how much are we going to spend on CSP
this year?
Mr. White. Around $600 million.
Mr. Lucas. Six hundred million dollars. How much on WRP?
Mr. White. About $611 million.
Mr. Lucas. Six hundred eleven million dollars dollars?
Mr. White. Yes.
Mr. Lucas. Okay. And I would take note the Chief is exactly
right. The Dam Rehabilitation Program is one of those designed
to be administered strictly on a priority basis established by
the Department after review of all the structures, no earmarks,
no silly games from Congress, a very straightforward way to do
things. And it has been implemented in that way.
Chief, could you explain to the Committee for just a moment
about EQIP and the difference between the approach in EQIP and
CSP?
Mr. White. Mr. Lucas, I kind of think of them in two
different ways. EQIP I think is your bricks and mortar. That is
your pipeline. That is your animal facility. That is your
fence. That is your filter strip. That is your terrace. It is
things you put on the ground. The Conservation Stewardship
Program is more of management-related. It is going to be taking
nutrient management and going to precision nutrient management.
It is going to be taking prescribed grazing and advancing that.
So it is more of the management. That is the way I kind of look
at them, sir.
Mr. Lucas. So from the perspective of the countryside on
CRP, if you want to participate in the program, you have to
participate within the guidelines. If you are accepted, you are
signed up for 10 years. In CSP it is not so much just putting
your property into the program. You have to adjust your
practices to fit the goals of CSP?
Mr. White. Well, there are priority resource concerns that
vary around the country. Each state kind of, with their state
technical committee and local workgroups, will design those.
CSP is a 5 year contract. It is renewable for another 5 years.
And to get in you have to be meeting a resource concern like
soil erosion, water quality, and you have to agree to do
another one. There is a lot of additionality. In fact, in the
20,000 contracts we had at the end of last year, Mr. Lucas, we
had about 78,000 to 79,000 new practices in there that the
producers self-select. So there are things they want to do.
Mr. Lucas. And I would note to my friends on the
Subcommittee that as we work through the next farm bill, we
also have obligations under WTO, CRP being green-box compliant.
CSP, because it requires certain practices, it falls in a
different category. Just for a moment back to the cost of the
various programs, at a $1.7 for CRP, $600 million approximately
for CSP, and you said $550 million for the Wetlands Reserve
Program?
Mr. White. Yes, let me double-check that.
Mr. Lucas. Please. And the simple reason I bring that, in
times of tighter budgets, that looks like a pretty interesting
dollar figure per acre on WRP compared to the other two.
Mr. White. It has been averaging about $2,000 an acre.
Mr. Lucas. Averaging $2,000 an acre?
Mr. White. But that is long-term protection as well.
Mr. Lucas. And we signed up for how many years on the WRP?
The length of contract on the WRP?
Mr. White. WRP is permanent easements, which is the bulk of
them. It could be 30 year. There is also a provision that was
put in in 2008 for 30 year tribal contract. And then there is
one that is not used very much for restoration only, 10 year
contracts.
Mr. Lucas. Six hundred thirty million dollars on 10 million
acres.
Mr. White. Sorry.
Mr. Lucas. I will send you some more questions later about
that.
Mr. White. Thank you, sir.
Mr. Lucas. And I see my time is about to expire. I would
just note to the Committee that the challenges we face--the
conservation programs are the most popular. They do the most
good. They are the legacy programs, as our friends here have
stated. But the budget situation and the grand negotiations
going on are going to be so tough. We are going to have to make
some extremely tough decisions in all areas of the farm bill in
a lot of things we have done historically such as helping our
California friends meet their emissions standards brings
questions to light: Is it appropriate? How much should the
Federal Government spend to meet state standards in comparison
to what it does in the rest of the country?
With that I yield back the time I don't have. Thank you,
Mr. Chairman.
The Chairman. I thank the Chairman. I now recognize the
Ranking Member of the full Agriculture Committee, Congressman
Peterson, for 5 minutes.
Mr. Peterson. Thank you, Mr. Chairman.
First of all, Mr. White, I was having a discussion back
home this last week about CSP, and according to them, the way
this is rolled out that there is not flexibility for the states
to set their own priorities, that according to them, they are
having to follow national priorities, which do not work in
northwest Minnesota. And I heard you say that the state
technical committees were making these decisions and so forth,
but these are from local folks that are on the ground saying
that the way this has been put together does not work for them.
There are 25 practices that you can choose from to get
qualified and only three of the 25 actually work in that part
of the country. And so they were asking for more flexibility
for the states. So, if you would check into it, I don't know
what is going on exactly. Maybe the state made this decision
and they didn't recognize what was going on. I don't know.
Mr. White. There are about 80 or 90 enhancements, there are
some national priorities, but we do try to fit it so I will
have to get back to you.
Mr. Peterson. Well, for whatever reason, they claim there
is only like three things on that list that actually work in
that part of the world. So whatever.
And Chairman Lucas, you have to, when you go to sign up,
you have this list of all of these practices that you can pick
and some of them are worth more than others, but, supposedly,
there is flexibility there to make it work on your farm.
And I would also say on the CRP, I hope that everybody
recognizes what is going on. There has been talk out there
about CRP. But as we go through these signups, we are sorting
this out. We had 4.1 million acres come out this year, 4.4,
million acres something like that. Pardon?
Mr. Nelson. Congressman, that is 4.4 million acres of
contracts expiring this year.
Mr. Peterson. Right. And they only signed back up 2.9
million acres.
Mr. Nelson. Well, 2.8 million acres, yes.
Mr. Peterson. Oh, 2.8 million acres. And I think the number
was like you had to have 279 EBI or something to get qualified,
so this is significantly higher than what it has been, and so
there is a lot of this land out there that is coming back into
production just as we go through this process. Next year, there
are going to be 6 million acres coming out. We will probably
see a similar kind of situation where only \1/2\ of that is
going to get back in.
I think we have a process set up here that is sorting out
the land that should be farmed, the land that shouldn't be
farmed, and I hope we don't go off on some tangent where we are
doing some meat-ax thing where we end up putting a bunch of
land back in production that is going to cost us crop insurance
and disasters and other things. So that is just an editorial
comment.
The other thing I am concerned about is with these budget
deals that were made in the CR and so forth, there has been
talk out there that I read in news articles that you are not
going to be able to honor contracts. I just want to make sure
that you have enough money to--any contract that has been
signed that there is sufficient money to actually pay that
contract. Is that the case?
Mr. White. Mr. Peterson, that is the case. We will have
enough money to fund all of the contracts.
Mr. Peterson. But you probably have had to cut back on how
many additional contracts you couldn't offer because of this?
Mr. White. Not at this point.
Mr. Peterson. Well, I thought they cut back on your
appropriation. Didn't they?
Mr. White. The biggest cutback we had was in the
discretionary amounts like RC&D, the Watershed Program, there
were reductions in mandatory but they were just kind of the
normal CHIMPs. They were from the authorized levels. No program
actually got less. There was maybe some cut in WRP but a cut
from the authorized level, we still saw an increase in the
actual, at least for EQIP.
Mr. Peterson. So you weren't spending your authorized
level? I mean just because it has been CHIMPed every year.
Mr. White. For programs like EQIP, it has generally been
CHIMPed.
Mr. Peterson. So because they have been CHIMPing it every
year, you guys just don't spend what was authorized?
Mr. White. No, sir. We can only spend what is appropriated.
And this year it will be about $1.4 billion. And I think your
authorized level this year is $1.588.
Mr. Peterson. Well, I thought they CHIMPed some other
programs, too?
Mr. White. Yes, but I don't think that anything that is
going to result in a reduction in contracts to people.
Mr. Peterson. So that didn't change anything out there in
terms of----
Mr. White. No. The biggest cuts we are dealing with are for
discretionary with the RC&D Program, the Watershed, trying to
close those two. They affect about 400 people, 500 people. We
are offering a buyout, early-out offers. No one has lost their
job, and for this year at least I think we are okay. I guess
the biggest thing is WRP was capped at 202,000 acres. Last year
we enrolled like 270,000 acres, but that was an unbelievable
year. That was the biggest enrollment year in the history of
the program.
Mr. Peterson. Thank you.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. I recognize myself for
5 minutes for questions.
Both of you mentioned the positive impacts conservation
programs are having on restoration efforts in the Chesapeake
Bay. Does NRCS have specific data on how much nitrogen,
phosphorus, and sediment has been reduced in recent years, and
are there projections for future reductions?
Mr. White. Yes, sir. Yes, sir, we do. We embarked on this
project called the Conservation Effects Assessment Project,
CEAP. We have done one in the Chesapeake Bay and it looked at
2003, 2004, 2005. So that is kind of the baseline. And I can
tell you that voluntary incentive-based conservation is having
huge reductions in nitrogen, phosphorus and sediment going into
the Bay. If you look at that 2005-06 baseline and you look at
just the conservation we put on since that time, we have had
like a 15 percent further reduction in phosphorus, like a 17
percent reduction in nitrogen, and I cannot remember the figure
for sediment, but we can get that to you. That has just
occurred since 2006. So farmers and ranchers really are making
huge strides in the Chesapeake Bay.
The Chairman. Very good. I hear a lot from aspiring young
farmers. Some of these folks, frankly, didn't grow up in a farm
family, which is very impressive, somebody that wants to go
into farming. And one of the concerns that I often hear--and I
have heard this in different parts of the district is that
there are often times USDA, the programs we are talking about
today offers a higher reimbursement or rental rates per acre to
put something into a conservation program than what those same
acres would fetch in an open market. And frankly, I had one
farmer that actually had to rent fields a long distance from
his home when there was adjoining property that his business
plan he put together, he couldn't compete with the government
was the bottom line. Is this something that you have heard
before? Is this something that we look at, that we monitor the
impact of?
Mr. Nelson. Mr. Chairman, I will learn how to use that talk
button yet, sir.
Mr. Chairman, with respect to the CRP program, the 2008
Farm Bill, as you know, now requires that the National
Agricultural Statistics Service do a survey of cash rental
rates in counties around the country, and that is used as a
basis for setting the CRP rental rates. And so we now have a
more solid statistical basis for defending those rates than we
might have had in the past.
And just to give you some anecdotal evidence putting CRP
rental rates in perspective, I come from Chouteau County,
Montana, dry land wheat farmer out there, hometown is Fort
Benton. And I was on the farm back in the 1980s when the CRP
program got started. And the rental rates at that time were
about $45 an acre. That is the biggest wheat-producing county
in the state and we still enrolled about 240,000 acres in CRP.
So $45 back in 1986. In the latest Signup 41 in Chouteau
County, the average rental rate in county was about $39. And if
you take into account the consumer price index that a dollar is
worth about half now what it was back in 1986, that means that
the real cash rental rates for my friends and neighbors there
in Chouteau County who participate in CRP, the real CRP rental
rate is about half now what it was. And I think part of that,
again, is that because we have a statistic service doing that
survey out there that we are pegging the CRP rental rates
closer to the market than perhaps they were in the past.
The Chairman. Very good. Thank you. My time has expired. I
am thinking we will probably get an opportunity for a second
round.
So I now recognize the gentleman from Pennsylvania, Mr.
Holden, for 5 minutes.
Mr. Holden. Thank you, Mr. Chairman.
Chief White, you mentioned in your opening statement the
Chesapeake Bay Program, and you know Mr. Goodlatte and I worked
hard on the last farm bill with the other Members of this
Subcommittee and the full Committee to get that program into
the farm bill. Has the 2011 CR, which cut mandatory spending by
$673 million hindered the ability to implement that program as
we envisioned it, due to the regulatory burdens that they were
facing. We thought it was so important to give them a little
extra investment to deal with what was coming down from EPA.
Have you been able to do what we asked you to do despite the
cuts in 2011?
Mr. White. Yes, sir. As part of that, the Chesapeake Bay
was fully funded. It was not CHIMPed or reduced.
Mr. Holden. We have no idea where the 2012 Appropriation
Bill is going to end up but we know what the House did. If it
ends up being around $1 billion in reductions in conservation,
do you think that will affect the Bay program?
Mr. White. Yes. Basically, what you will have, Mr. Holden,
is fewer contracts, less conservation on the land, probably
fewer people to do that.
Mr. Holden. And finally, Chief White, you mentioned
farmland preservation, and how important it is to the
Commonwealth of Pennsylvania. In the 2008 Farm Bill, as you
mentioned, we had to make some changes because we though there
were some administrative problems in Pennsylvania specifically.
And I was hearing everything was going fine, but I have one
county in my district, Lebanon County, who was complaining
about the ability to enter into contracts, that there seems to
still be some red tape. So this really isn't a question. If you
could have you or your staff look into it, is there still a
problem with getting someone in your agency to approve
contracts or what the exact problem is?
Mr. White. It is a problem, Mr. Holden. I take full
responsibility for it. We have not been as fast as we should
have been in getting that certified entity process out there.
We have advanced how we are looking at with Pennsylvania in
particular so we hopefully have taken care of that problem. But
the root cause lies with me and hopefully in the next 30 days
we will get those rules out there for certified entities, which
will greatly streamline the process across the country.
Mr. Holden. And you don't need anything further from us?
Mr. White. No, sir.
Mr. Holden. All right. Thank you.
Mr. White. I have to assume blame for that one.
Mr. Holden. Thanks, Mr. Chairman.
The Chairman. I thank the gentleman. I recognize the
gentleman from Florida, Mr. Southerland, for 5 minutes.
Mr. Southerland. Thank you, Mr. Chairman.
Mr. White, I find your testimony refreshing, very honest.
You are passionate about what you do and thank you. And you as
well, Mr. Nelson. I know that regarding the issues that I am
concerned with, it just seems that, Mr. White, you seem to be
speaking about quite a bit of the things that interest me.
But I wanted to ask you regarding Longleaf Pine
Restoration. I am from North Florida----
Mr. White. Yes.
Mr. Southerland.--and obviously Longleaf Pine restoration
is something that is a great concern to a lot of our landowners
there, as well as our National Forest there. I understand that
the Florida NRCS and the Wildlife Habitat Incentive Program has
been used to assist landowners, increasing planting of Longleaf
Pine. Can you just elaborate to me? I am still learning about
the program. Please elaborate a little bit on USDA efforts and
the services you are providing for these private landowners.
Mr. White. Thank you, sir. That is a great one. I love the
longleaf pine. When this nation was settled, we had 90 million
acres of longleaf pine. It is a gorgeous plant. It is more like
a savannah grass underneath, a tree that grew up under frequent
fire regimes. And now we are down to like 3 million acres. And
your area from Mr. Goodlatte's area to yours and swinging
across the Texas is where the longleaf were.
We are trying to work with the Forest Service, other
agencies outside of USDA, private landowners to try to restore
that particular forest. And we are using mostly the Wildlife
Habitat Incentive Program. And when I talked a little bit about
WHIP, I said the unique thing, one of the really cool things
about it is we have a directive there to use the funding for
state and national initiatives. This longleaf pine really came
from the bottom up. It wasn't from me down. It came from those
various states saying we need to do something about this. And
we are very pleased to cost-share with producers to plant
trees.
Another big thing is getting rid of the invasives like an
Alabama cogongrass and there is just a gob of invasive species
out there. Well, you know that being from Florida. You are like
ground zero for that. So it is helping with invasives and
helping to reestablish this tree. This tree built Williamsburg.
It kept the wooden ships afloat, built Savannah, straight,
long-grain, rot-resistant, a fabulous--it provides habitat for
I don't know how many hundreds of different creatures. It is
amazing.
Mr. Southerland. Well, thank you. I am going to move on to
Everglades restoration, a little bit farther down from my neck
of the woods, but still the Everglades is an important part of
our state. And I know that WRP is a popular program in Florida,
but tell me just a little bit because it is farther down, so
you understand more about that than I do even thought I still
have constituents in my neck of the woods who still reach out
to my office.
Share with me, though, and the Committee how the WRP
Wetland Restoration Program, it works down with the--and I know
that there are private landowners in and around the Everglades
working with you. Can you shed a little light on that? And,
again, I am asking because I don't know as much about the
program as I perhaps need to.
Mr. White. Right. I have to be careful what I say here. The
Everglades is a very, very ecologically important area and a
lot of different entities have done a lot of talk about how
important it is to restore it and we are doing something about.
And this is just private lands, working with ranchers, last
year, Mr. Southerland, we enrolled the largest contiguous block
of land ever enrolled at the WRP and it was in the northern
Everglades in a place called Fisheating Creek. It is going to
have a huge, huge positive impact on Lake Okeechobee and the
Everglades water system. The ranchers are going to work to
restore the natural hydrology. We are going to work with them
to control the invasive species. We are going to work with them
under compatible use to make sure there is still some
production. We need that land grazed periodically. There were I
can't remember how many landowners in this 26,000. It was just
very few. They were large landholders----
Mr. Southerland. Right.
Mr. White.--but a few years ago, this land probably would
have been in subdivisions. And now it is going to be restored.
The landowners keep the land. They control access to it. I
think it is going to be a big, big win for the Everglades. And
stay tuned for Part two.
Mr. Southerland. Thank you very much.
Mr. White. Yes, sir.
Mr. Southerland. Mr. Chairman, I yield back.
The Chairman. I thank the gentleman. I now recognize Ms.
Pingree for 5 minutes.
Ms. Pingree. Thank you, Mr. Chairman.
Well, thank you very much for your interesting testimony
this morning. As one of the new Members of the Committee, I
feel like much of this is a tutorial for me. And I look forward
to continuing to learn more about these programs.
Perhaps my only editorial comment really is sort of meant
for us generally. I understand the chair of the Committee when
he talks about the need to make cuts. The deficit issues that
we are facing in this country and the importance of tightening
our budget everywhere that we can. But considering that my
other committee happens to be the House Armed Services
Committee where we rarely think about making cuts and spend far
more money on what is an essential services, of course,
defense, but we also have to think about the security around
our food systems in this country. And as you mentioned earlier
this morning, our population is only increasing. The needs that
we are going to have for food produced in this country I think
are only going to grow. And much of what you do in the programs
that you administer are very critical to that.
So I thank you for your work, and I certainly will be doing
all I can as a brand new, highly junior Member of this
Committee to support many of these programs. And I do hear
about them in my home state. One question I want to bring
forward to you is really how one of the programs is
administered. And I apologize. I am reading off my phone so my
lettering is a little strong.
But in the 2008 Farm Bill, Congress recognized the
importance of making conservation programs accessible to all
farmers, including organic producers and conventional producers
interested in transitioning to organic. I represent the State
of Maine. Organic farming has been growing there for a long
time but increasingly is of great interest on the part of the
producers and consumers and is one of the areas where farmers
have been able to increase their profits, which is a wonderful
thing for all of us. We have managed to increase the amount of
farmland in our state, and the average age of the farmer is
going down. So that also is bucking a national trend and I
think showing that we can do more to produce our food locally.
But I want to talk about the EQIP program. It has a
specific provision to ensure that the program can be accessed
by organic and transitioning farmers in recognition of both the
conservation opportunities here, and I think also because of
the historic lack of participation of organic producers in the
conservation programs. So I am very supportive of the
implementation of this provision through the Organic
Initiative. As I said, it has been popular in Maine with over
$700,000 provided in the fiscal assistance to Maine producers
in Fiscal Year 2010, which in our small state is actually
great.
But while it has been popular, there have been some
barriers to implementation. And I hear about this not just in
Maine but with other producers I talk to about it to around the
country. One of these barriers includes the unfamiliarity with
NRCS with organic systems. Can you talk to me a little bit
about the training and educational efforts to overcome this and
other barriers? And to be a little more specific, I have heard
that sometimes when a transitioning farmer visits a field
office, they will find that the person that they are dealing
with isn't well trained in making that transition, doesn't
necessarily know how to help them make that, that the field
guide recommends some pesticides that wouldn't be qualified
under organic certification. And again, where I see both the
environmental but also great economic benefits to farmers who
have been able to make this transition, get a higher price for
their products, and also do good conservation work alongside,
it seems like an important initiative. So can you fill me in on
that?
Mr. White. Ms. Pingree, you are absolutely right. I
encountered this when I was in Montana. We are a traditional ag
agency and this has moved us outside of our comfort zone, and
it is going to take us a while to become more familiar with the
organic. I mean, we are heck on wheels when it comes to corn,
cotton, wheat, soybeans, cows, sheep, stuff like that, but then
all of a sudden you are talking organic, you go, ``Oh my
gosh.'' So we are doing training for our people. We are making
some changes at headquarters that is going to streamline it and
make it more accessible to organic producers.
What Ms. Pingree is talking about is a section of EQIP that
has organic the Secretary shall provide us. It is not a
``may,'' it is not a ``maybe,'' it is ``shall,'' and we are
trying to have the training and to equip ourselves to do a
better job.
I had mentioned the Conservation Innovation Grants. We did
one a couple years ago to a group of sustainable ag organic
producers who are to look at all our standards and to make sure
that we have adequately incorporated them. We have put our
standards out there to try and take care of those kinds of
issues. So we are trying to make some steps to that.
As far as funding goes, I set a $50 million limit for that.
For $50 million, we are using about half of it. The rest is
rolled back into other stuff. But you also need to think you
are an AMA state, ag marketing, which has some organic in it
and also the Conservation Stewardship Program has some organic
sections in it. In fact, if you look at that 35 million acres--
twice the size of the State of Maine--enrolled in a
conservation program. Pretty cool.
Ms. Pingree. That is great. Well, thank you for your
comments.
I will yield back the time I don't have.
The Chairman. I thank the gentlelady.
And I now recognize the gentleman from Wisconsin, Mr.
Ribble, for 5 minutes.
Mr. Ribble. Good morning. I appreciate your testimony this
morning. And I have a question, actually, for each of you, but
I will start with Mr. White.
I represent Wisconsin's 8th Congressional District, which
is one of the largest dairy-producing districts in the United
States. And Wisconsin dairy farmers rely pretty heavily on EQIP
and use it pretty regularly. I am wondering if you can just
talk about the current funding allocation for livestock. Do you
feel that funding is appropriate and necessary? And then as a
follow up, are there structural changes that need to be made to
the program to ensure that a wide range of producers can
benefit from the program?
Mr. White. Mr. Ribble, Wisconsin?
Mr. Ribble. Yes.
Mr. White. I got to tell you, when you go to Wisconsin, it
does your heart good if you are a conservationist, all of those
beautiful strip crop fields, those small little dairy farms. It
is just a fabulous part of the world. We do a lot of work with
dairy. EQIP has a statutory requirement in it that 60 percent
of the funds have to go to livestock operations. And we have
never had a problem meeting that. And frankly, most of that
money is beef production and dairy, followed by poultry, then
swine. I think that it is widely available in your state. I
know we do a lot of work with animal feeding operations, water
quality aspects. I have been there. I have seen some of the
stuff. I don't know of any access problems that we have.
Ms. Pingree mentioned the age of farmers are dropping in
her state. This Committee actually put into EQIP where five
percent of the funds have to go to beginning farmers and
ranchers and five percent has to go to socially disadvantaged
producers. So from that standpoint, we are trying to make it as
broadly applicable as possible, sir.
Mr. Ribble. Are there formulas between larger and smaller
producing dairies?
Mr. White. No, sir.
Mr. Ribble. No, okay. So the size of the dairy doesn't
matter?
Mr. White. Size-neutral.
Mr. Ribble. Okay. Very good. Thank you.
Mr. Nelson, as you know, farmers nationwide are facing an
ever-increasing regulatory burden, particularly from EPA, and I
hear quite a bit from them regarding EPA. Could you maybe give
some insight into what USDA programs in your view provide the
best assistance for producers as they strive to meet those
demands?
Mr. Nelson. Congressman, I appreciate that question because
our programs aren't necessarily always thought of in that
context. I think they should be because, look, I am a farmer
myself, and I think it is always good when we have the
opportunity as ag producers to have a variety of conservation
programs out there that we can tailor to our individual needs
on our farms and ranches. And if we can achieve compliance with
other regulations at the national or state level in that
manner, that is great. And so I think the approach of a
partnership between Federal Government, in some cases state
government, and individual farmers and ranchers out there on a
voluntary basis to achieve goals like preventing nitrates into
the Mississippi river or the Chesapeake Bay, that is a great
approach and is the kind of public-private partnerships that
are good for all of us.
Mr. Ribble. Are those partnerships available? Are you
working in a collaborative effort with producers around the
country?
Mr. Nelson. Yes. Virtually all of the programs that both
Chief White and I have talked about here today are
collaborative efforts. In some cases, Chief White's agency
works with organizations and larger entities. Farm Service
Agency, we work with individual agricultural producers on their
individual farms. And, for example, the Conservation Reserve
Enhancement Program, the first area we talked about Chesapeake
Bay a little bit before and what NRCS is doing there. FSA has a
Conservation Reserve Enhancement Program area that goes right
along, works hand-in-hand with NRCS that gives individual
producers the opportunity to enroll on a continuous basis on
CRP in that area. And that prevents the leaching of nitrates
into the Bay that is so problematic.
As a matter of fact, as Mr. White talked about earlier, the
assessment that they did earlier that we in FSA worked together
with them on shows that that effort alone has resulted in
reducing the levels of nitrogen off every acre down about 79
pounds an acre. And I tell you, 79 pounds of nitrogen an acre
would grow one heck of a lot of winter wheat out in Montana. So
it is significant.
Mr. Ribble. All right. Thank you very much.
The Chairman. I thank the gentleman.
I recognize Ms. Fudge from Ohio.
Ms. Fudge. Thank you very much, Mr. Chairman. And thank you
both, gentlemen, for your testimony today.
Chief White, I do want to follow up on a question that was
just asked by my colleague. Under EQIP, the 2008 Farm Bill
authorized increased payments for socially disadvantaged
farmers, ranchers, and beginning producers. There were also
incentives for organic operations. At that time there was a lot
of discussion, obviously, about these incentives which some may
have even called preferences at the time as best I can glean
from that. I wasn't on the Committee. I am a new Member.
A couple of questions. Was there some projection at the
time as to how many producers would take advantage of these
incentives and do you know to date how many socially
disadvantaged and beginning producers have, in fact, taken
advantage of the incentives?
Mr. White. Thanks, Ms. Fudge. I can get you those numbers
on how many are doing it. I can tell you we blow away that five
percent every year, far beyond, both beginners and socially
disadvantaged. And what it essentially means is if you are a
beginning farmer/rancher, socially disadvantaged, you can get
up to 90 percent cost-share or 15 percent above whatever the
prevailing rate is because rates vary, but a maximum of 90
percent. I can tell you it is very popular. You may know
Secretary Vilsack has embarked on his ``strike force'' where we
are trying to do specific, more targeted outreach to make sure
we reach our underserved communities. We are participating in
that. My personal feeling is it has been extraordinarily
successful, ma'am.
Ms. Fudge. So then, in fact, you do believe that there has
been a very positive impact with these programs?
Mr. White. Oh, yes, ma'am.
Ms. Fudge. And is there something that you think we should
consider changing that would make it--that there would be more
participation--which at this point I am not sure that you
really need--or include other groups? Do you think there needs
to be some change in it?
Mr. White. No, because we view that five percent as a
floor, not a ceiling.
Ms. Fudge. Okay. Thank you.
Mr. Nelson, Section 2101 of the 2002 Farm Bill provided for
use of Conservation Reserve Program, CRP, land to be used to
grow biomass or place wind turbines on that acreage. Businesses
in my district are working to place wind turbines and to
develop other renewable energy solutions. As you know,
renewable energy is important for job creation and to sustain
our environment. Have businesses and other organizations
approached NRCS about using this land to grow biomass or to
place wind turbines? Do you know?
Mr. Nelson. I am sorry, ma'am. I wasn't quite sure your
question, but we have implemented the provision of the farm
bill with respect to the placement of wind turbines on
Conservation Reserve Program acreage, and what we do in that
case is essentially the footprint of the wind turbine would be
penalty-free take-out of the CRP program. So we have
implemented that.
Ms. Fudge. All right. So have people taken advantage of it?
Mr. Nelson. Yes. Yes. And we will provide you with some
specific figures on that.
Ms. Fudge. Okay.
Mr. Nelson. Be more than happy to.
Ms. Fudge. Thank you. I look forward to it. Thank you.
Mr. Nelson. Thank you.
Ms. Fudge. Mr. Chairman, I yield back.
The Chairman. I thank the gentlelady and I recognize Mr.
Hultgren from Illinois for 5 minutes.
Mr. Hultgren. Thank you, Mr. Chairman.
Thank you. I apologize. It is a busy day with a lot of
committees going on, but I appreciate you being here,
appreciate the work that you're doing.
Question for you: I wonder if I could get a response from
both of you. Farmers and ranchers continue to face
environmental regulations that increase costs and can drive
producers out of business. We all know that. What program
provides the most benefit to producers to assist with these
mounting regulations?
Mr. Nelson. Well, with respect to Farm Service Agency, it
is a Conservation Reserve Program which is our largest program.
And that gives individual producers the opportunity to
participate in things like the continuous signup practices of
buffer strips and other practices where you enroll very highly
environmentally sensitive land that is actually protecting
larger acreages. And that helps with the individual producer's
compliance with other regulations. And I believe that any time
an individual farmer or rancher has the opportunity to enter
into a partnership with the Federal Government or state or
local agencies through, again, a voluntary program and achieve
not only the benefits of that program but compliance with other
environmental regulations, that is a good thing for all of us.
Mr. White. Mr. Hultgren, from my perspective, four letters:
EQIP, Environmental Quality Incentive Program. We have a
statutory provision in there that says one purpose of the
program is to help producers meet or avoid the need for
regulation. And with that statement, you have stood NRCS as the
shield arm between the regulatory agencies and our producers.
And you have arrayed the strategic forces of 11,000 or 12,000
highly trained technical people with billions of dollars at
their disposal to help producers meet or avoid regulation. And
I don't mean this in a pejorative sense, but we take that very
seriously. And I could die a happy person if I could turn the
regulatory community into the Maytag Repairman.
Mr. Hultgren. One of the things that we know is there is a
lot of overlap and some duplication in programs. I just wonder,
with overlap and duplication in conservation programs, does it
produce any challenges for producers who may participate in
multiple programs?
Mr. White. In a word, yes. But go ahead.
Mr. Nelson. Well, I think there is some duplication but
there are also complementary programs. And we will look forward
to working with you as you get into the farm bill and our
technical folks will provide you with all of the information
that we can and assistance that we can with respect to the
administration of programs and our experience working with
producers.
But one of the things that I would like to emphasize--and
again, this is coming from a producer point of view--is that it
is a good thing to have a lot of different alternatives out
there, alternatives that will work as well in Montana as they
will in Florida or in Illinois because some programs that work
in some parts of the country don't work in other parts of the
country. And the more alternatives that individual producers
have to voluntarily participate in these programs, the more you
can tailor and shape them to your individual farming operation.
And that gives us a better chance of getting more conservation
on the land, which is what the whole thing is about.
So again, we look forward to working with you and providing
you with any information that we can that will help you in
those deliberations, but we also want to make sure that we
continue to give the full range of options to producers in
every part of the country to increase the amount of
conservation on the land.
Mr. White. I will just briefly add to that. I agree with
what Administrator Nelson has said. It is good to have a full
toolbox. But that said, in each of your packets, we have
provided you with a matrix, and in that matrix it shows side-
by-side all the easement programs and it shows side-by-side all
the cost-share programs. If you are a field person, you have to
know the rules for all of them. You have to know which you need
AGI for, which are HEL-compliant, which don't need it, which
are no-year funds, which are one year--you can see the
differences across this matrix and it makes it very complex for
our people. It makes it complex for our producers. The matrix
will speak for itself, sir. And I think that while we need that
toolbox where you have enough implements in there, I don't know
that we need as many as we have.
Mr. Hultgren. Well, thank you both. My time is up but I do
appreciate you being here. I appreciate your answers to
questions. I look forward to continuing this discussion as we
go forward in the farm bill. I do think it is important for us
to be looking at. I think it has been kind of a piecemeal
approach in the past on this, but there are ways we can find
more of an understandable and easier-to-navigate process that
works. I am hoping we can get there with that.
I yield back. Thank you.
The Chairman. I thank the gentleman and I recognize Mr.
Schrader, from Oregon, for 5 minutes.
Mr. Schrader. Thank you, Mr. Chairman. Well, I really
appreciate Mr. White's final comments there because to the
uninitiated or relatively uninitiated, even though I am a
farmer, this is a pretty complex arena with multiple programs.
And I have never seen an agency yet or a program yet that
didn't think it was pure and important in and of itself and
does something terribly distinct and different than the other
program that is very similar and almost duplicative to it. So I
appreciate the emphasis on that.
I guess my challenge to both of you, both FSA and NRCS
would be to look at the outcomes. I mean instead of we as
legislators tend to come up with brilliant new programs that
are going to fit in a variety of areas, usually ours, and get
us great results, but I think to get past that sort of
multiplicity of management schemes and the duplication that is
evident there, maybe we should focus on outcomes. Which of
these different programs give us the biggest bang for the buck?
What is the cost per acre of each of these different programs?
What relative level of nitrates or phosphates are prevented
from going in the rivers and streams given the different types
of programs? What sediment doesn't occur or does occur as a
result? That would give us a much more informed input as to
which programs are the biggest bang for the buck in these tough
times and doing great work.
There are probably some other intangible concerns we also
want to know, but I guess I would really hope this Committee
would focus on helping the agency develop outcomes that we can
measure so that all the variety of programs--I don't care what
program you use if you get good results. You can go to Tahiti
for 2 weeks, I don't care, as long as the air quality and the
water quality gets a little better as a result of what you are
doing. So I just would challenge you in that regard.
A series of comments that I don't need answers to right now
but would like at some point a response. The TIP subprogram as
part of the CRP program, what is the management overlay or
duplication or whatever in that regard? It would seem that the
ECP program could be duplicative of other disaster relief
programs. I just need information as to how it is not, why we
need this particular one for farm and forestland. The VPA-HIP
program, while a nice program and I am a big fan of hunting and
fishing, too--I am not sure, given our budget limitations, that
is one I would put a whole heck of a lot of money in, but I
stand to be corrected on that. And the idea of having both NRCS
and FSA manage the Grassland Reserve Program seems a little
cumbersome to me, so I would be curious as to why we have
gotten into that area.
On the positive side, it is nice to see that some of the
programs that were enacted in the 1930s, 1940s, 1950s, and
1960s are transitioning away, not that they are not important
but perhaps less important than some of the programs that we
have identified for the 21st century. I think that is important
but hope that both agencies would continue to look at that.
I guess the big question I have is--I come from Oregon and
half my state is forestland. And 40 percent of that is private
forestland. And I think we are missing the mark on our
forestland programs. The information I have, only six percent
of EQIP funding goes to forestland, despite increases recently.
I recognize the increases. Only six percent with the emphasis
on carbon sequestration, air quality, wildfires, invasive
species ruining one of our greatest natural resources that
built this country, that has me greatly concerned. And the
Beginning Farmer and Rancher Development Program, only three
percent is dedicated towards forest stewardship and new
forestry.
So I am just very, very concerned that forestry is getting
a real short end of the stick in these conservation programs in
the Agriculture Department and Natural Resources Conservation
Service. I would hope that we would look at that a little more
closely and beef those programs up as we get rid of some of the
duplication in other areas.
So with that, I yield back, Mr. Chairman.
The Chairman. I thank the gentleman.
And I wanted to take the opportunity for a second round for
anyone that has questions. I exercise that liberty first for 5
minutes.
Chief White, you have expressed an interest in having more
employees on the farm rather than behind a desk at NRCS
offices. Can you give us an update on where you are in this
process?
Mr. White. Two items I will cover with you briefly, Mr.
Chairman, that I can think of off the top of my head is the
Conservation Delivery Streamlining Initiative. We are looking
at our whole business processes. The outcome goal, we want to
eliminate 80 percent of the administrative clerical tasks from
our field office and free up 75 percent of their time for
direct working with farmers. If we can pull this off, Mr.
Chairman, it is the equivalent of adding more than a thousand
people to our workforce. It is going to free up that much time.
The second thing I would add is that I have recently
challenged our State Conservationists. Hugh Hammond Bennett
created this agency back in the 1930s. When he retired in 1952,
90 percent of the Soil Conservation Service employees were in
direct field positions. And by golly, if Hugh Hammond Bennett
could do it, why can't we? So I asked the State
Conservationists, what are you going to have to do in Florida,
in Pennsylvania, or wherever you may be if we want 90 percent
of our technical staff be in direct service to producers? And
they came back with all kinds of cool ideas. We are going to
start implementing them, and my hope is that despite any budget
cuts we can actually end up with more people on those front
lines providing direct service to producers.
The Chairman. Well, I congratulate you for your efforts. I
think there is many of us that when you are successful, we may
want to replicate that process across all parts of the Federal
Government.
Mr. White. I am not running for President yet.
The Chairman. Okay. And this is just my observation and I
may be incorrect, but it seems like the last farm bill, in
terms of the balance between direct technical assistance at
what I would call boots on the ground in programs, there was an
emphasis more primarily on programs. And I am concerned that
perhaps we skewed too far and I just see a lot of value of
those boots on the ground, those folks that provide the
technical assistance to help the farmers make the right
decisions, to be that present resource.
And just to both panelists, I just want to get your
perspectives on that as we approach the next farm bill. Do you
see the 2008 Farm Bill kind of skewed in that direction, more
programs, less technical assistance, and should that be
something that we should move back if not a 50-50 at least more
technical assistance?
Mr. White. Well, I agree with you. And I think the 2008
Farm Bill made some clarifications in technical assistance we
are finding very valuable now. And technical assistance, I mean
we talk about it, but what does it really mean? There are some
books here that I brought just in case somebody would ask about
TA. Those two books at the end are for one animal confined
feeding operation, the technical documents it took for the
design specifications. This right here is a 29 head dairy
lining a pond, and a separator. This is the construction of a
5.3 mile pipeline for a rancher. This is converting a flood
irrigation system to a sprinkler.
And if you look at the technical drawings that are
throughout this, it is absolutely vital that we keep those
highly trained men and women out there on the land. I have been
in this business for a long time. I have yet to see a Keebler
elf come out and help us with this. This is done by highly
trained men and women. We need to keep them there. We need more
boots on the ground. But I will also say this, Mr. Chairman. I
don't care whose foot is in that boot. And if we can make
arrangements with state agencies, conservation districts,
nonprofit groups, ag organizations to get the feet in those
boots, that is what we will do. This past year we took $20
million--you may have heard of this Strategic Watershed Action
Teams--we leveraged it, that $20 million, turned into $30
million and it gave us, oh gosh, 450 boots on the ground. They
are non-Federal, but they are going to be working alongside of
us.
The Chairman. Very good. Mr. Nelson, any thoughts on this
issue?
Mr. Nelson. Well, yes, I think one of the interesting
things about this discussion is that is points out there are
some differences between Farm Service Agency and NRCS. NRCS is
a technical agency. And as Chief White said and I think
everybody would like to have, their folks do best when they are
out in the field. They arrange conservationists and engineers
who are out in the field and not in the offices doing
paperwork. And so we have already had discussions about how we
at FSA, which tends to be an administrative agency that is more
paperwork-oriented, can actually support and help that effort,
because in these times when we are tightening our belts, we are
all going to have to be more efficient in the way we do things.
The challenge for us in FSA is to how we can
technologically get to the point where we need to be. As you
know, we are going through a terrible transition from 1970s and
1980s computer technology to 21st century computer technology,
and that has been very difficult not only on our employees, but
it is actually difficult on the producers as well.
I was privileged a couple of weeks ago to come up here and
be part of a demonstration for folks of a project, a long-
overdue project in the Agency to update our computer systems
and our software so that we are actually into the 21st century
with this MIDAS project. And I appreciated everybody's
participation in that because it is going to make us a lot more
efficient. And it is going to make us not only better able to
serve producers but produce information in response to requests
from you folks because I can tell you right now that in putting
together the answer to these audit questionnaires because of
all of the different computer systems we are working with in
FSA, we had to put word out literally to our county offices
across the country in some cases to put this information
together. That doesn't make any sense.
And so this move, like I say, is not only going to be a big
help to the Agency, it is going to be a big help to you and to
our producers as well. So we have to operate more efficiently
and we have to get to a point where we do more online with our
producers so that they can sit at home and do their work with
not only Farm Service Agency but NRCS and other USDA agencies
as well, because our producers are in the 21st century but we
are not. And so we have to catch up with them in this case. And
we are working hard on that. And again, we really appreciated
the opportunity to come up here and visit with you about it and
look forward to the future opportunities to do that. And all of
that will help both of our agencies.
Mr. White. Can I respond one more time? I would like to put
to rest an old canard about the animosity or the conflict or
the turf battles that occur between NRCS and FSA. We really
don't have time for that. Mr. Nelson and I have talked on how
we can work better together, and our commitment to you is that
we will do that. And not only are we going to work better
together but we are going to work better together for the
benefit of the American producer and for the American taxpayer.
The Chairman. And I know we all appreciate that.
I now recognize the gentlelady from Alabama for 5 minutes
of questioning.
Mrs. Roby. Thank you so much, Mr. Chairman. Thank you both
for being here.
Just last Thursday, we held a 2 hour listening session with
farmers in Alabama, and I did it in conjunction with our
Agriculture Commissioner John McMillan, and the number one
issue that kept coming up over and over again was CRP. And this
isn't the first time I have heard it. And for Alabama, this
program was definitely useful in the beginning, taking marginal
lands out of production, but as time has gone on and more and
more viable land is being shifted out of production into
longleaf pine. And one of the issues that has been discussed is
Alabama, it would be much more valuable to have to option of
grass, which would make it easier to move that land back into
production if needed.
Another issue is that farmers are competing against the
Federal Government in finding land to rent and oftentimes, the
presence of the government causes the prices of land to
increase drastically. And interestingly enough, one of the
farmers who participated in our listening session last week
that brought up and had concerns about the CRP was a timber
owner, and he said that the conversion of cropland to longleaf
pine has hurt him because it impacts, of course, the price of
the timber produced. And so my question to both of you is
whether Alabama is unique in seeing the usefulness of CRP
diminishing? Or has CRP served its purpose and is no longer
needed? And what changes might we make to CRP to ensure that
much-needed land stays in productive agriculture?
Mr. Nelson. Well, I appreciate the question because we
just, as you know, finished with CRP general Signup 41, and I
think it is important to note that even in this time of high
commodity prices that producers voluntarily around the country
offered 3.8 million acres into that program. And so in response
to your question, I think the producers have shown that there
is still great interest in participation in CRP, at least
around the country.
Mrs. Roby. But the people operating the land are not
necessarily producers because there is so much land that our
farmers rent or lease to produce, and it is up to the landowner
to shift that into the CRP program and thus takes that
property, then, out of production for those farmers who just
want to farm.
Mr. Nelson. Congresswoman, we would be more than happy to
visit with you further about this and to provide you with the
information about the CRP participation in Alabama. And I think
it is important to note one other thing, too, that could be
affecting this, and that is that there was established down in
the Gulf Coast and Atlantic Coast region and including Florida
a national conservation priority area for longleaf pine. It
does, in fact, give producers additional environmental benefits
index points when they go to enroll land in the Conservation
Reserve Program. And certainly, before we will go forward with
another general signup, the question of whether these
conservation priority areas are one that I am sure you will
look at in Congress and we will certainly look at within the
Farm Service Agency. So I would look forward to talking further
with you about that.
Mrs. Roby. Well, as the Ranking Member pointed out, he said
there is what, 4.1 million acres coming out, but the problem is
is that it is very, very costly to then convert that property
back into productive farm use. And so that is a tremendous
concern in my State of Alabama because of this program.
Mr. White, do you have anything to add?
Mr. White. Earlier, when you were out, we had a discussion
about how wonderful longleaf pines were. NRCS is certainly
working with producers on cost-share programs, working lands
programs on a voluntary basis for producers who want to do
that. Certainly, Alabama is in the belt where those trees were
from.
I guess I hear this from time to time but the beautiful
thing about voluntary conservation programs, if you don't want
to do it, you don't have to. And I would not want to take the
right of someone else away to enter into a voluntary
conservation program of which the CRP certainly is one.
Mrs. Roby. And my time is expired but I just would add to
that that it is for our farmers, the concern is because of the
existence of the program, maybe its usefulness has run out
because we do need to provide for all of those, as you
referenced, millions----
Mr. White. Yes, ma'am.
Mrs. Roby.--of mouths that are going to need to be fed. So
that is the point of my question. And I appreciate both of you
being here. And Mr. Chairman, I yield back.
The Chairman. I thank the gentlelady.
I recognize the gentleman from Florida for any additional
questions.
Mr. Southerland. Just to kind of follow up on that
statement, I think one of the challenges of the longleaf pine,
as you know, the woodpecker issue down there in our area--so
when you have one agency that is trying to encourage you to
come in and help restore--and I agree with everything you said,
Chief, about the longleaf pine and how beautiful it is, and I
think we are doing some incredible things down in North
Florida, especially with the Tall Timbers organization down
there. When you assist in helping us plant longleaf pine only
to have the redheaded woodpecker come in, then you will never
be able to harvest your timber because of regulations. So if
they are identified on your property, please believe me, there
are many that say as a result of them coming here and making
them your home, you can't cut. But that is just a follow-up
comment to Mrs. Roby.
I want to ask a couple questions. I know regarding CRP, you
know--and again I am learning these programs--but what
penalties does a landowner face if he opts out of CRP contract
and what flexibility is currently available, if any, to allow
landowners out of a CRP contract?
Mr. Nelson. Well, I appreciate that question because CRP,
again, we just went through a general signup, and so the issue
has been in front of the Department and the country. And the
Secretary does have the authority to do penalty-free early-
outs----
Mr. Southerland. Okay.
Mr. Nelson.--under CRP. The policy at the present time is
that if a producer wants to voluntarily opt out of the program
that they would have to pay back the rental payments that they
had received and there would be liquidated damages of 25
percent on the rental payments they had received and 25 percent
liquidated damages on any cost-share assistance they had
received and possibly interest as well. So that is the current
policy.
Mr. Southerland. That sounds like that was designed by the
IRS.
Mr. White. Mr. Southerland, can I address that?
Mr. Southerland. Sure.
Mr. White. I am going to take you back a little bit. The
guys we are cost-sharing with for longleaf pine, they are going
to cut that thing or projected in, what, 20, 30 years?
Mr. Southerland. No, it is longleaf pine you are looking at
closer to 50 years.
Mr. White. Okay. Well----
Mr. Southerland. And that is another issue. You know, there
are some other crops, certainly, that one could say obviously
we need to address longleaf pine but maybe some other species
that we can also plant in order to return an investment for the
landowner.
Mr. White. But I am going to check on that, whether you can
cut them or not, because I think you can.
Mr. Southerland. Well, I know this. I know that we have a
National Forest down there and the National Forest because of
the woodpecker has been turned into basically a national park.
And in the rural county where having logging operations in
these rural counties has been shut down because of the
woodpecker, and they basically have taken a National Forest and
made it a national park, it is creating economic damage to
these communities. And so it something very near and dear to my
heart. And so I think some flexibility there would be good
because I do believe that the longleaf pine is worth pursuing.
I mean it is a great thing. But, yes, anything you can check on
that, that would be good.
Mr. White. I will get back to you, sir.
Mr. Southerland. Thank you.
And my follow-up question, what programs have wildlife
components--hold on. My question here is messed up. Let me
shift here. What percentage of funding under EQIP makes it to
the producer?
Mr. White. About 75 percent. About 20--the numbers vary
from year to year, sir, but it is normally--the technical
assistant generally runs from 20 to 25 percent.
Mr. Southerland. Okay.
Mr. White. And that is what buys these books that I just
showed.
Mr. Southerland. I got you. And last, on just a statement
on the budget cuts, I appreciate your can-do attitude because
the American people are given a dollar amount that they have to
live within and they have a can-do attitude that they are going
to make it work. And I have heard you display that this morning
and it is refreshing. And so I just want to tell you how much I
appreciate the way both of you have testified before us this
morning. Thank you very much.
Mr. White. Listen, I am an American. I am not going to
crawl up in a fetal position and cry myself to sleep.
Mr. Southerland. Well, that is not how this country was
founded and----
Mr. White. I am going to try to do what I can do.
Mr. Southerland.--and I don't believe you would. So thank
you very much. I yield back.
The Chairman. The gentleman yields back. And I recognize
the gentleman from Illinois for any additional questions.
Mr. Hultgren. Thank you, Mr. Chairman, just a couple.
I wondered if you could explain the Conservation Innovation
Grants. Tell me a little bit more what they are, and also let
me know, if you would, the success rate for these innovation
projects eventually becoming adopted conservation practices?
Mr. White. Yes, sir. I am assuming you are referring to the
one that is supposed to bridge Death Valley, to take promising
research and try and figure out how it can be broadly applied
to the land. We have had some spectacular successes and we have
had some spectacular failures. I can get you more of a rundown
on which is which on that, but I think in the area of feed
management, we have seen some extraordinary results from the
University of Washington. Odor control, I think that was
Wisconsin Department of Agriculture did some wonderful work on
how to do better odor control, precision agriculture, water
quality. We have had some really good stuff, but we have also
had some things that just did not work out. And I am trying,
frankly, to get my arms wrapped around it better and I will
have to get back to you on some of this, sir.
Mr. Hultgren. Is your sense that most of them are working,
most of them not working, just to kind of gauge a success rate?
Is it possible to do that? And again, it is for the
Conservation Innovation Grants.
Mr. White. Maybe 75-25.
Mr. Hultgren. Working to not working?
Mr. White. Yes, and that is kind of an estimate. So can I
revise and extend my remarks?
Mr. Hultgren. Yes.
Mr. White. Okay.
Mr. Hultgren. That would be good. Yes, and if you can let
us know if there is more feel to that. For me my concern is
money that is being spent, is it being useful?
Mr. White. Exactly.
Mr. Hultgren. So it is not numbers of success but dollars
being spent leading to real innovation that is actually being
used out in the field.
Mr. White. Got you.
Mr. Hultgren. Switching over to the Conservation
Stewardship Program, what percentage of funds for the
Conservation Stewardship Program are used to pay for things
farmers already have done and how much is used to encourage new
practices?
Mr. White. Okay. The law says you will pay to maintain
existing and to create additional. We have put an emphasis on
the additional. Right now, that annual payment is roughly split
60-40, 60 percent for new stuff, 40 for the maintenance of
existing.
Mr. Hultgren. Okay. Kind of wrapping up and getting back to
the first round of questions. I guess I would like to just get
some thoughts from you. We talked a little bit about going into
the farm bill and really looking for ways--certainly, we want
options out there, but at the same time we don't want to be
tripping over options and having it with limited resources
where we are not being as effective as we possibly can be. So I
wondered, do you think is there a more comprehensive way to
provide environmental benefits to our farmers and ranchers
instead of the piecemeal approach that Congress has provided
over the last 25 years? If you think there is, give me some
sense of what that would be.
Mr. White. You go first.
Mr. Nelson. Well, I think again, as I said earlier, the
challenge here is to look at all of these programs and figure
out ways which we absolutely need to do to both operate them
more efficiently and make them more effective to farmers. But
as I also talked about earlier, to do that in a way that we
don't take alternatives away from farmers and ranchers around
the country so that, again, a farmer in my State of Montana,
your State of Illinois, they are not going to need exactly the
same thing.
So it isn't an easy thing to do, but we need to figure out
a way to do it because like it or not, we are facing budget
challenges here. We have had to tighten our belts. You know, I
had to do that back on the farm. I had to do that when I was in
the Governor's office back in Helena. And we are going to have
to do it. So, again, the challenge is to figure out a way to
become more efficient in the administration of programs, make
them more effective for the individual producers, and not take
alternatives away so that we can continue to make sure our
producers in every area in the country have the full range of
options. And I think all of the programs need to be on the
table that both agencies are involved with, and we are
certainly looking forward to working with you on that and
providing you our technical assistance and our experience in
administration of the programs and working with producers on
the best ways to do that.
Mr. White. I think Mr. Nelson said that very well. One of
the things that we all have to recognize is every program is
there for a reason. And they have all done some great work and
they all have a constituent base and we need to respect that as
we move forward. But your challenge is, in this budget climate,
how do you increase the efficiency? How do we do a better job
and still provide the producers with what they need in the area
of conservation.
Mr. Hultgren. Yes, just in closing, I do think that is our
challenge. I think recognition that we want to see results for
money that is being spent, especially with limited dollars.
Programs that made sense 10 years ago may not make sense any
longer. And I get concerned when the focus is more on agenda
rather than on real results. And so, anyhow, I look forward to
working with you. I know this is just a first step of a long
process that is coming forward. Thank you both.
I yield back.
The Chairman. I thank the gentleman. I thank all Committee
Members. And Administrator Nelson, Chief White, thank you so
much for your service and your testimony here today. Your
preparation coming in, very well prepared. I think this hearing
was very informative. Frankly, we have a lot of work to do as
we continue down the road of preparing for this next farm bill.
And as has been mentioned many times, these are challenging
times with the debt and the fiscal situation we are in, but we
never should forget that as Americans we enjoy, frankly, the
most affordable, highest-quality, and safest food supply of
anywhere in the world. And the biggest threat to our national
security by far would be at whatever point we would rely on a
foreign country to provide that for us. So we are blessed not
to be in that position.
I certainly appreciate the work of FSA and NRCS and the
fact that you work together, collaboratively. And certainly we
look forward to working with you as we continue forward in this
process. So thank you all so much.
Under the rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member. This hearing
of the Subcommittee on Conservation, Energy, and Forestry is
adjourned.
[Whereupon, at 11:56 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Submitted Letter by Mark G. Huntley, President, Irrigation Association
July 18, 2011

Hon. Glenn Thompson,
Chairman,
Subcommittee on Conservation, Energy, and Forestry
House Committee on Agriculture,
Washington, D.C.;

Hon. Tim Holden,
Ranking Minority Member,
Subcommittee on Conservation, Energy, and Forestry
House Committee on Agriculture,
Washington, D.C.

Chairman Thompson and Ranking Member Holden:

On behalf of the members of the Irrigation Association, thank you
for the opportunity to offer our perspective on USDA's conservation
programs. Our industry appreciates your focus and leadership on this
issue, as we believe that the conservation title of the farm bill is
important to the long-term viability of U.S. agriculture and meeting
the demands of our current and future generations, as well as a sound
and sustainable environment.
The Irrigation Association is a trade association representing
approximately 2,000 member companies in the irrigation industry. Our
members include irrigation product manufacturers, dealers,
distributors, contractors and end users in the agricultural and
landscape industries. The mission of the Irrigation Association is to
promote efficient irrigation technologies, products and services, and
our expertise lies in ensuring every drop of water applied to a crop is
done so in an efficient manner, thus leading to more agricultural
output per unit of input.
I would like to begin by discussing the USDA's Environmental
Quality Incentives Program. As you know, EQIP is a voluntary
conservation program, which provides financial and technical assistance
to farmers and ranchers who face threats to soil, water, air, and
related natural resources on their land. Through EQIP, the NRCS
develops contracts with agricultural producers to implement
conservation practices, which address on-farm environmental natural
resource opportunities and challenges. Even though this program is an
incentive program for agricultural producers, this is first and
foremost an environmental quality program. For example, if an
agricultural producer were to invest in more efficient irrigation
technologies and products; not only would that producer see a decrease
in the amount of water used to produce the same amount of yield, the
producer will also see a decrease in run-off (leading to an increase in
water quality) and an increase in energy efficiency (using the energy
embedded in the water used for irrigation in an efficient manner),
among other recognized environmental benefits. It is our belief that
the further investment in this environmental quality program is much
more effective than increased regulations placed on U.S. agricultural
producers.
From 1997 to 2010, EQIP has been a strong supporter of promoting
efficient irrigation technology and products. During this time, three
of the top ten projects funded by EQIP have been focused on irrigation:
Top 10 EQIP Funded Projects (1997-2010)

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Source: NRCS.

Specific to irrigation projects, EQIP works with the producer,
through the technical service provider program, to determine the best
technology, design and practices to ensure that every drop of water is
being used in the most efficient way possible, while ensuring that the
investment makes financial sense for the producer. In fact, the
Irrigation Association works collaboratively with the NRCS through a
Memorandum of Understanding that qualifies our certified irrigation
designers to participate in the TSP program.
Through these investments in efficient irrigation technologies and
products, the effects on the environment have been very positive, as
we've seen documented through the USDA's Conservation Effects
Assessment Program.
Next, I would like to spend a moment discussing some of the
challenges currently facing American agriculture.
According to the Global Harvest Initiative, the global population
is expected grow to more than nine billion people by 2040, an increase
of nearly 50 percent from today's level. In this same time period,
global agriculture will be required to double its productivity in the
face of limited water resources.
Feeding more than nine billion people will require substantial
increases in agricultural output and productivity. Irrigation is one of
the most powerful levers of agricultural productivity, so it is no
surprise that irrigation comprises a significant proportion of the
country's overall water use (37 percent of total water withdrawals
according to the U.S. Geological Survey 2005 Water Use Report). As more
farmers seek to leverage the productivity benefits of irrigation,
irrigated acreage in the United States will continue to grow. Irrigated
acreage in the United States has more than doubled from 25 million
acres in 1950 to over 60 million acres in 2005. At the same time
farmers are irrigating more acres, they are using less water for
irrigation. Water use for irrigation has dropped back to 1970 levels
(Source: NRCS Farm and Ranch Irrigation Survey 2008). The Irrigation
Association joins the USGS and the Department of the Interior in
attributing these decreases in irrigation water use to significant
increases in on-farm irrigation efficiency.
As the population continues to increase, regulations and aging
infrastructure are affecting the amount of water available for
irrigation. American farmers are among the most productive and
innovative in the world. Yet, if United States agriculture is to meet
this challenge, we must sustain, improve and expand efficiently
irrigated agriculture. The Irrigation Association recognizes that
United States agriculture will need to continue increasing productivity
to meet the future needs of the growing global population, while
optimizing the efficient use of natural resources.
As I mentioned earlier, fostering the adoption of efficient
irrigation technologies and practices is an effective way to improve
agricultural productivity, overall water-use efficiency and water
quality, thus sustaining water resources for future generations.
In conclusion, the irrigation industry highly values the variety of
benefits achieved with efficient on-farm water use. We've enjoyed our
historic partnership with the NRCS and look forward to working with the
Congress and the NRCS for years to come in promoting efficiencies in
agricultural production.
As the House Committee on Agriculture continues the audit of the
USDA, we encourage you to review EQIP, note the positive attributes of
the program and continue the promotion of the efficient use of water in
agricultural production.
If you have any questions regarding EQIP or any other irrigation-
related issue, please contact IA's Federal Affairs Director John Farner
at [Redacted] or [Redacted]. Thank you again for the opportunity to
submit comments.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Mark G. Huntley,
John Deere Water,
President, Irrigation Association.
______

Submitted Questions
Response from Bruce Nelson, Administrator, Farm Service Agency, U.S.
Department of Agriculture
Questions Submitted By Hon. Frank D. Lucas, a Representative in
Congress from Oklahoma
Question 1. How many different conservation programs does FSA
administer?
Answer. FSA administers five primary conservation programs
including the:

Conservation Reserve Program (including Conservation Reserve
Enhancement Program, Farmable Wetlands Program and Transition
Incentives Program);

Emergency Conservation Program (ECP);

Grassland Reserve Program (GRP);

Grass Roots Source Water Protection Program; and

Voluntary Public Access and Habitat Incentive Program (VPA-
HIP).

FSA also administers programs under other Titles that support
conservation goals and purposes including:

Emergency Forest Restoration Program (EFRP) under the
Forestry Title;

Biomass Crop Assistance Program (BCAP) under the Energy
Title;

Conservation Loan Program under the Credit Title; and

Debt for Nature under the Credit Title.

Question 2. Do the current criteria to determine the Environmental
Benefit Index (EBI) for CRP eligibility ensure that the most productive
land stays in production and the environmentally sensitive land, or
highly erodible land, is enrolled?
Answer. The EBI is used to rank and select offers for enrollment in
the general signup component of CRP which includes about 26 million
acres of the CRP's 32 million acre enrollment authority. The general
signup accepts land based on eligibility criteria defined in the CRP
statute and the EBI ranking. Before any cropland may be considered for
general signup enrollment, it must have a recent cropping history and
meet other eligibility requirements which can be any of the following:

Highly erodible cropland (i.e., have an erodibility index of
8 or greater);

Located in a conservation priority area; or

Under an expiring CRP contract.

Each general signup offer is ranked with the EBI which uses data
collected for five environmental factors (wildlife benefits, water
quality benefits, soil conservation benefits, air quality benefits, and
enduring benefits) and a cost factor. There is no prohibition on
enrolling productive land in the CRP and certainly some lands in the
program are productive, but must have significant environmental
benefits to qualify. The productivity of the lands in the CRP is
reflected in the soil rental rates of the lands enrolled. For CRP
general signup, the higher the rental rate requested, the lower the EBI
points for the cost factor, as illustrated in the chart below.
Relationship Between Rental Rate and Cost Factor EBI Score

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

For general signup, the cost factor serves to discourage enrollment
of more productive lands, but if the environmental benefits are
sufficiently high, they may be accepted. For example, an offer with a
rental rate of $150 per acre would get 40 points for cost, while an
offer with a rental rate of $30 per acre would get 108 points. Thus,
the points for the five environmental factors of offers of the more
productive land ($150 per acre land) would have to be at least 68
points higher than the scores of land with lower productivity ($30 per
acre land) to be ranked higher.
Regarding keeping environmentally sensitive or highly erodible land
enrolled, the CRP is implemented using two basic approaches: the
competitive general signup discussed above and the continuous signup.
An assessment of the environmental sensitivity of the lands enrolled
under general signup begins with the erodibility index (EI).
Of the general signup acres currently enrolled, 19.9 million acres
are categorized as HEL (EI%8) based on the weighted average of the EI
of the soils on the contracted fields. The remaining 6.3 million acres
are non-HEL. However, ``environmental sensitivity'' is not based solely
on EI. Many non-HEL general signup CRP lands may be adjacent to
wetlands or streams, overlay at-risk groundwater, or are providing
significant wildlife benefits, and would be considered environmentally
sensitive.
Continuous signup specifically targets the most environmentally
sensitive lands and, includes the Conservation Reserve Enhancement
Program (CREP),\1\ wetland, conservation buffer, and wildlife
initiatives. There are about 5.1 million continuous signup acres
currently enrolled.
---------------------------------------------------------------------------
\1\ CREP agreements leverage Federal funding with funding provided
by state and local partners whose primary purpose is to target acres
for enrollment that will address environmental concerns specific to the
state. The outcome is that environmental sensitive lands of special
significance are enrolled in a CREP project area.

Question 3. What percentage of acres enrolled in CRP currently have
an EBI that is low enough that the land could be farmed productively
without significant environmental impact?
Answer. It is likely that much of the land enrolled in CRP can be
farmed productively because most were used for crop production prior to
enrollment; however, whether that land can be farmed without
significant environmental impact in not clear. HEL lands brought back
into production will need a conservation plan (to maintain eligibility
for commodity program payments). Even with a plan, however, many
environmental benefits would be lost including air and water quality,
sediment, carbon sequestration, and wildlife habitat. In addition, as
noted in the response to Question 2, many non-HEL lands are providing
significant environmental benefits, many of which would be lost if
returned to cropping.
In addition to HEL lands enrolled, non-HEL and continuous signup
enrollment currently includes:

2.0 million acres of conservation (streamside) buffers

2.2 million acre of wetland restoration practices

4.2 million acres of Prairie Pothole grass plantings

2.6 million acres in state conservation priority areas

165,000 acres of Longleaf Pine plantings

252,000 acres of volcanic or organic soils highly
susceptible to blowing

934,000 acres of grass plantings in 1930's Dust Bowl
counties

Since 1990, USDA has ranked the quality of general signup offers
using an EBI. Doing so helps USDA achieve environmental benefits in a
cost-effective manner. The EBI is a numeric score resulting from the
summation of five environmental indices \2\ and a cost factor which is
a function of the rental rate requested by the producer. As discussed
in Question 2, the lower the rental rate requested, the higher the cost
factor score. At the time general signup offers were selected, a
determination was made that the land was of sufficient environmental
sensitivity to be enrolled in CRP.
---------------------------------------------------------------------------
\2\ The environmental factors are wildlife, water quality, soil
erosion, air quality benefits, and the likelihood of benefits enduring
after the contract ends.
---------------------------------------------------------------------------
The EBI is used to rank CRP offers and provides a numeric score
that serves as a qualitative measure of environmental benefits relative
to cost. It provides information about whether one offer is likely to
provide more environmental benefits than another. The score provides an
indication of environmental sensitivity; however, it does not address
whether lands could be farmed productively without significant
environmental impact.
CRP is designed as a reserve program to safeguard the nation's
natural resources and is a major contributor to increased wildlife
populations in many parts of the country because enrolled acreage is
planted to resource-conserving vegetative covers. CRP also protects
groundwater and helps improve the condition of lakes, rivers, ponds,
and streams by reducing water runoff and sedimentation. Another benefit
is the protection of millions of acres of topsoil from erosion. In
addition, CRP sequesters more carbon on private lands than any other
federally-administered program.
Secondary objectives include protecting the nations' long-run
capability to produce food and fiber, curbing production of surplus
commodities, and providing income support for farmers. If it is in the
public interest, such as times of emergency, the Secretary may
authorize CRP acreage to be used for the production of agricultural
commodities.

Question 4. Do you think the goals of the Farmable Wetlands Program
(FWP) are consistent with the overall goals of the CRP program? Are the
eligibility criteria for FWP the same as the overall program? Where do
we see the most land being enrolled for FWP?
Answer. FWP is a voluntary program to restore up to one million
acres of farmable wetlands and associated buffers by improving the
land's hydrology and vegetation. Eligible producers in all states may
enroll eligible land in the FWP through the Conservation Reserve
Program (CRP). The majority of the land enrolled in the FWP is located
in Iowa, Minnesota, Mississippi, North Dakota, and South Dakota,
although enrollment is throughout the nation.
FWP is consistent with the overall goals of the CRP to improve the
quality of water, control soil erosion, and enhance wildlife habitat.
CRP wetland restoration practices utilize multiple buffer-to-wetland
ratios and size requirements due to the differing underlying purposes
of the wetland restoration. Buffer-to-wetland ratios and wetland or
tract size requirements differ not only within FWP practices but also
with other CRP wetland restoration practices.
For example, under the CRP Duck Nesting Habitat wetland restoration
practice the buffer-to-wetland ratio is 6:1 with no wetland or tract
size limitations; however, under the FWP Flooded Prairie wetland
restoration practice the buffer-to-wetland ratio is 4:1, and there is a
statutory limitation of 20 acres for the size of the wetland and 40
acres for the size of the tract.
Land eligibility and cropping history requirements are also
different under FWP. Land enrolled under CRP wetland restoration
practices must be cropland with a cropping history of 4 out of the
previous 6 years. For FWP, cropland enrolled has different cropping
history requirements and for certain practices the land may be marginal
pastureland.

Question 5. How much flexibility is allowed for haying and grazing
activities? Could CRP take on some of the same goals as the Grasslands
Reserve Program (GRP)?
Answer. The CRP authorizing legislation generally prohibits any use
of the forage including haying and grazing except for managed
harvesting, haying or grazing or other commercial use in response to a
drought or other emergency, routine grazing, or prescribed grazing for
the control of invasive species. The annual rental payment is reduced
by an amount commensurate with the economic value of the activity which
is generally 25 percent. Any haying or grazing must be conducted with
an appropriate cover management plan. By contrast, the GRP authorizing
legislation generally requires that a rental contract or an easement
permit common grazing practices and haying, mowing or harvesting for
seed production.
For CRP to take on some of the same goals as GRP, certain
provisions of the CRP authorizing legislation would need to be reviewed
including:

Land eligibility,

Permissible activities for haying and grazing of the land
subject to a GRP management plan,

Enrollment terms with longer contracts and/or easements, and

Landlord tenant provisions.

Question 6. How successful has the Transition Incentive Program
(TIP) been under CRP? Is this program being utilized and do you believe
this is a successful approach to getting workable land back into
production?
Answer. The regulation for the Transition Incentives Program (TIP)
was published May 14, 2010. The farm bill authorized $25 million for
TIP through fiscal year 2012.
FSA has implemented this program including a TIP Net website which
provides a web-based tool to connect interested retired or retiring
land owners or operators with interested beginning or socially
disadvantaged farmers or ranchers.
As of July 31, 2011, there are 575 approved TIP contracts with
85,956.6 acres enrolled. Currently, $7,580,705 in CRP annual rental
payments will be issued over the next 2 years for TIP to retired/
retiring farmers or ranchers.

Question 7. How much is being spent on cost-share assistance for
tree thinning activities?
Answer. As of July 7, 2011, FSA had 64 contracts with total
payments of $11,366 for the CRP tree thinning practice.

Question 8. How does the split administration of GRP work, do you
think this is the best way to administer this program?
Answer. National leadership for GRP is provided by the Chief, NRCS,
and the Administrator, FSA, and their designees. Specific agency
responsibilities are detailed in a Memorandum of Understanding.
NRCS and FSA at the national level jointly develop and evaluate
program policy and direction, monitor program implementation, ensure
that GRP information is made available to the public, formulate
budgets, and coordinate national GRP funding allocations to achieve
national program objectives. Obligations are tracked at the national
level to ensure 60 percent of the funding supports easements and 40
percent of the funding supports rental contracts over the life of the
farm bill.
FSA has lead responsibility for rental contract administration and
financial activities. FSA also provides all of the producer eligibility
determinations and implements the rental contract enrollment options.
NRCS has lead responsibility on conservation planning, technical
assistance to owners and operators, and easement administration.
National ranking criteria guide the development of state ranking
criteria to ensure GRP funds are focused on projects that support
grazing operations, protect grassland from conversion to other uses,
enhance plant and animal biodiversity, leverage non-Federal funds and
address that state's program priorities. Priority is given to expiring
Conservation Reserve Program (CRP) grasslands.
While shared administration responsibilities for GRP does create
some challenges, the agencies have worked together to implement this
program as efficiently as possible. The Department is always interested
in exploring more efficient and effective ways to implement our
programs and would welcome the opportunity to work with you and others
to achieve that end.

Question 9. What steps do your respective agencies take to ensure
that conservation practices are truly effective? Can you describe the
process you use, for example, to ensure that measures to prevent
streambank erosion are working?
Answer. We take a number of steps to ensure that conservation
practices are working--from our science-based technical standards and
conservation planning process to oversight for practice installation
and follow-up to validate performance.

The planning process used by USDA is site specific and our
technically trained staff works with the customer to identify
the resource problems and plan the right suite of science-based
practices to fix the problem (in this case it would likely be
our shoreline and streambank protection practice).

Conservation practices are developed by technical experts
and undergo thorough peer and public review before being
finalized and published through a Federal Register notice.

Practices are designed and installed to specifications by
technically qualified professionals (could be NRCS, State
Forester, a third party, or the landowner); where engineering
is involved there are additional review and approval
requirements and authorities.

Once installed, USDA follows up to ensure that the practice
was installed correctly and completely and that it is
performing as expected for the intended purpose and lifespan.

FRPP is used to assist eligible entities to purchase
conservation easements that prevent conversion of agricultural
land to non-agricultural uses. Easements are held by the entity
and USDA has a ``right of enforcement'' should the entity be
unable to fulfill its responsibilities associated with
enforcing the terms of the easement.

GRP is used to assist to landowners and operators to protect
grazing uses and conservation values by conserving and
restoring grassland resources on eligible private lands through
rental contracts, easements, and restoration cost-share
agreements. GRP prohibits non-agriculture uses of the enrolled
land and the conversion of grazing lands or grassland to
cropland. The U.S. Government holds the GRP easements but GRP
also offers an option where an eligible entity can either
assume title to the GRP easement or receive financial
assistance toward the purchase an easement under an arrangement
similar to FRPP.

WRP is used to restore, protect, and enhance wetlands and
associated habitats on eligible farmlands through easements
(permanent and 30 year), 30 year contracts with Tribes, and
restoration cost-share agreements. Compatible uses, such as
haying and grazing, may be permitted if they further the
purposes of the easement. For example, grazing may be
authorized if it was a natural part of the ecosystem or is
necessary to control invasive species. The United States
Government holds the WRP easements.

NRCS welcomes the opportunity to work with you in exploring
opportunities to consolidate programs to achieve efficiencies, while
preserving the natural resource conservation objectives that these
programs were designed to achieve.

Question 2. Could you tell us to your best of your ability what
percentage of time and funds are used simply on program administration
and do you think Congress could help the Department out on the
administrative side of things by combining like programs?
Answer. While the administrative tasks associated with the farm
bill conservation programs represent a marginal workload for our field
and state offices, these tasks are inextricably linked with the
successful delivery of these programs. Examples of the program
administration tasks include establishing a case file, developing
participant notifications and issuing correspondence, managing
contracts and agreements, and performing effective oversight of
contracts with producers. For customer service and program delivery to
be most successful, the technical aspects of program delivery must be
interconnected and coordinated with the administrative activities.
Recognizing the need to reduce the amount of staff time expended in
performing administrative tasks and the need to strengthen program
coordination, NRCS is implementing a Conservation Delivery Streamlining
Initiative to more cost-effectively deliver our programs and increase
the time our field staff has to work with farmers and ranchers. The
agency is also identifying opportunities to realign workload and
structure to increase the proportion of our staff that is in direct
field service delivery.

Question 3. What unique purpose does the Agricultural Management
Assistance Program (AMA) program serve and does it share any goals/
purposes with other programs? What assistance does the AMA provide to
producers that other conservation programs do not?
Answer. AMA provides assistance to agricultural producers to manage
risk and voluntarily address issues such as water management, water
quality, and erosion control by incorporating conservation practices
into their farming operation. Many of these practices are also
available through the Environmental Quality Incentives Program (EQIP).
Even so, AMA provides assistance to producers who have small-acreage or
specialty-crop farming operations that do not meet the land eligibility
guidelines for participation in other programs. For example, AMA
provides cost-share assistance for irrigation-related practices that
may be implemented on land that does not have an irrigation history,
whereas EQIP will only provide assistance for irrigation-related
practices on land that has an irrigation history. By helping to
mitigate the risks associated with these kinds of agricultural
enterprises, AMA helps agriculture remain a valuable segment of local
economies.

Question 4. What programs have wildlife components and what makes
the WHIP program different than these other programs? Are there ways to
incorporate those differences into the other programs currently
authorized to build on wildlife habitat success?
Answer. While many programs have wildlife components, the Wildlife
Habitat Incentive Program (WHIP) is the only conservation program that
focuses solely on wildlife habitat on private agricultural,
nonindustrial private forest, and tribal lands. WHIP is also the only
conservation program that addresses a wide range of aquatic wildlife
habitat resource concerns. WHIP is directed by statute to prioritize
projects that would address issues raised by state, regional, and
national conservation initiatives, such as State Wildlife Action Plans
or similar wildlife-oriented initiatives. While less direct than WHIP's
authority, the following conservation programs also have wildlife
components or contribute to wildlife-related resource concerns:

The Environmental Quality Incentives Program (EQIP). EQIP
participants may adopt practices for the benefit of fish and
wildlife-related resource concerns on working agricultural
lands. While EQIP eligibility requires lands to be in
agricultural use, WHIP focuses on habitat development. Although
projects on publicly owned land are not eligible for WHIP,
under certain conditions, such projects may be eligible for
EQIP. WHIP has a $50,000 annual payment limitation while EQIP
has a $300,000 contract and payment limitation.

The Conservation Stewardship Program (CSP). CSP offers 31
enhancements that benefit wildlife to provide improvements to
cover, food, habitat connectivity and access to water for
terrestrial and aquatic wildlife including rare and declining
habitats. In comparison, WHIP provides basic self-sustaining
prioritized habitats by the implementation of various
conservation practices. After the implementation of a complete
WHIP conservation plan the land is then eligible to participate
in CSP to further enhance the land for wildlife. CSP would have
to add the component of first developing the land for fish and
wildlife habitat and then enhance the lands.

The Wetlands Reserve Program (WRP). WRP provides for long-
term restoration and protection of valuable wetland and
associated upland habitat through permanent and 30 year
easements, 30 year contracts, and restoration cost-share
agreements. However, WHIP land eligibility is much broader than
WRP providing for habitat development benefiting species beyond
those associated with wetland habitats. While WHIP allows for
contract periods of up to 15 years for certain projects, it
does not provide an easement option and only provides cost-
share assistance.

The Healthy Forest Reserve Program (HFRP). HFRP provides for
long-term protection and restoration of forestland habitat
resources through permanent and 30 year easements, 30 year
contracts, and restoration agreements in order to benefit
species with special status such as those listed as threatened
or endangered under the Endangered Species Act (ESA), proposed
or candidate species for ESA listing, or species of special
concern within the state. HFRP is primarily confined to the
restoration and protection of forest land resources while WHIP
eligibility is much broader, providing for habitat development
benefiting species beyond those associated with forestland
habitats. Unlike the various HFRP enrollment options, WHIP can
only provide long term cost-share contracts.

The Grassland Reserve Program (GRP). GRP provides for long-
term protection of grazing uses and related conservation values
through conservation easements, rental contracts, and
restoration agreements. GRP emphasizes support for working
grazing operations, enhancement of plant and animal
biodiversity, and protection of grassland under threat of
conversion to other uses. WHIP eligibility is much broader and
provides for habitat development benefiting species beyond
those associated with grassland habitats. While WHIP provides
for long-term contracts (15 years), it does not contain rental
agreement or easement enrollment options.

The Conservation Reserve Program (CRP). Under CRP, FSA
enters into contracts with agricultural producers to retire
highly erodible and other environmentally sensitive land.
During the 10 to 15 year contract period, eligible land is
converted to grass, trees, wildlife cover, or other
conservation uses to improve soil, air, and water quality and
improve wildlife habitat. Participants receive annual rental
payments and half the cost of establishing conservation covers
CRP enrolls land to create wildlife habitat. All of the lands
eligible for CRP could be enrolled in WHIP if they fall within
the WHIP priority areas but not all lands eligible for WHIP
could be enrolled in CRP. While WHIP allows for contract
periods of up to 15 years for certain projects, it does not
provide a rental contract option and only provides cost-share
assistance.

USDA welcomes the opportunity to work with the Committee in
evaluating opportunities to incorporate the unique elements of WHIP
into other programs that have wildlife components, while preserving the
natural resource conservation objectives that those programs are
designed to achieve. Features of WHIP that are lacking in other
programs include: broader land use eligibility; emphasis on wildlife
habitat development; ability to undertake aquatic-related habitat
measures; and priority for projects that support state, regional, and
national initiatives.

Question 5. EQIP funding has grown exponentially over the last 10
years, can you talk about the backlog and do you think the Department
is able to effectively manage the program as the funding has increased?
Answer. The farm bill increased funding for EQIP by 337 percent
from its authorized level of $400 million in 2002 to $1.75 billion
authorized for 2012. With this increased level of funding, program
participation also increased dramatically. In FY 2002, producers
enrolled 19,682 EQIP contracts at an average contract value of $15,700.
In FY 2010, we added 36,499 new EQIP contracts at an average contract
value of $23,000, resulting in about 150,000 active EQIP contracts.
Despite the increase in participation, demand for program assistance
remains high. The number of unfunded applications for EQIP at the end
of FY 2010 was 7,777.
While farm bill program participation has increased significantly,
the number of staff years available to support these programs has not
followed suit. Since FY 2002, the amount of financial assistance
administered by NRCS has increased by 390 percent across all programs
while the staff years available to deliver this assistance increased by
10 percent (see following chart).
The increase in program delivery workload for the field office has
created challenges. We recognize that in order to deliver conservation
services NRCS needs to have adequate ``boots on the ground'' and we are
taking aggressive steps to address the increased program workload.
These steps include:

Making improvements to the farm bill technical service
provider (TSP) provision that will increase the number of
technical experts available to assist producers with their
conservation planning and implementation.

Implementing a Conservation Delivery Streamlining Initiative
(CDSI) that will reduce the number of administrative tasks
performed by field staff and allow them to be working in the
field up to 75 percent of the time, and

Initiating a process to increase the proportion of agency
technical staff in direct field service delivery positions.
Change in Program Funding and Staff Years Since 2002

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Question 6. What percentage of EQIP funding is carved-out by set
asides or subprograms?
Answer. The 2008 Farm Bill requires the following funding set
asides for the Environmental Quality Incentives Program for each of
fiscal years 2009 through 2012:

Socially Disadvantaged Farmers and Ranchers--5 percent

Beginning Farmer and Ranchers--5 percent

Cooperative Conservation Partnership Initiative--6 percent

Air Quality--$37.5 million

Organic--Payments are authorized to assist organic or
transition to organic production, but there is no specified
minimum. The NRCS Chief has set aside $50,000,000 annually.

Conservation Innovation Grants--Competitive grants are
authorized to stimulate innovative approaches to leveraging the
Federal investment in environmental enhancement in concert with
agriculture, but there is no specified amount. Since 2008, NRCS
has set aside between $20 and $30 million annually for national
CIG awards.

Livestock--60 percent of EQIP must be obligated to practices
related to livestock production.

Question 7. I am concerned that while EQIP receives fewer funds
than authorized every year, these subprograms do not receive the same
cuts. Can you explain if these cuts to mandatory spending have any
further impact on subprograms?
Answer. Where the subprograms are provided a percentage of the
available funds, they receive proportionally the same reductions as the
overall program. For subprograms where the statute requires a specific
amount of funding, such as the $37.5 million set aside for air quality
(1240H(b)), an overall reduction in EQIP funding is absorbed by the
general program and may potentially impact other EQIP priorities. For
subprograms that are authorized, but no specific funding is set aside,
such as for the organic initiative, NRCS has discretionary authority to
adjust the amount of funding as appropriate, so as to avoid adverse
impacts to other EQIP program priorities.

Question 8. The 2008 Farm Bill included ``bidding down'' language
like that in the EQIP program which states: ``If the Secretary
determines that the environmental values of two or more applications
for payments are comparable, the Secretary shall NOT assign a higher
priority to the application only because it would present the least
cost to the program.'' Does this seem like language that makes sense in
this fiscal environment?
Answer. The ``bidding down'' language was incorporated in the 2002
Farm Bill to address concerns from agricultural stakeholders that
wealthier landowners whose main income was from non-agricultural
sources were out-competing farmers and ranchers for conservation
program contracts because they could afford to take less Federal cost-
share for the installation of practices. As a result, farmers and
ranchers had a harder time successfully getting in to EQIP.
NRCS implements this provision in a manner that ensures
applications are evaluated and prioritized on the least-cost
alternative to achieve the highest environmental benefits and thus NRCS
is able to make cost-effective project selections. The ``bidding down''
requirement allows EQIP to select projects that achieve the highest
environmental benefit and treat all applicants in a fair and equitable
manner regardless of their financial status.

Question 9. How much money has come out of EQIP to fund the CCPI
program?
Answer. As directed by the 2008 Farm Bill, no more than six percent
of the funds made available for the Environmental Quality Incentives
Program (EQIP) are used for the Cooperative Conservation Partnership
Initiative (CCPI). EQIP funds made available through CCPI go to
producers participating in the project, delivered in accordance with
the EQIP authorities. The following amounts were obligated in contracts
with producers participating in CCPI projects in:

FY 2010: $70,800,000

FY 2011: $74,280,000 (estimated)

Question 10. How has the Department used the EQIP program in
regards to organics and do you think the money used for that purpose is
an effective use of conservation dollars. What are the comparative
environmental benefits?
Answer. The 2008 Farm Bill included a provision within EQIP
intended to assist organic producers as well as producers in the
process of transitioning to organic production. In FY 2010, NRCS
obligated $24 million in contracts with producers to treat 148,000
acres in organic production or in transition to organic production.
The most commonly used practices included:

Nutrient Management

Cover Crop

Pest Management

Conservation Crop Rotation

Prescribed Grazing

Seasonal High Tunnel (interim conservation practice)

Assisting organic producers and those in the transition to organic
farming with conservation practices furthers EQIP purposes with this
new and growing segment of the agricultural sector. While many
observers interpret organic production alone to be the most sustainable
form of farming, NRCS has found that there are many conservation needs
in the organic sector. Helping these operators to integrate
conservation approaches in their production system ensures that
critical environmental benefits are realized by helping organic growers
remain economically viable so that they may sustain the natural
physical, biological, and chemical properties of the soil and other
natural resources, which is vital to organic production.

Question 11. Congress created the Conservation Security Program
(CSP) in the 2002 Farm Bill. This program was then replaced with the
Conservation Stewardship Program in the 2008 Farm Bill. Can you discuss
the changes that were made to the new CSP?
Answer. The Conservation Stewardship Program reflects many changes
from its predecessor, the Conservation Security Program. Overall the
changes made the program more accessible and accountable and include:

Providing continuous nationwide enrollment.

Establishing an enrollment cap of 12.769 million acres each
fiscal year at an average cost of $18/acre/year.

Making nonindustrial private forestland (NIPF) eligible for
enrollment while establishing a limit of 10 percent of total
acres per year.

Ensuring that a minimum of 5 percent of acres are dedicated
to assist Beginning Farmers or Ranchers and a minimum 5 percent
of acres are dedicated to assist Socially Disadvantaged Farmers
or Ranchers.

Requiring contract offers to include all eligible land under
the effective control of the producer.

Limiting the contract length to 5 years with an opportunity
for one renewal for a 5 year term.

Allowing producers to initiate organic certification during
the contract period.

Allowing for annual and supplemental payments.

Limiting each person or legal entity to $40,000 per year.
Contract limitations for formal joint operations are $400,000
for the contract period and from $40,000 to $80,000 per year.

Question 12. A major issue with CSP was paying farmers for the
status quo? How much more environmental benefit have we seen from the
implementation of the new CSP program? What does the new CSP program
offer that other working lands programs cannot provide?
Answer. The Conservation Stewardship Program (CSP) is resulting in
agricultural producers applying thousands of additional conservation
activities on enrolled lands in conjunction with maintaining existing
stewardship levels, generating sizable environmental benefits to the
public. For example, under the 20,567 contracts enrolled during FY
2010, participants will apply and maintain an additional 78,947
conservation activities--an average of 3.8 additional activities per
contract over all land uses in the contract. Additionally, CSP requires
a participant to apply at least one additional activity for each land
use, such as cropland and pasture, in order to be eligible to receive
payment for the enrollment of that particular land use. An individual
contract often has more than one land use, and thus an average of 2.8
additional activities will be applied per land use across all land
uses.
The purpose of other programs is to meet conservation standards
while CSP focuses on achieving an additional, higher level of
management. This higher level of conservation management is achieved
through a comprehensive approach to working lands conservation where
all of a participant's eligible land must be enrolled. Of the enrolled
land, CSP encourages the participant to implement additional
conservation activities while maintaining existing conservation
activities.

Question 13. What is the Administration's position on the situation
with WRP having no baseline and what priority does the Administration
put on the continuation of the program. Where should Congress look to
fund this program?
Answer. Demand for WRP continues to be high and WRP has proven
itself to be a valuable program for meeting the nation's objectives
related to protecting and restoring wetlands on private lands. Over the
last 20 years, more than 11,000 private landowners have voluntarily
enrolled in WRP to restore, protect and enhance wetlands and wildlife
habitat on over 2.3 million acres nationwide. Through WRP, NRCS,
landowners, and many partners work together to achieve long-term
benefits on a landscape scale that will ensure our wetland resources
are available for future generations.
NRCS welcomes the opportunity to work with the Committee in
exploring opportunities to achieve efficiencies that would allow
funding of WRP while preserving the full array of natural resource
conservation objectives that the broader suite of conservation programs
are intended to achieve.

Question 14. In terms of environmental benefits, do you see working
lands or easement programs providing the biggest bang for the buck?
Answer. Both program approaches deliver their intended
environmental benefits. With a variety of program approaches, it is
possible for participants to find a conservation path that fits their
personal economic situation and environmental objectives. Working land
programs offer a valuable tool for assisting producers to address
natural resource concerns that affect the viability and productivity of
their operations. For example, working lands programs can provide
technical and financial assistance needed to help producers meet or
eliminate the need for regulatory requirements on their operations.
These investments--voluntarily shared by the program participant--also
provide a public benefit such as better water, air, or habitat quality.
Some working lands programs, such as the Grasslands Reserve Program or
Farm and Ranch Lands Protection Program, offer easements, but ensure
that enrolled lands will remain in agricultural uses over the long
term--retaining important agricultural lands is a critical component
for ensuring food security for the nation.
Other easement programs emphasize the retirement of sensitive or
environmentally significant lands. These conservation easements
recognize the rights reserved to private landowners, compensate these
landowners for the rights they voluntarily forego, and create valuable
enduring environmental benefits for society. For example, establishing
easements that protect and improve essential habitat can help to
prevent a candidate species, like the sage-grouse, from being listed.
These protections need to be in place for the long-term which an
easement program can provide.
Program approaches also can be used in tandem. For example, land
retirement easements and working lands programs are valuable tools for
addressing hypoxia in the Gulf of Mexico. Working lands programs can
help producers improve nutrient management and reduce potential losses
of nutrients into the riverine system, while land retirement easement
programs can restore and protect wetlands and floodplain areas in
strategic areas that best trap the nutrients that have left the farm
prior to reaching the Gulf. Using program approaches together can
achieve the landscape-scale transformation needed to address larger
conservation challenges such as hypoxia or candidate species
protection.

Question 15. Do you think the benefit outweighs the cost to the
Federal Government when acquiring permanent easements on lands at huge
costs during this fiscal environment?
Answer. Conservation easements provide significant and enduring
benefits. These benefits are increased by ensuring that project
location and purpose are part of the selection process. NRCS ranks and
selects projects based upon several resource concern factors that
consider the resource potential of the site itself and its location in
the watershed. These factors are key to identifying valuable
opportunities as the quality of any easement project will depend on its
location as well as its intrinsic attributes.
While initial easement acquisition costs may appear high, they
should be considered in the context of the enduring public benefits.
For example, based on the Benefit Cost Analysis for WRP, the estimated
value of benefits per acre of permanent wetland was $10,935 and the
estimated cost was $3,000. This means that the program has a cost
benefit ratio of 3.6. This indicates that the value of estimated
benefits from wetlands is considerable.
Easements may also provide benefits through avoided costs. For
example, for frequently flooded lands where producers routinely lose
crops, the producer typically receives crop insurance or disaster
payments. Retiring these lands through floodplain easements eliminates
the insurance and disaster payments, reduces overall damages downsteam
from flooding; and improves water quality.

Question 16. Do the carve-outs in the law for certain groups get
fully used or do you often have to roll those funds back in?
Answer. The set asides for socially disadvantaged and beginning
farmers and ranchers, as authorized under the 2008 Farm Bill for the
Environmental Quality Incentives Program (EQIP) and the Conservation
Stewardship Program (CSP), are fully used. Each year we have exceeded
the funding target goals. In 2010, the funding for these certain groups
was:

EQIP--$57,736,481 or 6.9 percent of total funds obligated in
2,109 contracts for socially disadvantaged farmers and ranchers

EQIP--$ 134,944,240 or 16 percent of total funds obligated
in 5,450 contracts for beginning farmers and ranchers

CSP--1,695,890 acres or 6.7 percent of acres in 378
contracts for socially disadvantaged farmers and ranchers.

CSP--1,038,269 acres or 4.1 percent of acres in 1,496
contracts for beginning farmers and ranchers

Question 17. How does regional equity affect the way you run the
conservation programs and are they a hindrance to getting money to the
places that need it the most?
Answer. Regional equity ensures that each state receives an the
opportunity for a minimum level of $15 million in aggregate funding
under subtitle D programs, excluding the Conservation Reserve Program,
Wetlands Reserve Program, and Conservation Security Program. The intent
is to ensure that states are able to meet producers' needs and address
priority natural resource concerns. The provision allows that funds not
obligated in contracts by April 1st of each year may be recalled by the
Chief to meet demand in other states. While ensuring that a minimum
level of funding is provided to all states is an important
consideration, the establishment of a fixed level may create disharmony
should overall program funding be reduced. Establishing a proportion of
funding rather than a fixed number could create a more balanced
approach to ensuring that all states receive the mandatory resources
needed to achieve conservation objectives.

Question 18. What is the Administration's opinion on priority areas
and do you think they match with the priorities of the Administration?
Do you feel that funds go to these priority areas solely because of
their inclusion in the law?
Answer. Focusing scarce resources on priority issues is an
effective method for accelerating progress. NRCS' Conservation Effects
Assessment Project (CEAP) reports have documented that risks to natural
resource quality may be concentrated in specific areas and treating
those can generate disproportionate benefits. The 2008 Farm Bill
identified a number of priorities:

geographically based (e.g., Agriculture Water Enhancement
Program's (AWEP) Eastern Snake Plain Aquifer, Puget Sound,
Ogallala Aquifer, Sacramento River watershed, Upper Mississippi
River Basin, Red River of the North Basin, and the Everglades;
Chesapeake Bay Watershed Program; and Conservation Reserve
Program priority areas);

production-oriented (EQIP and CSP organic initiatives);

producer-focused (Conservation Access for beginning and
socially disadvantaged producers); and

resource-specific (EQIP air quality initiative, AWEP's water
quality and quantity focus).

These farm bill priorities align well with Administration
priorities for conservation and strengthening rural America. For
example:

The emphasis on serving historically underserved communities
mirrors USDA's Strike Force initiative;

the Administration's Chesapeake Bay Executive Order further
emphasizes the priorities outlined in the Chesapeake Bay
Watershed Program;

USDA's focus on strengthening rural economies is supported
by priorities for assisting beginning farmers and ranchers in
their conservation needs.

While funds go to these farm bill priorities because of statutory
direction, they are nonetheless areas of considerable conservation need
and deserving of conservation funding irrespective of their
establishment as priority areas within the statute.

Question 19. How does the split administration of GRP work, do you
think this is the best way to administer this program?
Answer. National leadership for GRP is provided by the Chief, NRCS,
and the Administrator, FSA, and their designees. Specific agency
responsibilities are detailed in a Memorandum of Understanding.
NRCS and FSA at the national level jointly develop and evaluate
program policy and direction, monitor program implementation, ensure
that GRP information is made available to the public, formulate
budgets, and coordinate national GRP funding allocations to achieve
national program objectives. Obligations are tracked at the national
level to ensure 60 percent of the funding supports easements and 40
percent of the funding supports rental contracts over the life of the
farm bill.
FSA has lead responsibility for rental contract administration and
financial activities. FSA also provides all of the producer eligibility
determinations and implements the rental contract enrollment options.
NRCS has lead responsibility on conservation planning, technical
assistance to owners and operators, and easement administration.
National ranking criteria guide the development of state ranking
criteria to ensure GRP funds are focused on projects that support
grazing operations, protect grassland from conversion to other uses,
enhance plant and animal biodiversity, leverage non-Federal funds and
address that state's program priorities. Priority is given to expiring
Conservation Reserve Program (CRP) grasslands.
While shared administration responsibilities for GRP does create
some challenges, the agencies have worked together to implement this
program as efficiently as possible. The Department is always interested
in exploring more efficient and effective ways to implement our
programs and would welcome the opportunity to work with you and others
to achieve that end.

Question 20. What steps do your respective agencies take to ensure
that conservation practices are truly effective? Can you describe the
process you use, for example, to ensure that measures to prevent
streambank erosion are working?
Answer. We take a number of steps to ensure that conservation
practices are working--from our science-based technical standards and
conservation planning process to oversight for practice installation
and follow-up to validate performance.

Conservation practices are developed by technical experts
and undergo thorough peer and public review before being
finalized and published through a Federal Register notice.

Once installed, USDA follows up to ensure that the practice
was installed correctly and completely and that it is
performing as expected for the intended purpose and lifespan.

USDA implements a number of conservation practices that reduce
streambank erosion and modify the vegetation and hydrology to enhance
streambank stability. There are numerous examples and case studies that
demonstrate that conservation practices and systems can improve
streambank stability and improve water quality. A recent example is
Peacheater Creek-Northeast Oklahoma. The area is characterized by
poultry and cattle production and the downstream Illinois River and
Lake Tenkiller had been placed on the 303(d) list for elevated
phosphorus levels. Riparian area protection along with in-field
conservation practices and farmstead improvements were applied.
Measured decreases in streambank erosion were among the results, which
also included reductions in phosphorus and nutrient loading and
improved fish communities.
In addition to the technical requirements to ensure conservation
practice integrity, USDA collects natural resource trend data and
conducts short- and long-term analyses of the conservation benefits of
USDA conservation practices. The National Resources Inventory (NRI),
for example, provides statistically sound data on natural resource
status and trends on non-Federal lands, including trends in soil
erosion, land use change, and wetlands, among others.
USDA's Conservation Effects Assessment Project (CEAP) is a multi-
agency effort to quantify the environmental effects of conservation
practices and programs and develop the science base for managing the
agricultural landscape for environmental quality. CEAP literature
reviews and assessments document the effects of conservation practices
and related environmental benefits.
Monitoring and evaluation of conservation practice effectiveness in
all 43 Conservation Reserve Enhancement Program (CREP) Projects also
document the effectiveness of conservation practices applied and the
public the societal benefits. Another data set developed in partnership
with the U.S. Geological Survey has quantified the benefits of
conservation plantings and habitat development to many grassland and
waterfowl species in over 12 Great Plain States.
Questions Submitted By Hon. Martha Roby, a Representative in Congress
from Alabama
Question 1. Representative Terry Everett, who held my seat from
1993-2009 and during his tenure on this Committee, was very active in
regards to irrigation. During the last farm bill, Representative
Everett worked tirelessly in the creation of the Agricultural Water
Enhancement Program under EQIP. This program has provided technical and
financial assistance for agricultural water enhancement activities on
farms. In particular, on-site off-stream reservoir was an initiative
that many of our farmers were excited about participating in when it
was passed into law.
Unfortunately, the implementation of the program has been difficult
to access in Alabama due to the requirement that the pond should be on
high ground which much of our farm land is flat.
Additionally, Alabama has had difficulty in accessing USDA's
irrigation programs due to the traditional lack of historical
irrigation. Many of our farmers do not own the land that they are
farming and therefore it is not cost-effective to build irrigation
system. In a recent survey conducted by a team of Alabama Agricultural
Experiment Station researchers at Auburn University, six out of ten
farmers without irrigation in the state said they would be more likely
to install or improve irrigation systems if a cost-share or subsidized
loan program were available.
What can we do to improve EQIP to ensure that farmers are able to
find assistance in irrigation?
Answer. The agency has authority through EQIP and AWEP to provide
financial and technical assistance to producers for improvements to
existing irrigation systems that address water conservation or water
quality resource issues. Such assistance may include development of
irrigation storage reservoirs, ponds, and in-ground dugouts for new
sources of water. Although water storage facilities on high ground are
more ideal as these practices allow for use of less expensive efficient
gravity flow irrigation, this is not the only alternative that may be
available. For locations with relatively flat topography, EQIP and AWEP
can be used to install water storage facilities along with pumping
systems to transport the water to area for application of irrigation
water. Under AWEP, the 2008 Farm Bill encourages development of
irrigation storage facilities for areas experiencing drought in
accordance with applicable EQIP program rules and on eligible on-farm
agricultural land. This includes assistance to establish on-farm
irrigation storage practices, which may be off-stream, but still on
eligible land that is either owned or under the control of the
producer.
According to the statute, financial assistance through EQIP and
AWEP many only be provided to achieve a measurable water conservation
or water quality environmental benefit. Correspondingly, there is a
requirement that EQIP and AWEP program applicants demonstrate
irrigation history on cropland as a condition for approval of
irrigation system improvements. This standard is in place to help meet
the statutory requirement to validate a resulting environmental
benefit. Demonstration of irrigation history, however, is not limited
to evidence of in-field irrigation equipment. Producers that may be
using other, transportable means to irrigate may document those methods
as evidence of irrigation history.

Question 2. As a report that the American Forest Foundation
recently produced highlights, Alabama is spending quite a bit of its
EQIP funds, roughly 17% and about 33% of WHIP funds on family forest--
this is great, given how heavily forested my state is and given many of
the forest health and fire challenges we are dealing with. What do you
think is the reason for my state's focus on forests, as compared with
other states, that average about 4% spending on forests?
Answer. The focus of program assistance on forest related issues in
your state is reflective of the locally-led process where conservation
partners and producers provide recommendations to the agency for the
kind and scope of assistance needed. Through local work groups and
State Technical Committee's, the State Conservationist is provided
latitude to focus program assistance to identified priority natural
resource concerns. This flexibility allows each State Conservationist
to prioritize funding on those geographic locations which have
significant need for assistance to address resource concerns.
______

House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
Conservation Reserve Program (CRP).
Prepared by the U.S. Department of Agriculture's (USDA) Farm
Service Agency (FSA).
2. Subprograms/Department Initiatives
FSA enters into contracts with agricultural producers to retire
highly erodible and other environmentally sensitive land. During the 10
to 15 year contract period, eligible land is converted to grass, trees,
wildlife cover, or other conservation uses to improve soil, air, and
water quality and improve wildlife habitat. The program was initially
authorized by the 1985 Farm Bill and amended by every subsequent farm
bill.
FSA is responsible for overall implementation and has entered into
agreements for technical assistance with the Natural Resources
Conservation Service (NRCS), the Forest Service acting on behalf of
State Foresters, and other technical service providers. Participants
receive annual rental payments and half the cost of establishing
conservation covers.
Since the 1985 Farm Bill, CRP has evolved from a program with a
commodity supply control component to a conservation program that has
increasingly focused or targeted limited program resources.

General Signup

Producers may offer land for CRP general sign-up enrollment during
designated signup periods and all offers compete and are ranked against
all other offers nationwide using an Environmental Benefit Index (EBI)
which is used to rank offers based on a number of environmental factors
and cost.

Continuous Signup

Continuous signup targets environmentally-desirable land which
could be devoted to conservation practices such as filter strips, grass
waterways, and other practices that protect larger acreages. Offers may
be made at any time.

Conservation Reserve Enhancement Program (CREP)

CREP is a state and Federal partnership to address environmental
issues of importance to the state and nation. CREP combines state and
Federal dollars with funding from nongovernment sources and provides a
framework for USDA to work closely with state, tribal, and local
governments to address specific environmental issues and goals.

Farmable Wetlands Program (FWP)

FWP is designed to restore up to one million acres of farmable
wetlands and associated buffers by improving the land's hydrology and
vegetation. This includes constructed wetlands developed to receive
flow for row-crop agriculture drainage systems for the purpose of
providing nitrogen removal; land that was devoted to commercial pond-
raised aquaculture; and cropland that was subject to the natural
overflow of a prairie wetland.

Transition Incentive Program (TIP)

TIP is designed to facilitate the transition of expiring CRP land
from a retired or retiring owner or operator to a beginning or socially
disadvantaged farmer or rancher to return the land to production for
sustainable grazing or crop production. TIP provides annual rental
payments for up to 2 additional years after the expiration of the CRP
contract to facilitate this transition.

Emergency Forestry Conservation Reserve Program (EFCRP)

EFCRP was designed to help restore and enhance forest resources
that were damaged by the 2005 hurricanes. By planting trees, such as
longleaf pine and bottomland hardwoods, landowners and operators could
enhance wildlife habitat and improve the ability of at-risk land to
withstand future storms. Enrollment for EFCRP ended in January 2009.

Wetland Restoration Floodplain Initiative

This initiative was designed to restore the functions and values of
wetland ecosystems that have been devoted to agricultural use. This
500,000 acre initiative enrolls wetlands and buffers within a 100 year
floodplain. These wetlands prevent degradation of the wetland area,
increase sediment trapping efficiencies, improve water quality, prevent
erosion and provide vital habitat for waterfowl and other wildlife.

Wetland Restoration Non-Floodplain Initiative

This initiative restores wetlands and playa lakes, which are
shallow, depressional wetlands that are located outside a 100 year
floodplain. This 250,000 acre initiative provides vital habitat for
many wildlife species, filters runoff, recharges groundwater supplies
and sequesters carbon.

Bottomland Hardwood Initiative

This initiative is designed to restore flood plains through the
restoration of primarily bottomland hardwoods. This 250,000 acre
initiative improves air and water quality and provides carbon
sequestration benefits through reduction of greenhouse gases as well as
increasing wildlife habitat.

Quail Initiative

This 350,000 acre initiative is designed to create habitat for the
northern bobwhite quail and other grassland dependent birds. Bobwhite
populations have declined with their habitat disappearing due to
urbanization, increased grassland cultivation, and succession. This
initiative provides successional grass buffers along agricultural field
borders.

Longleaf Pine Initiative

This 250,000 acre initiative is designed to restore and re-
establish longleaf pine stands that benefit wildlife species and
protect water quality.

Duck Nesting Habitat Initiative

This 150,000 acre initiative is designed to restore wetlands
located outside the 100 year floodplain in Iowa, Minnesota, Montana,
North Dakota, and South Dakota. Restoring these wetlands will provide
nesting ducks with critical habitat, nesting cover, security from
predators, and food.

State Acres for Wildlife Enhancement Initiative (SAFE)

SAFE is an 850,000 acre initiative designed to target high priority
state and regional wildlife objectives. SAFE provides the flexibility
to meet the specific needs of high-value wildlife species in a
participating state or region by targeting the restoration of vital
habitat.
3. Brief History
Title XII of the Food Security Act of 1985, as amended (1985 Farm
Bill), authorized CRP to enroll 40 to 45 million acres by 1990 with a
primary goal of reducing soil erosion on highly erodible cropland.
Secondary objectives included protecting the nation's long-run
capability to produce food and fiber, reducing sedimentation, improving
water quality, fostering wildlife habitat, curbing production of
surplus commodities, and providing income support for farmers.
The Food, Agriculture, Conservation, and Trade Act of 1990 (1990
Farm Bill) extended CRP through 1995 and expanded the types of land
eligible for enrollment to include lands that could reduce on-site or
off-site threats to water quality if removed from production. Following
1990 Farm Bill enactment, FSA adopted new rental rates based on soil-
specific productivity and developed an EBI to rank offers.
The Federal Agriculture Improvement and Reform Act of 1996 (1996
Farm Bill) re-authorized CRP enrollment through 2002 and set a maximum
enrollment of 36.4 million acres. After 1996 Farm Bill enactment, FSA
modified the EBI to include a wildlife benefits component. To better
target the program, FSA began enrollment of selected practices such as
filter strips and riparian buffers on a continuous basis without
competition which included an incentive payment to encourage
enrollment. In 1997, FSA created CREP which furthered targeting through
state-Federal conservation partnerships that address specific state and
nationally significant water quality, soil erosion, and wildlife
habitat concerns related to agriculture. Additional incentives are
generally provided. An up-front signing payment and a practice
incentive payment were established in 2000 to further enhance
continuous enrollment, including CREP.
The 2001 agriculture appropriations act authorized FWP which
provided for non-competitive enrollment under continuous sign-up
provisions and incentives for up to 500,000 acres of small non-flood
plain wetlands and adjacent uplands in six states (Nebraska, Iowa,
Minnesota, North Dakota, South Dakota, and Montana). Enrollment was
limited to 100,000 acres per state.
The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill)
extended CRP enrollment authority through 2007 and increased the
enrollment cap by 2.8 million acres to 39.2 million acres. An
administrative requirement that cropland must have been recently
cropped was added by the 2002 Farm Bill to require that cropland must
have been cropped or considered cropped in at least 4 of the 6 years
preceding enactment. The 2002 Farm Bill also generally authorized
managed harvesting of forage, expanded FWP from the original six states
to all states, and raised the enrollment cap to 1 million acres while
keeping the 100,000 acre state maximum.
During 2006, FSA offered CRP participants the opportunity to re-
enroll or extend contracts set to expire between 2007 and to 2010 on
about 28 million acres. FSA ranked the acreage based on the EBI score
when the land was enrolled. The highest ranked were offered new 10 or
15 year contracts. Lower ranking contracts were offered extensions of
2-5 years depending upon the relative ranking. This preserved farmers'
ability to protect America's most sensitive agricultural lands. Holders
of about 82 percent of expiring contract acres were approved for re-
enrollment or extension.
The 2006 supplemental emergency appropriations act authorized the
EFCRP to provide assistance to timberland damaged by the 2005
hurricanes. Acreage enrolled does not count against the CRP enrollment
cap.
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
extended CRP enrollment authority through September 30, 2012, and
required that enrollment be no more than 32 million acres beginning
October 1, 2009. Other changes included:

Expansion of practices under FWP;

50 percent cost-share for tree thinning activities;

New payment limitation applicability and adjusted gross
income eligibility criteria;

Updated cropping history to 4 of 6 years between 2002 and
2007;

Added new routine grazing authority;

Added TIP; and

Added authority to exclude continuous and CREP acreage from
the 25 percent county cropland enrollment limit.
4. Purpose/Goals
CRP's purpose is ``to assist owners and operators of land to
conserve and improve the soil, water, and wildlife resources of such
land and to address issues raised by state, regional, and national
conservation initiatives.''
5. Success in Meeting Programmatic Purpose/Goals
CRP environmental benefits include:

Total Land Enrolled and Land Enrolled in Certain Categories
----------------------------------------------------------------------------------------------------------------
Fiscal Year (FY)
Measure Unit ----------------------------------------------------------------
2006 2007 2008 2009 2010
----------------------------------------------------------------------------------------------------------------
Total Land Enrolled million acres 36.0 36.8 34.6 33.8 31.3
In Buffers million acres 1.84 1.90 2.00 2.01 2.02
Wetlands million acres 2.01 2.06 1.98 1.98 2.05
HEL 1 million acres 25.2 25.5 23.6 22.8 20.5
----------------------------------------------------------------------------------------------------------------
Reductions (not leaving field or intercepted by buffers)
----------------------------------------------------------------------------------------------------------------
Sediment million tons 210 216 219 220 220
Nitrogen million lbs 607 623 616 611 607
Phosphorus million lbs 121 124 123 123 122
----------------------------------------------------------------------------------------------------------------
Greenhouse Gas Reduction (Carbon Dioxide (CO2) equivalent/Year)
----------------------------------------------------------------------------------------------------------------
CO2 sequestered million metric tons 51 50 48 47 44
Energy and Fertilizer million metric tons 9 9 9 8 8
----------------------------------------------------------------
Total million metric tons 60 60 57 55 52
----------------------------------------------------------------------------------------------------------------
1 HEL means highly erodible land.

CRP improves water quality.

CRP reduces the nitrogen and phosphorus leaving a field by
runoff and percolation. Using models developed by the Food and
Agricultural Policy Research Institute (FAPRI), in FY 2010, 607
million pounds less nitrogen and 122 million pounds less
phosphorus left fields due to CRP, which accounted for 95 and
86 percent reductions, respectively, as compared to cropped
land conditions in 2005/2006.

Grass filters and riparian buffers (partial field
enrollments) intercept sediment, nutrients, and other
contaminants before they enter waterways. FAPRI's model
estimates that in 2010, 356 million pounds of nitrogen and 72
million pounds of phosphorus were intercepted by 2.0 million
acres of CRP buffers, nationally.

In 2010, grass and tree plantings reduced nitrate loss by
109 million pounds. Nitrate is a form of nitrogen that is
biologically available to algae. Excess nitrate contributes to
the formation of hypoxic zones in the Gulf of Mexico,
Chesapeake Bay, and other waters.

Wetlands restored and constructed by CRP improve water
quality by converting nitrate/nitrogen into benign atmospheric
nitrogen. In 2010, Iowa's 65 CREP constructed wetland projects
on 1,808 acres reduced nitrate runoff by nearly 650,000 pounds.

CRP enhances wildlife habitat. The 31.3 million acres of grass,
trees, and wetlands established by CRP benefit numerous wildlife
species. Several independent studies have identified benefits to
multiple bird populations including:

Prairie Pothole Ducks--Researchers from the U.S. Fish and
Wildlife Service (USFWS) estimated that the CRP contributed to
a net increase of about two million additional ducks per year
(30 percent increase in duck production) since 1992 in North
Dakota, South Dakota, and Northeastern Montana. Populations
fluctuate on a year-to-year basis due to differences in
precipitation patterns.

Ringed-Neck Pheasants--Western EcoSystems Technology, Inc.,
found that, in prime pheasant habitat, a four percent increase
in CRP herbaceous vegetation was associated with a 22 percent
increase in pheasant counts.

Sage Grouse--The Washington Department of Natural Resources
found that CRP enrollment was associated with halting a decline
(25 percent between 1970-1988) in sage grouse populations. The
study found that a region without substantial CRP enrollment
had continued sage grouse population decline.

Northern Bobwhite Quail--Mississippi State University found
that quail observations were positively related to CRP
enrollment. The quail population response varies by cover and
region.

Grassland Birds--The CRP was identified as a ``Reason for
Hope'' for grassland birds in the 2009 ``State of the Birds''
report, which documented serious declines in grassland birds.
Researchers from the United States Fish and Wildlife Service,
U.S. Geological Survey, and the University of Montana found
that CRP had a large impact on grassland bird populations,
including two birds designated as species of continental
importance by Partners in Flight.

CRP sequesters carbon. CRP sequesters more carbon on private lands
than any other federally administered program. In 2010, CRP resulted in
the equivalent of a 52 million metric ton net reduction in carbon
dioxide (CO2) from CO2 sequestration, reduced
fuel use, and nitrous oxide emissions avoided from not applying
fertilizer. Carbon sequestration helps offset the release of greenhouse
gases (GHG) into the atmosphere. GHG have been associated with
anthropogenic climate change.
CRP protects and enhances soil productivity. CRP conservation
covers reduce erosion and protect soil productivity. By targeting
fragile cropland and placing these lands into protective conservation
covers, the CRP greatly reduces sheet, rill, and wind soil erosion.
Each year since 2002, CRP reduced soil erosion by 325 million tons or
more from pre-CRP levels. Since 1986, CRP has reduced more than 8
billion tons of soil erosion. (Note: Erosion rates and total sediment
provided at the beginning of this section are not comparable
measurements because erosion includes the rate of soil loss through
wind and water erosion.)
CRP reduces downstream flood damage. CRP lands reduce downstream
flood damage by helping to reduce peak flows after storm events by
holding and slowly releasing the storm water.
FSA is using CRP enrollment data, the USDA soils and natural
resource inventories, and cooperative agreements with Federal, state,
and other partners to refine these performance measures and to estimate
the benefits from CRP. For more information see: http://
www.fsa.usda.gov/FSA/webapp?area=home&subject=
ecpa&topic=nra.
Other sources of information related to the topics discussed above
include the following:

http://www.fsa.usda.gov/Internet/FSA_File/factsheet_crp_bennies.pdf
http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ecpa&topic=nra
http://www.fsa.usda.gov/Internet/FSA_File/duck_report.pdf
http://www.fsa.usda.gov/Internet/FSA_File/pheasant_study.pdf
http://www.fsa.usda.gov/Internet/FSA_File/sage_grouse.pdf
http://www.fsa.usda.gov/Internet/FSA_File/quail_study.pdf
http://www.fsa.usda.gov/Internet/FSA_File/grassland_birds_fws.pdf
http://www.stateofthebirds.org/2009/habitats/game-birds
http://www.fsa.usda.gov/Internet/FSA_File/fyannual2009.pdf
http://www.fsa.usda.gov/Internet/FSA_File/606586_hr.pdf

7. Annual Outlays (FY 2002-FY 2011)
---------------------------------------------------------------------------------------------------------------------------------------------------------
CRP is funded by Commodity Credit Corporation (CCC). Budget authority for CCC programs is based on obligations. Funds that are obligated in one
fiscal year may not be disbursed until a succeeding fiscal year or fiscal years.

FY 2002 Through FY 2011 Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Conservation Reserve Program $1,785,059 $1,789,258 $1,800,675 $1,828,470 $1,895,872 $1,963,161 $1,990,867 $1,916,468 $1,910,630 $1,997,496
Emergency Forestry Conservation 0 0 0 0 5,500 6,060 9,524 9,846 8,297 9,291
Reserve Program
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2007-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000) Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored,
and made more resilient to climate change, while enhancing our resources.

Program
Program ItemsConservation Conservation Reserve 974,124 1,990,178 1,872,881 1,910,630 1,997,496
Program
Grassroots Source Water 1,856 3,687 5,000 5,000 5,000
Protection Program
State Mediation Grants 1 526 1,092 1,092 1,092 1,092
Direct Conservation Loans 0 0 0 114 1,065
1
Guaranteed Conservation 0 0 0 1 278
Loans 1
Other Conservation 4,600 3,247 46 ^4 33,334
Payments 2
-------------------------------------------------------------------------------
Administrative Costs 107,118 240,070 256,932 278,940 278,825
(direct)
Indirect costs 9,773 82,642 63,352 68,779 72,804
-------------------------------------------------------------------------------
Total Costs 1,097,997 2,320,916 2,199,303 2,264,552 2,389,894
FTEs 1,228 3,023 2,015 2,928 2,885

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000) Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining,
repopulating, and economically thriving.

Program
Program ItemsIncome Support and Disaster
Assistance Emergency Conservation 149,727.00 128,456.00 0.00 92,459.00 39,719.00
Program 3
Administrative costs 776,465.00 683,795.00 694,980.00 744,303.00 753,934.00
(direct)
Indirect costs 47,548.00 234,633.00 226,905.00 242,967.00 246,299.00
-------------------------------------------------------------------------------
Total Costs 973,740.00 1,046,884.00 921,885.00 1,079,729.00 1,039,952.00
FTEs 8,905.00 8,620.00 9,528.75 8,355.00 8,140.00Conservation Emergency Conservation 0 0 153,044.00 0 0
Program 3
Administrative costs 0 0 8,344.00 0 0
(direct)
Indirect costs 0 0 0 0.00 0
-------------------------------------------------------------------------------
Total Costs 0.00 0.00 161,388.00 0.00 0.00
FTEs 0.00 0.00 0.25 0.00 0.001 FSA has programs related to supporting the conservation goal that are not part of the specific request.
2 Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs
related to GRP and Voluntary Public Access and Habitat Incentive Program are included.
3 The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under
Goal 1. We have broken out the program information but the administrative costs relate to all programs for the
Income Support and Disaster Assistance Goal.

9. Eligibility Criteria
Eligible Producers

An eligible producer must have owned or operated eligible land for
at least 12 months prior to enrollment. In cases where the land was not
acquired to enroll in the CRP, a waiver may be authorized.

Eligible Land

Land that may be offered includes cropland that is planted or
considered planted to an agricultural commodity 4 of the 6 crop years
from 2002 through 2007, and is physically and legally capable of being
planted in a normal manner to an agricultural commodity.
For continuous signup, land may be certain marginal pasture land.

Additional Cropland Requirements

In addition to cropping history, for general signup, cropland must
meet one of the following:

Have a weighted average erosion index of 8 or greater;

Be expiring CRP acreage; or

Be located in a national or state CRP conservation priority
area.
10. Utilization (Participation) Data

Total enrollment of 31.31 million acres in 750,000 contracts
on 416,000 farms.

Consists of 26.2 million acres in 338,000 contracts on
222,000 farms in general signup enrollment and 5.0 million
acres in 412,000 contracts on 239,000 farms.

CRP Enrollment by State as of April 2011
----------------------------------------------------------------------------------------------------------------
Annual Rental Payments
State Number of Number of Farms Acres ----------------------------------
Contracts ($1,000) ($/Acre)
----------------------------------------------------------------------------------------------------------------
U.S. 749,913 415,953 31,213,510 1,720,354 55.12
Alabama 9,108 6,488 398,166 18,286 45.93
Alaska 45 28 19,037 671 35.25
Arkansas 5,956 3,289 250,780 14,971 59.70
California 506 390 124,510 4,712 37.84
Colorado 12,744 6,125 2,251,395 74,324 33.01
Connecticut 16 13 163 13 78.44
Delaware 666 349 6,850 754 110.13
Florida 1,318 1,067 56,382 2,262 40.12
Georgia 9,069 6,440 318,782 14,973 46.97
Hawaii 9 9 167 10 57.64
Idaho 5,200 2,960 668,317 29,619 44.32
Illinois 82,044 44,833 1,035,931 118,474 114.36
Indiana 38,168 21,360 286,447 31,196 108.91
Iowa 106,489 53,422 1,673,364 214,169 127.99
Kansas 47,139 26,794 2,738,960 109,973 40.15
Kentucky 17,649 9,459 360,295 40,039 111.13
Louisiana 5,036 3,210 327,661 20,172 61.56
Maine 679 472 17,972 931 51.83
Maryland 6,427 3,518 79,041 10,891 137.78
Massachusetts 4 4 15 3 172.53
Michigan 15,185 8,695 229,140 20,198 88.15
Minnesota 63,002 33,112 1,640,921 110,574 67.39
Mississippi 19,808 12,458 850,134 40,870 48.07
Missouri 36,459 21,063 1,364,524 101,211 74.17
Montana 15,257 5,982 2,863,105 92,025 32.14
Nebraska 28,306 15,872 1,081,185 65,850 60.91
New Hampshire 5 5 58 3 55.46
New Jersey 275 194 2,449 170 69.29
New Mexico 1,978 1,283 453,819 15,221 33.54
New York 2,866 2,032 53,136 3,713 69.87
North Carolina 8,076 5,263 117,457 8,049 68.53
North Dakota 34,254 16,766 2,650,455 95,825 36.15
Ohio 38,008 21,227 343,596 40,952 119.19
Oklahoma 7,500 5,074 861,360 28,902 33.55
Oregon 4,279 2,253 551,279 28,710 52.08
Pennsylvania 12,115 7,625 220,750 22,729 102.96
Puerto Rico 19 19 2,032 130 63.93
South Carolina 7,649 4,323 159,731 6,129 38.37
South Dakota 31,613 14,790 1,165,373 65,084 55.85
Tennessee 7,321 4,883 205,282 13,775 67.10
Texas 22,107 16,234 3,465,165 124,839 36.03
Utah 875 543 167,952 5,206 31.00
Vermont 384 271 2,875 288 100.18
Virginia 5,839 4,464 63,416 3,760 59.29
Washington 12,406 5,168 1,453,510 81,116 55.81
West Virginia 447 363 5,840 431 73.73
Wisconsin 24,642 15,107 400,679 32,064 80.02
Wyoming 965 653 224,020 6,087 27.17
Not Reported 1 1 28 2 82.00
----------------------------------------------------------------------------------------------------------------
Note: ``Not Reported'' includes a contract with a data anomaly.

11. Duplication or Overlap with Other Programs
CRP is not a duplicate of other USDA conservation programs. Certain
programs may share some common eligibility, but each program provides
producers a unique set of options for the short and long-term
management of the farm or ranch. Generally, the same parcel of land
cannot be enrolled in more than one program at the same time. These
programs are complementary because they provide choices for producers
in how they voluntarily protect their land and provide conservation
benefits to their community and beyond.
CRP enrolls land to create wildlife habitat. All of the lands
eligible for CRP could be enrolled in Wildlife Habitat Incentive
Program (WHIP) if they fall within the WHIP priority areas but not all
lands eligible for WHIP could be enrolled in CRP.
CRP and WRP address the restoration and long term conservation of
wetland resources. However, CRP is directed primarily to cropland and
marginal pastureland, and many CRP participants with wetland resources
are unwilling to have an easement placed on the land.
In the case of Grasslands Reserve Program (GRP), most of the land
is either native sod or pasture but some cropland may be enrolled into
easements or long-term contracts. There is some potential overlap of
eligible acres in riparian areas near streams or rivers, but this gives
producers the flexibility to enroll in the program that best suits
their needs.
CREP targets specific resource concerns in a state CREP project
area while providing additional incentives for enrollment above and
beyond what is available under continuous CRP and Initiatives. These
additional incentives are made possible through USDA and state
government partnerships.
Initiatives and continuous CRP are available nationwide or in
certain selected geographic areas.
Both Environmental Quality Incentives Program (EQIP) and CRP
address natural resource concerns, the land uses on which the practices
are applied generally are distinct. There could be minimal overlap
where CRP enrolls windbreaks, shelterbelts and shallow water
impoundments for wildlife.
There are many examples of FSA and NRCS programs working together
to achieve conservation goals. For example, in the Chesapeake Bay,
combinations of land retirement and conservation practices/systems are
used to achieve nutrient, sediment and other resource objectives.
12. Waste, Fraud and Abuse
There has been no extensive Office of Inspector (OIG) or Government
Accountability Office (GAO) audit of the program during the past 5
years. Although occasional cases of producer misconduct may have been
identified and addressed through investigations in the past, we do not
have a current audit that indicates on-going systemic waste, fraud or
abuse. FSA conducts its own internal investigation through its county
office review process and through its internal review audit process. In
2008, 2009 and 2010 the amount of improper payments for CRP was .77
percent, 1.2 percent, and 1.77 percent, respectively.
13. Effect of Administrative PAYGO
Exhibit 1 shows the costs and savings related to USDA's
Administrative PAYGO Scorecard.
______

1. Program Name
Emergency Conservation Program (ECP).
Prepared by USDA's FSA.
2. Subprograms/Department Initiatives
None.
3. Brief History
ECP was authorized by the Agricultural Credit Act of 1978, as
amended, to provide financial assistance to agricultural producers to
rehabilitate farmlands damaged by natural disaster when new
conservation problems have been created that: (1) if not treated, will
impair or endanger the land; (2) materially affect the productive
capacity of the land; (3) represent damage that is unusual in character
and is not the type that would recur frequently in the same area; and
(4) will be so costly to rehabilitate that Federal assistance is or
will be required to return the land to productive agricultural use.
Funding is appropriated by Congress. ECP generally is funded through
periodic supplemental appropriations that remains available until
expended.
4. Purpose/Goals
ECP provides emergency funding and technical assistance for farmers
and ranchers to rehabilitate farmland damaged by natural disasters and
for carrying out emergency water conservation measures in periods of
severe drought.
5. Success in Meeting Programmatic Purpose/Goals
ECP successfully provides financial assistance to agricultural
producers to rehabilitate farmlands damaged by natural disasters. In FY
2010, nearly $54 million was allocated to help producers throughout the
country address damage from drought, floods, hurricanes, wildfire,
tornados and other disasters. As of June 20, 2011, in FY 2011, nearly
$65 million (see 2011 allocations table below) has been allocated to
assist with similar disasters, including the devastating tornados that
have hit states such as Alabama, Arkansas, Alabama, Georgia, North
Carolina, Pennsylvania, Virginia and others, and floods in Arkansas,
California, Colorado, Iowa, Kentucky, Oregon, Minnesota, New York,
North Carolina, Tennessee, Virginia, Wisconsin and other states. If
funds allocated to a state are not used within a reasonable period of
time, the funds are withdrawn and reallocated to meet ECP needs
elsewhere.

7. Annual Outlays (FY 2002-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Emergency Conservation Program (ECP) receives no-year discretionary appropriations. Actual ECP cost-share outlays are made when practices are
completed.

FY 2002 Through FY 2011 Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emergency Conservation Program $32,365 $46,980 $23,100 $57,123 $88,311 $72,166 $27,730 $71,084 $76,879 $71,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
County FSA committees determine land eligibility based on on-site
inspections of damage, taking into account the type and extent of
damage. For land to be eligible, the natural disaster must create new
conservation problems that, if untreated, would:

impair or endanger the land;

materially affect the land's productive capacity;

represent unusual damage which, except for wind erosion, is
not the type likely to recur frequently in the same area; and

be so costly to repair that Federal assistance is or will be
required to return the land to productive agricultural use.

Conservation problems existing prior to the applicable disaster are
ineligible for ECP assistance.
ECP program participants receive cost-share assistance of up to 75
percent of the cost to implement approved emergency conservation
practices, as determined by county FSA committees. Socially-
disadvantaged producers may be eligible for up to 90 percent cost-share
assistance.
Individual or cumulative requests for cost-sharing of $50,000 or
less per person, per disaster are approved at the county committee
level. Cost-sharing from $50,001 to $100,000 is approved at the state
committee level. Cost-sharing over $100,000 must be approved by FSA's
national office. Further, there is a payment limitation of $200,000 per
person or legal entity per disaster.
10. Utilization (Participation) Data
Since 1978, ECP has provided assistance to help producers on
between 2,000 to nearly 38,000 farms a year. The wide range of
assistance stems from the fact that ECP is an appropriated program that
is only utilized when needed by farmers and ranchers after disasters
strike.
As of June 20, 2011, about $167 million is estimated in unmet ECP
needs primarily related to recent natural disasters including flooding,
tornadoes, drought, and wildfires.
11. Duplication or Overlap with Other Programs
Although the Emergency Watershed Protection Program (EWP) and ECP
have similar goals, generally, ECP is farm level, and EWP is watershed
level. Through ECP, USDA works directly with farmers to cost-share on
practices to restore land and return it to production after a natural
disaster. Under EWP, USDA works with states, counties, or other local
sponsors to provide financial assistance to address problems caused by
natural disasters that affect area wide issues. Sponsors must provide a
share of the resources to support the project.
ECP also works in concert with the Emergency Forest Restoration
Program (EFRP), authorized by the 2008 Farm Bill, Forestry Title, to
address all eligible private agricultural land after a natural
disaster. EFRP addresses the critical need to restore nonindustrial
private forestland after a natural disaster such a hurricane or
tornado.
12. Waste, Fraud and Abuse
Although occasional cases of producer misconduct may have been
identified and addressed through investigations in the past, no current
systemic waste, fraud or abuse has been identified related to this
program. Due to the nature of ECP funding, ECP has been audited often.
Most recently, following appropriations under the 2008 supplemental
appropriations act and the 2008 disaster relief and recovery
supplemental appropriations act as well as transfer authority provided
in the 2009 supplemental appropriations act, OIG conducted the
following audits:

a. Review of Emergency Disaster Assistance for 2008 Disasters:
Emergency Conservation Program, (Audit 03702-1-TE). This audit,
which focused on ECP assistance to address damages from
Hurricanes Ike and Gustav, did not find many significant
issues.

b. Review of Emergency Disaster Assistance for the 2008 Natural
Disasters: Emergency Conservation Program (Audit 03702-1-TE).
This audit, which focused on ECP assistance to address damage
from the 2008 Midwest Floods, had a number of findings, which
could only be addressed with additional funding and staff
salary.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Voluntary Public Access and Habitat Incentive Program (VPA-HIP).
Prepared by USDA's Farm Service Agency.
2. Subprograms/Department Initiatives
None.
3. Brief History
VPA-HIP is a competitive grant program authorized by the 2008 Farm
Bill. Up to $50 million is available through FY 2012. Funding is
limited to state and tribal governments establishing new public access
programs, expanding existing public access programs, and/or enhancing
wildlife habitat on lands enrolled in public access programs.
4. Purpose/Goals
The primary objective of the VPA-HIP is to encourage owners and
operators of privately-held farm, ranch, and forestland to voluntarily
make that land available for access by the public for wildlife-
dependent recreation, including hunting or fishing, under programs
implemented by state or tribal governments. VPA-HIP will provide
environmental, economic and social benefits including, but not limited
to, enhanced wildlife habitat, improved wildlife populations, increased
revenue for rural communities, and expanded opportunities for re-
connecting Americans with the great outdoors.
5. Success in Meeting Programmatic Purpose/Goals
Funding was first obligated under VPA-HIP in 2010. It is too soon
to assess the success in meeting programmatic goals.

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Voluntary Public Access and 0 0 0 0 0 0 0 0 0 $33,334
Habitat Incentives Program
--------------------------------------------------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Only states and tribal governments are eligible for Federal VPA-HIP
funding. States and tribal governments may propose to use VPA-HIP grant
funding to expand existing public access programs, create new public
access programs, and/or provide incentives to enhance wildlife habitat
on lands enrolled in state or tribal government public access programs.
10. Utilization (Participation) Data
States and tribal governments participating in VPA-HIP are Arizona,
California, Colorado, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas,
Kentucky, Michigan, Minnesota, Montana, Nebraska, New Hampshire, North
Dakota, Oregon, Pennsylvania, South Dakota, Texas, Utah, Virginia,
Washington, Wisconsin, Wyoming and the Confederated Tribes and Bands of
the Yakama Nation.
11. Duplication or Overlap with Other Programs
VPA-HIP is unlike any other USDA program as it specifically targets
public access. Incentives for enhancing wildlife habitat under VPA-HIP
are limited to those private land owners and operators who make land
available for public access. The Department of Interior Federal Aid in
Wildlife Restoration Act makes funds available from an 11 percent
excise tax on sporting arms and ammunition through the Secretary of
Interior to states. Activities eligible under the Landowner Incentive
Program (LIP) of the USFWS for such funding include acquisition and
development of access and improvement of wildlife habitat. VPA-HIP has
proven complementary to state public access program initiated as a
result of LIP funding.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Grass Roots Source Water Program (Source Water).
Prepared by USDA's Farm Service Agency.
2. Subprograms/Department Initiatives
None.
3. Brief History
Source Water is a grant program implemented for State Rural Water
Associations and is designed to help prevent source water pollution in
states through voluntary practices installed by producers and other
landowners at the local level.
Source Water uses onsite technical assistance capabilities of each
state rural water association that operates a source water program in
the state. State rural water associations deliver assistance in
developing source water protection plans within watersheds for the
common goal of preventing the contamination of drinking water supplies.
Source water is surface and ground water that is consumed by rural
residents. According to the National Rural Water Association, ground
water is the primary source of drinking water for some 44,000
communities in the United States. Through the program, state rural
water associations hire, for every participating state, a full-time
source water specialist who possesses knowledge and experience in rural
issues. The technician works with FSA's state and county leadership,
NRCS technicians, local leaders, and communities to create operating
plans that identify priority areas where local pollution prevention
efforts are needed most in their respective states.
This collaboration is intended to result in the development of a
source water protection plan that outlines voluntary measures for
farmers, ranchers, and local communities that can be installed on their
lands to prevent source water pollution. Voluntary measures may range
from storing herbicides, pesticides, or other substances in more secure
containers to relocating waste lagoons. By working at the grassroots
level, local team members inform and educate participants about source
water protection measures that benefit their neighbors and communities.
Additionally, the plans also establish steering committees to evaluate
voluntary practices that have been implemented. FSA monitors the
overall performance of the program.
4. Purpose/Goals
Source Water's goal is to implement source water protection plans
in each state by assisting small and rural communities in protecting
their drinking water resources. There are source water protection plans
in 43 states. The ultimate goal of the project is to assist public
water utilities and the agricultural community in coordinating efforts
by taking a proactive approach to maintain and/or improve water quality
within their source water protection planning areas.
5. Success in Meeting Programmatic Purpose/Goals
Between October 1, 2009, and September 30, 2010, source water
protection plans were completed in 119 communities which provide
protection measures for 470 public drinking water sources (415 wells
and 55 surface water intakes).

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grassroots Source Water $0 $0 $0 $0 $3,713 $3,713 $3,687 $5,000 $5,000 $4,242
Protection Program
--------------------------------------------------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
States are selected based on a formula that ranks states based on
total maximum daily loads, impaired waters, total farm acres, and total
toxic discharges.
10. Utilization (Participation) Data
States participating in Source Water include: Alaska, Alabama,
Arizona, Arkansas, California, Colorado, Connecticut, Delaware,
Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana,
Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi,
Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South
Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia,
Wisconsin, and Wyoming. The 43 participating states were chosen based
on objective technical criteria relating to water quality and
population.
11. Duplication or Overlap with Other Programs
There is no overlap with Rural Development (RD) programs which
provide support grants and loans for water and wastewater treatment,
distribution, and collection systems.
The FSA source water program is not a duplication but is
complementary of the Environmental Protection Agency's (EPA) source
water initiatives. The EPA source water program is targeted to
compliance of community water supplies with Safe Drinking Water Act
regulations. FSA authorized source water efforts focuses incorporating
the agriculture community into prevention of contamination in source
waters through FSA programs such as the CRP and education of the
agriculture community and non-governmental entities.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Grassland Reserve Program (GRP).
Prepared by USDA's NRCS and FSA.
2. Subprograms/Department Initiatives
None.
3. Brief History
GRP was authorized in section 2401 of the 2002 Farm Bill and was
reauthorized by section 2403 of the 2008 Farm Bill. NRCS and FSA
jointly administer this program. Both agencies share policy
development, NRCS administers the easements, and FSA implements the
rental contracts. Funding for GRP comes from the Commodity Credit
Corporation (CCC).
Legislative Changes. The 2008 Farm Bill:

Increased the acreage that may be enrolled in the program by
1.2 million acres during the years 2009 through 2012.

Provided priority for enrollment of expiring acreage from
the Conservation Reserve Program (CRP), limited to ten percent
of the total acres enrolled in any year.

Authorized eligible lands to be enrolled into either a
permanent easement (or maximum allowed under state law); or a
10, 15, or 20 year rental contract.

Authorized restoration agreements on lands, enrolled under a
either a rental contract or an easement, to receive up to 50
percent cost-share.

Expanded the definition of eligible to include land that
contains historical or archeological resources and land that
addresses state, regional, or national conservation priorities.

Required a grazing management plan for GRP participants.

Required that valuation of an easement be at the lower of
either an appraisal or market survey, a rate set by the
Secretary of Agriculture, or the landowner's offer.

Defined ``eligible entities'' as units of state, local, or
tribal government or nongovernmental organizations that have a
charter describing a commitment to conserving ranchland,
agricultural land, or grassland for grazing and conservation
purposes.

Allowed that easements may now be acquired by eligible
entities based on a 50 percent cost-share with the Federal
Government.

Established an annual payment limitation of $50,000 for both
rental and restoration agreements.

Waived a minimum acreage limitation for enrollment.

Excluded land from the GRP if it is currently enrolled in
another conservation program or is already protected by an
existing easement, contract or deed restriction or is owned by
a conservation organization.

Allowed interested landowners to submit applications under a
continuous sign-up.
4. Purpose/Goals
The purpose of the Grassland Reserve Program (GRP) is to assist
landowners and operators in protecting grazing uses and related
conservation values by conserving and restoring grassland resources on
eligible private lands through rental contracts, easements, and
restoration agreements. The program emphasizes support for working
grazing operations; enhancement of plant and animal biodiversity; and
protection of grassland and land containing shrubs and forbs under
threat of conversion.
5. Success in Meeting Programmatic Purpose/Goals
Montana: GRP Enrollments Support Agency Commitment to Sage Grouse
Habitat. In Phillips County, Montana, five GRP projects enrolled in the
last 2 years protect 29,485 acres. These projects help preserve rural
ranching operations while providing critical wildlife habitat for sage
grouse and other grassland birds. The USFWS announced this species as a
candidate for listing on the Endangered Species List. NRCS is taking
proactive steps to protect and improve habitat in order to prevent
listing of this bird in significant decline. More than 80 percent of
the acres in these five ranches are prime habitat for of sage grouse.
These ranchers have embraced management activities that continue to
provide food, clean water, and habitat for mule deer, elk, pronghorn,
and a multitude of neo-tropical grassland birds and one of the
healthiest populations of sage grouse in the nation.
Pennsylvania: GRP Helps Landowners Manage for Conservation.
Conservation-minded landowners are interested in protecting and
improving pastures for grazing management, while maintaining wildlife
habitat for ground nesting birds. These landowners see the GRP program
as a good fit for their management goals. These conservation easements
protected nearly 400 acres of grasslands in areas subject to increasing
development pressure.
Wyoming: A 2,412 acre GRP easement was placed on land in central
Wyoming, adjacent to the Medicine Bow National Forest. The upper
meadows are used by an elk herd. Cows and calves graze during late
spring and stay all summer. Good feed and water nourish both domestic
animals and wildlife, with escape cover on the west end of the pasture.
During fall and winter, elk cows and bulls spend days on the pasture.
Pronghorn antelope and mule deer are often seen in the lower
elevations. Approximately 25 to 35 sage grouse forage in the lower
elevation habitat.
Sage-Grouse Recovery: USDA provided $2.5 million in GRP financial
assistance to five western states for Greater Sage-Grouse conservation
and recovery on lands identified by state wildlife agencies as
containing critical sage grouse habitat. The funds were used for
enrollment of GRP easements on private lands in California, Colorado,
Montana, Utah and Wyoming, with technical assistance and additional
financial assistance provided through state and local partnerships.
Conservation on the Ground--GRP in Kansas. Kansas has very
productive native grasslands. During FY 2007, ranchers in Kansas signed
47 GRP conservation easements that will protect 22,600 acres of the
state's native grassland. GRP conservation easements are one way to
prevent the destruction of the Kansas tall-grass prairie. And, Kansas
ranchers have demonstrated a keen interest in the program by enrolling
22,600 acres in GRP easements that will forever remain in tall-grass
prairie.
Washington State protecting historic grazing lands. The Colvin
family has ranched on their 530 acres family homestead along Scatter
Creek in Washington State since Ignatius Colvin arrived over the Oregon
Trail in the 1850's. GRP easements allow the current generation of the
Colvin family to keep the land as a working ranch in perpetuity. Urban
development pressures in western Washington make maintaining large
tracts of grazing lands very difficult. By granting GRP easements, the
entire 530 acres grazing area soon will be protected. The contiguous
easements were funded through Fiscal Year 2004, 2005, and 2009
allocations. The Colvin family's grazing management plan, developed
with NRCS, maintains and enhances native prairie habitat.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 --
2003 $85
2004 $115
2005 $128
2006 $54
2007 $16
2008 $3
2009 $48
2010 $101
2011 $79
------------------------------------------------------------------------

NRCS GRP financial assistance (FA) funds support eligibility
determinations, rental contracts, easement acquisition, and monitoring.
FA for easement acquisition is obligated when the acres to be placed
under easement are enrolled but are not expended until the easement has
been perfected which is a process that may take over a year. Technical
Assistance (TA) funds obligated in a given year are used for workload
generated by the enrollment of new acres and acreage already enrolled.
The majority of TA funding usually is expended in the year of
obligation. FA funding represents the majority of program budget
authority.

8. Annual Delivery Cost (FY 2007-FY 2011) Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan: Annual delivery cost for NRCS includes:
Grassland Reserve Program Conservation Planning and 453 155 2,021 2,047 5,880
Technical Consultation
Conservation 330 203 835 846 2,430
Implementation
Financial Assistance-- 1,079 445 3,240 3,281 9,425
Program Administration
Indirect Costs 1,282 200 520 526 1,512
-------------------------------------------------------------------------------
Sub-total Technical 3,144 1,003 6,616 6,700 19,247
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 9,843 1,810 41,042 93,408 98,126
Share & Monetary
Incentive
===============================================================================
Total Costs 12,987 2,813 47,658 100,108 117,373
FTEs 21 7 30 28 55Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000) Annual delivery cost for FSA includes: Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored,
and made more resilient to climate change, while enhancing our resources.

9. Eligibility Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
Land is eligible if it is privately owned or Tribal land and it is: (1) grassland that contains forbs or shrubs (including rangeland and
pastureland) for which grazing is the predominant use; or (2) located in an area that has been historically dominated by grassland, forbs, or shrubs.
The land must also have potential to provide habitat for animal or plant populations of significant ecological value if the land is retained in the
current use or restored to a natural condition.

10. Utilization (Participation) Data
Contract Fiscal Year 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rental Contracts Easements
------------------------------------------------------------------------------
Obligations Dollars
for Due Allocated Technical
Number 1 Acres 1 Obligations Number 1 Acres 1 Diligence for Assistance
and Market Easements
Analysis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 424 273,516 $29,288,185 144 95,907 $3,232,610 $52,318,210 $3,437,072
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 Numbers currently reported in National Easement Staging Tool (NEST) are undergoing an intense quality assurance review. Numbers are subject to change
during this process.

11. Duplication or Overlap with Other Programs
GRP provides for the long-term conservation/preservation of
critical grassland resources that are under pressure from conversion.
Other long-term conservation programs such as CRP, WRP, and Farm and
Ranch Land Protection Program share the common objective to enhance and
improve the grassland resources through short-term (10+ year
contracts--CRP) or through the purchase of easements under FRPP.
Generally, the same parcel of land cannot be enrolled in more than one
program at the same time. These programs are complementary because they
provide choices for producers in how they voluntarily protect their
land and provide conservation benefits to their community and beyond.
These programs share a common goal of restoring and protecting the
natural resources benefits of grassland ecosystems to provide wildlife,
water quality erosion and other natural resource benefits. In some
cases, the restoration of the grassland resources requires the
development of grassland habitat or the development of the
infrastructure (fences, springs etc.) that will enable the long-term
management of these resources. In the cases where infrastructure or
management changes are needed, there may be some overlap with EQIP,
Stewardship, and/or WHIP.
Some of the practices offered through Stewardship to meet the
minimum threshold at the end of the contract are also offered through
other programs such as EQIP. Utilizing Stewardship for this purpose
increases the additionality intent and uniqueness of the program.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Chesapeake Bay Watershed Program (CBWP).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
The CBWP was authorized by section 2602 of the 2008 Farm Bill. The
Chief of NRCS may implement CBWP in the watersheds of all tributaries,
backwaters, and side channels draining into the Chesapeake Bay. These
areas include lands in Delaware, Maryland, New York, Pennsylvania,
Virginia, and West Virginia.
As of 2010, CBWP participants have enrolled nearly 270,000 acres in
about 1,800 agreements in the Chesapeake Bay watershed.
4. Purpose/Goals
The purpose of CWBP is to assist producers in implementing
conservation activities on agricultural lands in the Chesapeake Bay for
the purposes of (1) improving water quality and quantity in the
Chesapeake Bay watershed and (2) restoring, enhancing, and preserving
soil, air, and related resources in the Chesapeake Bay watershed.
5. Success in Meeting Programmatic Purpose/Goals
In FY 2010:

NRCS enrolled over 950 agreements on over 156,000 acres.

The value of the contracts was over $33.5 million.

The average agreement size is 164 acres.

On average, NRCS agreed to reimburse participants
approximately $35,000 for each long-term agreement.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 --
2003 --
2004 --
2005 --
2006 --
2007 --
2008 --
2009 1 $23
2010 $43
2011 $72
------------------------------------------------------------------------
1 Chesapeake Bay Watershed Program funding began in FY 2009. Prior to
this time, discretionary funds were received through Congressionally
designated projects.

7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Outlays ($ in millions)
------------------------------------------------------------------------
2002 --
2003 --
2004 --
2005 --
2006 --
2007 --
2008 --
2009 1 $3
2010 $23
2011 $41
------------------------------------------------------------------------
1 Chesapeake Bay Watershed Program funding began in FY 2009. Prior to
this time, discretionary funds were received through Congressionally-
designated projects.

CBWP FA funds are obligated the year a contract is entered into,
and this initial obligation is applicable to the entire multi-year span
of the contract. As the years pass, FA for contracted practices is not
expended until the practices are installed and inspected for quality
control by NRCS personnel. For this reason, FA funds tend to outlay for
multiple years after obligation. TA funds obligated in a given year are
used for workload generated by the enrollment of new contracts and
workload generated by prior year contract implementation. The vast
majority of TA funding tends to outlay in the year of obligation. FA
funding represents the majority of program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Chesapeake Bay Watershed Program Conservation Planning and -- -- 209 676 1,234
Technical Consultation
Conservation -- -- 1,083 3,501 6,393
Implementation
Financial Assistance-- -- -- 727 2,350 4,292
Program Administration
Indirect Costs -- -- 1,228 3,970 7,251
-------------------------------------------------------------------------------
Sub-total Technical -- -- 3,247 10,497 19,170
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost -- -- 18,595 33,539 52,830
Share & Monetary
Incentive
===============================================================================
Total Costs -- -- 21,842 44,036 72,000
FTEs -- -- 25 85 172Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
Congress provided the authority to deliver CBWP funds through
applicable programs in the Chesapeake Bay. Since the purpose of CBWP is
similar to the purpose of the Environmental Quality Incentives Program
(EQIP), CBWP is administered using the same programmatic rules as EQIP.
To participate in CBWP, both the land and the applicant must be
eligible. Eligible land includes cropland, rangeland, pastureland,
private nonindustrial forestland, and other farm or ranch lands in the
Chesapeake Bay watershed. The land must have an identified natural
resource concern that poses a serious threat to soil, water, air, or
related resources by reason of land use practices, soil type, terrain,
climatic conditions, topography, flooding, saline characteristics, or
other natural resource factors or natural hazard. Publicly-owned land
is eligible only if: (1) the land is under private control for the
contract period; (2) is included within the participant's operating
unit; and (3) must have written authorization from the government
agency that owns the land to apply conservation practices. For
irrigation-related practices, the land must have a history of actively
irrigating the land unit for 2 out of the last 5 years.
Applicants must be an agricultural producer, have control of the
land for the life of the contract, be in compliance with farm bill
provisions (highly erodible land, wetland conservation, protection of
tenants and sharecroppers), be within appropriate program payment
limitations and adjusted gross income requirements, and develop an EQIP
plan of operations. Applications are accepted year round at local USDA
Service Centers, but there are application cut-off dates that vary from
state to state.
10. Utilization (Participation) Data
CBWP Application/Contract Status data include:

------------------------------------------------------------------------
Number of Active Financial
Fiscal Year and Completed Assistance Total Treated
Contracts Obligated Acres
------------------------------------------------------------------------
2009 826 $18,592,739 110,327
2010 953 $33,517,624 156,704
-----------------------------------------------------
Total........... 1,779 $52,110,363 267,031
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
CBWP is a mechanism for focusing funding for maximum impact, is
delivered through existing programs such as the EQIP, and is focused in
the Chesapeake Bay watershed and on priorities related to controlling
nutrient and sediment and habitat conservation.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Watershed Operations Program (Small Watershed).
Prepared by USDA's NRCS.
2. Subprogram/Department Initiatives
None.
3. Brief History
The Watershed Operations programs operate under Public Law 83-566,
the Watershed Protection and Flood Prevention Act of 1954, as amended
(P.L. 83-566); and Public Law 78-534, the Flood Control Act of 1944
(P.L. 78-534). Both of these laws authorize the Secretary of
Agriculture to install watershed improvement measures to reduce
flooding, sedimentation, and erosion damage; and improve the
conservation, development, utilization, and disposal of water; and
advance the conservation and proper utilization of land.
4. Purpose and Goals
The program sets out to develop Watershed Project Plans, with
specific actions and schedules that will meet local sponsor and
resource concerns and that are physically, environmentally, socially,
and economically defensible. The three general purposes set out in P.L.
83-566 include: (a) Preventing damage from erosion, floodwater, and
sediment; (b) Furthering the conservation, development, utilization,
and disposal of waters; and (c) Furthering the conservation and proper
utilization of land. The general purposes set out in P.L. 78-534 are
(a) Run-off and water-flow retardation and (b) Soil-erosion prevention.
NRCS provides technical and financial assistance to install watershed
improvement measures through three means: technical assistance, land
treatment measures, and easement and construction measures.
These programs (P.L. 83-566 & P.L. 78-534) provide for cooperation
between the Federal Government and the states and their political
subdivisions for purposes of:

Agricultural Watershed Water Quality
Water Protection Management
Management Fish and Flood Municipal &
Wildlife Prevention--Flood Industrial Water
Damage Reduction Supply
Public
Recreation
5. Success in Meeting Programmatic Purpose/Goals
Program Benefits. Estimates of flood prevention and other annual
benefits to the environment and communities from P.L. 83-566 and P.L.
78-534 that occurred in FY 2010 are shown below.
Monetary Benefits. Benefits include:

Agricultural Benefits (not related to flood control): $404
million. Benefits associated with erosion control, animal waste
management, water conservation, water quality improvement,
irrigation efficiency, change in land use, etc.

Non-Agricultural Benefits (not related to flood control):
$899 million. Benefits associated with recreation, fish and
wildlife, rural water supply, water quality, municipal and
industrial water supply, and incidental recreation uses, etc.

Agricultural Flood Protection Benefits: $320 million. This
value includes all crop and pasture damage reduction benefits
as well as all other agricultural damage reduction benefits.

Non-Agricultural Flood Protection Benefits: $434 million.
Non-agricultural flood damage prevented to roads, bridges,
homes, and other structures that exist in the floodplain.

Natural Resources Benefits include:

Acres of nutrient management: 674,283

Tons of animal waste properly disposed: 4,801,640

Tons of soil saved from erosion: 90,038,700

Miles of streams and corridors enhanced, or protected:
54,190

Acres of lakes and reservoirs enhanced, or protected:
2,518,613

Acre-feet of water conserved: 1,842,813

Acres of wetlands created, enhanced, or restored: 279,326

Acres of upland wildlife habitat created, enhanced, or
restored: 9,149,776

Social and Community Benefits:

Number of people: 48,316,354

Number of farms and ranches: 181,248

Number of bridges: 61,678

Number of public facilities: 3,650

Number of businesses: 46,583

Number of homes: 610,983

Number of domestic water supplies: 27,857

6. Annual Budget Authority (FY 2002-FY 2011)
(Watershed and Flood Prevention Operations, P.L. 78-534, and Small
Watershed, P.L. 83-566)
------------------------------------------------------------------------
FY Appropriation ($ in millions)
------------------------------------------------------------------------
2002 $106
2003 $109
2004 $86
2005 $75
2006 $74
2007 $9
2008 $30
2009 $24
2010 $30
2011 --
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
(Watershed and Flood Prevention Operations, P.L. 78-534, and Small
Watershed, P.L. 83-566)
------------------------------------------------------------------------
FY Outlays ($ in millions)
------------------------------------------------------------------------
2002 $85
2003 $80
2004 $73
2005 $86
2006 $81
2007 $78
2008 $44
2009 $42
2010 $19
2011 $15
------------------------------------------------------------------------

Watershed Operations program TA funds generally outlay in the year
the funds are obligated. The only exception to this is when TA funds
are obligated through an architecture and engineering services contract
to provide planning, design or quality assurance inspection during
construction. FA funds are obligated after permitting and/or land
rights are obtained. Outlays for these funds are generally expended
over a fiscal year, but can extend over multi-years for a complex
watershed operations project or for a project whose contract was
awarded toward the end of the fiscal year. Given the nature of
construction projects, it is possible for outlays to carryon for
multiple years after the initial appropriation or obligation of the
funds. Watershed Operations program funds are no-year funds.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Watershed and Flood Prevention
Operations Conservation Planning and 771 1,027 3,802 824 824
Technical Consultation
Conservation 2,514 4,654 18,130 3,827 3,827
Implementation
Financial Assistance-- 271 337 1,326 280 280
Program Administration
Indirect Costs 1,779 4,715 11,876 3,133 3,133
-------------------------------------------------------------------------------
Sub-total Technical 5,335 10,733 35,134 8,064 8,064
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 3,540 19,057 134,155 21,936 21,936
Share & Monetary
Incentive
===============================================================================
Total Costs 8,875 29,790 169,289 30,000 30,000
FTEs 139 90 94 28 120Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from
the Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.
Fiscal year 2009 includes $145 million in budget authority and associated FTE from the American Recovery and
Reinvestment Act of 2009.

9. Eligibility Criteria
Sponsor: All watershed projects must have at least one outside
sponsor which must be a state or local organization/agency (i.e.,
state, city, town, conservancy district, tribal) that has legal
authorities to acquire and hold land rights, condemn land if necessary,
and perform continuing operations and maintenance. The sponsor(s) must
also be able to raise, expend, and publicly account for funds as these
projects have a local match or share required.
Project/Structures: Watershed projects involving an estimated
Federal contribution in excess of $5 million for construction, or
construction of any single structure having a capacity in excess of
2,500 acre-feet of water storage require authorization by Congressional
Committee. Watershed projects are limited to 250,000 acres and cannot
include any single structure which provides more than 12,500 acre-feet
of floodwater detention capacity, or more than 25,000 acre-feet of
total capacity. The Chief of NRCS authorizes the use of Watershed
Operations funds for all other projects.
Federal financial assistance may be applied to installation costs
when land treatment measures are installed primarily to achieve
environmental and public benefits such as surface and ground water
quality improvement, water conservation, and flood mitigation. The
Federal share may not exceed the rate of assistance for similar
practices under other USDA conservation programs.
Land treatment measures are installed through project agreements
with local sponsoring organizations or through long-term contracts
between the landowner and NRCS. In the first case, the local sponsors
arrange for and accomplish the work by contract or force account and
NRCS makes payments to the local sponsoring organizations as the land
treatment measures are installed. In the second case, NRCS contracts
directly with landowners.
10. Utilization (Participation Data)
At the end of FY 2010, of the 1,757 projects authorized by the
Watershed Protection and Flood Prevention Act, NRCS has assisted
sponsors complete implementation on over 1,066 watersheds and are
implementing works of improvement in 300 active watershed projects.
11. Duplication or Overlap with Other Programs:
The program was not funded under the 2011 Full-Year Continuing
Appropriations Act. The Agency is in the process of closing out
operations.
Watershed Operations program payments cannot be applied to payments
on land for the same conservation purposes funded through other USDA
conservation programs.
12. Waste, Fraud and Abuse:
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
The Watershed Rehabilitation Program.
Prepared by USDA's NRCS.
2. Subprogram/Department Initiatives
None.
3. Brief History
The Watershed Rehabilitation Program (P.L. 106-472) is administered
by NRCS to assist project sponsors with rehabilitation of aging project
dams. Only dams installed under P.L. 83-566, the Pilot Watershed
Program, P.L. 78-534, or Resource Conservation and Development (RC&D)
Programs are eligible. This program provides technical and financial
assistance to watershed project sponsors in rehabilitating aging dams
in their communities.
4. Purpose/Goals
The purpose of P.L. 106-472 is to extend the service life of dams
and meet applicable safety and performance standards. Priority is given
to those structures that pose the highest risk to life and property.
Projects are eligible when hazard to life and property increases due to
downstream development and when there is need for rehabilitation to
extend the planned life of a structure. Watershed Rehabilitation
Program work can consist of repairing or replacing deteriorated
components, repairing damages from catastrophic events, upgrading the
structure to meet state dam safety laws, or to decommission a
structure.
5. Success in Meeting Programmatic Purpose/Goals
The Natural Resources Conservation Service has authorized the
rehabilitation of 162 of these high hazard dams in 22 states as of the
end of FY 2010. Many of these structures were originally set in rural
areas and designed and constructed as ``low hazard'' structures. As a
result of land use change and downstream development, many of these
dams now represent a ``high hazard'' to surrounding communities. These
rehabilitated structures are constructed to high hazard standard which
provide millions of dollars of flood protection. Through this program,
NRCS is making sure that the rehabilitation of these dams will not only
ensure that these watershed dams remain safe and protect the lives of
people, property, and infrastructure, but continue to provide flood
control, recreation and wildlife habitat to the citizenry and
communities for an additional 50 to 100 years.

The Watershed Rehabilitation Program TA funds are generally
expended in the year the funds are obligated. The only exception to
this is when TA funds are obligated through a services contract to
provide planning, design or quality assurance inspection during
construction. FA funds are obligated after permitting and/or land
rights are obtained. These funds are generally expended over a fiscal
year, but can extend over multi-years for a complex dam rehabilitation
project or for a project whose contract was awarded toward the end of
the fiscal year. Given the nature of constructions projects, it is
possible for outlays to carryon for multiple years after the initial
appropriation or obligation of the funds. Watershed Rehabilitation
Program funds are no-year funds.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Watershed Rehabilitation Program Conservation Planning and 2,573 845 4,739 1,994 1,368
Technical Consultation
Conservation 2,799 2,972 16,667 7,008 4,805
Implementation
Financial Assistance-- 1,193 342 1,918 806 553
Program Administration
Indirect Costs 10,460 3,135 17,581 7,392 5,070
-------------------------------------------------------------------------------
Sub-total Technical 17,025 7,294 40,905 17,200 11,796
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 14,284 12,566 49,095 22,961 28,365
Share & Monetary
Incentive
===============================================================================
Total Costs 31,309 19,860 90,000 40,161 40,161
FTEs 113 65 72 82 71Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from
the Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.
Fiscal year 2009 includes $50 million in budget authority and associated FTE from the American Recovery and
Reinvestment Act of 2009.

9. Eligibility Criteria
A dam must be under proper and active maintenance, and only dams
installed under P.L. 83-566, the Pilot Watershed Program, P.L. 78-534,
or RC&D Programs are eligible.
Each project requires a local cooperating sponsor that works
closely with NRCS to complete the rehabilitation of each dam. Each
sponsor must provide thirty-five (35) percent of the costs to
rehabilitation a dam. Through several means, sponsors in these
communities contribute their funds through the collection bonds, County
budgets, state appropriations, state park division, Municipal taxing
authority, Watershed taxing authority, and through In-kind technical
services.
11. Duplication or overlap with other programs
There is no duplication or overlap with other USDA conservation
programs.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Healthy Forests Reserve Program (HFRP).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
Title V of the Healthy Forests Restoration Act of 2003 (Public Law
108-148) authorized the establishment of the Healthy Forests Reserve
Program (HFRP) which was reauthorized by the 2008 Farm Bill.
HFRP provides financial assistance for specific conservation
actions completed by the landowner. As funds are made available, the
NRCS Chief solicits project proposals State Conservationists have
developed in cooperation with partnering organizations. States selected
for funding provide public notice of the availability of funding within
the selected area. HFRP offers four enrollment options:

10 year restoration agreement for which the landowner may
receive 50 percent of the average cost of the approved
conservation practices;

30 year contract (equivalent to the value of a 30 year
easement) for which the landowner may receive 75 percent of the
easement value of the enrolled land plus 75 percent of the
average cost of the approved conservation restoration
practices. This option is available to Indian Tribes only;

30 year easement for which the landowner may receive 75
percent of the easement value of the enrolled land plus 75
percent of the average cost of the approved conservation
practices; or

Permanent easement for which landowners may receive 100
percent of the easement value of the enrolled land plus 100
percent of the average cost of the approved conservation
practices.
4. Purpose/Goals
HFRP assists landowners in restoring, enhancing, and protecting
forest ecosystems to: (1) promote the recovery of threatened and
endangered species; (2) improve biodiversity; and (3) enhance carbon
sequestration. HFRP supports the NRCS Mission Goal of Healthy Plant and
Animal Communities.
5. Success in Meeting Programmatic Purpose/Goals
The following provides examples of HFRP results:
Oregon: Partnership Protects Working Forest and Enhances Habitat.
In FY 2010, NRCS partnered with the USFWS and the Oregon Department of
Forestry (ODF) to provide private landowners the opportunity to create
a northern spotted owl (NSO) habitat while maintaining a working
forest. NSO habitat in the Pacific Northwest is an important criterion
for defining healthy forests, making HFRP an excellent vehicle for this
effort. NRCS developed HFRP long term management requirements and
sideboards as a supplement to the ODF Forest Stewardship Plan on 11
properties being offered for permanent easements.
The supplements specify the long term management requirements and
sideboards of each individual property; some properties opted for even-
age stand management and others for the uneven-age stand management
regime. The FSP-HFRP supplement recognizes the requirements of a State
of Oregon Stewardship Agreement and will require that the landowner
intends to meet or exceed all Oregon Forest Practices Act standards
current at the time of approval including provisions for Riparian
Management Areas. The information contained in the supplement provides
guidance and requirements to reach landowner and program goals and
objectives. The supplements include area regulation timelines and
overall forest management practices for thinning, patch cuts, planting,
canopy cover requirements and specific management regimes for each
property.
NRCS worked closely with USFWS and ODF to ensure consistency among
agencies' requirements while developing the supplements. The
supplements use forest management to enhance future NSO habitat and
maintain existing habitat. NRCS, USFWS, and ODF entered into a
programmatic Safe Harbor Agreement to provide assurances to the
landowner if they manage the property according to the Forest
Stewardship Plan supplement. NRCS develops conservation plans and
landowner conservation program contracts to implement the conservation
practices necessary for restoration, enhancement, and management for
NSO as planned in the Forest Stewardship Plan supplement. NRCS has
completed the supplement plans for 11 properties in western Oregon
totaling 1,852 acres of valuable habitat for the endangered NSO on
these potential permanent easements. The HFRP work has been an
excellent demonstration of one-on-one conservation planning resulting
in detailed landowner decisions while allowing management flexibility
for plans that will stretch into perpetuity. This has been an excellent
model for all nonindustrial forest planning.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
Appropriation/Apportionment ($ in
FY millions)
------------------------------------------------------------------------
2002 --
2003 --
2004 --
2005 --
2006 $2
2007 $2
2008 $2
2009 $10
2010 $10
2011 $10
------------------------------------------------------------------------
Note: FY 2006 through 2008 is Discretionary appropriations. FY 2009
through 2011 is the Mandatory apportionments.

HFRP FA funds support easement acquisition and restoration. Funds
are expended when the easement is perfected or the practices necessary
for restoration are installed and verified by NRCS personnel, both
processes which may take over a year to complete. TA funds obligated in
a given year are used for workload generated by the enrollment of new
easements and workload generated by easements enrolled in prior years.
The vast majority of TA funding tends to be expended in the year of
obligation. FA funding represents the majority of program budget
authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Healthy Forests Reserve Program Conservation Planning and 19 12 180 187 301
Technical Consultation
Conservation 21 15 382 398 641
Implementation
Financial Assistance-- 9 58 459 478 770
Program Administration
Indirect Costs 78 66 314 328 529
-------------------------------------------------------------------------------
Sub-total Technical 127 151 1,335 1,391 2,241
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 2,349 1,835 1,191 6,226 7,509
Share & Monetary
Incentive
===============================================================================
Total Costs 2,476 1,986 2,526 7,617 9,750
FTEs 1 2 5 6 23Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 and 2008 are the discretionary appropriations. The 2009 and 2010 are actual mandatory
obligations; and Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
Only privately held land, including acreage owned by an Indian
Tribe, is eligible for enrollment in HFRP. In addition, to be eligible,
the landowner must commit to restoring, enhancing, or measurably
increasing the likelihood of recovery of a threatened or endangered
species or candidates for the Federal or state threatened or endangered
species list, and must improve biological diversity or increase carbon
sequestration. Land enrolled in HFRP must have a restoration plan that
includes practices necessary to restore and enhance habitat for species
listed as threatened or endangered or species that are candidates for
the threatened or endangered species list. NRCS provides technical
assistance to help owners comply with the terms of their HFRP
restoration plans.
Landowners may receive safe harbor assurance for land enrolled in
the HFRP who agree, for a specified period, to protect, restore, or
enhance their land for threatened or endangered species habitat. In
exchange, landowners avoid future regulatory restrictions on the use of
that land under the Endangered Species Act.

10. Utilization (Participation) Data
Contract Fiscal Year 2010
------------------------------------------------------------------------
10 Year
Restoration 30 Year Permanent
Agreements Easements Easements
------------------------------------------------------------------------
Number 1 1 2 9
Acres 1 2,747 1,416 1,472
Dollars Obligated $599,988 $882,139 $4,994,249
------------------------------------------------------------------------
1 Numbers currently reported in NEST are undergoing an intense quality
assurance review.

11. Duplication or Overlap with Other Programs
To the extent that these programs each allow for 10 year
restoration agreements to improve wildlife habitat, there is
duplication and overlap with the WHIP program and the 10 year
restoration agreement portion of HFRP.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Conservation Security Program (Security).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
The 2002 Farm Bill authorized the Security. Except for existing
program contracts, it was replaced by the Conservation Stewardship
Program (Stewardship) by the 2008 Farm Bill.
Security is a voluntary program that provides financial and
technical assistance through 5 to 10 year contracts to promote the
conservation and improvement of soil, water, air, energy, plant and
animal life, and other conservation purposes on Tribal and private
working lands.
The Chief of NRCS was authorized to implement Security in all 50
states, the Caribbean Area, and the Pacific Basin area. The program
provides equitable access to benefits to all producers, regardless of
size of operation, crops produced, or geographic location.
4. Purpose/Goals
Security's goal is to identify and reward those farmers and
ranchers who are meeting the highest standards of conservation and
environmental management on their operations and to support ongoing
stewardship of private agricultural lands by providing payments for
maintaining and enhancing natural resources.
5. Success in Meeting Programmatic Purpose/Goals
In Fiscal Year 2011, a total of $180,292,191 was expended to cover
the obligations of 15,031 prior year contracts (2004-2008).

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 --
2003 $4
2004 $41
2005 $202
2006 $259
2007 $297
2008 $379
2009 $283
2010 $234
2011 $204
------------------------------------------------------------------------

Security's FA funds are obligated separately for each year of the
contract with the producer. They are expended during the year of
obligation. TA funds obligated for a given year are used for workload
generated by prior year contract implementation. The vast majority of
TA funding also are expended in the year of obligation. FA funding
represents the majority of program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Conservation Security Program Conservation Planning and 2,033 2,228 1,264 941 990
Technical Consultation
Conservation 2,348 2,920 1,657 1,233 1,297
Implementation
Financial Assistance-- 17,204 11,714 6,647 4,947 5,205
Program Administration
Indirect Costs 4,321 27,728 20,315 15,120 13,446
-------------------------------------------------------------------------------
Sub-total Technical 25,906 44,590 29,883 22,241 20,938
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 268,451 272,461 246,121 199,928 182,468
Share & Monetary
Incentive
===============================================================================
Total Costs 294,357 317,051 276,004 222,169 203,406
FTEs 200 367 220 154 132Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
Applicants must have submitted an application applied prior
to Oct. 1, 2008.

Eligible applicants include an individual producer,
partnership, association, corporation, estate, trust, other
business or other legal entities controlling eligible lands.
The term producer means an owner, operator, landlord, tenant or
sharecropper that shares in the risk of producing any crop or
livestock; and must be entitled to share in the crop or
livestock available for marketing from an agricultural
operation.

An applicant must be in compliance with highly erodible land
and wetland conservation provisions, and average adjusted gross
income requirements.

Working lands include cropland, grassland, prairie land,
improved pasture, and range land, as well as forested land that
is an incidental part of an agriculture operation.
10. Utilization (Participation) Data
Security Dollars Obligated on Active/Completed Contracts data
include:

------------------------------------------------------------------------
Financial Assistance Technical Assistance
Obligated Obligated
------------------------------------------------------------------------
Total $199,927,828.26 $16,985,614.49
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
Because Security is available only for contracts that were entered
into prior to the enactment date of the 2008 Farm Bill, a producer who
receives Security payments cannot also receive payments under the
Stewardship.
12. Waste, Fraud and Abuse
In July 2009, OIG issued an audit report on the Conservation
Security Program. They noted potential improper payments made to
participants that were ineligible and participants that received
payments for more than one Security contract at a time. The audit
involved review of 20,653 contracts. Of those contracts, 37 percent
(7,666) contained errors, mostly minor or technical in nature. Three
contracts (less than one percent of all the contracts) were found to be
fraudulent. Corrective actions were taken on all errors and were
completed by December 31, 2009.
To recover the improper payments that were made, NRCS sent demand
letters and bills to participants. For certain participants, liquidated
damages have also been assessed. NRCS has recovered $4.618 million to
date as result of these corrective actions. To remediate the situation,
updated procedures were issued to require field verifications prior to
funds being obligated. NRCS continues to work to recover all improper
payments made.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Conservation Stewardship Program (Stewardship).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
The 2008 Farm Bill authorized Stewardship with an enrollment of
12,769,000 acres for each fiscal year (FY) for the period beginning
October 1, 2008, and ending on September 30, 2017.
The Chief of NRCS makes Stewardship available to all producers,
regardless of operation size or crops produced, in all 50 states, the
District of Columbia, and the Caribbean and Pacific Island areas.
Since it was first funded in 2008, Stewardship has enrolled 20,567
contracts on over 25.1 million acres.
4. Purpose/Goals
The purpose of Stewardship, as a voluntary program, is to encourage
agricultural and forestry producers to address resource concerns by:
(1) undertaking additional conservation activities; and (2) improving
and maintaining existing conservation systems. Stewardship provides
financial and technical assistance to help land stewards conserve and
enhance soil, water, air, and related natural resources on their land.
Stewardship participants receive payments for conservation
performance--the higher the performance, the higher the payment. It
provides two possible types of payments. An annual payment is available
for installing new conservation activities and maintaining existing
practices. A supplemental payment is available to participants who also
adopt a resource conserving crop rotation. Through 5 year contracts,
NRCS makes payments as soon as practical after October 1 of each fiscal
year for contract activities installed and maintained in the previous
year.
5. Success in Meeting Programmatic Purpose/Goals
In FY 2010:

NRCS enrolled 20,567 contracts on 25,164,327 acres.

The value of the contracts is $320,399,890.

The average contract size is 1,224 acres.

On average, NRCS agreed to reimburse participants $15,578
for each contract.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 --
2003 --
2004 --
2005 --
2006 --
2007 --
2008 --
2009 $10
2010 $469
2011 $601
------------------------------------------------------------------------

Stewardship's FA funds are obligated separately for each year of
the 5 year contract for installing new or maintaining existing
conservation activities. FA funds are expended one year after
obligation, after NRCS personnel perform a field visit to site-verify
that the conservation activities are installed and maintained to
specifications. TA funds obligated in a given year are used for
workload generated by the enrollment of new contracts and workload
generated by prior year contract implementation. The vast majority of
TA funding tends to be expended in the year of obligation. FA funding
represents the majority of program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Conservation Stewardship Program Conservation Planning and -- -- 398 2,939 3,356
Technical Consultation
Conservation -- -- 520 3,849 4,397
Implementation
Financial Assistance-- -- -- 2,086 15,440 17,645
Program Administration
Indirect Costs -- -- 6,374 47,187 45,581
-------------------------------------------------------------------------------
Sub-total Technical -- -- 9,378 69,415 70,979
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost -- -- -- 320,398 529,855
Share & Monetary
Incentive
===============================================================================
Total Costs -- -- 9,378 389,813 600,834
FTEs -- -- 75 496 540Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
Eligible land includes cropland, grassland, prairie land,
improved pastureland, rangeland, nonindustrial private
forestland, and agricultural land under the jurisdiction of an
Indian tribe.

Eligible applicants include individuals, legal entities,
joint operations, or Indian tribes. Applicants must be the
operator of record in the USDA farm records management system
for the eligible land being offered for enrollment and have
effective control of the land for the term of the proposed
contract.

Applicants must be in compliance with the highly erodible
land and wetland conservation provisions requirements and
adjusted gross income provisions prior to receiving program
payments.

Stewardship contract provisions provide:

A person or legal entity may have more than one Stewardship
contract but, for all Stewardship contracts combined, may not
receive more than $40,000 in any year or more than $200,000
during any 5 year period.

The contract limit is the same as the payment limit except
in the case of joint operations, for which the contract limit
is $80,000 per fiscal year and $400,000 over the term of the
contract period.
10. Utilization (Participation) Data
2010 Stewardship Application/Contract Status data includes:

------------------------------------------------------------------------
Number of
Active and Financial Total Technical
Completed Assistance Treated Assistance
Contracts Obligated Acres Obligated
------------------------------------------------------------------------
Total 20,567 $320,397,871 25,164,327 $59,940,382
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
Some of the practices offered through Stewardship to meet the
minimum threshold at the end of the contract are also offered through
other programs such as EQIP. Utilizing Stewardship for this purpose
increases the additionality intent and uniqueness of the program.
12. Waste, Fraud and Abuse
In an effort to implement lessons learned from the 2009
Conservation Security Program OIG audit, NRCS undertook an independent
inquiry of FY 2010 Conservation Stewardship Program Contracts. The
agency reviewed ten random contracts from 15 selected states after all
states completed a ``Checklist to Address Conservation Stewardship
Program O&E Review Findings.'' The results of the review showed
inconsistencies in the calculation of additional activity points. To
address these matters NRCS has undertaken an extensive follow-up regime
with all states providing additional guidance, training, written
directives and net conferences to alleviate the problem. Finally, each
new contract entered into must now have a NRCS conservationist field
review the operation's on-the-ground compliance prior to enrollment.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Wetlands Reserve Program (WRP).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
Congress first authorized WRP in the 1990 Farm Bill and has
reauthorized it with little change in the three farm bills since. WRP
is a voluntary program that provides technical and financial assistance
to enable eligible landowners to address wetland, wildlife habitat,
soil, water and related natural resource concerns on private lands in
an environmentally beneficial and cost effective manner. The program
achieves solutions to local community issues related to farms, ranches,
rural lands and other areas by establishing easements and long-term
agreements on eligible farmlands and establishing 30 year contracts on
Tribal lands. Over the last 20 years, WRP's voluntary, private lands
approach has made it the Federal Government's private lands wetland
restoration and conservation program. Year after year, WRP has
delivered benefits to both the individuals participating and the
American public benefitting from the services the WRP wetlands provide.
4. Purpose/Goals
The primary purpose of WRP is the restoration, protection and
enhancement of wetlands and associated habitats for the benefit of
wetland-dependent wildlife, with an emphasis on migratory birds and
special status species. The WRP goal is to achieve the greatest wetland
functions and values, along with optimum wildlife habitat, on every
acre enrolled in the program. WRP is most suited for frequently flooded
agricultural lands, where restoration will maximize habitat for
migratory birds and other wildlife, and improve water quality. WRP
focuses on:

Enrolling marginal lands that have a history of crop
failures or low production yields;

Restoring and protecting wetland values on degraded
wetlands;

Maximizing wildlife benefits;

Achieving cost-effective restoration with a priority on
benefits to migratory birds;

Protecting and improving water quality; and

Reducing the impact of flood events.
5. Success in Meeting Programmatic Purpose/Goals
WRP has become the preeminent Federal private lands program for
protecting and restoring wetlands. Over the last 20 years, WRP has
helped more than 11,000 private landowners voluntarily restore, protect
and enhance wetlands and wildlife habitat on over 2.3 million acres
nationwide. Currently, about 30 percent of those acres are in the
restoration process and will require continued conservation assistance
in order to reach full restoration. WRP has proven to be a program
under which NRCS, landowners and many various partners can work
together to achieve truly cooperative conservation resulting in long-
term benefits on a landscape scale that will ensure our wetland
resources are available for future generations.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 $275
2003 $306
2004 $280
2005 $273
2006 $273
2007 $283
2008 $184
2009 $571
2010 $675
2011 $611
------------------------------------------------------------------------

WRP TA funds support staff time needed to conduct eligibility
determinations, finalize easement transactions, complete restoration
designs, develop management and maintenance plans, and conduct
monitoring of wetlands under easement. WRP FA funds support the
easement costs paid to the landowner, restoration costs paid for
implementation of restoration design, and implementation costs for
maintenance and repairs on existing easements. FA for easement
acquisition is obligated when the acres to be placed under easement are
enrolled but is not expended until the easement is perfected, a process
that may take years. FA for restoration is obligated when contracts are
developed based on final restoration designs but is not expended until
the installation of practices used to restore the wetlands is complete
and verified by NRCS personnel, which also may occur over several
years. TA funds obligated in a given year are used for workload
generated by the enrollment of new acres and workload generated by
acquisition, restoration, and monitoring of prior year enrollments
which requires the majority of the TA funds obligated in a given year.
FA funding represents the majority of program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Wetlands Reserve Program Conservation Planning and 4,346 2,363 2,191 2,558 3,807
Technical Consultation
Conservation 21,771 12,719 11,791 13,764 20,482
Implementation
Financial Assistance-- 17,382 11,186 10,370 12,106 18,015
Program Administration
Indirect Costs 16,599 6,923 6,418 7,492 11,148
-------------------------------------------------------------------------------
Sub-total Technical 60,098 33,191 30,770 35,920 53,452
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 187,757 149,758 404,941 594,219 672,647
Share & Monetary
Incentive
===============================================================================
Total Costs 247,855 182,949 435,711 630,139 726,099
FTEs 190 225 191 217 343Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
Owners of private and tribal lands are eligible to participate in the WRP. WRP offers a perpetual easement, 30 year easement, or 10 year restoration
cost-share agreement available to all private and tribal landowners and a 30 year contract option for tribal landowners only. Land is eligible if it
contains wetlands that have been degraded primarily as a result of agricultural use and have a high likelihood of successful restoration that will
maximize wildlife benefits and wetland functions and values taking cost into consideration. Associated habitats and lands functionally related to the
eligible wetlands may also be enrolled if they will contribute significantly to the wetland functions and values or practical administration of the
enrolled area.

10. Utilization (Participation) Data
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
During the 2008 Farm Bill, WRP has enrolled an average of approximately 215,000 acres on 1,200 projects each year. Since its inception in 1992, WRP has enrolled over 2.3 million acres on
over 11,000 projects. The majority of enrollments, over 77 percent are perpetual easements, 16 percent are 30 year easements and 30 year contracts with tribes, and the remaining six percent
are restoration cost-share agreements. 2010 WRP Number of Agreements and Dollars Obligated data includes:

--------------------------------------------------------------------------------------------------------------------------------------------------------
30 Year Contracts 30 Year Easements Permanent Easements Restoration Cost Total Agreements
-------------------------------------------- Share Agreement ---------------------- Financial Technical
-------------------------------------------- Assistance Assistance
Acres Number Acres Number Acres Number Acres Number Acres Number Obligated Obligated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 1,761 4 60,154 425 206,692 954 4,155 31 272,762 1,414 $592,562,106 $28,910,632
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers currently reported in NEST are undergoing an intense quality assurance review. Numbers are subject to change during this process.

11. Duplication or Overlap with Other Programs
There is some potential overlap of the restoration cost-share
agreement enrollment option of WRP with WHIP. Because the restoration
cost-share agreement enrollment option does not have an associated
easement, it provides technical and financial assistance in the form of
a cost-share agreement for the implementation of wetland restoration.
The wetland restoration practices implemented through the WRP
restoration cost-share agreements would potentially be eligible for
cost-share under WHIP. The primary benefit of the WRP restoration cost-
share agreement that sets it apart from WHIP is the length of the
agreement. The WRP agreements require the restoration to be maintained
for a longer period of time--a minimum of 10 years after the date the
last practice is installed and, in contrast, WHIP agreements can be for
one year to a maximum of 10 years. Thus, the WRP restoration cost-share
agreements provide for a longer term protection of the public
investment and realization of the public benefits resulting from the
restored wetlands.
CRP land eligibility criteria is more narrow than WRP. The nature
of the agreements with landowners is also vastly different. Although
there may be some overlap of eligible land with the CRP, WRP does not
offer enrollment options similar to CRP.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Farm and Ranch Lands Protection Program (FRPP).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
FRPP was last reauthorized in 2008 Farm Bill. This legislation
expanded the purpose of the Farm and Ranch Lands Protection Program
from ``protecting topsoil'' to ``protecting agricultural use and
related conservation values of the land.'' The program now allows for
long term agreements with cooperating entities. Such agreements may be
5 years in duration for certified entities and 3 years for eligible
entities that are not certified. The 2008 Farm Bill defines a
``certified entity'' as an eligible entity with a proven record of
acquiring and monitoring conservation easements. Entities may submit
proposals to protect farm and ranch lands throughout the term of the
agreement.
4. Purpose/Goals
FRPP is a voluntary program that helps farmers and ranchers keep
their land in agriculture. The program provides matching funds to
state, Tribal, or local governments and non-governmental organizations
with existing farm and ranch land protection programs to purchase
conservation easements.
5. Success in Meeting Programmatic Purpose/Goals
The following is an example of the benefits of FRPP:
The 180 acre Carpenter Farm and the 142 acre Sparks Farm in Salem
County were protected from development with funding from the State
Agriculture Development Committee (SADC), Garden State Preservation
Trust, and FRPP. The Carpenter Farm has been in agriculture for more
than 300 years. Wheat and soybeans are the primary crops cultivated on
the Sparks Farm. In addition to protecting rich, fertile farmland and
investing in the agricultural economy of the region, preserving these
lands also provides a significant environmental benefit. The resulting
land and waterscape is one of the top areas in the state for waterfowl
diversity and has been designated an Important Bird Area by New Jersey
Audubon.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 $50
2003 $100
2004 $112
2005 $112
2006 $74
2007 $74
2008 $97
2009 $121
2010 $150
2011 $175
------------------------------------------------------------------------

FRPP FA funds are obligated the year parcels are enrolled in the
program but not expended until easements are closed, which may take
several years. TA funds obligated in a given year are used for workload
generated by the enrollment of new parcels and workload generated by
parcels enrolled in prior years. The vast majority of TA funding tends
to be expended in the year of obligation. FA funding represents the
majority of program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Farm and Ranch Lands Protection
Program Conservation Planning and N/A 325 336 336 460
Technical Consultation
Conservation N/A 17 18 18 25
Implementation
Financial Assistance-- 958 3,704 3,828 3,830 5,248
Program Administration
Indirect Costs 2,185 1,615 1,669 1,670 2,289
-------------------------------------------------------------------------------
Sub-total Technical 3,143 5,661 5,851 5,854 8,022
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 69,940 90,520 112,915 144,042 166,978
Share & Monetary
Incentive
===============================================================================
Total Costs 73,083 96,181 118,766 149,896 175,000
FTEs 24 29 34 29 44Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
Individual landowners must apply to and be accepted by the eligible
state, tribe, or local government or nongovernmental programs to
participate in FRPP. As a Title XII program, these individual
landowners must meet farm bill payment eligibility requirements for
adjusted gross income, wetland conservation, and highly erodible land
conservation. The land to be enrolled in FRPP must meet one of three
criteria to qualify for consideration: (1) have at least 50 percent
prime, unique, or important farmland soil; (2) have historic or
archeological resources; or (3) support the policies of a state or
local farm and ranch lands protection program.
To qualify, farmland must: be part of a pending offer from a state,
tribe, or local farmland protection program; be privately owned; have a
conservation plan for highly erodible land; be large enough to sustain
agricultural production; be accessible to markets for what the land
produces; have adequate infrastructure and agricultural support
services; and have surrounding parcels of land that can support long-
term agricultural production. Depending on funding availability,
proposals must be submitted by the eligible entities to the appropriate
NRCS State Office during the application window.
10. Utilization (Participation) Data
2010 FRPP Number of Parcels and Dollars Obligated data includes:

------------------------------------------------------------------------
Financial
Assistance Technical
Number of Acres 1 Obligated for Assistance
Parcels 1 Easement Obligated
Acquisition
------------------------------------------------------------------------
Total 403 170,412 $144,041,755 $4,425,878
------------------------------------------------------------------------
1 Numbers currently reported in NEST are undergoing an intense quality
assurance review. Numbers are subject to change during this process.

11. Duplication or Overlap with Other Programs
GRP also offers long-term and permanent easements to protect
grazing lands from conversion to other uses. Lands eligible for GRP are
generally eligible for FRPP; however, FRPP is more broadly applicable
to include cropland or other lands that may not be eligible for GRP.
12. Waste, Fraud and Abuse
NRCS has uncovered few instances of entity misuse of landowner
contributions in acquiring easements through FRPP. However, a 2005 OIG
audit found that the entity coerced landowners into returning some of
the proceeds of the sale of the easement to the entity, who had claimed
these as part of their non Federal match. As a result, the entity did
not pay the required 25 percent of the purchase price for the FRPP
easement. In response, NRCS terminated the agreement with the eligible
entity and arranged for parcels to be included in a subsequent
agreement with another eligible entity. Internal controls have been
instituted that require landowners to sign a ``Confirmation of Matching
Funds'' to ensure that cooperating entities do not use landowners'
proceeds from the easement acquisition to cover the entities'
contribution. In addition NRCS State Office staff interview landowners
to be certain that they are not being forced to provide the entity cash
match.
In Wisconsin, the eligible entity misrepresented the source of its
funds by certifying that it had not obtained the money from landowners
when it had. This resulted in NRCS overpaying on these easements. The
Office of General Counsel is currently reviewing legal options. As a
result of this case, changes were made to FRPP policy requiring NRCS
State office staff to visit every FRPP parcel and interview every
landowner, inform them of FRPP regulations, and confirm the estimated
easement value, Federal contribution, entity contribution, landowner
donation, and recommended contribution to stewardship funds before a
cooperative agreement is signed.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Resource Conservation and Development (RC&D).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
RC&D was initiated under the Soil Conservation and Domestic
Allotment Act, (16 U.S.C. 590a-590f), the Bankhead-Jones Farm Tenant
Act (16 U.S.C. 1010 and 1011), and the Food and Agriculture Act of
1962, and is authorized under subtitle H, title XV of the Agriculture
and Food Act of 1981, (16 U.S.C. 3451-3461), as amended. Through the
program, RC&D areas establish or improve coordination systems in rural
communities, and build rural community leadership skills to more
effectively use Federal, state, and local programs for the communities'
benefit. The 2002 Farm Bill permanently authorized the program. The
2008 Act further strengthened the relationship between USDA and RC&D
councils. The program began with ten pilot areas and grew to 375 areas
designated by the Secretary of Agriculture.
A RC&D area is a locally defined multi-county area, sponsored and
directed by a RC&D Council that carries out the program encouraging
natural resource conservation and utilization, accelerated economic
development, and/or improvement of social conditions where needed to
foster a sound local economy. The RC&D Council consists of sponsors
from the public and private sector that represent a diverse cross-
section of community interests. Sponsors include county and city
governments, soil and water conservation districts, sub-state
districts, Tribal governments, and other interested private
organizations in the area. The RC&D program is based on grassroots
involvement and decision-making. From public meetings to identify
community concerns, needs, and problems, the RC&D Council develops an
area plan that details the goals, objectives, and action items needed
to address the local communities' priorities and concerns. The RC&D
Council then collects data about identified problems, develops
alternatives, and recommends solutions. Implementation of an action
item may include one step or a full range of steps, such as problem
identification, development of alternatives, plan development, and
funding.
4. Purpose/Goals
The purpose of the RC&D program is to--

(i) Develop and carry out area plans and projects in designated
areas in order to conserve, develop, and improve the use of
land.

(ii) Develop natural resources.

(iii) Improve and enhance the social, economic, and environmental
conditions in primarily rural areas of the United States.

(iv) Encourage and improve the capability of state and local units
of government, Indian Tribes, nonprofit organizations, and
councils.

The mission of the RC&D Program was to make the financial,
administrative, educational, and technical resources of USDA and other
public and private partners available to increase the ability of
communities to meet their regionally identified resource conservation
and economic development needs.
5. Success in Meeting Programmatic Purpose/Goals
The program has been successful in meeting its purpose and goals.
Each year RC&D Councils and their partners, with technical assistance
from NRCS, help to create, retain, and expand businesses and the
formation of cooperatives. RC&D Council projects create and retain
jobs. Each RC&D Council brings in external grant funds for direct
project implementation into their area.
RC&D Councils assist farm or ranch operations with agri-tourism
activities and direct marketing from the field to the consumer via
Community Supported Agriculture groups (CSAs), restaurants, commercial
stores, or public access farmers markets.
Efforts to improve natural resources within RC&D areas result in
the improvement of wildlife habitat, lakes and other water bodies, and
streams. RC&D Councils assist animal agricultural operations with water
quality projects; assist the construction or rehabilitation of flood
control structures; and preserve or protect agricultural land. Over the
last 5-8 years, RC&D Councils have begun implementing renewable energy
projects.
RC&D Councils hold workshops, tours and seminars nationwide on
agriculture, aquaculture, forestry and wildlife; and training sessions
on leadership development, grant writing, business development,
nonprofit management and environmental education. These educational
projects have helped people develop new skills.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Appropriation ($ in millions)
------------------------------------------------------------------------
2002 $48
2003 $51
2004 $52
2005 $51
2006 $51
2007 $51
2008 $51
2009 $51
2010 $51
2011 1 --
------------------------------------------------------------------------
1 The 2011 Appropriations Act provided no funding for this program.
Based on authority provided through multiple short-term continuing
resolutions, a total of $27 million was available for this program
through April 15, 2011.

RC&D primarily funded the support of RC&D Coordinators. Given the
nature of this expense, outlays generally occurred in the year of
appropriation and obligation. Prior to FY 2009, RC&D funds were no-year
funds.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Resource Conservation and
Development Conservation Planning and 27,693 21,364 21,364 21,364 21,364
Technical Consultation
Conservation 21,495 19,355 19,355 19,355 19,355
Implementation
Financial Assistance-- N/A N/A N/A N/A N/A
Program Administration
Financial Assistance--Cost N/A N/A N/A N/A N/A
Share & Monetary
Incentive
Indirect Costs 1,900 10,011 10,011 10,011 10,011
-------------------------------------------------------------------------------
Total Costs 51,088 50,730 50,730 50,730 50,730
FTEs 453 440 412 403 423Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from
the Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
Eligible entities for the RC&D program are nonprofit entities that
are established by volunteers or representatives of states, local units
of government, Indian tribes, or local nonprofit organizations
specifically to participate in the RC&D program. They apply to the
Secretary of Agriculture to be designated as a USDA RC&D area. The size
and configuration of an area must be based on an assessment of rural
development needs, institutional arrangements, and the natural
resources of the region. Boundaries of an RC&D area are established on
a multi-jurisdictional basis to make the most efficient use of area
plans relating to land conservation, land management, community
development, and environmental enhancement. Commonality of existing
needs and opportunities are important aspects relating to the
geographic boundaries of the area. The Secretary selects designated
areas for assistance on the basis of the elements of the RC&D Council's
area plan.
10. Utilization (Participation) Data
There are 375 RC&D areas serving 2,696 counties in every state, the
Caribbean, and the Pacific Basin. Designated areas continue to serve
over 85 percent of U.S. counties and more than 77 percent of the U.S.
population. There are 39 applicant areas covering 236 additional
counties that have applied for the designation by USDA.
11. Duplication or Overlap with Other Programs
The Federal support for the program was not funded under the FY
2011 Full-Year Continuing Appropriations and agency technical support
for the program is being closed out. RC&D councils may continue to
compete to participate in other programs.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Environmental Quality Incentives Program (EQIP).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
Agricultural Water Enhancement Program.
Conservation Innovation Grants (CIG).
Organics.
Air Quality Initiative.
3. Brief History
EQIP was established in the 1996 Farm Bill and was reauthorized in
the 2002 and 2008 Farm Bills. The Chief of NRCS may implement EQIP in
any of the 50 states, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Virgin Islands of the United States, American
Samoa, and the Commonwealth of the Northern Mariana Islands.
4. Purpose/Goals
NRCS is charged with carrying out EQIP in a manner that optimizes
environmental benefits and provides:

Flexible technical and financial assistance to farmers and
ranchers that face the most serious threats to soil, water,
air, and related natural resources;

Assistance to farmers and ranchers in complying with
Federal, state, and local environmental regulatory
requirements;

Assistance to farmers and ranchers in making beneficial,
cost-effective changes to cropping systems, grazing management,
manure, nutrient, pest, or irrigation management, land uses, or
other measures needed to conserve and improve soil, water, air,
and related natural resources; and

For the consolidation and simplification of conservation
planning and implementation to reduce the administration burden
on producers.
5. Success in Meeting Programmatic Purpose/Goals
In FY 2010:

NRCS enrolled almost 36,500 agreements on over 13,000,000
acres.

The value of the contracts was over $839 million.

The average agreement size is 357 acres.

On average, NRCS agreed to reimburse participants
approximately $23,000 for each agreement.
6. Annual Budget Authority (FY 2002-FY 2011)
EQIP supports CCPI and CIG. These are not appropriated separately
or tracked separately in the NRCS financial system.

------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 $200
2003 $695
2004 $975
2005 $1,000
2006 $995
2007 $996
2008 $1,200
2009 $1,067
2010 $1,180
2011 $1,238
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Outlays ($ in millions)
------------------------------------------------------------------------
2002 $185
2003 $626
2004 $859
2005 1 ^$531
2006 $771
2007 $815
2008 $953
2009 $943
2010 $1,059
2011 $1,171
------------------------------------------------------------------------
1 Prior to FY 2005, NRCS advanced funding for the EQIP program to FSA.
In FY 2005 all obligations from FY 2005 and prior and the remaining
funding to pay those obligations came back to NRCS. The negative
outlays meant there was additional cash available to pay for the EQIP
obligations that came back to NRCS.

EQIP FA funds are obligated the year of contract enrollment for the
entire multi-year span of the contract. As the years pass, FA for
contracted practices is not expended until the practices are installed
and inspected for quality control by NRCS personnel. For this reason,
FA funds tend to be expended over multiple years after obligation. TA
funds obligated in a given year are used for workload generated by the
enrollment of new contracts and workload generated by prior year
contract implementation. The vast majority of TA funding tends to be
expended in the year of obligation. FA funding represents the majority
of program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Enironmental Quality Incentives
Program Conservation Planning and 27,928 17,315 19,132 20,429 22,277
Technical Consultation
Conservation 119,171 89,704 99,117 105,837 115,411
Implementation
Financial Assistance-- 80,152 60,221 66,540 71,051 77,479
Program Administration
Indirect Costs 15,460 101,729 112,404 120,025 130,883
-------------------------------------------------------------------------------
Sub-total Technical 242,711 268,969 297,193 317,342 346,050
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 750,140 924,221 757,389 856,697 833,950
Share & Monetary
Incentive
===============================================================================
Total Costs 992,851 1,193,190 1,054,582 1,174,039 1,180,000
FTEs 2,171 2,313 2,395 2,407 2,872Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
To participate in EQIP, both the land and the applicant must be
eligible. Eligible land includes cropland, rangeland, pastureland,
private nonindustrial forestland, and other farm or ranch lands. The
land must have an identified natural resource concern that poses a
serious threat to soil, water, air, or related resources by reason of
land use practices, soil type, terrain, climatic conditions,
topography, flooding, saline characteristics, or other natural resource
factors or natural hazard. Publicly owned land is eligible when the
land is under private control for the contract period, and is included
in the participant's operating unit, and must have written
authorization from the government agency to apply conservation
practices. For irrigation-related practices, the land must have a
history of actively irrigating the land unit for 2 out of the last 5
years.
Applicants must be an agricultural producer, have control of the
land for the life of the contract, be in compliance with farm bill
provisions (highly erodible land, wetland conservation, protection of
tenants and sharecroppers), be within appropriate program payment
limitations and adjusted gross income requirements, and develop an EQIP
plan of operations.
Organics--The Organic Initiative is a nationwide special initiative
within EQIP to provide assistance to organic producers as well as
producers in the process of transitioning to organic production.
Air Quality Initiative--The Air Quality Initiative is a nationwide
special initiative within EQIP to provide assistance to farmers and
ranchers to reduce air pollution generated from agricultural operations
in areas designated by the EPA as non-attainment areas for ozone and
particulate matter.
10. Utilization (Participation) Data
EQIP Application/Contract Status data includes:

------------------------------------------------------------------------
Number of Active Financial
FY or Completed Assistance Total Treated
Contracts Obligated Acres
------------------------------------------------------------------------
2005 49,406 $792,091,721 18,080,499
2006 41,190 $784,849,667 21,115,275
2007 41,700 $781,954,270 17,104,234
2008 48,116 $943,407,338 16,944,359
2009 31,960 $731,099,112 12,003,583
2010 36,499 $838,985,212 13,034,363
-----------------------------------------------------
Total........... 248,871 $4,872,387,320 98,282,313
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
EQIP is one of the program structures through which CBWP is
delivered. CBWP has more focused priorities by concentrating on water
quality and quantity and only in the Chesapeake Bay watershed.
Although similar to EQIP, WHIP has expanded priorities to support
fish and wildlife.
Although similar to EQIP in implementation, Agricultural Management
Assistance (AMA) is limited to 16 statutorily-designated states that
have low participation in Federal Crop Insurance Programs. There are
some practices that can be installed through AMA but not EQIP
Although similar to EQIP, Agricultural Water Enhancement Program
(AWEP) focuses on ground and surface water conservation and water
quality, and is a component of EQIP.
Both EQIP and CRP address natural resource concerns, the land uses
on which the practices are applied generally are distinct. There could
be minimal overlap where CRP enrolls windbreaks, shelterbelts and
shallow water impoundments for wildlife.
12. Waste, Fraud and Abuse
An audit by the OIG revealed that participant contracts for the
Migratory Bird Habitat Initiative in one Louisiana Parrish received an
increased payment rate for the socially disadvantaged designation
although those participants were not actually in a socially
disadvantaged group. It was identified by OIG that staff inadvertently
selected an incorrect payment schedule. It was recommended to adjust
the agency's business tools so that the socially disadvantaged
designation indicated by the participant would automatically provide
the correct payment rate without staff having to manually select
various payment schedules for each application. For the improper
payments, the agency provided each participant with the option to
either return the overpayment amount or to receive a reduction in
future scheduled payments.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Conservation Innovation Grants (CIG).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
First authorized in the 2002 Farm Bill and reauthorized by each
subsequent farm bill, CIG is a voluntary program intended to stimulate
the development and adoption of innovative conservation approaches and
technologies while leveraging Federal investment in environmental
enhancement and protection, in conjunction with agricultural
production. Under CIG, EQIP funds are used to award competitive grants
to non-Federal governmental or non-governmental organizations, Tribes,
or individuals.
CIG enables NRCS to work with other public and private entities to
accelerate technology transfer and adoption of promising technologies
and approaches to address some of the nation's most pressing natural
resource concerns. CIG will benefit agricultural producers by providing
more options for environmental enhancement and compliance with Federal,
state, and local regulations.
4. Purpose/Goals
CIG provides grants on a competitive basis to stimulate the
development and adoption of innovative conservation approaches and
technologies while leveraging Federal investment in environmental
enhancement and protection, in conjunction with agricultural
production.
NRCS expects to incorporate innovative technologies and approaches
which result from CIG into NRCS technical manuals, guides, activities,
and references, and to transfer these innovations to others in the
public sector. CIG projects target innovative on-the-ground
conservation, including pilot projects and field demonstrations.
5. Success in Meeting Programmatic Purpose/Goals
The following provides examples of CIG project results:

(a) In 2005, the Washington State University was awarded a CIG
grant to implement the project titled ``Development and
Integration of a National Feed Management Education Program and
Assessment Tools into a Comprehensive Nutrient Management Plan
(CNMP)'' in Washington. The intend of the project was to
develop a two-tier tool for assessing the impacts of feed
management practices on whole farm nutrient balance for animal
nutritionists and NRCS staff and TSP advisors; develop the
content of a Feed Management chapter for the NRCS Agricultural
Waste Management Field Handbook (AWMFH), and develop and
implement an education program targeting integration of feed
management into a CNMP.

At the end of the project in 2008, the Washington State University
(WSU) developed educational materials that are applicable at
the national level and provided training for NRCS staff,
agricultural professionals, and technical service providers
(TSP's) in feed management concepts and practices that minimize
import of nutrients to the farm. WSU provided training in the
use of computer models and software for strategic ration
balancing, whole farm nutrient balance, and nutrient excretion
estimates based upon feed and animal performance inputs, and
developed a chapter for the NRCS Agricultural Waste Management
Field Handbook (AWMFH) on Feed Management. Education materials
were used to assist with the understanding of the conservation
practice standard (CPS) code 592 Feed Management, feed
management plan development and implementation tools, and a
decision aid tool were developed (Feed Nutrient Management
Economics software--FNMP$).

Workshops have been conducted in the States of Washington,
California, Texas, Maryland, Nebraska, Pennsylvania, and
Wisconsin. Collaborating states with these trainings included:
Idaho, Oregon, Virginia, Indiana, Iowa, and Minnesota. In
addition, the national CNMP training program led by Iowa State
has incorporated our Feed Management project material into
their curriculum. Approximately 70 individuals have become
certified through the American Registry of Professional Animal
Scientists organization to be feed management planners.

While the funding for this project has ended, the interest and
implementation activities are continuing. The project team is
available to work with individual states with adoption of CPS
592 Feed Management. In addition, the American Registry of
Professional Animal Scientists continues to provide the exam
process for certifying that a nutritionist is qualified to
develop a nutrient management plan.

The Feed Management chapter for the AWMFH was completed by
September 2008. In addition, NRCS is converting a decision aid
tool called Feed Management Nutrient Planning Economics (FNMP$)
from Excel to an Access data base format. Efforts to provide
training for nutritionists and TSPs will continue.

(b) The World Wildlife Fund, Inc. (WWF), received a CIG grant in
2005 for a project titled ``Market-Based Program for
Environmental Services on South Florida Ranch Lands.'' The main
goal of the project was to engage ranchers, public agencies,
and public interest groups to design, establish, and install a
market-based incentive program for phosphorous reduction in the
Lake Okeechobee (Northern Everglades) region; monitored and
evaluate the environmental benefits (Phosphorous load
reduction) achieved by the water management alternatives
installed by the livestock producer participants; and design a
scaled-up version of the pilot incentive program for use on a
broader scale and communicated results of the field tests
through field days, journal articles, workshops, and
conferences.

When the project was completed in 2006, eight (8) ranching
operations located within the Northern Everglades--Lake
Okeechobee region in south Florida were contracted by WWF to
developed Water Management Alternatives (WMA's) on formerly
drained wetlands that had been converted to pasturelands in an
effort to retain surface waters and nutrients. Each rancher had
different circumstances for which to implement practices and to
demonstrate surface water retention/water quality benefits.
Sizes of the rancher WMA's ranged from very small in-pasture
systems of 49 acres to two large systems involving 3,748 and
2,500 acres respectively. The average size of the eight WMA
project areas was 1,092 acres.

This CIG project has successfully established a foundation for a
Payment for Environmental Services (PES) program that is
locally accepted among livestock producers, and local, state
and Federal agencies. The eight pilot projects WMA's
demonstrated an average of 3 metric tons of phosphorous
retained on-site from 0.5-2.24 acre-feet of water retained
within their CIG project areas. As a result of this CIG
project, the first effective PES program was generated on a
large regional scale to benefit a globally recognized imperiled
ecosystem, the Everglades, and will do so by maintaining
agriculture as part of the solution. The CIG PES Program
offered a previously unrecognized environmental benefit from
the installation of conservation practices for farm bill
participants located within the Northern Everglades--Lake
Okeechobee region.

The project titled ``Wisconsin's Dairy and Livestock Air Emission/
Odor Project'' from Wisconsin Department of Agriculture, Trade,
and Consumer Protection (ATCP) was funded in 2005 to implement
best management practices to establish the connection between
agricultural ambient air concentrations and odor and evaluate
various best management practices installed on dairy and other
livestock operations to reduce odor, ambient air
concentrations, and overall environmental impacts; and to test
the odor standards developed as part of the administrative rule
to implement Wisconsin's Livestock Siting Law.

Wisconsin Department of Agriculture developed and implemented a
plan to evaluate the odor standards in ATCP 51 LIVESTOCK
FACILITY SITING, Wisconsin Administrative Code through odor
measurements and the relationship with measured ambient air
concentrations on six to eight dairy/livestock farms.
Evaluation installation of a manure digester to produce methane
for production of electricity was completed. An evaluation of
post implementation impacts on ambient air concentrations,
odors, and water quality was conducted. And results were
communicated through the Wisconsin Agricultural Stewardship
Initiative (WASI).

This project provided actual air sampling data associated with the
implementation of practices on dairies in the Midwest U.S. This
data verified that impermeable covers are extremely effective
at controlling odors and permeable covers are considerably
effective at controlling odors. This data also emphasized the
importance of proper design and operation (proper retention
time, operational reliability, and addition of substrate
material) for anaerobic digesters and that storage lagoons
receiving digested manure may require additional management for
odors and ammonia. Solids separation with aeration does appear
to reduce odors (about 25 percent) and hydrogen sulfide, but
may increase ammonia emissions. Overall, the project provided
some much-needed data regarding the effectiveness of certain
odor control practices. Although the data set is somewhat
limited, it does provide some trends and identification of
areas for further study.

(c) In 2005, the Chesapeake Bay Foundation received a CIG grant for
a project titled ``Precision Dairy Feeding to Reduce Nutrient
Pollution in Pennsylvania's Waters and the Chesapeake Bay'' to
demonstrate to dairy producers that precision feeding of dairy
cows could facilitate reductions in the protein (nitrogen) and
phosphorus being fed to dairy animals while maintaining or even
improving milk production and possibly improving animal health.

A total of 66 diverse farms were enrolled in the precision dairy
feeding program and received technical assistance from the
University of Pennsylvania. Forage, feed, and feces samples
were collected quarterly from these farms and analyzed to
adjust their rations to more precisely meet the nutrient needs
of the dairy herds. An additional 33 farms had their forage,
feed, and feces sampled and received technical assistance
through nutritionists and veterinarians who were trained to
precisely balance dairy rations by the University of
Pennsylvania. Dairy producers with their nutritionists
regularly adjusted rations to maintain and improve production
while minimizing manure nutrients.

Based on the finding from these feeding trials, the Pennsylvania
State University Cooperative Extension developed the ``Dairy
Tool'' to help farmers identify the greatest opportunities to
improve profitability on their farms. Feed management is an
essential component of this assessment. In addition, several
publications related to feed management were prepared by the
project participants in August 2008. Further the findings from
the CIG project were presented at various conferences through
display of posters and booths. Also, the Chesapeake Bay
Foundation created and distributed a brochure entitled ``Feed
Efficiency: Improving Dairy Production while Cutting Feed
Costs'' to introduce precision to 13,000 dairy producers who
were not participants in the program. Further several workshops
and training sessions were conducted in Pennsylvania to present
the findings and benefits of precision dairy feeding to dairy
farmers throughout Pennsylvania.

Widespread application of the ``precision dairy feeding''
techniques that were demonstrated and analyzed in this project
could be most valuable to NRCS in achievement of lower
phosphorus and nitrogen loading rates to receiving streams and
water bodies. This could make an especially beneficial
contribution to improved water quality in many watersheds with
high concentrations of dairy animals. Further this feeding
technology could aid development acceptable alternatives in
development of CNMP's. In addition, improvements in animal
health through precision dairy feeding would contribute towards
addressing health issues related to the animal resource.

The findings through this project relating to the evaluation and
promotion of ``precision dairy feeding'' could the s
significant value to NRCS in assisting dairy producers with the
development and implementation of resource management systems
and the achievement of water quality pollutant loading limits.
6. Annual Budget Authority (FY 2002-FY 2011)
CIG is not appropriated as a separate program. CIG is an initiative
within the Environmental Quality Incentives Program and is reported in
the immediately preceding Questionnaire.
7. Annual Outlays (FY 2002-FY 2011)
CIG is a sub-program of EQIP. Budget Authority and Outlays for CIG
are reported as part of EQIP. Since 2004, $125.9 million has been
awarded to CIG grant recipients.
8. Annual Delivery Cost (FY 2007-FY 2011)
CIG is not appropriated separately. It is a subprogram of the EQIP.
The program delivery costs for CIG are included in the total EQIP
delivery cost and are reflected in the EQIP table.
9. Eligibility Criteria
CIG is available to all eligible applicants in the 50 states,
Caribbean Area (Puerto Rico and the Virgin Islands), and the Pacific
Islands Area (Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands).

10. Utilization (Participation) Data
------------------------------------------------------------------------
FY Number of Applications Number of Grants
------------------------------------------------------------------------
2004 148 40
2005 175 54
2006 199 63
2007 194 50
2008 260 56
2009 391 52
2010 388 58
2011 411 TBD
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
There is no duplication or overlapping with USDA conservation
programs. Because the purposes and functions of CIG are unique, CIG
payments do not overlap with other USDA conservation payments.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Agricultural Water Enhancement Program (AWEP).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
AWEP was authorized by the 2008 Farm Bill as a CCC-funded program
within EQIP. The Chief of NRCS may enter into AWEP partnership
agreements with eligible partners who compete through the Request for
Proposals process in any of the 50 states, the District of Columbia,
the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United
States, American Samoa, and the Commonwealth of the Northern Mariana
Islands.
4. Purpose/Goals
The purpose of the AWEP is to promote ground and surface water
conservation and water quality by helping producers implement
agricultural water enhancement activities. NRCS is charged with
carrying out AWEP in a manner that optimizes environmental benefits and
encourages the following activities with respect to agricultural land:

Development of a water quality or water conservation plan,
including resource condition assessment and modeling;

Water conservation restoration or enhancement projects,
including conversion of dryland farming or to producing
commodities that are less water intensive;

Water quality or quantity restoration or enhancement
projects;

Irrigation system improvement and irrigation efficiency
enhancement;

Activities designed to mitigate the effects of drought; and

Related activities that the Secretary of Agriculture
determines will help achieve water quality or water
conservation benefits on agricultural land.
5. Success in Meeting Programmatic Purpose/Goals
In FY 2010, NRCS obligated approximately $60.8 million in 1,489 new
contracts to implement conservation practices on nearly 271 thousand
acres of agricultural lands. Partners provided approximately $50.5
million in technical and financial assistance. Through AWEP, the agency
approved 28 new partner project areas during FY 2010, and continued to
provide support for 63 projects approved during FY 2009.
Approximately 54 percent of the projects approved in FY 2010 are
located in the designated high-priority water quantity concern areas.
Socially disadvantaged producers received 2.8 percent of all contracts
under the program.
For FY 2011 eight new projects in seven states were approved for a
total of $4.7 million. Producer enrollment currently underway for FY
2011 projects.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 $0
2003 $0
2004 $0
2005 $0
2006 $0
2007 $0
2008 $0
2009 $73
2010 $73
2011 $74
------------------------------------------------------------------------

AWEP FA funds are obligated the year of contract enrollment for the
entire multi-year span of the contract. As the years pass, FA for
contracted practices is not expended until the practices are installed
and inspected for quality control by NRCS personnel. For this reason,
FA funds tend to outlay for multiple years after obligation. TA funds
obligated in a given year are used for workload generated by the
enrollment of new contracts and workload generated by prior year
contract implementation. The vast majority of TA funding tends to
outlay in the year of obligation. FA funding represents the majority of
program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Agricultural Water Enhancement
Program Conservation Planning and -- -- 1,264 1,257 3,757
Technical Consultation
Conservation -- -- 4,390 4,367 13,052
Implementation
Financial Assistance-- -- -- 3,091 3,075 9,190
Program Administration
Indirect Costs -- -- 2,661 2,648 7,914
-------------------------------------------------------------------------------
Sub-total Technical -- -- 11,406 11,347 33,913
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost -- -- 60,397 60,813 40,087
Share & Monetary
Incentive
===============================================================================
Total Costs -- -- 71,803 72,160 74,000
FTEs -- -- 66 65 223Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
Eligible partners include: Federally recognized Indian Tribes,
states, units of local government, agricultural or silvicultural
associations or other groups of such producers such as an irrigation
association an agricultural land trust, or other nongovernmental
organizations with experience working with agricultural producers.
The Managers' Report to the 2008 Farm Bill provides direction for
the Secretary to give priority to producers in six priority areas: The
Eastern Snake Plain Aquifer region, Puget Sound, the Ogallala Aquifer,
the Sacramento River watershed, Upper Mississippi River Basin, the Red
River of the North Basin, and the Everglades.
10. Utilization (Participation) Data
Approximately 46 percent of valid applications were funded during
FY 2010. Funding the remaining 54 percent of valid applications would
require an additional $70.4 million. For FY 2011, requirements for
continued funding of previous-year projects will significantly impact
the number of new projects awarded and increase the percentage of
unfunded applications. This condition is expected to continue to impact
the number of new applications funded in future years.
AWEP Application/Contract Status data includes:

------------------------------------------------------------------------
Active or Financial
FY Completed Assistance Total Acres
Contracts Obligated
------------------------------------------------------------------------
2009 1,704 $60,385,278 488,380
2010 1,489 $60,813,288 270,667
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
The Agricultural Management Assistance (AMA) also focuses on ground
and surface water conservation and water quality. Although similar to
AMA in implementation, AWEP is available nationwide. There are some
practices that can be installed through AMA but not AWEP.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Cooperative Conservation Partnership Initiative (CCPI).
Prepared by USDA's Natural Resources Conservation Service.
2. Subprograms/Department Initiatives
None.
3. Brief History
Section 2707 of the 2008 Farm Bill authorized the CCPI as a CCC-
funded program. The Chief of NRCS may enter into CCPI partnership
agreements with eligible partners who compete through the Request for
Proposals process in any of the 50 states, the District of Columbia,
the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United
States, American Samoa, and the Commonwealth of the Northern Mariana
Islands.
4. Purpose/Goals
The purposes of the CCPI are to:

Address conservation priorities involving agriculture and
nonindustrial private forestland on a local, state, multi-
state, or regional level;

Encourage producers to cooperate in meeting applicable
Federal, state, and local regulatory requirements related to
production involving agriculture and nonindustrial private
forestland;

Encourage producers to cooperate in the installation and
maintenance of conservation practices that affect multiple
agricultural or nonindustrial private forest operations; or

Promote the development and demonstration of innovative
conservation practices and delivery methods, including those
for specialty crop and organic production and precision
agriculture producers.

NRCS may make EQIP, Wildlife Habitat Incentive Program (WHIP), and
Stewardship program resources available to owners and operators of
agricultural and nonindustrial private forestlands who are located in
an approved CCPI project area.
5. Success in Meeting Programmatic Purpose/Goals
In FY 2010, NRCS obligated approximately $42.3 million in 279 new
contracts to implement conservation practices on nearly 1.2 million
acres of agricultural lands. Through CCPI, the agency approved 51 new
partner project areas during FY 2010, and continued to provide support
for 110 projects approved during FY 2009.
For FY 2011 51 new projects were approved for a total of $20
million. Producer enrollment currently underway for FY 2011 projects.
6. Annual Budget Authority (FY 2002-FY 2011)
CCPI is not appropriated as a separate program. CCPI is a provision
for delivering up to six percent of the resources within the WHIP,
EQIP, and Stewardship.
7. Annual Outlays (FY 2002-FY 2011)
CCPI is not appropriated as a separate program. CCPI is an
initiative within WHIP, EQIP, and Stewardship resources.
8. Annual Delivery Cost (FY 2007-FY 2011)
CCPI is not appropriated separately. It is a provision through
which several existing programs may be delivered, including the
Environmental Quality Incentives Program, Conservation Stewardship
Program, and Wildlife Habitat Incentive Program. The program delivery
costs for CCPI are included in the delivery costs for EQIP,
Stewardship, and WHIP and are reflected in the tables for those
programs.
9. Eligibility Criteria
Eligible partners include: Federally recognized Indian Tribes,
states, units of local government, agricultural or silvicultural
associations or other groups of such producers such as an irrigation
association an agricultural land trust, or other nongovernmental
organization with experience working with agricultural producers.
10. Utilization (Participation) Data
Approximately 42 percent of valid applications were funded during
FY 2010. Prior year project were funded to approximately 90 percent of
the original request.
2010 CCPI--EQIP Application/Contract Status data includes:

------------------------------------------------------------------------
Number of Active Financial
and Completed Assistance Total Treated
Contracts Obligated Acres
------------------------------------------------------------------------
Total 1,188 $23,234,738 1,080,901
------------------------------------------------------------------------

2010 CCPI-WHIP Application/Contract Status data includes:

------------------------------------------------------------------------
Number of Active Financial
and Completed Assistance Total Treated
Contracts Obligated Acres
------------------------------------------------------------------------
Total 106 $654,375 12,549
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
CCPI is a provision that is delivered through existing programs,
including EQIP, Conservation Stewardship Program, and WHIP. CCPI is a
way for partners to identify target areas where program funds will be
spent.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Wildlife Habitat Incentive Program (WHIP).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
WHIP was first authorized in the 1996 Farm Bill and was
reauthorized in the 2002 and 2008 Farm Bills. The Chief of NRCS may
implement WHIP in any of the 50 states, the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United
States, American Samoa, and the Commonwealth of the Northern Mariana
Islands.
4. Purpose/Goals
The purpose of WHIP is to help participants develop fish and
wildlife habitat on private agricultural land, nonindustrial private
forestland, and Indian land.
In order to provide direction to the state and local levels for
implementing WHIP and achieving its objective, NRCS has established the
following national priorities:

(i) Promote the restoration of declining or important native fish
and wildlife habitats.

(ii) Protect, restore, develop, or enhance fish and wildlife
habitat to benefit at-risk species.

(iii) Reduce the impacts of invasive species on fish and wildlife
habitats.

(iv) Protect, restore, develop, or enhance declining or important
aquatic wildlife species' habitats.

(v) Protect, restore, develop, or enhance important migration and
other movement corridors for wildlife.
5. Success in Meeting Programmatic Purpose/Goals
In FY 2010

NRCS enrolled over 4,700 agreements on over 1,000,000 acres.

The value of the contracts was almost $63 million.

The average agreement size is 223 acres.

There were 68 contracts valued at over $3.7 million with
American Indian and Alaska Native Lands.

On average, NRCS agreed to reimburse participants
approximately $13,000 for each long-term agreement.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Apportionment ($ in millions)
------------------------------------------------------------------------
2002 $15
2003 $30
2004 $42
2005 $47
2006 $43
2007 $43
2008 $85
2009 $85
2010 $85
2011 $85
------------------------------------------------------------------------

Please explain changes between budget authority and outlays:
WHIP FA funds are obligated the year of contract enrollment for the
entire multi-year span of the contract. As the years pass, FA for
contracted practices is not expended until the practices are installed
and inspected for quality control by NRCS personnel. For this reason,
FA funds tend to outlay for multiple years after obligation. TA funds
obligated in a given year are used for workload generated by the
enrollment of new contracts and workload generated by prior year
contract implementation. The vast majority of TA funding tends to
outlay in the year of obligation. FA funding represents the majority of
program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Wildlife Habitat Incentives
Program Conservation Planning and 1,310 3,554 2,770 2,733 2,769
Technical Consultation
Conservation 3,410 7,563 5,895 5,817 5,893
Implementation
Financial Assistance-- 3,688 9,086 7,083 6,989 7,080
Program Administration
Indirect Costs 1,919 6,220 4,849 4,785 4,846
-------------------------------------------------------------------------------
Sub-total Technical 10,327 26,423 20,597 20,324 20,588
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 32,131 57,080 52,146 62,602 64,412
Share & Monetary
Incentive
===============================================================================
Total Costs 42,458 83,503 72,743 82,926 85,000
FTEs 77 150 128 126 150Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
To be eligible for WHIP, the land must be:

Private agricultural land including cropland, grassland,
rangeland, pasture, and other land determined by NRCS to be
suitable for fish and wildlife habitat development.

Nonindustrial private forestland including rural land that
has existing tree cover or is suitable for growing trees.

Indian land.

An exception may be made by the Chief in the case of
land allotted by the Bureau of Indian Affairs or Indian
land where there is sufficient assurance of control.

Applicants are subject to adjusted gross income provisions and must
provide NRCS with written evidence of ownership or legal control of the
land.
WHIP plays an important role in implementing a number of NRCS
special initiatives.

Longleaf Pine Initiative. In Alabama, Florida, Georgia,
Louisiana, Mississippi, North Carolina, South Carolina, Texas,
and Virginia, WHIP improved the health and extent of the
longleaf pine forest ecosystem in ways that benefited both the
health of the plant community and wildlife habitat. During FY
2010, NRCS enrolled over 33,000 acres of longleaf pine forest
in almost 400 contracts valued at nearly $4.65 million.

Lesser Prairie Chicken Initiative. WHIP enrolled land in
Colorado, Kansas, New Mexico, Oklahoma, and Texas to keep this
candidate species from being listed as threatened and
endangered under the Endangered Species Act, while also
improving grazing and wildlife habitat. During FY 2010, NRCS
enrolled over 98,000 acres in these states in 138 WHIP
contracts valued at more than $3.8 million.

New England-New York Forestry Initiative. WHIP expanded
stewardship opportunities for forestlands and wildlife in the
New England States of Connecticut, Maine, Massachusetts, New
Hampshire, New York, Rhode Island, and Vermont. During FY 2010,
NRCS enrolled over 48,500 acres in these states in more than
300 WHIP contracts valued at more than $4.6 million.

Sage-Grouse Initiative. In 11 states (California, Colorado,
Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota,
Utah, Washington, and Wyoming) WHIP implemented conservation
practices that will reduce threats to sage-grouse habitat;
these practices are designed both to keep this candidate
species from being listed as threatened and endangered and to
provide grazing land for ranches. During FY 2010, NRCS enrolled
almost 90,000 acres in these states in 37 WHIP contracts valued
at more than $3.8 million.
10. Utilization (Participation) Data
Approximately 56 percent of valid applications were funded during
Fiscal Year 2010. Funding the remaining 44 percent would require an
additional $44 million.
WHIP Application/Contract Status data includes:

------------------------------------------------------------------------
Number of Active Financial
FY and Completed Assistance Treated Acres
Contracts Obligated
------------------------------------------------------------------------
2005 3,333 $33,246,702 454,091
2006 2,717 $31,464,158 324,954
2007 2,107 $31,494,465 357,699
2008 3,495 $57,221,029 646,491
2009 3,706 $51,998,722 812,497
2010 4,731 $62,862,480 1,054,095
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
WHIP provides for developing, restoring, and enhancing wildlife
habitats which can also be done under EQIP. EQIP has one national
priority in regard to at-risk species habitat conservation as does
WHIP. However, WHIP has four additional priorities for fish and
wildlife.
EQIP is agriculturally support based while WHIP is fish and
wildlife habitat support based. EQIP requires lands to be in production
agriculture to be eligible. Lands can be in agriculture or have the
potential to be in agriculture to be eligible for WHIP. Public lands
connected with eligible lands are eligible for EQIP but not for WHIP.
CRP enrolls land to create wildlife habitat. All of the lands
eligible for CRP could be enrolled in WHIP if they fall within the WHIP
priority areas but not all lands eligible for WHIP could be enrolled in
CRP.
12. Waste, Fraud and Abuse
An audit by the Office of Inspector General (OIG) revealed that
participant WHIP contracts for the Migratory Bird Habitat Initiative in
one Louisiana Parrish received an increased payment rate for the
socially disadvantaged designation although those participants were not
actually in a socially disadvantaged group. It was identified by OIG
that staff inadvertently selected an incorrect payment schedule. It was
recommended to adjust the agency's business tools so that the socially
disadvantaged designation indicated by the participant would
automatically provide the correct payment rate without staff having to
manually select various payment schedules for each application. For the
improper payments, the agency provided each participant with the option
to either return the overpayment amount or to receive a reduction in
future scheduled payments.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Agricultural Management Assistance (AMA).
Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
None.
3. Brief History
AMA was originally authorized under the Agricultural Risk
Protection Act of 2000, Title I, Section 133, Public Law 106-224, on
June 22, 2000. This title was amended by the 2002 Farm Bill and the
2008 Farm Bill.
AMA is available in 16 states where participation in the Federal
Crop Insurance Program is historically low: Connecticut, Delaware,
Hawaii, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New
Jersey, New York, Pennsylvania, Rhode Island, Utah, Vermont, West
Virginia, and Wyoming.
4. Purpose/Goals
AMA provides financial assistance payments to agricultural
producers to voluntarily address issues such as water management, water
quality, and erosion control by incorporating conservation practices
into their farming operations. The Agricultural Marketing Service (AMS)
is responsible for using AMA funding for organic certification
assistance, and the Risk Management Agency (RMA) is responsible for
using AMA funds for mitigation of financial risks through assisting
producers to purchase risk insurance. Funding is authorized at $15
million for FY 2008-2012 and of the funding made available each fiscal
year, not less than 50 percent is to be provided to NRCS, 40 percent to
RMA, and 10 percent to AMS.
5. Success in Meeting Programmatic Purpose/Goals
AMA currently has over 660 contracts in implementation and a
continuing backlog of applications that indicates strong support among
producers for the program. At the end of FY 2010, AMA had a backlog of
767 applications, with an estimated contract value of $5.1 million,
covering over 9,500 acres.
AMA provides many producers a first-time opportunity to address
natural resource concerns on their lands. For instance, many producers
have not been able to participate in EQIP because they do not meet the
eligibility criterion that land must have been irrigated for 2 of the
previous 5 years to receive EQIP funding. A number of these EQIP-
ineligible producers are small-acreage or specialty-crop farming
operations that provide high dollar value products to the general
public. By helping to mitigate the risks associated with these kinds of
agricultural enterprises, AMA helps agriculture remain a valuable
segment of local economies.

AMA FA funds are obligated the year of contract enrollment for the
entire multi-year span of the contract. As the years pass, FA for
contracted practices is not expended until the practices are installed
and inspected for quality control by NRCS personnel. For this reason,
FA funds tend to outlay for multiple years after obligation. TA funds
obligated in a given year are used for workload generated by the
enrollment of new contracts and workload generated by prior year
contract implementation. The vast majority of TA funding tends to
outlay in the year of obligation. FA funding represents the majority of
program budget authority.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Agricultural Management
Assistance Conservation Planning and 458 147 150 147 212
Technical Consultation
Conservation 2,386 457 465 457 659
Implementation
Financial Assistance-- 940 433 441 433 624
Program Administration
Indirect Costs 775 457 141 165 238
-------------------------------------------------------------------------------
Sub-total Technical 4,559 1,494 1,197 1,202 1,733
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost -- 5,756 6,181 6,048 5,767
Share & Monetary
Incentive
===============================================================================
Total Costs 4,559 7,250 7,378 7,250 7,500
FTEs 27 9 9 12 33Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
Applicants must own or control the land within an identified AMA
state and comply with adjusted gross income limitation provisions.
Eligible land includes cropland, rangeland, grassland, pastureland,
nonindustrial forestland, and other private land that produces crops or
livestock where risk may be mitigated through operation diversification
or change in resource conservation practices.
10. Utilization (Participation) Data
Approximately 36 percent of valid applications were funded during
FY 2010. Funding the additional remaining 64 percent of valid
applications would require an additional $5.1 million. The FY 2010
funded applications covered over 11,000 acres.
AMA Application/Contract Status data includes:

------------------------------------------------------------------------
Number of Active Financial
Fiscal Year and Completed Assistance Treated Acres
Contracts Obligated
------------------------------------------------------------------------
2005 766 $9,578,046 74,255
2006 275 $3,718,549 13,328
2007 0 $0 0
2008 276 $5,756,087 33,202
2009 214 $6,179,956 13,875
2010 426 $6,048,438 11,102
-----------------------------------------------------
Total........... 1,957 $30,942,815 145,762
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
The priorities of AMA are the same as for EQIP. There are some
practices that can be implemented under AMA that cannot be under EQIP.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF SPECIALTY CROP PROGRAMS)

----------

THURSDAY, JULY 7, 2011

Subcommittee on Nutrition and Horticulture,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:52 p.m., in
Room 1300 of the Longworth House Office Building, Hon. Jean
Schmidt [Chairwoman of the Subcommittee] presiding.
Members present: Representatives Schmidt, Southerland,
Crawford, Baca, Pingree, and Costa.
Staff present: Patricia Barr, John Goldberg, Pam Miller,
Mary Nowak, Matt Perin, Debbie Smith, Keith Jones, John Konya,
and Jamie Mitchell.

OPENING STATEMENT OF HON. JEAN SCHMIDT, A REPRESENTATIVE IN
CONGRESS FROM OHIO

The Chairwoman. I would like to thank our witnesses. I am
sorry for the delay, but at least we got the first set of votes
out of the way.
First off, I just want to say thank you to everybody for
your patience, and especially to our witnesses for the USDA's
Agricultural Marketing Service, and to the Animal and Plant
Health Inspection Service, or APHIS, for joining us. I look
forward to your insight and to your testimony. I also want to
thank my good friend, Ranking Member Joe Baca, who got an
exciting gift from a friend of his today. He actually bought
the baseball, but--can I brag for you? Well, Hank Aaron signed
his baseball. Is that like the coolest thing in the world?
Sorry I had to steal your thunder, but I just am really
impressed. So obviously, this is a big day for Mr. Baca. But,
thank you for joining me in this hearing, it is well known that
a certain degree of bipartisanship exists in this Committee. It
is one of the best committees to actually be on because we
fight about regional issues, not about Republican versus
Democratic. I am really glad that he is my friend throughout
this whole process.
As we approach the next farm bill, I look forward to
hearing from the farming community, the producers, the
handlers, everyone from around the country. And as Chairman
Lucas said and has continued to say, that there has to be a
firm understanding of the programs within the framework of the
farm bill, because as he has said, everything is on the table.
So I look forward to hearing from APHIS and AMS with a general
snapshot of the spending of each program that they administer.
I just want to say to Ms. Pegg, I understand you are
leaving, so I won't bother you with any leafy green issues
today. But we will be looking at your testimony and asking
questions. We will study the financial aspects of these
programs and consider whether or not the program's goals are
being met, and whether the programs are financially prudent. We
will join the other Subcommittees in looking for instances of
program overlap, as well as examples of waste, fraud, and
abuse.
An additional benefit to examining programs and their
operation is the education that members will receive. Many of
us do not have firsthand knowledge of how each program is
administered on a daily basis. I appreciate the opportunity to
learn what you all do, and I am excited to hear your testimony.
It is our hope that this process of evaluation and
education will give Members a clear picture of the farm bill as
a whole and see how well programs are being administered before
engaging in policy discussions before the next farm bill.
Today's audit hearing is focused specifically on specialty crop
programs found in Title X of the farm bill, as well as the
administration of Section 32 of the Act of August 24, 1935.
While many programs that affect the specialty crop industry are
found throughout the farm bill, we will do our best to stay
focused on Title X.
USDA's Agricultural Marketing Service and APHIS are the
agencies charged with administering most of the Title X
programs. AMS also administers a series of grant programs,
including the Specialty Crop Block Grant Program, which is
designed to enhance the competitiveness of fruits and
vegetables, tree nuts, dry fruits, horticulture, floriculture,
and nursery crops. These grants are widely used throughout the
states in a variety of ways. I know many in Ohio are
beneficiaries of and like the flexibility that Specialty Crop
Block Grant Program provide.
Creating technical assistance programs throughout the Ohio
Produce Marketing Agreement has been helpful and beneficial.
Last July, a grower from a neighboring district appeared before
our Subcommittee. In his testimony, he stated ``In states like
Ohio, we do not have existing support programs and systems of
technical assistance similar to what other states enjoy. The
Specialty Crop Block Grant Program is one of the few tools we
have to support our growers and better realize our specialty
crop opportunities.'' Further, AMS administers research and
promotion programs, as well as marketing orders and agreements
to help stabilize markets for specific commodities. One
marketing agreement that has received a considerable amount of
attention is the National Leafy Green Marketing Agreement that
AMS is considering, and that is currently open for public
comment. I look forward to learning how AMS is administering
Section 32 funds which have supported agricultural commodities
like fruits, vegetables, and meats, which are not typically
covered by mandatory price supports. AMS has the responsibility
of administering a wide range of programs, including the
National Organic Program, which oversees the labeling of
products as organic.
In addition to AMS testifying, APHIS will detail their
responsibilities in administering the pest and disease
programs, including the National Clean Plant Network, which
propagates pest and disease-free nursery stocks for the
industry. As we approach the next farm bill, it is imperative
that we hear directly from the Department so we can fully
understand from your firsthand experience what is working and
what is not working. Some of the decisions on program
authorizations and funding levels will be difficult, but with
proper evaluation, I am confident that we can put together a
farm bill that meets the goals of food safety and security,
rural prosperity, and nutritional well-being.
Again, I look forward to the panel, and to the witnesses
from the Department and for Ms. Bech and Ms. Pegg for joining
us today.
[The prepared statement of Mrs. Schmidt follows:]

Prepared Statement of Hon. Jean Schmidt, a Representative in Congress
from Ohio
Thank you all for coming to this hearing to review specialty crop
programs to help us prepare for the next farm bill. I thank our
witnesses from USDA's Agricultural Marketing Service and Animal and
Plant Health Inspection Service for joining us today. I look forward to
hearing your insightful testimony.
I also want to thank my friend, Ranking Member Baca, for joining me
in holding this hearing today. It is well known that a certain degree
of comity or bipartisanship exists here on the Agriculture Committee
and I look forward to working with my friend as we go through this farm
bill process.
As we approach the next farm bill, I look forward to hearing from
producers and handlers from around the country. But before we begin
that process, I agree with Chairman Lucas that Members need to have a
firm understanding of the programs within the framework of the farm
bill.
I look forward to hearing from APHIS and AMS with a general
snapshot of the spending of each program that they administer. We will
study the financial aspects of these programs and consider whether or
not the programs' goals are being met and whether the programs are
financially prudent.
We will join the other Subcommittees in looking for instances of
program overlap as well as examples of waste, fraud, and abuse.
An additional benefit to examining programs and their operation is
the education that Members will receive. Many of us, do not have
firsthand knowledge of how each program is administered on a daily
basis. I appreciate the opportunity to learn as much about individual
programs before the farm bill hearings begin.
It is our hope that this process of evaluation and education will
give Members a clear picture of the farm bill as a whole and see how
well programs are being administered before engaging in policy
discussions before the next farm bill.
Today's audit hearing is focused specifically on specialty crop
programs found in Title X of the farm bill as well as the
administration of Section 32 of the Act of August 24,1935. While many
programs that affect the specialty crop industry are found throughout
the farm bill, we will do our best to stay focused on those in Title X.
USDA's Agricultural Marketing Service (AMS) and Animal and Plant
Health Inspection Service are the agencies charged with administering
most of the Title X programs.
AMS also administers a series of grant programs including the
Specialty Crop Block Grant Program which is designed to enhance the
competitiveness of fruits and vegetables, tree nuts, dried fruits,
horticulture, floriculture and nursery crops. These grants are widely
used throughout the states in a variety of ways.
I know many of my Ohio constituents like the flexibility that the
Specialty Crop Block Grant Program provides producers, creating
technical assistance programs through the Ohio Produce Marketing
Agreement. Last July, a grower from near my district appeared before
our Subcommittee. In his testimony, he stated ``In states like Ohio, we
do not have existing support programs and systems of technical
assistance similar to what other states enjoy. The block grant program
is one of the few tools we have to support our growers and better
realize our specialty crop opportunities.''
Further, AMS administers research and promotion programs as well as
marketing orders and agreements to help stabilize markets for specific
commodities. One marketing agreement that has received a considerable
amount of attention is the National Leafy Green Marketing Agreement
that AMS is considering and that is currently open for public comment.
I also look forward to learning how AMS is administering Section 32
funds, which have supported agricultural commodities like fruits,
vegetables, and meats, which are not typically covered by mandatory
price supports.
AMS has the responsibility of administering a wide range of
programs including the National Organic Program which oversees the
labeling of products as organic.
In addition to AMS testifying, APHIS will detail their
responsibilities in administering the Pest and Disease programs
including the National Clean Plant Network which propagates pest and
disease-free nursery stock for the industry.
As we approach the next farm bill, it is imperative that we hear
directly from the Department so we can fully understand from your
first-hand experience what is working and what is not working. Some of
the decisions on program authorizations and funding levels will be
difficult, but with proper evaluation, I am confident that we can put
together a farm bill that meets the goals of food safety and security,
rural prosperity, and nutritional well-being.
Again, I would like to thank the witnesses from the Department, Ms.
Bech and Ms. Pegg, for joining us today. I look forward to your
testimony and today' s discussion.

The Chairwoman. Now I will turn this over to the Ranking
Member, my good friend, Joe Baca.

OPENING STATEMENT OF HON. JOE BACA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA

Mr. Baca. Good afternoon, and thank you, Madam Chairwoman
Schmidt for holding this important hearing to examine programs
that are contained within Title X of the 2008 Farm Bill. I
appreciate your bipartisanship in working with these issues. I
appreciate the little bit of stealing the thunder of Hank Aaron
signing this autographed ball. As you know, he broke Babe
Ruth's record and still holds the record for most home runs
right now. Some of us who play in the Congressional game, hope
we can hit a home run.
The Chairwoman. Can I just add that the Cincinnati Reds
could use some help. Do you think you could come help?
Mr. Baca. Some of us are willing to come out of retirement.
Maybe even to play for the Reds. I do appreciate that. Thank
you very much, Madam Chair.
Let's get back to the original topic here. The 2008 Farm
Bill was historic legislation that included the fundamental
improvements to the USDA nutrition and farm conservation
programs, but perhaps none more important that its recognition
of specialty crops and organic agriculture.
Specialty crops now represent nearly 50 percent of the farm
gate value of the plants based in U.S. agriculture. Organic
fruits and vegetables now account for over 11 percent of all
fruits and vegetable sales in the United States. The
availability of fruits, vegetables, and other specialty crops
are critical to the health of the American consumer, especially
as we look at obesity and other health-related problems that
are impacting us. If we don't deal with that, the additional
taxpayer costs will be roughly around $197 billion. As we look
at alternative fruits and vegetables, we need to focus on
American products. Let me state that again, we need American
products grown by American farmers to better ensure the
economic well-being of our citizens.
The specialty crops and organic sector were recognized in
the 2008 Farm Bill because they looked to the future in areas
like research, conservation, pests and disease management, and
expansion of market opportunities. Congress responded to this
forward thinking with a nearly $3 billion in investment in the
future of specialty crops and organic producers. This
investment is vital to farms across the nation.
My home State of California is blessed as the nation's top
producer of many fruits, tree nuts, and other crops. California
also leads the nation in the amount of certified organic
cropland with over 430,000 acres. As we now know, the 2012 Farm
Bill will be written during a time of unprecedented fiscal
challenges. The question of how to wisely use American's hard-
earned tax dollars will never be far from us. We must not lose
sight of the fact that any farm bill, at its core, is about
good public policy. If we are smart, the 2012 Farm Bill can
save money, improve health and nutrition, and strengthen our
economy.
I am convinced that we are on the right policy track with
the programs that we will be reviewing today. I look forward to
working with my colleagues to ensure that the down payment made
on behalf of specialty crops and organic producers does not go
to waste in 2012. Again, I want to thank the panelists for
their patience in waiting for our votes to conclude. I want to,
again, thank the Chairwoman for holding this hearing.
With that, I yield back the balance of my time.
[The prepared statement of Mr. Baca follows:]

Prepared Statement of Hon. Joe Baca, a Representative in Congress from
California
Good afternoon. Thank you Chairwoman Schmidt for holding this
important hearing to examine programs that are contained within Title X
of the 2008 Farm Bill.
The 2008 Farm Bill was historic legislation that included
fundamental improvements to USDA nutrition and farm conservation
programs.
But perhaps no policy change was more vital than the recognition of
specialty crops and organic agriculture.
Specialty crops now represent nearly 50 percent of the farm gate
value of plant based U.S. agriculture.
Organic fruits and vegetables now account for over 11 percent of
all fruit and vegetable sales in the U.S.
The availability of fruits, vegetables, and other specialty crops
is critical to the health of America's consumers.
And we need American products--grown by American farmers--to better
ensure the economic well-being of our citizens.
The specialty crop and organic sectors were recognized in the 2008
Farm Bill--because they looked to the future in policy areas, like:

Research and conservation;

Pest and disease management; and

Expansion of market opportunities.

Congress responded to this forward thinking with a nearly $3
billion investment in the future of specialty crop and organic
producers.
This investment is vital to farmers across the nation.
My home State of California is blessed as the nation's top producer
of many fruits, tree nuts, and other crops.
California also leads the nation in the amount of certified organic
crop-land--with over 430 thousand acres.
As we all know--the 2012 Farm Bill will be written during a time of
fiscal challenges.
We must not lose sight of the fact that any farm bill--at its
core--is about good public policy.
If we are smart--the 2012 bill can save money, improve health and
nutrition, and strengthen our economy.
I am convinced that we are on the right policy track with the
programs that we will be reviewing today.
I look forward to working with my colleagues to ensure the down
payment made on behalf of specialty crop and organic producers does not
go to waste in 2012.
Again--I want to thank the Chairwoman for holding this hearing--and
thank our witnesses for taking the time to help us better understand
these programs. I yield back.

The Chairwoman. Thank you very much. The chair would
request that other Members submit their opening statements for
the record so the witnesses may begin their testimony in a
timely manner, since we already are an hour delayed.
[The prepared statement of Mr. Southerland follows:]

Prepared Statement of Hon. Steve Southerland II, a Representative in
Congress from Florida
I welcome the opportunity to reauthorize Federal agricultural
policies affecting American agricultural production in the development
of the 2012 Farm Bill. As a significant contributor to U.S. farm
receipts and balance of trade, it is extremely important that the
issues affecting specialty crops play a meaningful role in the farm
bill. Specialty crops, including fruits, vegetables, nuts,
horticultural crops and others, represent over \1/3\ of gross
agricultural cash receipts in the U.S., and hence have a significant
stake in our nation's agricultural policy.
Florida ranks among the top ten states in the nation in
agricultural crop value and second in the specialty crop production
with a wide variety of fruit, vegetable and nursery crops grown through
the state. The farm bill 5 year farm policy measure should continue and
strengthen its emphasis on key areas such as pest and disease,
research, as well as giving states the flexibility needed to better
address environmental challenges and ensuring critical resources are
available to respond to the unique needs of specialty crops in most
budget efficient manner possible.
Historically, many Florida agricultural producers--and specialty
crop growers throughout the country--have chosen to base their economic
decisions on the marketplace and have not relied on Federal farm price
support programs. However, these markets can be very volatile and the
industry faces extreme and somewhat unique pressures including ever
increasing environmental challenges, labor and production costs beyond
that of our competitors, subsidized foreign market competition. In
addition, unprecedented exposure to pests and disease and state-of-the-
art agricultural research needs tailored to the needs of fruit and
vegetable production is also vital.
Florida is listed by the USDA as the number two high risk state
second only to California regarding exotic pest and disease
introductions pressure. According to the Florida Department of
Agriculture, costs to combat pests and diseases affecting Florida
farmers, have easily exceeded $1 billion over the last decade.
Specialty crop farm bill measures such as the such Pest and Disease
Management Program ``Section 10201'', the Specialty Crop Block Grants,
the Specialty Crop Research Initiative, and well as marketing,
nutrition, and other programs provide valuable opportunities for
Florida and U.S. specialty crop industry in American farm policy.
Mindful of the fiscal constraints facing our Federal budget and
increasing national debt, we must be vigilant within this Committee and
working with the U.S. Department of Agriculture to focus valuable
Federal resources in those areas with the most effective impact to
sustain and strengthen specialty crop and agricultural production in
our nation. I look forward to working with my colleagues toward that
end as we consider reauthorization of the 2012 Farm Bill.

The Chairwoman. I am going to begin with introducing our
first panelist, Ms. Rayne Pegg, who is the Administrator,
Agricultural Marketing Service, U.S. Department of Agriculture,
Washington, D.C., and Ms. Rebecca Bech, Deputy Administrator
for the Plant Protection and Quarantine, Animal and Plant
Health Inspection Service, U.S. Department of Agriculture,
Washington, D.C.
Ms. Pegg, we will let you begin.

STATEMENT OF RAYNE PEGG, ADMINISTRATOR,
AGRICULTURAL MARKETING SERVICE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.

Ms. Pegg. Thank you very much, Chairwoman Schmidt, Ranking
Member Baca, and Members of the Subcommittee. Thank you for
inviting me to appear before you today to provide a
comprehensive picture of the activities authorized in the
Organic Agriculture Title X of the farm bill, as well as the
activities under Section 32. It is our hope that this
examination of specialty crop, organic, pest and disease
management and Section 32 provisions from the last farm bill
will prove helpful as you begin the next farm bill discussions.
USDA Agricultural Marketing Service and the Animal and
Plant Health Inspection Service are the primary agencies with
the responsibility for implementing Title X. Rebecca Bech from
APHIS is here with me today to answer any APHIS-specific
questions that you might have.
As you mentioned earlier, AMS administers two grant
programs that were reauthorized and amended in the 2008 Farm
Bill. Specialty Crop Block Grant Program provides funding to
states and U.S. territories to enhance the competitiveness of
specialty crops. Specialty crops are defined as fruits and
vegetables, tree nuts, dried fruits, horticulture, and nursery
crops, including floriculture.
The 2008 Farm Bill provided the following funding levels
for the block grants program from CCC funding: $10 million in
2008, $49 million in 2009, $55 million for 2010 through 2012.
In Fiscal Year 2010, approximately $55 million was awarded for
54 grants, which funded a total of 822 different projects. This
year's application deadline is July 13.
The Farmers Market Promotion Program is another AMS grant
program covered under Title X. This works to help improve and
expand domestic Farmers Markets, roadside stands, community-
supported agricultural programs--sorry, agriculture tourism
activities, and other direct producer to consumer market
opportunities. The 2008 Farm Bill extended the Farmers Market
Promotion Program through 2012, and provided a total of $33
million in CCC funding. In 2008, that funding was at $3
million, 2009, $5 million, and in 2010, it was still $5
million, and for 2011 and 2012, we are going up to $10 million
in funding. In 2010, with the $5 million funding, we funded a
total of 81 awards that went to 35 different states. In 2011,
we have notified--we published notice of funding availability
in June of 2011, and the deadline for applying for those funds
was last Friday, July the 1st.
AMS's Market News disseminates detailed information on
marketing conditions for hundreds of agricultural commodities
at major domestic and international wholesale markets,
production areas, and ports of entry. Using direct contacts of
salespersons, suppliers, brokers, buyers, Market News reporters
collect, validate, analyze, and organize unbiased data on
price, volume, quality, and condition, making it available
within hours of collection. In the 2008 Farm Bill, there was
specialty crop market news allocation which authorized $9
million for each fiscal year, starting in 2008 through 2012.
Although funding was not appropriated, AMS continues to carry
out specialty crop Market News activities as the agency
collects information on current supply, demand, and price for
nearly 400 domestic and 700 international fruits, vegetables,
nuts, ornamental and specialty crops.
Title X also directed USDA to collect data on production,
pricing, and marketing of organic agricultural products,
provided $5 million in CCC funds, available until expended. Of
the $5 million, $3.5 million was directed specifically to AMS.
AMS is working to enhance Market News systems to expand
reporting of organic market prices. By the end of 2009, AMS
Market News had expanded the daily reporting of organic
commodities to include a total of 234 items.
Marketing orders and agreements serve as tools to help
fruit and vegetable growers work together to solve marketing
problems that they cannot solve independently. These programs
are designed to help balance the availability of quality
product with the need of adequate returns to producers and
demand of consumers. There are currently 32 active specialty
crop marketing orders and agreements that the agency oversees.
Authorized by Federal legislation, research and promotion
programs, often referred to as check-off programs, are designed
to strengthen the position of the industry in the marketplace,
and to maintain and expand domestic and foreign markets. The
programs are fully funded by the industry. Board members are
nominated by the industry and appointed by the Secretary. AMS
oversees the activities of boards and approves their budgets in
order to ensure compliance with the legislation.
There were two research and promotion provisions in the
2008 Farm Bill. The first made a number of amendments to the
Honey Research Promotion and Consumer Information Act. As a
result of those amendments, a Honey Packers and Importers
Program became effective in 2008. A final research and
promotion provision in the last farm bill allowed for the
development of a program for good agricultural practices and
good handling practices under the Mushroom Promotion Research
and Consumer Information Order, as well as reapportioned the
membership of the Mushroom Council to reflect the shifts in the
industry.
To support organic agriculture, the 2008 Farm Bill
authorized funding for the National Organic Program at $5
million for Fiscal Year 2008, $6.5 million for 2009, $8 million
for 2010, $9.5 million for 2011, and $11 million for 2012. For
the Fiscal Year 2010, Congress appropriated $6.9 million, and
the 2011 budget for the program is $6.91 million. In addition
the National Organic Certification Cost-share Program makes
funds available to states and U.S. territories that are
interested in providing cost-share assistance to organic
producers and handlers certified under the National Organic
Program. The 2008 Farm Bill provided $22 million in CCC funding
for cost-share activities. It also increased the amount of
reimbursement from $500 to $750. Of the $22 million for the
program, $6.5 million remains for the Fiscal Year 2011 and 2012
to be spent.
To support domestic producers, Section 32 of the Act of
August 24, 1935, authorizes the appropriation for each fiscal
year of an amount equal to 30 percent of the gross receipts
from duties collected under Customs laws of the United States
during the preceding calendar year. These funds are
specifically used to encourage domestic consumption of non-
price supported perishable commodities and reestablish farmers'
purchasing power through a variety of activities. These
activities include purchasing commodities, removal of surplus
commodities from the marketplace for distribution to our
Federal nutrition programs, including those programs that
support the National School Lunch Program as well as food
banks, diversion programs that bring production into line with
demand to assist producers, and disaster assistance. AMS
annually purchases approximately $1 billion worth of
commodities for distribution through various nutrition
assistance programs. The 2008 Farm Bill authorized a spending
cap for AMS purchases that has since been modified through
subsequent appropriations.
In addition to the 2002 Farm Bill which established that
there be a minimum of $200 million used for the purchases of
fruits and vegetables, the 2008 Farm Bill established
additional fruit and vegetable purchases for each subsequent
year. The minimum purchase requirement for the 2011 year for
fruits and vegetables is a total of $403 million. To make up
this purchase, entitlement purchases, Department of Defense
purchases, and bonus buys can make up the total requirement for
meeting the minimum fruit and vegetable purchasing requirement
under the farm bill.
AMS and APHIS undertake numerous activities to facilitate
the competitive and efficient marketing of the U.S.
agricultural products, as well as to protect and promote U.S.
agricultural health. I hope that this testimony and subsequent
questions and answers will prove useful to the Subcommittee as
you undertake your work on the next farm bill.
I want to introduce Rebecca Bech, who will add some
additional comments regarding APHIS's administration of Title X
of the farm bill.

STATEMENT OF REBECCA BECH, DEPUTY ADMINISTRATOR FOR PLANT
PROTECTION AND QUARANTINE, ANIMAL AND PLANT HEALTH INSPECTION
SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

Ms. Bech. Well, thank you for inviting me to join
Administrator Pegg today to talk to you about the specialty
crop provisions from the 2008 Farm Bill that APHIS continues to
implement.
The Animal and Plant Health Inspection Service is charged
with protecting American agriculture from foreign pest and
disease introductions, and within APHIS, I head up the Plant
Protection Quarantine Program, which focuses on both plant
pests and diseases that can harm our specialty crops, but also
our forests and natural resources, as well as traditional
crops.
To accomplish that mission, APHIS has developed a robust
agricultural safeguarding system, which consists of a set of
comprehensive interlocking programs that work together to
protect our agricultural resources.
The 2008 Farm Bill created two programs that take these
measures further by targeting specific segments of agriculture
and activities that particularly benefit the specialty crops,
and I would like to thank the Committee for its continued
support for these crucial programs. Both the programs, the
Plant Pest and Disease Management and Disaster Prevention
Program, and the National Clean Plant Network, have proven to
be highly effective and widely supported by stakeholders and
industry. Through the Plant Pest and Disease Management and
Disaster Prevention provision, which we refer to as Section
10201 of the farm bill, APHIS is partnered with numerous
states, tribes, universities, and other community partners to
strengthen and expand the scope of APHIS's pest and disease
prevention activities. Under the program, which is funded
through the Commodity Credit Corporation, APHIS is allocated
$50 million in Fiscal Year 2011, and as of today, we have
funded 317 projects this year with over 100 cooperators. The
agency provided $45 million in Fiscal Year 2010, along with $12
million in Fiscal Year 2009. This program has been hugely
successful and well-supported as we continue to see the
positive impact of the various 2009, 2010, and 2011 projects.
Because of this influx of farm bill funding, we have been
able to work with states and industry to eradicate the plum pox
virus in Pennsylvania, enhance California's ability to detect
dangerous pests entering through mail and freight. We have
eradicated 13 separate Mediterranean fruit fly outbreaks
without the use of emergency funding, and we work with states
across the country to survey for pests so that we can respond
to any pest issues swiftly.
These are just a few of the success stories that we have
seen through this effort, but the net effect of these efforts
and the many partnerships is a demonstrated improvement in
USDA's ability to detect and respond to a plant pest or disease
outbreak. Detecting and responding to a plant pest or disease
in the early stage of an introduction is a significant cost
saving for taxpayers, and can help minimize the potentially
devastating impact on agriculture.
The second farm bill program that helps address plant pest
and diseases is Section 10202, the National Clean Plant
Network. The network is a partnership of APHIS, the
Agricultural Research Service, and the National Institute of
Food and Agriculture. The network works to develop and produce
clean propagative material, so that should a plant pest or
disease strike, clean plant material is available to states,
private nurseries, and the producers. Essentially, it is like
an insurance policy that guarantees that there will be fresh
stock of disease-free plants. The network is currently
comprised of clean plant networks for fruit trees, grapes,
citrus, berries, and hops. It includes 18 supported clean plant
centers and associated programs located in 14 states. We
continue to see broad support within the specialty crop
industry, and also interest from other commodity groups in
becoming part of this program.
I would like to thank you again for the opportunity to
testify today, and we look forward to working with the
Subcommittee as you develop the next farm bill.
Thank you.
[The prepared statement of Ms. Pegg and Ms. Bech follows:]

Joint Prepared Statement of Rayne Pegg, Administrator, Agricultural
Marketing Service; Rebecca Bech, Deputy Administrator for Plant
Protection and Quarantine, Animal and Plant Health Inspection Service,
U.S. Department of Agriculture, Washington, D.C.
Chairwoman Schmidt, Ranking Member Baca, and Members of the
Subcommittee, thank you for inviting me to appear before you today to
provide a comprehensive picture of the activities authorized in the
Horticulture and Organic Agriculture Title of the Food, Conservation,
and Energy Act of 2008 (2008 Farm Bill), as well as the activities
under Section 32 of the Act of August 24, 1935 (Section 32). It is our
hope that this examination of the specialty crop, organic, pest and
disease management, and Section 32 provisions from the last farm bill
will prove helpful as you begin work on the next farm bill.
The Horticulture and Organic Agriculture Title (Title X) of the
2008 Farm Bill represents the first time that a farm bill title was
devoted exclusively to these two sectors. The U.S. Department of
Agriculture's (USDA) Agricultural Marketing Service (AMS) and the
Animal and Plant Health Inspection Service (APHIS) are the primary
agencies with responsibility for implementing Title X. APHIS Deputy
Administrator Bech is here with me today to answer any APHIS-specific
questions that you might have.
The economic vitality of rural America and the U.S. economy at
large depends on a competitive, efficient, and productive agricultural
system. In order to increase prosperity and sustainability in our
nation's agricultural system and rural communities, AMS conducts
oversight activities designed to protect producers from unfair
competition and business practices. AMS assists producers in management
and marketing through the development and oversight of national
standards for the production and handling of agricultural products.
Under the National Organic Program (NOP), the agency also develops and
oversees the standards of products labeled as organic. AMS also
supports producers by providing market trend analysis and business and
marketing tools to cover hundreds of commodities every day and
producing information that impacts billions of dollars in agricultural
products each year.
Grant Programs
The Specialty Crops Competitiveness Act of 2004, as amended by the
2008 Farm Bill, defines specialty crops to include fruits and
vegetables, tree nuts, dried fruits, horticulture and nursery crops,
including floriculture. Using this definition, specialty crops
accounted for about 20 percent of the $283 billion in U.S. farm cash
receipts in 2009. Yet, only about three percent of total crop acres in
the U.S. are devoted to specialty crops.
AMS administers two grant programs that were reauthorized and
amended in the 2008 Farm Bill. The Specialty Crop Block Grant Program
provides funding to states and U.S. territories to enhance the
competiveness of specialty crops. The agency, commission, or department
responsible for agriculture within each of the 50 states, the District
of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the
U.S. Virgin Islands, and the Commonwealth of the Northern Mariana
Islands is eligible to apply for these grant funds from USDA. The
minimum base grant each state or U.S. Territory is eligible to receive
is equal to the higher of $100,000 or \1/3\ of 1 percent of the total
amount of funding made available for that fiscal year (FY).
The 2008 Farm Bill provided the following funding levels for the
Specialty Crop Block Grant Program from the Commodity Credit
Corporation (CCC): $10 million in FY 2008, $49 million in FY 2009, and
$55 million for each Fiscal Year 2010 through 2012. In Fiscal Year (FY)
2010, approximately $55 million was awarded for 54 grants that funded
827 projects, an approximate ten percent increase in the number of
projects funded the previous year. The application deadline for FY 2011
awards is July 13, 2011.
The last farm bill also amended the definition of specialty crop to
include horticulture, and added Guam, American Samoa, the U.S. Virgin
Islands and the Commonwealth of the Northern Mariana Islands to the
list of ``states'' eligible to apply for grants. These changes required
AMS to undertake rulemaking that was completed on March 27, 2009, with
the publication of the final rule in the Federal Register.
The other AMS grant program reauthorized and amended in Title X of
the 2008 Farm Bill is the Farmers Market Promotion Program (FMPP). This
program seeks to improve and expand domestic farmers markets, roadside
stands, community-supported agriculture programs, agri-tourism
activities, and other direct producer-to-consumer market opportunities.
The 2008 Farm Bill extended the FMPP through 2012 and provided $33
million in CCC funds: $3 million in FY 2008, $5 million in each Fiscal
Years 2009 and 2010, and $10 million in each Fiscal Years 2011 and
2012.
The farm bill specified statutorily the categories of farmer-to-
consumer direct marketing activities eligible for funding under the
program. It also required that not less than ten percent of the funds
used to carry out the program in a fiscal year are to be used to
support the use of Electronic Benefits Transfers (EBT) at farmers'
markets. The 2010 awards were announced in October 2010, and totaled
approximately $4.3 million (81 awards in 35 states). A proposed rule
that established eligibility and application requirements, the review
and approval process, and grant administration procedures, was
published in the Federal Register on June 1, 2011. The 2011 Notice of
Funding Availability (approximately $10 million) was published on June
3, 2011, with a deadline of July 1, 2011 for submission of grant
proposals.
Market News
AMS' Market News disseminates detailed information on marketing
conditions for hundreds of agricultural commodities at major domestic
and international wholesale markets, production areas, and ports of
entry. Using direct contacts with salespeople, suppliers, brokers, and
buyers, Market News reporters collect, validate, analyze, and organize
unbiased data on price, volume, quality and condition, making it
available within hours of collection.
In the 2008 Farm Bill, there was a Specialty Crops Market News
allocation which authorized $9 million for each Fiscal Year 2008
through 2012, to remain available until expended. Although recent
appropriations have not specified specialty crops, AMS continues to
carry out specialty crops Market News activities as the agency collects
information on the current supply, demand and prices on nearly 400
domestic and 70 international fruits, vegetables, nuts, ornamental and
specialty crops.
Title X also directed USDA to collect data on the production,
pricing, and marketing of organic agricultural products and provided $5
million in CCC funds, available until expended. Of the $5 million
provided in FY 2008, $3.5 million was directed to AMS. In addition, the
bill required a report to Congress within 180 days of enactment on the
progress made implementing these activities and identifying additional
production and marketing data needs. The report was delivered to
Congress on December 29, 2008. AMS is working to enhance Market News
systems to expand reporting of organic market prices. By the end of
2009, AMS Market News had expanded the daily reporting of organic
commodities to include 234 items. AMS Market News also added an
additional section on the advertised specials on organic products to
the weekly National Fruit and Vegetable Retail Report.
Marketing Orders and Agreements
Marketing orders and agreements serve as tools to help fruit and
vegetable growers work together to solve marketing problems that they
cannot solve individually. These programs are designed to balance the
supply of quality product with the need for adequate returns to
producers and the demands of consumers. There are currently 32 active
specialty crop marketing orders and agreements.
Marketing orders are typically initiated by producers who have an
active role in the development of program provisions. Before any
program is implemented or amended, approval by a \2/3\ or larger
majority by number or volume represented in a referendum is required.
Local committees of farmers and handlers--appointed by the Secretary of
Agriculture--administer the orders.
Marketing orders are binding on all individuals and businesses
classified as ``handlers'' in the geographic area covered by the order.
As defined by most agreements and orders, a handler is anyone who
receives the commodity from producers, grades and packs it, transports,
or places the commodity in commercial channels. However, this
definition is ultimately defined by an individual program. Marketing
orders are distinguished from marketing agreements, in that the
agreements are binding only on handlers who are signatories of the
agreements. Handlers must comply with the grade, size, quality, volume,
and other requirements established under the specific program.
In the 2008 Farm Bill, Congress directed USDA to add clementines to
the list of products in Section 8e of the Agricultural Marketing
Agreement Act of 1937. Section 8e provides that whenever a specified
domestically produced commodity is regulated under a Federal marketing
order, imports of the commodity must meet the same or comparable
product standards as the domestic commodity. However, this provision
has not been implemented as the industry has not pursued establishing a
Federal clementines marketing order.
Also, Title X provided for an expedited marketing order for Hass
avocados relating to grades and standards. The order would become
effective within 15 months of the date that the Department began the
procedures for determining if the order should proceed. To date, AMS
has not received an industry proposal.
Research and Promotion
Research and promotion programs, often referred to as ``check-
offs'', are designed to strengthen the position of the industry in the
marketplace and to maintain and expand domestic and foreign markets.
The programs are all fully funded by industry assessments and are
authorized by Federal legislation. Board or council members are
nominated by the industry and officially appointed by the Secretary of
Agriculture. In order to ensure compliance with the legislation, AMS
oversees the activities of the boards or councils and approves their
budgets.
There were two research and promotion provisions in the 2008 Farm
Bill. The first made a number of amendments to the Honey Research,
Promotion, and Consumer Information Act. It directed AMS to consider a
national research and promotion program for honey packers and
importers. AMS received a proposal for the packers and importers
program, and conducted a referendum on that proposal from April 2-16,
2008. In the referendum, 78 percent of those voting, representing 92
percent of the volume of referendum voters, approved the program. The
program became effective on May 22, 2008, one day after the final rule
was published in the Federal Register. The first board meeting took
place on September 4, 2008. With the approval of this new program, the
collection of assessments under the Honey Research, Promotion and
Consumer Information Order--authorized under the Honey Research,
Promotion and Consumer Information Act--was suspended. A termination
order for that program was published in the Federal Register on April
17, 2009.
Furthermore, USDA was directed to consider establishing a research
and promotion program for domestic honey producers. On July 14, 2009,
AMS published a proposed rule and solicited comments for a domestic
honey producer program. The rule and referendum procedures were
published on April 12, 2010. The referendum was held May 17-June 4,
2010, and resulted in the producers rejecting the domestic research and
promotion program.
Another research and promotion provision in the last farm bill
allowed for the development of a program for Good Agricultural
Practices and Good Handling Practices under the Mushroom Promotion,
Research and Consumer Information Order, as well as reapportioned the
membership of the Mushroom Council to reflect shifts in domestic
mushroom production. AMS published the final rule implementing these
provisions in the Federal Register on October 2, 2009.
Organics
The Organic Foods Production Act (OFPA) of 1990 required USDA to
develop national standards for organically produced agricultural
products and to assure consumers that agricultural products marketed as
``organic'' meet consistent and uniform standards. The National Organic
Program (NOP) is a marketing program administered by AMS.
The 2008 Farm Bill authorized funding for the NOP at $5 million for
FY 2008, $6.5 million for FY 2009, $8 million for FY 2010, $9.5 million
for FY 2011, and $11 million for FY 2012. For FY 2010, Congress
appropriated $6.96 million while the FY 2011 funding for NOP is $6.91
million.
The National Organic Certification Cost-Share Program makes funds
available to states and U.S. territories that are interested in
providing cost-share assistance to organic producers and handlers that
are certified under the NOP. The 2008 Farm Bill provided $22 million in
CCC funds, to remain available until expended, for organic cost-share
activities, and increased the cost-share reimbursement from $500 to
$750 annually. Also, USDA was directed to submit an annual report to
Congress, by March 1 of each year, that describes requests by,
disbursements to, and expenditures for each state during the current
and previous fiscal years, including the number of producers and
handlers served. The program made approximately $4.8 million available
for FY 2010 and approximately $5.2 million is available for FY 2011.
Section 32
Section 32 of the Act of August 24, 1935 authorizes the
appropriation for each fiscal year of an amount equal to 30 percent of
the gross receipts from duties collected under customs laws of the
United States during the previous calendar year. These funds are used
to encourage domestic consumption of non-price supported perishable
commodities and to re-establish farmers' purchasing power through a
variety of activities, including: purchases of commodities and removal
of surplus commodities from the marketplace for distribution to Federal
nutrition assistance programs such as the National School Lunch Program
and diversion programs that bring production in line with demand to
assist producers. AMS annually purchases approximately $1 billion in
commodities for distribution to various nutrition assistance programs.
Section 32 funds are also used to finance the administrative costs
associated with the purchase of commodities and the development of
specifications used for food procurement throughout the Federal
Government.
The 2008 Farm Bill directed USDA to make Section 32 specialty crop
purchases of (in addition to the $200 million required in the 2002 Farm
Bill): $190 million for FY 2008, $193 million for FY 2009, $199 million
for FY 2010, and $203 million for FY 2011, and $206 million for FY 2012
and each fiscal year thereafter. AMS purchased $390.3 million in
specialty crops in FY 2008, $472.8 million in FY 2009, $511 million in
FY 2010, and plans to purchase $403 million in FY 2011.
The 2008 Farm Bill also required USDA to arrange for an independent
study and evaluation of the purchasing processes principally devoted to
perishable agricultural commodities provided in Section 32. The report
was released on May 13, 2010.
Pest and Disease Management
The mission of protecting American agriculture from foreign pests
and disease introduction is among USDA's most critical. To accomplish
that mission, APHIS has developed a robust agricultural safeguarding
system. While APHIS' efforts benefit all of agriculture, its programs
are of particular importance to specialty crops, as foreign pest and
disease introductions could potentially devastate them.
The agricultural safeguarding system that APHIS has developed is a
set of comprehensive, interlocking programs that work together to
protect agriculture. While the border inspection function--which was
transferred to the Department of Homeland Security's Customs and Border
Protection in 2003--is a critical component, it is but one part of the
layered system in place, which has programs that begin well before
products or people reach the border, and continues after their entry.
The system relies on APHIS' strength as a science and risk based
regulatory agency, and the many measures the Agency has developed,
including:

Sound regulatory policies based upon strong science and
thorough risk assessments;

Pre-clearance inspections of commodities in overseas
countries before shipment to the United States;

Extensive pest surveillance activities, both here and
abroad;

Inspection of living plants imported through USDA-operated
plant inspection stations;

Supervision of fumigation and other pest mitigation
treatments when protocols require; and

Robust emergency response activities in the event of
significant pest or disease introductions.

Together, these multi-faceted activities serve as a safety net that
allows all agriculture to succeed.
APHIS has two programs that take these measures further, by
targeting specific segments of agriculture and activities that
particularly benefit specialty crops. Both programs, which were created
in the 2008 Farm Bill, have proven to be highly effective, and widely
supported by stakeholders and industry.
The first, section 10201 of the farm bill, Plant Pest and Disease
Management and Disaster Prevention, is a new program that allows APHIS
to partner with numerous states, Tribes, universities, and other
community partners to strengthen and expand the scope of APHIS' pest
and disease prevention activities.
Under the program, which is funded through the CCC, APHIS allocated
$50 million in FY 2011 to fund 270 projects with over 100 cooperators
that prevent the introduction or spread of plant pests and diseases.
This follows $45 million in FY 2010 and $12 million in FY 2009.
Projects originate as suggestions from hundreds of cooperators
throughout the country. These projects aim to improve the six key goals
of the program:

1. Enhancing plant pest analysis and survey

2. Targeting domestic inspection activities at vulnerable points

3. Enhancing threat identification tools and technology

4. Developing programs to safeguard nursery production

5. Enhancing outreach and education to increase public awareness
and support of plant pest and disease eradication and control
programs

6. Enhancing mitigation capabilities

Projects are evaluated based on how well they align with these
goals, the expected impact of the project, and their technical
approach.
The program provides strong protection to America's agricultural
and environmental resources, and helps nursery and specialty crop
growers flourish. Over the last 2 years, Section 10201 projects have
played a significant role in many USDA successes, such as including the
eradication of plum pox in Pennsylvania, minimizing the effect of a
Mediterranean fruit fly outbreak in Florida, survey work for European
grapevine moth in California, national surveys for honeybee pests, and
methods development work to combat citrus pests.
The net effect of these efforts and the many partnerships is a
demonstrated improvement in USDA's ability to detect and respond to a
plant pest or disease. Detecting and responding to a plant pest or
disease in the early stages of an introduction is a significant cost
savings for taxpayers, and can help minimize the potentially
devastating impact on agriculture.
The second farm bill program that helps address plant pests and
disease is Section 10202, the National Clean Plant Network (NCPN). The
NCPN is a partnership of three USDA Agencies: APHIS, the Agricultural
Research Service and the National Institute of Food and Agriculture. It
aims to develop and produce clean propagative plant material. Should a
plant pest or disease strike, the network could then provide clean
plant material to states for certified clean plant programs and to
private nurseries and producers. Essentially, it is an insurance policy
that guarantees that there will be fresh stock of disease-free plants.
NCPN is comprised of commodity-based networks. Commodities that
have developed a clean plant network under the auspices of the program
are fruit trees, grapes, citrus, berries and hops. These five networks
include 18 supported clean plant centers and associated programs
located in 14 states. There has been broad support within the specialty
crop industry, and other commodities have expressed interest in the
program as well. The NCPN national stakeholder database has about 500
people enrolled who expressed specific interest in the program, which
includes nursery and grower industries, scientists, state regulatory
officials, and educators. The program has been funded with $5 million
in CCC funding each fiscal year from 2009 to 2012, to remain available
until expended.
Miscellaneous
The 2008 Farm Bill provided country of origin labeling requirements
for honey that bears any official certificate of quality, grade mark or
statement, continuous inspection mark or statement, sampling mark or
statement or any combination of the certificates, marks, or statements
of USDA. An interim rule, which became effective October 6, 2009,
established a new regulation addressing country of origin labeling for
packed honey bearing any official USDA mark or statement and added a
new cause for debarment from inspection and certification service for
honey. The final rule was published on January 4, 2011, with an
effective date of February 3, 2011.
It should be noted that USDA did not implement the 2008 Farm Bill's
Food Safety Education Initiatives provision or the Grant Program to
Improve Movement of Specialty Crops as no funding was provided by
Congress.
Conclusion
AMS and APHIS undertake numerous activities to facilitate the
competitive and efficient marketing of U.S. agricultural products, as
well as to protect and promote U.S. agricultural viability. These
efforts support the overall mission of USDA, which is to protect and
promote food, agriculture, natural resources and related issues. I hope
that this testimony and the subsequent questions and answers will prove
useful to the Subcommittee as you undertake your work on the next farm
bill.

The Chairwoman. Thank you so much for your testimony, and I
will remind the Members that just came in, that if you have any
written statements, you have 5 calendar days to bring them to
the Committee, and that we will begin questioning in order of
who came and then by seniority, and so I will begin.
I would like to start with Specialty Crop Block Grants,
probably to Ms. Pegg.
Ms. Pegg, in Fiscal Year 2010, approximately 13 percent of
block grant funding was used for research. How do states or the
USDA ensure that there are not duplicative research projects
funded with both block grants and other research projects?
Ms. Pegg. This is a good question, because not only
regarding research projects but also with the Farmers Market
Promotion Project, we need to keep this in mind when people
make applications. There are two tracks that occur. If a
project applies for a Farmers Market Promotion Grant or another
research grant throughout the Department, when that project
comes in it is shared with the other agencies and divisions to
look at if they are receiving block grant funds, therefore it
may be disqualified. Regarding block grant applications, they
will come in and we will review them, and they will have to
justify if they are receiving other grant funds, what is the
benefit, why do they need this funding, and why do they
specifically need it for this one component?
So they have to create a justification or not receive the
funding at all for that, and that is part of our review
process.
The Chairwoman. Thank you. Can you elaborate on what
activities are considered allowable marketing and promotion
activities, and allowable education activities under the block
grant program?
Ms. Pegg. There are a number of educational activities. It
must be for the benefit of specialty crops defined under the
farm bill, so if it is a marketing program, it must
specifically demonstrate that it is going to promote specialty
crops and not other commodities that are not defined. We want
to ensure that is the case when handing out the dollars,
awarding the dollars to each of the recipients. So it can vary
from a specific commodity being promoted. Education can be, for
instance, in Ohio they have done a number of projects regarding
food safety training for their producers, creating food safety
manuals and practices that are specific for their specialty
crop industry as well as their region.
So those are some examples there that they have focused on.
The Chairwoman. Thank you. When the block grants are made
to states, how much funding is being used by the states for
administration or overhead costs to run the program, and are
states required to disclose this information when they are
applying for the funding?
Ms. Pegg. Yes, there is already a ten percent cap that they
can use for administration costs for each state. They must also
provide--we go in and do site visits of the states as well as
financial audits that they provide to the program, and so they
will supply that to demonstrate that they are meeting that cap.
The Chairwoman. Thank you. Can you talk about the process a
project must undergo to be approved for a grant?
Ms. Pegg. The process initially starts with a state--each
state administers it according to what is best for their
program, whether they have a pool of people that are reviewing
the grants and then grading them and then making the
determination, but the state makes the initial determination.
They send those recommendations to USDA. We review those to
make sure that they are in compliance with the statute, that
they do support specialty crops specifically, and that there is
no other conflicts that may occur regarding other funding that
may be received before giving the final approval for the award
funds to go out to the state.
The Chairwoman. And is the program set up to favor one type
of project over another?
Ms. Pegg. No, not at all.
The Chairwoman. Okay. In Section 32, the DOD Fresh Program
uses Section 32 funds to purchase fresh fruits and vegetables
for child and other nutrition programs. I understand there has
been concern over DOD's administration of this program. Do you
think it is cost effective and efficient for DOD to make these
purchases as opposed to AMS that makes the other Section 32
fruit and vegetable purchases?
Ms. Pegg. This is a question that a number of people have
been discussing. DOD is effective in certain parts of the
United States, and we really look to our FNS, our Food and
Nutrition Service counterpart as well as those Food Service
directors that are dealing directly with DOD to see the
effectiveness. However, we have been discussing with our
counterparts regarding if it is not effective, are there some
other alternatives in which AMS could either administer or the
Food Service directors could administer directly.
So we are looking at other alternatives. We would love to
continue the conversation with the Committee at looking at
other options for schools. We do think that the DOD model is
effective for some schools, but we are also open to looking at
some other alternatives where it may not be as effective.
The Chairwoman. Thank you so much. I will allow Mr. Baca at
this time to question the panel.
Mr. Baca. Thank you, Madam Chair.
Ms. Pegg, we appreciate your insight as we look to
determine the best policies for specialty crops and organic
agriculture in the next farm bill. Since first serving on the
House Agriculture Committee, one of my greatest passions in
Congress has been the work of the Committee to improve and
expand the nutrition programs. Specifically, I am proud of the
progress we have made with the SNAP Program in the 2008 Farm
Bill. Not only did we increase the benefit level, but we also
went a long way to remove the stigma associated with food
stamps by changing the name of the program and switching to
debit cards.
That said, can you update the Subcommittee on AMS's efforts
in working with Food and Nutrition Service to ensure the
farmers markets accept SNAP benefits through debits as a form
of payment? Another question, do you have any specific data on
the number of farmers markets that currently can accept the
SNAP benefits?
Ms. Pegg. Regarding your question, this has been an
important topic and one that both my agency as well as Food and
Nutrition Service have been working on collaboratively to
determine what are the hurdles that people are facing in terms
of getting more SNAP benefits into farmers markets. There are a
couple programs that are working to increase EBT at farmers
markets, the accessibility of EBT at farmers markets. That is
the Farmers Market Promotion Program, of course. That grant
program provides for ten percent of the funds. However, in
2010, we saw 30 percent of the dollars in the Farmers Market
Promotion Program go to support EBT transactions in farmers
markets.
We are also working directly with Food and Nutrition
Service to look at the hurdles. We have developed a handbook to
help farmers markets, individual stalls in order to help them
put in EBT machines, how to administer that effectively, how to
make it cost effective, looking at some of those hurdles and
providing a handbook that gives them some additional tools for
making it simpler, so that these things are more accessible in
more markets.
We have increased the number of EBTs at farmers markets to
1,600, and we really hope to improve that over the years as we
look at some of these issues that they are facing and find new
ways to address them, so that we are creating more access in
more markets throughout the United States.
Mr. Baca. Thank you.
In the 2008 Farm Bill, we established a minimum of ten
percent set aside with FMPP funds to cover electronic benefit
transfer equipment. This allows folks participating in SNAP to
use their benefits at farmers markets. I understand since
adding this set-aside for the program demands for these debit
funds has far exceeded the supply. Are you finding this to be
the case? How many applications have you received that included
EBTs, and how many have been funded?
Ms. Pegg. Well, I don't have the 2011 numbers yet, but when
we saw the $5 million in funding of the Farmers Market
Promotion Program, we saw 30 percent of those funds going to
support EBT in farmers markets. So that is a clear indication
now we are dealing with $10 million in the 2011 year. So we are
hopeful that once we review all of those applications that we
received on July 1, we will actually see an increase in the
number of applicants for those supporting EBT transactions at
farmers markets, CSAs, food hubs, and so forth. And you are
seeing a lot of various entities throughout the nation
recognize the need for providing this to their constituency,
whether it is Detroit's food hub, that they recognize that they
are doing $30,000 a month in sales just for food stamp
recipients every month, that they need to be providing this
service at their food hub. It is one that people are
recognizing the need for, and therefore they are utilizing
Farmers Market Promotion dollars----
Mr. Baca. Let me follow up with another question since you
mentioned that. Beyond FMPP, what else could we in Congress do
to ensure that fruit and vegetable farmers selling directing to
SNAP and WIC customers, can afford to do so. That has been the
problem. Can they afford to? Costs are going up, the debit card
amounts have not. The costs of fruits and vegetables is a lot
higher.
Ms. Pegg. Well, this is one that a lot of nonprofits are
also addressing, whether they are providing the benefit of
double dollars specifically to go for fruit and vegetable
purchases. A lot of nonprofits have been focused on those pilot
programs. I think we have to be creative. It is not only those
programs within AMS, but whether it is Rural Development or
other programs throughout USDA in terms of how to address this
very specific need in creating more access of foods for those
that are underserved.
Mr. Baca. Our schools are now doing a lot of the fresh
fruits and vegetables. That costs a lot. With our school lunch
facilities downsizing and a lack of funding for these efforts,
a lot of needy children who need fresh fruits and vegetables,
aren't receiving them.
Ms. Pegg. Yes, it is a very critical issue that we need to
think about how these different programs can be used to benefit
a lot of these difficult times and difficult struggles that a
lot of local entities are facing right now.
Mr. Baca. Right. I know that my time has run out. Hopefully
in the second round I can ask Ms. Bech some questions.
The Chairwoman. Thank you, and now, Mr. Southerland, you
have 5 minutes.
Mr. Southerland. Thank you, Madam Chair. Ms. Bech, I wanted
to ask--you may not be aware, but I am from Florida and so
obviously in Florida, we have an enormous number of specialty
crops. I just want to ask you some questions regarding the
Specialty Crop Research Initiative, if I could read a brief
statement here. ``Florida, as many other specialty crop regions
of the country, are fighting an extremely dangerous threat due
to citrus greening''--which I am sure you are familiar with--
``represents an immediate threat to the entire $12.2 billion
citrus industry in Florida, California, Alabama, Louisiana, and
Texas. The specialty crop disease has the ability to kill
citrus trees and their fruit within a few short years,
literally placing the future of citrus production in this
nation at risk. Citrus ranks nearly first in the nation among
crop value, among fruit and vegetable specialty crops,
according to the USDA's National Agricultural Statistics
Services. Timely research on citrus greening and its vector,
the Asian citrus psyllid, is absolutely essential to ensuring
the future of citrus production in this country.'' As you know,
Congress authored the Specialty Crop Research Initiative under
the farm bill in an effort to meet the critical needs of the
specialty crop industry by developing and disseminating
science-based tools to address needs of specialty crops,
including pest and disease management, resistance to pest, and
diseases and management strategies in an effort to identify and
address threats from pests. This is the type of research need
for which Congress intended to address through the SCRI, and it
would be difficult to identify a specialty crop of such major
national significance that faces more of a devastating risk to
the future of its existence. Recognizing this dire challenge,
domestic citrus growers have self-funded more than $39 million
in research annually over the past 4 years. Please explain, if
you would, why the USDA has declined to fund over the last 3
years this devastating disease through Specialty Crop Research
Initiative Program, as I have stated, designed by Congress and
intended specifically for the purposes such as these.
Ms. Bech. Well, we certainly share your concern. Citrus
Greening is a very devastating disease. The Specialty Crop
Research Program is administered underneath the National
Institute of Food and Agriculture, which is not my program, and
we can get you some information about the administering of that
particular program.
For APHIS, I would like to say that we have a Citrus Health
Response Program in which part of that funding we set aside for
research, and we have worked very closely with the growers and
the industry down in Florida as well as the rest of the citrus
industry to try to address the concerns about citrus greening.
Mr. Southerland. I think--and that would be helpful. I will
tell you, having been there and been on the ground there, no
country that has ever faced this has ever solved it. It
literally wipes out the citrus industry. This is an enormous
problem, and having met the farmers that are there that are
funding this, and perhaps not getting the assistance that I
think some of the funds were set up to aid is bothersome. So I
would appreciate that. Thank you very much.
Ms. Pegg, I want to ask a quick question. The Specialty
Crop Block Grants provide Florida flexibility to meet the
unique farming challenges of our state, targeting specialty
crops including fruits and vegetables and nursery to support
projects and marketing research innovation, education, pest
disease management, and other things. Florida, as I stated, is
the second largest recipient based on specialty crop
production, receiving $24.3 and $4.9 million annually.
Please comment, just with the time I have remaining, on
this block grant program which gives the states flexibility to
address their unique agricultural needs.
Ms. Pegg. Well, I think you have raised a lot of the points
that are important to this program. It really is one of the
programs that is very beneficial to each state and the growers
in that state and what they are facing. What the projects that
Florida may be focused on, whether it is food safety or finding
new tomato varieties or looking at methyl bromide's
alternatives are really specific to those needs of that
industry versus what Ohio or even California will focus on,
which I think is really the success of this program, is it is
really meeting the unique needs of whatever those producers are
facing. I think that is why it has been such a successful
program and why people really do feel that they are seeing the
benefits of those dollars.
Mr. Southerland. Madam Chair, I see that I am out of time
so I will yield back what time I don't have.
The Chairwoman. Thank you. Why don't we go to Mr. Crawford,
5 minutes, and then we will go to round two on questions.
Mr. Crawford. All right, thank you, Madam Chair.
Last fall, USDA announced that Section 32 funds would be
used to fund $630 million in disaster assistance. Ms. Pegg, can
you cite the authority that the Department used to establish
such a disaster assistance program under Section 32 funds?
Ms. Pegg. You know, it is really important under Section 32
to look at all the clauses which give us the authority for the
different activities that we do. So Clause 1 is encourage
exportation of agricultural products. Clause 2 is encourage
domestic consumption. Clause 3 is reestablish farmer's
purchasing power by making payments in connection with normal
production of agricultural commodities. In addition, the
Secretary also has the authority to direct Section 32 funds to
be used for special disaster assistance programs, and this is
the authority that we used to provide that funding. We provided
a total of $270 million in support for those that were
experiencing the excessive moisture flash flooding disaster in
the Midwest.
It is important to note that this authority has not only
been used in recent years, but you know, in 2007 it was used to
help hog producers with the melamine poisoning. It was also
used in 2006 to help citrus growers with citrus canker in
Florida. So it has been a tool that many Secretaries have used
over the years to help those producers that are struggling.
There is a number of tools under Section 32, not only providing
disaster assistance, but whether that be bonus buys and so
forth.
Mr. Crawford. Okay. I understand the Commodity Credit
Corporation funds were to be used to make up for this shortfall
in Section 32 funds. How much CCC funding has been used to make
commodity purchases that would have normally been bought with
Section 32 funds?
Ms. Pegg. So just to back up a little bit, initially it was
announced that $550 million would be used to provide support.
We didn't use all of that $550 million; only $270 million was
actually used in support. So there is roughly, $160 million
still available to provide, whether it be bonus buy assistance
or disaster assistance under the Section 32 account. So there
are still funds available to meet the needs, should anything
occur in the remainder of the fiscal year.
Mr. Crawford. Okay. I understand CCC has a line of credit
with the Treasury that has to be paid back. Will future Section
32 funds have to be used to reimburse the CCC?
Ms. Pegg. Well, there is the authority to use Section 32
CCC funds if we need to, and there--we can consider if we need
to, to reimburse CCC funds. That has not yet been determined if
that is necessary at this time.
Mr. Crawford. Okay. I yield back. Thank you. Thank you, Ms.
Pegg.
The Chairwoman. I would now like to look at pest and
disease issues, and probably Ms. Bech would be better suited
for this, but feel free to chime in.
What is the main conclusion that can be drawn from the 2009
Annual Pesticide Data Report you just released this spring?
That would be you, Ms. Pegg.
Ms. Pegg. Sorry about that, we were--yes. The Pesticide
Data Report is I think the one you are referring to regarding
the residues, and this is a really important report because it
is really showing us the historical trends in terms of
pesticide use throughout the United States. It looks at
pesticide usage for all the different commodities primarily
consumed in the marketplace.
So what it is indicating is it is indicating that we are
seeing that pesticide use over time is reducing. There is a
changing in trends in terms of pesticide use. Producers are
moving to softer chemicals, as well as overall, our annual
report shows that pesticide residues found on foods tested at
levels below tolerances established by EPA. So you know, as we
are always encouraging people to eat more fruits and vegetables
and to wash them before you do, and I think this age-old rule
still applies.
The Chairwoman. What do you believe the purpose of the 2009
annual report is, and what value was derived from it, do you
believe?
Ms. Pegg. Pardon, what was the second question?
The Chairwoman. What was the value of the program shown in
the report?
Ms. Pegg. Well, there are a lot of purposes for it. I mean,
not only does it help inform EPA in terms of trends that we are
seeing in terms of usage, there is also value in it in that it
is also used in discussions with foreign countries when they
ask about pesticide usage for various commodities to set
maximum residue limits. What we are seeing the trends is that
overall usage is changing, and we are using softer chemicals
and transitioning from some of the older chemicals that were
used in previous years. So you are seeing some developments in
terms of that science and technology, and the products that are
available in the marketplace.
The Chairwoman. When consumers hear about residue, they
might get concerned. I think you have answered the question you
tell them to wash the fruit, but what advice is there for
consumers who are still troubled by the newspaper stories
warning of the consumption of produce based in this report?
Ms. Pegg. Well, once again our annual report shows that
overall pesticide residues found on foods tested are at levels
below the tolerance established by EPA, and it also shows us to
continue eating fruits and vegetables, and wash them before you
do.
The Chairwoman. All right, and then to go back to Section
32 again. Does the Department have the ability to operate the
DOD Fresh Program, or would legislative language be needed for
you to operate it?
Ms. Pegg. We do have the authority to operate that program,
should it be necessary.
The Chairwoman. Okay. In your testimony outlines, the
required Section 32 specialty crop purchases for each fiscal
year, and that AMS plans to purchase $403 million in Fiscal
Year 2011. Can you tell me how much of this you have spent so
far?
Ms. Pegg. Yes. There is the total requirement for fruit and
vegetable purchases of the $403 million that you mentioned, and
so far we have purchased $232 million in fruit and vegetable
purchases. So we will have to meet that minimum before the end
of the fiscal year.
The Chairwoman. Last fall, the USDA announced that Section
32 funds would be used to fund $630 million in disaster
assistance. What authority did the Department use to establish
such a disaster assistance program using Section 32 funds?
Ms. Pegg. The authority that we used is the Secretary also
has the authority to direct Section 32 funds to be used for
special disaster assistance programs is the authority that we
used. And we used a total of $270 million to provide that
assistance to sweet potato, rice, soybean, cotton farmers that
were experiencing crop loss.
The Chairwoman. Has the Department used this authority
before?
Ms. Pegg. Yes, we have used this authority a number of
years. In 2006, we used it for Florida growers dealing with
citrus canker. We have used it for the melamine incident with
pork producers. So we have used it on a number of occasions.
The Chairwoman. Okay. And now since I am about out of time,
first off, Mr. Costa has joined the dais. Do we have unanimous
consent that he can ask questions of the panel? Is there
agreement? Fine. And I think the next 5 minutes goes to the
Ranking Member, Mr. Baca, and then Mr. Southerland and then Mr.
Costa.
Mr. Baca. Thank you, Mrs. Schmidt. With a constant threat
of invasive species like the Asian citrus psyllid, and the
European grapevine moth, pest and disease management is
critical to agriculture in my home State of California. Because
of this, I am very interested in the implementation of Section
10201 of the 2008 Farm Bill. While I am pleased to know that
the pest prevention project in California has received
approximately $12 million in funding for the Fiscal Year 2011,
I am concerned regarding APHIS prohibition from funding the
administration costs associated with these projects. Congress
has now acted on three separate occasions, the Recovery Act,
the Agriculture Appropriation Bill for 2011, and the
Agriculture Appropriation Bill for 2012, to provide technical
correction that allows APHIS to move forward with the
administrative funding needed. Do you have any recommendations
for how these issues can be permanently resolved so that
constant funding for the program may continue?
Ms. Bech. Yes, well we share the concern and first, we
appreciate Congress passing the temporary fixes. We agree that
there needs to be a permanent fix, and we believe that the
permanent fix can be achieved either through the farm bill or
another law. We would look forward to working with you with
language.
Mr. Baca. Okay. Can you please provide the Subcommittee in
writing of the USDA's Office of General Counsel's opinion on
the current prohibition and their recommendation as to how to
best resolve it?
Ms. Bech. Well, we would be happy to work with our Office
of General Counsel to address your request about the opinion,
and I am no lawyer, but I would be happy to talk a little bit
about it.
We know that according to USDA's General Counsel and the
Department of Justice that the statute provided that the
Secretary can use the funds, facilities, and authorities of CCC
to carry out a particular program or activity. However, the
funding cap on administrative expenses of the CCC Charter Act
continues to apply, so we can work with our Office of General
Counsel to address your requests.
[The information referred to is located on p. 225.]
Mr. Baca. Okay, thank you. In 2009, APHIS released a pest
and disease risk assessment update for 50 states. This update
mentioned specific challenges and identified risks and
suggestions that included county level data that would be
helpful in better identifying the risks moving forward. Has the
Department released an updated risk assessment analysis since
October of 2009? If not, can you tell me how APHIS plans to
refine its interpretation of the pest finding and trends, and
how would these changes impact partnership among the Federal,
state, and industry cooperators?
Ms. Bech. Well, we initially characterized the states' risk
by applying certain criteria, and we looked at different things
such as the susceptibility of the state to invasive species,
the number of ports that they have, as well as things like the
impact and the agricultural commodities that are grown in the
state. And while we did that with consulting our National Plant
Board, as well as working with the Specialty Crops Farm Bill
Alliance, you can imagine when we came out with the assessment
that there was some concern about how different states ranked.
But we used that--it is not a formula-based method that we used
to establish the funding of the project, so this is only one
aspect that we used. But because there was some concern, what
we have done is we have authorized the use of funds for some of
the projects working with states to redefine what that
assessment process would look like, and we funded two projects
with that. We are hoping that they will be completed this year.
By the end of the year, we hope to reassess the assessment for
the risk ranking of the states, and we would be able to then
look at how that would be implemented.
So the actual impact on it right now I think it really
shows that we have to work together and that we can employ all
the different interests to come together to administer the
funds. I think it would actually support a stronger team-
building effort.
Mr. Baca. Thank you. I know that my time has run out, are
there any duplicated services that can be consolidated in
trying to implement this?
Ms. Bech. The specific risk----
Mr. Baca. Yes, are there duplicated services that we might
want to consolidate to reduce our costs, and yet still provide
these important services?
Ms. Bech. Well, I think that the risk assessment as well as
the other things that we look at, and the transparency in which
we go about looking at the projects and the funding list have
served us well, and it shows a coordinated effort, especially
because a lot of the projects that we fund cross multiple
states and we look at regional approaches as well. So it is
really looking at it nationally as well as individually.
Mr. Baca. Thank you. I know my time has run out, Madam
Chair.
The Chairwoman. Mr. Southerland?
Mr. Southerland. Thank you, Madam Chair.
Mrs. Bech, I apologize for asking you a question outside of
your purview here, but obviously we will track that down,
because citrus greening is terribly important to all of those,
especially the Florida delegation.
Moving over to APHIS, could you explain to me, as a new
Member, just--and this will be very simple as my only
question--just elaborate how the USDA assesses risk. Help me
understand: I know 4\1/2\ minutes is not a long time, but give
me kind of a kindergartner's understanding of how that--how it
works. How do you go after it?
Ms. Bech. Well, that is a good question, and we can provide
you with some additional information after this hearing about
it.
Mr. Southerland. Okay.
Ms. Bech. But one of the things we have done is we have
really created a very collaborative approach with working with
the states, as well as the industry groups to look at the risk,
and as I mentioned earlier, we had a risk assessment that was
done, looking at the different risks of the states and looking
at the kinds of commodities, the impacts, the kinds of invasive
species that are coming through, such as citrus greening and
the Asian----
Mr. Southerland. So they are the ones that--I apologize for
interrupting, but you are basically put on notice from the
states because they have obviously--something has been
triggered and they see it, so they are doing basically R&D for
you?
Ms. Bech. Well, what the states are doing is we are working
together to survey and to look at the pests that are coming in,
and so we are working as a team to address the threats as they
come in.
Mr. Southerland. Okay.
Ms. Bech. And we have been enhancing the surveys that the
states do, as well as providing traps and lures, things like
that. So it is really a real partnership.
Mr. Southerland. Collaborative effort. Is that--and part of
your assessment, obviously when you have aid that you can send
to the states, I mean, is there--do you always take into
account the economic impact if those diseases or insects would
go unhampered? I mean, as far as being able to prioritize,
okay, because obviously you have a finite resource and you have
so many problems. I mean, do you prioritize based upon the
impact economically, because that is a jobs issues to many
states.
Ms. Bech. Yes. Well, we do look at economics but there are
other factors that weigh in as well, and we try to look at the
impact--like you are a citrus-producing state. Certainly the
problems that you are facing in Florida impact the other
citrus-producing states as well, so we take many things into
consideration and the impact on the commodity itself, yes.
Mr. Southerland. Very good, thank you. And if you could
give me information, maybe provide it to our office, I would
welcome that. I would love to learn more about how you go about
assessing. So thank you.
I yield back.
The Chairwoman. Thank you. Now, Mr. Costa from California.
Mr. Costa. Thank you very much, Madam Chairperson, for
allowing me to participate with the Subcommittee this
afternoon. It is an important issue, and I look forward to
questioning the witnesses.
For my colleague from Florida, what we tend to do is look
at this in terms of risk assessment versus risk management.
Your ability to manage the risk is based upon your ability to
assess the various aspects of risk. Then with state agencies
and local ag commissioners in California, you make a
determination on what resources should be placed on the
management of the risk, based upon the risk assessment that has
taken place.
I would like to ask this question as it relates to APHIS.
As you know, over the 16 year period from 1995 to 2010, as it
relates to our ability to export our products abroad, we have
had 312, World Trade Organization SPS trade concerns that have
been raised. Of these, 212 trade concerns, I understand, remain
unresolved. California, is at the tip of this spear. California
uses over 500,000 phytosanitary export certificates to access
those markets.
My question to you is how APHIS works with all Federal
agencies in trying to deal with this backlog? How does it
assist the USTR on these SPS trade concerns? Ms. Bech, can you
address that quickly, because I have some other questions.
Ms. Bech. Okay. Well, I will try to address what APHIS has
done, but of course, our USTR and others take the lead in----
Mr. Costa. I know, but I want to understand APHIS's role.
Ms. Bech. Yes, so we provide technical support on that, we
do bilateral agreements with the----
Mr. Costa. But how well are you helping USTR deal with
those 212 trade concerns? You haven't been able to come up to
speed on the risk management side to provide those export
certificates.
Ms. Bech. Well, the export certificates are to meet the
trade obligations for the others, and what we do is provide the
assessments. I believe that might be what you are talking
about. However, I would like to clarify that there is no
backlog of export certificates.
Mr. Costa. Right.
Ms. Bech. And we have certainly worked very carefully in
shortening the risk assessment, categorizing it into a tiered
process to look at the priorities to address that----
Mr. Costa. Can you clarify the link between the pest and
the disease challenges, how in working with your partners in
USDA possible trade disruptions and the potential economic
losses that would occur to our agricultural producers are
addressed and hopefully minimized?
Ms. Bech. Well, I think if I can clarify, if I might ask a
clarifying question. Are you asking what we are doing with the
other USDA agencies in addressing the disease impacts on the
economics? Then we are providing, again, the assessments that
go into that economic analysis and working with our Foreign
Agriculture Service to address those issues.
Mr. Costa. Do you have any explanation as to why only \1/3\
of the SPS certificates or trade concerns have been addressed?
Ms. Bech. Well, I could get further information on it.
[The information referred to is located on p. 234.]
Mr. Costa. Let me, move quickly because my time is
expiring. I would like your agency to respond to our folks who
really rely upon you in their ability to get those trade
certificates expedited so that we can access international
markets.
Ms. Bech. Yes, sir.
Mr. Costa. Thank you.
Ms. Pegg, enjoying Washington?
Ms. Pegg. Yes, very much so.
Mr. Costa. Good. She is a former Californian. We used to
interact in the old days.
The Chairwoman and the Ranking Member were asking you on
your agency's various efforts on the USDA school lunch and
breakfast programs. How to expand the commodity purchases. You
talked about the amount of money left in this fiscal year. How
would you, with your previous experience and background,
suggest improvements to get healthy fruits and vegetables, and
better diets into our schools. How would you assess our
efforts, thus far, since the 2008 Farm Bill, both in California
and here in Washington?
Ms. Pegg. Well, I think the 2008 Farm Bill, because it
established those minimums--you know, in previous years, we
have exceeded the minimum amount, whether it was the minimum,
$399 million, we have purchased in the $400 to $500 million
amount. This year, we are seeing a slightly different situation
because we aren't getting a number of bonus buy requests
because people aren't having oversupply in the marketplace. So
that does impact some of the products supplied to schools and
food banks.
I think not only is it the collective work of our
purchases, it is also the food and nutrition standards that
they establish, and then to schools and what they do with that.
I mean, you are seeing a lot of schools that are really
recognizing how they can change their menus to provide more
variety, healthier choices for their students, and that is not
just--it is both including bonus buy, pork buy that we may
deliver to them, as well as complementing that with a local
orange to make a citrus pork dish. I mean, really schools are
being creative to provide more variety in their menus, and I
think we are also developing a lot more programs to assist them
in that, whether it is through more training, different
services to those food service directors, as well as looking at
the menu of items that we purchase directly from our Section 32
account.
Mr. Costa. Madam Chairperson, my time has expired. I
appreciate the answer. Madam Chairperson, knowing how health
conscious you are and how many marathons you run, and having a
good healthy diet, this is an area that is a constant source of
frustration. We see obesity continuing to increase among our
young people. Our efforts with regard to a better healthy
nutrition program in our schools is a step in the right
direction. I am just not sure if this Subcommittee can continue
to examine some new efforts on how we can do a better job. We
grow the healthiest, most abundant food products anywhere in
the world. Our farmers, our dairymen, our ranchers, excel in
doing this. Trying to get those products--those healthy food
products in our school lunch and breakfast programs is
essential to our children
The Chairwoman. We are going to have a hearing on that in
the future, and I invite you to come back, but before we
adjourn, I do have just two more questions, and looking at the
Members here, Mr. Baca may have one, and maybe Mr. Costa so we
may get out here in a quick dash.
But I want to talk a little bit about block grants. State
departments of agriculture have expressed frustration with the
timeliness of the notice of funds available being published by
the Office of Management and Budget, the OMB. Any delay in this
notice creates pressure on state grant processes, which can
discourage grants to non-state operated grant requests. What
needs to happen to expedite this process?
Ms. Pegg. Well, we recognize those concerns. Unfortunately,
because of the delay in the appropriations bill which gave us
the authority to use the funds for administrative functions,
that was the delay in getting out that notice. So there was
part of the reason why we had the concern. It also delayed the
notice for the farmers market promotion and the result of
basically a month turnaround in receiving applications. So that
is one of the issues that we ran into this year. We need to
look at some solutions in coming years to resolve that more
quickly so we can be more timely in our announcements and
getting those dollars out.
The Chairwoman. Thank you. It is our understanding that
states are required to submit state performance reports after
an annual agreement is completed. The reports are supposed to
detail the performance, outcomes, and results of the state
block program projects. What is the status of these reports,
and have states been submitting them in a timely manner, and if
not, do you know why?
Ms. Pegg. I can get you a number of how many reports we
have received. I think one of the important things to know of
this is that because some projects go over a 3 year period, we
have staggering of reports so some reports we are still waiting
for because the project has not yet been completed with the 3
year period that a project may go on for. But I think we are
current, but I will get you a final number of what we currently
have and what is still left to be received. There are currently
121 reports available.
The Chairwoman. Thank you. Mr. Baca, do you have any
questions?
Mr. Baca. I do, just a quick question. Earlier, Ms. Pegg,
you talked about the deadline of July 1st for anyone to submit
their SCBGD grants. It seems that state departments of
agriculture have expressed some frustration with the publishing
timeline for the notice of funds availability. Any delays in
this announcement creates pressure on the states, which can
discourage grant applications. What needs to happen for this
process to be expedited?
Ms. Pegg. Well, just to kind of mention it, what occurred
this year is the appropriations process, because Congress did
not act as quickly as needed. We had initially expected but
finally reached an agreement. We needed language in the
appropriations bill that would allow us for issuing those funds
and using those funds for administrative costs, so that was the
delay until the budget for 2011 was approved. That was the
delay in getting out the notice. So we can talk with you about
some options and some language that could be included in future
pieces of legislation that would assist in getting more timely
notices out.
Mr. Baca. We would love to hear suggestions. Hopefully we
can work on possible improvements.
Ms. Pegg. We would be happy to work with you on that.
Mr. Baca. Just one more question. Several grants supporting
the farmers market project have been approved under the SCBGP,
even though the farm bill provides for farmers market promotion
programs. How are these programs being coordinated? Shouldn't
projects related to farmers markets be considered by the
farmers market promotion program?
Ms. Pegg. Yes, and this very important that we don't have a
duplication or double-dipping when people are applying. So what
occurs is when there is an application for a farmers market
under the block grant program, in reviewing that application we
also send that to those that administer the farmers market
promotion program, the FISNIT Program, if it is a Rural
Development program, to ensure that they are also not receiving
funds under those grant projects. If they are receiving funds,
then they must then demonstrate what is the need for why they
must receive block grant funds. So that is part of our review
process to ensure that there is no double-dipping.
Mr. Baca. Does USDA have a follow-up mechanism for state
oversight to make sure that there is no double-dipping? What
are the consequences for those that are double-dipping?
Ms. Pegg. We do have follow-up in terms of the site visits
that we do to the states, the audits that they are required to
provide. There are no penalty provisions that I am aware of for
the double-dipping, but we would be happy to discuss that with
you.
Mr. Baca. Thank you. Maybe penalties is something to
consider. If there are no penalties, if I can get away with it,
I will get away with it.
Ms. Pegg. Well, we hope that our process does protect from
that ever occurring, and we hope that--yes, hopefully. We hope
that the process is stringent enough where both programs are
catching something, should an entity try to apply for all
funds. And I do see those--when every grant comes to my desk, I
do see the response of every agency, whether they have applied
for MAP or TASC funds, FMPP, Rural Development funds, every
grant application is reviewed upon those and there is a
response specific to that grant application.
Mr. Baca. Okay, thank you. With that, I have exhausted my
time so I yield back.
The Chairwoman. Thank you. Mr. Costa, do you any other
questions? Thank you.
Well, I want to thank the panelists, Ms. Pegg and Ms. Bech,
for being here today, and I wish you luck.
Ms. Pegg. Thank you.
The Chairwoman. This hearing is over. Thank you.
[Whereupon, at 4:08 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Supplementary Material Submitted by Rebecca Bech, Deputy Administrator
for Plant Protection and Quarantine, Animal and Plant Health Inspection
Service, U.S. Department of Agriculture
During the July 7, 2011 hearing entitled, Agricultural Program
Audit: Examination of Specialty Crop Programs, requests for information
were made to Rebecca Bech. The following are the information
submissions for the record.
Insert 1
Mr. Baca. Okay. Can you please provide the Subcommittee in
writing of the USDA's Office of General Counsel's opinion on
the current prohibition and their recommendation as to how to
best resolve it?
Ms. Bech. Well, we would be happy to work with our Office of
General Counsel to address your request about the opinion, and
I am no lawyer, but I would be happy to talk a little bit about
it.
We know that according to USDA's General Counsel and the
Department of Justice that the statute provided that the
Secretary can use the funds, facilities, and authorities of CCC
to carry out a particular program or activity. However, the
funding cap on administrative expenses of the CCC Charter Act
continues to apply, so we can work with our Office of General
Counsel to address your requests.

Please see attached memorandum.

December 22, 2008

Memorandum for W. Scott Steele, Director, Office of Budget and Program
Analysis

From:

Marc L. Kesseman,
General Counsel.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Subject:

Opinion re: Use of Commodity Credit Corporation Funds for Salaries and
Expenses

Issue:
This memorandum sets forth the opinion of the Office of the General
Counsel regarding when Commodity Credit Corporation (``CCC'') funds may
be used to pay for the costs of Federal and state agencies with respect
to the implementation of CCC programs.
This opinion has been prepared in response to recent requests for
the apportionment of CCC funds for the Healthy Forests Reserve Program
(``HFRP'') and the Agricultural Management Assistance Program
(``AMAP''). In reviewing these requests, it has become apparent that
clear legal guidance would benefit Department officials confronting the
question of when CCC funds may be expended for the salaries and related
administrative costs associated with the implementation of programs
that Congress has directed to be funded by CCC.
As a result of amendments to section 11 of the Commodity Credit
Corporation Charter Act made by section 161(b)(2) of the Federal
Agricultural Improvement and Reform Act of 1996 (the ``1996
Amendment''), there are significant limitations on the ability of CCC
to use its funds for the payment of costs incurred by state and Federal
agencies in the administration of CCC programs.\1\ Generally, as a
result of the 1996 Amendment, CCC may annually use not more than
$56,102,727 to reimburse Federal and state agencies for costs they
incur in the administration of CCC programs.
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\1\ The current text of section 11 is attached as Appendix 1.
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The Farm Security and Rural Investment Act of 2002 (the ``2002
Act'') authorized the use of CCC funds to pay for the salaries and
related expenses incurred in the delivery of a number of specified
programs. In response to a request by the Office of Management and
Budget (``OMB''), the United States Department of Justice (``DOJ'')
opined on the application of section 11 of the CCC Charter Act to
specific conservation programs authorized by the 2002 Act. We conclude
that the analysis of the 2003 DOJ opinion \2\ applies with full force
to the question presented here.
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\2\ Appendix 2.
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As noted in the 2003 DOJ opinion, the mere reference to the use of
CCC to carry out a program does not supersede the limitations in
section 11 of the CCC Charter Act. The enactment of the Food,
Conservation, and Energy Act of 2008 (the ``2008 Act'') again raises
the question of the extent to which funds of CCC can be used to pay
salaries and expenses in carrying out programs where the statute
authorizing the program provides that CCC funds or authorities will be
used with respect to such programs. Appendix 3 sets forth a
comprehensive list of the provisions of the 2008 Act that implicate the
use of CCC funds in the conduct of programs.
My office has consulted with OMB before issuance of this opinion
and OMB concurs with our conclusions.
Discussion:
I. 2002 Act
After enactment of the 2002 Act, a question arose with respect to
the propriety of using CCC funds to pay for the technical assistance
costs of the Natural Resources Conservation Service relating to several
CCC-funded conservation programs.
Section 1241(a) of the Food Security Act of 1985 (the ``1985 Act'')
had been amended by the 2002 Act to authorize the Secretary to ``use
the funds, facilities, and authorities of the Commodity Credit
Corporation to carry out'' seven listed conservation programs. As noted
at page 4 of the 2003 DOJ opinion, although these seven programs
provided for the use of CCC funds for program activities, the provision
of technical assistance using CCC funds was limited by section 11 of
the CCC Charter Act:

We believe that section 1241(a) does not confer on the CCC a
source of authority, independent of section 11, for funding
technical assistance to the programs listed in section 1241(a).

Subsequently, Congress amended the 1985 Act to specify that the use
of CCC funds to pay for technical assistance, as defined in section
1201(a)(25) of that Act would not constitute ``an allotment or fund
transfer from the Commodity Credit Corporation for purposes of the
limit on expenditures for technical assistance imposed by section 11 of
the Commodity Credit Corporation Charter Act (15 U.S.C. 714i)'' \3\
with respect to seven programs listed in section 1241(a) of that Act:
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\3\ Section 1241(c) of the 1985 Act.

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1. The Conservation Reserve Program;

2. The Wetlands Reserve Program;

3. The Conservation Security Program;

4. The Farmland Protection Program;

5. The Grassland Reserve Program;

6. The Environmental Quality Incentives Program; and

7. The Wildlife Habitat Program.

The 2008 Act added the Conservation Stewardship Program to section
1241(a), and it is therefore treated the same as the seven programs
originally enumerated. As a result of this Congressional action, CCC
funds have been made available to pay salary and related costs in the
administration of these eight programs.
II. 2008 Act
The 2008 Act contains approximately 30 references to programs that
use CCC funds in their implementation (see Appendix 3). While the
majority of the 2008 Act provisions that authorize the use of CCC funds
are not independent of section 11, the following sections of that Act
do provide such independent authority and, therefore, CCC funds may be
used for administrative costs without regard to the limitations in
section 11:

1. Section 1622--Section 1601 provides that the funds, facilities
and authorities of CCC shall be used to carry out Title I of
the 2008 Act and section 1622 further directs the Secretary of
Agriculture to make available $50 million to the Farm Service
Agency to carry out such title.

2. Section 2510--This section amends Title XII of the 1985 Act by
adding a new section 12401 to authorize the establishment of
the Agricultural Water Enhancement Program. Section 1240I(b) of
the 1985 Act specifically provides that an agricultural water
enhancement program shall be established ``as a part of the
environmental quality incentives program [EQIP].'' Because EQIP
is one of the eight programs subject to section 1241(c) of the
1985 Act, CCC funds may be used to pay for technical assistance
expenses.

3. Section 2605--This section amends Title XII of the 1985 Act by
adding a new section 1240Q to authorize the establishment of
the Chesapeake Bay Watershed Program (the ``CBWP''). Section
1240Q(c) of the 1985 Act provides that: ``The Secretary shall
deliver the funds made available to carry out this section
through applicable programs under this subtitle. . . .'' The
reference to ``applicable programs under this subtitle''
includes those eight programs listed above. Because the CBWP is
not an independent program but simply an authorization to use
additional funds of CCC to carry out delineated programs in the
Chesapeake Bay Watershed, to the extent the CCC funds are used
to carry out one of the seven listed conservation programs, CCC
funds may be used to pay for technical assistance expenses.

4. Section 3106--This section amends section 3107 of the 2002 Act
to provide that $84 million of CCC funds shall be used to
administer the McGovern-Dole International Food for Education
and Child Nutrition Program. Section 3107(l)(3) of the 2002 Act
provides that funds made available to carry out the program may
be used to pay related administrative expenses.

5. Section 7410--This section amends section 7405 of the 2002 Act
to provide that $18 million of CCC funds shall be used to carry
out the Beginning Farmer and Rancher Development Program in FY
2009 and $19 million in each of the 2010 through 2012 Fiscal
Years. Section 7405(c)(7) of the 2002 Act provides that not
more than four percent of the funds made available to carry out
this program may be used for administrative expenses.

6. Section 9001(a)--This subsection completely revises Title IX of
the 2002 Act. Included in this revision of Title IX is a new
section 9008, containing the authorization for the Biomass
Research and Development Board and the associated grant
program, which is funded by CCC. The new section 9008(f)(3) of
the 2002 Act specifically authorizes the Secretary to use not
more than four percent of the funds made available to carry out
this program, including the CCC funds, for the administration
of the authorized activities.
III. Other Statutory Provisions
Four additional statutory provisions pre-dating the enactment of
the 2008 Act also warrant reference in this opinion:

1. Section 1469(a)(3) of the National Agricultural Research,
Extension, and Teaching Policy Act of 1977;

2. Section 10417 of the Animal Health Protection Act;

3. Section 442 of the Plant Protection Act; and

4. Section 7405(c) of the 2002 Act.

We have determined previously that these four provisions provide
authority independent of section 11 of the CCC Charter Act to use CCC
funds for salaries and related expenses, and we do not amend that
determination here.
Section 1469(a)(3) of the National Agricultural Research,
Extension, and Teaching Policy Act of 1977 authorizes the Secretary to
retain up to four percent of amounts made available for agricultural
research, extension, and teaching assistance programs under any Act for
the administration of those programs. A similar provision is set forth
in section 7405(c) of the 2002 Act, as amended by section 7410 of the
2008 Act, with respect to the Beginning Farmer and Rancher Development
Program. Section 10417 of the Animal Health Protection Act and section
442 of the Plant Protection Act provide for the transfer of funds
otherwise available to the Secretary, including CCC funds, for use in
eradicating animal and plant pests.
Conclusion
With respect to the HFRP and AMAP, although CCC funds may be used
to pay for salaries and related expenses, the use of CCC funds for
these expenses would be subject to the limitations of section 11 of the
CCC Charter Act.
Based upon the foregoing analysis, and consistent with the 2003 DOJ
opinion, CCC funds may be used to pay for salaries and related expenses
attendant to programs carried out by Federal and state agencies
independent of section 11 only with respect to activities authorized
by:

1. Section 1469(a)(3) of the National Agricultural Research,
Extension, and Teaching Policy Act of 1977;

2. Section 10417 of the Animal Health Protection Act;

3. Section 442 of the Plant Protection Act;

4. Section 1241(a) of the 1985 Act;

5. Section 1240I of the 1985 Act;

6. Section 1240Q of the 1985 Act.

7. Section 3107 of the 2002 Act;

8. Section 7405(c)(7) of the 2002 Act;

9. Section 9008 of the 2002 Act; and

10. Section 1622 of the 2008 Act.

This list is, of course, subject to change by Congress; but cannot
be amended by regulation or other Administrative action.
Legislative Changes
If the relevant policymakers decide to seek a legislative change,
we stand ready to assist with drafting language similar to that adopted
in 2003 by Congress to authorize the use of CCC ``program'' funds for
technical assistance costs associated with the seven listed programs in
section 1241(a) of the 1985 Act. I have attached Appendix 4 as one
example of an amendment that could be enacted to address this matter.
appendix 1
Sec. 11. Cooperation With Other Government Agencies.--The
Corporation may, with the consent of the agency concerned, accept and
utilize, on a compensated or uncompensated basis, the officers,
employees, services, facilities, and information of any agency of the
Federal Government, including any bureau, office, administration, or
other agency of the Department of Agriculture, and of any state, the
District of Columbia, any territory or possession, or any political
subdivision thereof. The Corporation may allot to any bureau, office,
administration, or other agency of the Department of Agriculture or
transfer to such other agencies as it may request to assist it in the
conduct of its business any of the funds available to it for
administrative expenses. The personnel and facilities of the
Corporation may, with the consent of the Corporation, be utilized on a
reimbursable basis by any agency of the Federal Government, including
any bureau, office, administration, or other agency of the Department
of Agriculture, in the performance of any part or all of the functions
of such agency. After September 30, 1996, the total amount of all
allotments and fund transfers from the Corporation under this section
(including allotments and transfers for automated data processing or
information resource management activities) for a fiscal year may not
exceed the total amount of the allotments and transfers made under this
section in Fiscal Year 1995.
appendix 2
January 3, 2003

Memorandum for Philip J. Perry, General Counsel, Office of Management
and Budget

Re: Funding for Technical Assistance for Agricultural Conservation
Programs

You have asked us to examine the sources and limits on funding for
technical assistance provided for agricultural conservation programs
listed in amended section 1241(a) of the Food Security Act of 1985. See
16 U.S.C.A. 3841(a) (West, WESTLAW through Pub. L. 107-313). That
provision instructs the Secretary of Agriculture to ``use the .funds,
facilities, and authorities of the Commodity Credit Corporation
[(`CCC')] to carry out,'' these programs. You have asked us to
determine (1) whether expenditures on technical assistance for these
programs are subject to the annual limit that Congress has placed on
aggregate transfers of CCC funds to other components of the Department
of Agriculture (``USDA'') under section 11 of the Commodity Credit
Corporation Charter Act (``CCC Charter Act''), 15 U.S.C. 714i (2000),
and (2) whether the Secretary of Agriculture may draw upon USDA's
appropriation for Conservation Operations (``CO'') to fund technical
assistance for these programs.
Your Office has concluded that the section 11 cap applies to
technical assistance expenditures for the conservation programs listed
in section 1241(a) and that the Secretary of Agriculture may draw upon
USDA's CO appropriation to fund technical assistance for these
programs.\1\ USDA has concurred in your conclusions on both points.\2\
The Congressional Budget Office, addressing only the first point, has
also concurred.\3\ The General Accounting Office (``GAO''), however,
has reached contrary conclusions: it has determined that the section 11
ceiling does not apply and that the CO appropriation is not
available.'' \4\
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\1\ See Letter for Susan A. Poling, Associate General Counsel,
General Accounting Office, from Philip J. Perry, General Counsel,
Office of Management and Budget (Sept. 16, 2002).
\2\ See Letter for Susan A. Poling, Associate General Counsel,
General Accounting Office, from Nancy S. Bryson, General Counsel, U.S.
Department of Agriculture (Sept. 16, 2002).
\3\ See Letter for Senator Tom Harkin, Chairman, Senate Comm. on
Agriculture, Nutrition and Forestry, from Nancy S. Bryson, General
Counsel, U.S. Department of Agriculture (Sept. 24, 2002) (quoting
electronic message communicating the Congressional Budget Office's
conclusion that the section 11 ceiling remains ``applicable to the
transfers under section 1141(a)'').
\4\ See Letter for Senator Herb Kohl, Chairman, Subcom. on
Agriculture, Rural Development, and Related Agencies, Senate
Appropriation Comm.; Senator Thad Cochran, Ranking Minority Member,
Subcom. on Agriculture, Rural Development, and Related Agencies, Senate
Appropriation Comm.; and Representative Henry Bonilla, Chairman,
Subcom. on Agriculture, Rural Development, FDA & Related Agencies,
House Appropriations Comm. from Anthony H. Gamboa, General Counsel,
U.S. General Accounting Office, Re: Funding for Technical Assistance
for Conservation Programs Enumerated in Section 2701 of the farm bill,
No. B-29124l (Oct. 8, 2002) (available at http://www.gao.gov) (``GAO
Letter'').
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For the reasons set forth below, we conclude that the section 11
cap applies to technical assistance expenditures for the conservation
programs listed in section 1241(a) and that the Secretary of
Agriculture may draw upon USDA's CO appropriation to fund technical
assistance for these programs.
I.
We first address whether the section 11 cap applies to technical
assistance expenditures for the conservation programs listed in section
1241(a).
A.
In legislation enacted earlier this year, Congress substantially
revised section 1241 of the Food Security Act of 1985 concerning the
use of funds transferred from the Commodity Credit Corporation (CCC) to
finance agricultural conservation programs. See Farm Security and Rural
Investment Act of 2002, Pub. L. No. 107-171, 2701, 116 Stat. 134, 278
(``2002 Farm Bill''), codified at 16 U.S.C.A. 3841 (West. WESTLAW
through Pub. L. 107-313). Revised section 1241(a) instructs the
Secretary of Agriculture, during Fiscal Years 2002 through 2007, to
``use the funds, facilities, and authorities of the Commodity Credit
Corporation to carry out [seven specified conservation programs] under
subchapter IV [of title 16, chapter 58] (including technical
assistance).'' 16 U.S.C.A. 3841(a). For three of the seven specified
programs, this authorization to spend CCC funds is not subject to any
specific dollar limitation, although acreage and eligibility
restrictions place some limit on potential spending.\5\ The remaining
four, in contrast, are subject to annual spending limits specified in
section 1241(a).\6\
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\5\ Subsections 1241(a)(1)-(3) instruct the Secretary to use CCC
funds, without any dollar-denominated limit, to carry out the
Conservation Reserve Program (``CRP''), 16 U.S.C.A. 3831-3835a (West,
WESTLAW through Pub. L. 107-313); the Wetlands Reserve Program
(``WRP''), id. 3837-3837e; and the Conservation Security Program
(``CSP''), id. 3838-3838c.
\6\ Subsections 1241(a)(4)-(7) instruct the Secretary to use CCC
funds, up to prescribed annual limits, to carry out the Farmland
Protection Program (``FPP''), 16 U.S.C.A. 3837h-3837j (West, WESTLAW
through Pub. L. 107-313); the Grassland Reserve Program (``GRP''), id.
3838n-3838q; the Environmental Quality Incentives Program (``EQIP''),
id. 3839aa-3839aa-9; and the Wildlife Habitat Incentives Program
(``WHIP''), id. 3839bb-l.
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The 2002 Farm Bill also revised section 1241 to add an express
reference to the section 11 limit on the use of CCC funds to meet
administrative expenses. Revised. section 1241(b) provides that nothing
in the new provisions respecting CCC funding ``affects the limit on
expenditures for technical assistance imposed by section 714i of Title
15 [i.e., section 11 of the CCC Charter Act].'' 16 U.S.C.A. 3841(b)
(West, WESTLAW through Pub. L. 107-313).
The limit on expenditures that is explicitly preserved in this
portion of section 1241(b) restricts USDA uses of CCC funds. The CCC, a
Federal corporation that is located within the USDA and managed by a
Board of Directors under the supervision of the Secretary of
Agriculture, is empowered to obtain funds through borrowing (under a
$30 billion line of credit) as well as through direct appropriations
from Congress.\7\ Section 11 of the CCC Charter Act authorizes the CCC
to allot or transfer ``to any bureau, office, administration or other
agency of the Department of Agriculture . . . any of the funds
available to [the CCC] for administrative expenses.'' 15 U.S.C. 714i,
including funds that the CCC raises through borrowing. In particular,
the section 11 cap provides that:
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\7\ See 15 U.S.C. 714b(i) (authorizing CCC to borrow to finance its
programs, subject to $30 billion limit on indebtedness). Borrowing from
the United States Treasury under authority of section 714b(i)
represents the principal source of CCC funding. The CCC repays the
loans, thereby restoring its borrowing authority, using programmatic
revenues (such as loan repayments by commodity producers) and annual
appropriations. See e.g., Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations Act, 2002, Pub. L.
No. 107-76, 115 Stat. 704, 716-17, 729 (appropriating ``such sums as
may be necessary to reimburse the Commodity Credit Corporation for net
realized losses sustained, but not previously reimbursed'' and specific
amounts for overhead expenses of the commodity export guarantee
program). Direct appropriations for certain CCC programs, made
available through the annual Congressional appropriations process,
provide a secondary source of funding. See generally, U.S. General
Accounting Office, Commodity Credit Corporation: Information on the
Availability, Use, and Management of Funds, Rep. No. GAO/RCED-98-114,
at 1-2 (April 1998) (CCC Funds Report) (describing CCC's use or ''line-
of-credit'' financing and direct appropriations).

After September 30, 1996, the total amount of all allotments
and fund transfers from the Corporation under this section
(including allotments and transfers for automated data
processing or information resource management activities) for a
fiscal year may not exceed the total amount of the allotments
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and transfers made under this section in Fiscal Year 1995.

Id. According to OMB's figures, section 11 allotments and transfers for
administrative expenses during Fiscal Year 1995 totaled $56 million.
B.
Your Office and GAO have offered competing textual analyses of the
question whether the section 11 cap applies to technical assistance
expenditures for the conservation programs listed in section 1241(a).
You both agree that the section 11 cap applies only to allotments and
fund transfers made by CCC under its section 11 authority. The pivotal
point on which your Office and GAO disagree is whether section 1241(a)
gives CCC a source of authority, independent of section 11, for funding
technical-assistance to these programs. GAO maintains that section
1241(a) provides CCC independent authority; that the technical
assistance that CCC funds for the conservation programs listed in
section 1241(a) is pursuant to this independent authority; and that the
section 11 cap therefore does not come into play. Your office, by
contrast, maintains that section 11 is the sole source of authority for
the CCC to fund technical assistance by USDA entities for farm
conservation programs.
We believe that section 1241(a) does not confer on the CCC a source
of authority, independent of section 11, for funding technical
assistance to the programs listed in section 1241(a). We note in
particular that section 1241(a) states that ``the Secretary shall use
the funds, facilities, and authorities of the [CCC] to carry out''
these programs. Rather than vesting new authority in CCC, section
1241(a) thus states plainly that the Secretary of Agriculture shall use
the CCC's existing ``authorities'' to provide technical assistance to
these programs. Beyond invoking section 1241(a), GAO does not allege
any other authority that CCC has, apart from section 11, for funding
technical assistance to farm programs. Nor are we aware of any such
authority that would operate separately from section 11. We therefore
determine that insofar as the Secretary is using CCC's authorities to
fund such technical assistance, she is relying on CCC's section 11
authority.
Our textual analysis is reinforced by section 1241(b), which
provides that ``[n]othing in [section 1241] affects the limit on
expenditures for technical assistance imposed by [section 11]. '' 16
U.S.C.A. 1241(b). Before the 2002 Farm Bill was enacted, the section
11 cap indisputably applied to technical-assistance funds provided to
at least two of the programs (CRP and WRP) now listed in section
1241(a).\8\ If, as GAO contends, the effect of section 1241(a) were to
remove technical-assistance funding of these two programs from the
section 11 cap, it would be highly peculiar to describe this escape
from the section 11 cap merely as not ``affect[ing] the limit on
expenditures for technical assistance imposed by [section 11].'' It
would be far more natural and straightforward for any reference to the
section 11 cap to state simply that expenditures for technical
assistance under section 1241 are not subject to the section 11 cap.
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\8\ We are advised by your Office that under the statutory scheme,
including the predecessor version of Section 1241, in effect before the
2002 Farm Bill was enacted, OMB and USDA were of the view that (or at
least acted as if) transfer of CCC funds for technical assistance for
EQIP and WHIP was independently authorized. Whether or not such a view
was permissible under the previous statutory scheme, we do nor believe
that that view should affect our construction of the revised section
1241. It is true that under one canon of construction ``Congress is
presumed to be aware of an administrative . . . interpretation of
statute: and to adopt that interpretation when it re-enacts a statute
without change.'' Lorillard v. Pons, 434 U.S. 575, 580 (1978), but that
canon plainly does not apply where, as here, a statute has been revised
rather than merely re-enacted. Further, we note that one critical
respect in which section 1241 has been revised is the specification
that the Secretary shall use the ``authorities'' of the CCC.
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By contrast, section 1241(b) is sensibly phrased under our reading
of section 1241(a). With respect to four of the seven programs that it
lists, section 1241(a) sets forth specific amounts, totaling in the
hundreds of millions of dollars each fiscal year, that the Secretary is
to spend. Because section 1241(a) makes clear that the funds expended
may be for purposes ``including the provision of technical
assistance,'' section 1241(a), read in isolation, might suggest that,
irrespective of section 11, any portion of these hundreds of millions
of dollars could be used for technical assistance. Section 1241(b)
instead succinctly makes clear that the section 11 cap continues to
apply.
We therefore conclude that the section 11 cap applies to technical
assistance expenditures for the conservation programs listed in section
1241(a).\9\
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\9\ GAO argues that the legislative history of the 2002 Farm Bill
supports its reading of section 1241(a). Because we do not believe that
GAO's reading is permitted by the text of section 1241(a), we need not
consider its account of the legislative history. See, e.g., Barnhill v.
Johnson, 503 U.S. 393, 401 (1992).
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II.
We now consider whether the Secretary of Agriculture may draw upon
USDA's CO appropriation to fund technical assistance for the programs
listed in section 1241(a).
A.
Public Law 107-76 contains the Fiscal Year 2002 appropriation for
the CO account. It provides in relevant part:

``For necessary expenses for carrying out the provisions of the
Act of April 27, 1935 (16 U.S.C. 590a-f), including preparation
of conservation plans and establishment of measures to conserve
soil and water (including farm irrigation and land drainage and
such special measures for soil and water management as may be
necessary to prevent floods and the siltation of reservoirs and
to control agricultural related pollutants); operation of
conservation plant materials centers; classification and
mapping of soil; dissemination of information; acquisition of
lands; water, and interests therein for use in the plant
materials program by donation, exchange, or purchase at a
nominal cost not to exceed $100 pursuant to the Act of August
3, 1956 (7 U.S.C. 428a); purchase and erection or alteration or
improvement of permanent and temporary buildings; and operation
and maintenance of aircraft, $779,000,000, to remain available
until expended (7 U.S.C. 2209b), of which not less than
$8,515,000 is for snow survey and water forecasting, and not
less than $9,849,000 is for operation and establishment of the
plant materials centers, and of which not less than $21,500,000
shall be for the grazing lands conservation initiative. . . .''

115 Stat. at 117. This same authority for the CO appropriation applies
to the continuing appropriations for Fiscal Year 2003. See Pub. L. 107-
229, 101(l), 103, 116 Stat. 1465-66 (providing continuing
appropriations for Fiscal Year 2003); Pub. L. 107-294, 116 Stat. 2062
(extending continuing appropriations through January 11, 2003).
B.
GAO maintains that the CO appropriation identifies the specific
programs that it is available to fund and that it does not include the
programs listed in section 1241(a). It also argues that section
1241(a)'s directive that ``the Secretary shall use the funds,
facilities, and authorities of the [CCC] to carry out the [listed]
programs'' should be read to preclude the Secretary from using other
funds in support of these programs. GAO contends that both a Senate
floor colloquy on the 2002 Farm Bill and the history of funding of the
WRP support its position. See GAO Letter, at 8-11.
Your Office maintains instead that the CO appropriation is
sufficiently broad to authorize funding technical assistance for the
conservation programs listed in section 1241(a). You argue further that
the legislative history of the CO appropriation supports your reading.
See OMB Letter, at 2-4. You find further support in what you
characterize as USDA's ``longstanding regular practice of using the CO
account to fund conservation technical assistance.'' Id. at 4.
We believe that the CO appropriation may be used to fund technical
assistance for the conservation programs listed in section 1241(a). The
CO appropriation provides funds ``for carrying out the provisions of
the Act of April 27, 1935 (16 U.S.C. 590a-f).'' Although the programs
listed in section 1241(a) are not specifically identified in 16 U.S.C.
590a-590f (2000), section 590a(3) ``authorizes the Secretary to
cooperate or enter into agreements with, or to furnish financial or
other aid to, any agency, governmental or otherwise, or any person,
subject to such conditions as he may deem necessary, for the purposes
of this chapter [(chapter 3B)].`` Id. 590a(3) (emphasis added).
Further, the express purposes of chapter 3B include ``(1) preservation
and improvement of soil fertility; (2) promotion of the economic use
and conservation of land; (3) diminution of exploitation and wasteful
and unscientific use of national soil resources; (4) the protection of
rivers and harbors against the results of soil erosion in aid of
maintaining the navigability of waters and water courses and in aid of-
flood control; . . . [and] (6) prevention and abatement of
agricultural-related pollution.'' Id. 590g(a) (``declar[ing] . . .
the purposes of this chapter''). Therefore, insofar, as the Secretary
determines that providing technical assistance for the conservation
programs listed in section 1241(a) would serve any of these purposes,
she may use the CO appropriation to fund such technical assistance.
We do not read section 1241(a)'s directive that ``the Secretary
shall use the funds, facilities, and authorities of the [CCC] to carry
out the [listed] programs'' to foreclose the Secretary from using the
CO appropriation to fund technical assistance for these programs.
Section 1241(a) does not state that the Secretary shall use only the
funds, facilities, and authorities of the CCC to carry out these
programs. In short, we see no statutory bar to the Secretary's using
other funds, in addition to the CCC's, to carry out these programs.
Because we believe that the text of the CO appropriation clearly
authorizes the Secretary to use the CO account to provide technical
assistance for the conservation programs listed in section 1241(a) to
promote any of the purposes of chapter 3B, we need not address the
competing legislative-history arguments that your Office and GAO
present. Likewise, we see no reason to explore the conflicting accounts
of the history of funding of the listed programs: even if GAO is
correct in its assertion that the WRP was not funded out of the CO
appropriation before the predecessor version of section 1241 was
enacted in 1996, that would not bear meaningfully on the question
whether the CO appropriation could have been used to fund WRP.
* * * * *
In sum: The section 11 cap applies to technical assistance
expenditures for the conservation programs listed in section 1241(a).
The Secretary of Agriculture may draw upon USDA's CO appropriation to
fund technical assistance for these programs.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

M. Edward Whelan III,
Principal Deputy Assistant Attorney General.
appendix 3
Title I--Commodity Programs

Sec. 1601. Administration Generally.
Sec. 1622. Implementation.

Title II--Conservation

Sec. 2101. Extension of Conservation Reserve Program.
Sec. 2201. Wetlands Reserve Program.
Sec. 2301. Conservation Stewardship Program.
Sec. 2401. Farmland Protection.
Sec. 2403. Grasslands Reserve Program.
Sec. 2501. Environmental Quality Incentives Programs.
Sec. 2510. Agricultural Water Enhancement Program.
Sec. 2605. Chesapeake Bay Watershed Program.
Sec. 2606. Voluntary Public Access and Habitat Incentive Program.
Sec. 2706. Delivery of Technical Assistance.
Sec. 2801. Agricultural Management Assistance Program.
Sec. 2803. Small Watershed Rehabilitation Program.

Title III--Trade

Sec. 3016. Food for Peace.
Sec. 3101. Export Credit Guarantee Program.\4\
---------------------------------------------------------------------------
\4\ While funds to cover the losses incurred under this program
come directly from the Treasury of the United States, expenses related
to the administration of the program are within the provisions of
section 11 of the CCC Charter Act.
---------------------------------------------------------------------------
Sec. 3102. Market Access Program.
Sec. 3104. Cooperator Program.
Sec. 3105. Food for Progress.
Sec. 3106. McGovern-Dole International Food for Education and Child
Nutrition Program.
Sec. 3203. Technical Assistance for Specialty Crops.
Sec. 3204. Emerging Markets.
Sec. 3206. Local and Regional Food Aid Procurement Projects.

Title IV--Nutrition

Sec. 4231. Senior Farmers' Market Nutrition Program.
Sec. 4307. Survey of Food Purchased by School Food Authorities.
Sec. 4406. Re-Authorization of Federal Food Assistance Programs.

Title VI--Rural Development

Sec. 6022. Rural Micro Entrepreneur Assistance Program.
Sec. 6029. Funding of Pending Rural Development Loan and Grant
Applications.
Sec. 6202. Value-Added Agricultural Market Development Program
Grants.

Title VII--Research and Related Matters

Sec. 7206. Organic Agriculture Research and Extension Initiative.
Sec. 7311. Specialty Crop Research Initiative.
Sec. 7410. Beginning Farmer and Rancher Development Program.

Title VIII--

Sec. 8205. Healthy Forest Reserve Program.

Title IX--

Sec. 9001. Biobased Markets Program.
Biorefinery Assistance.
Repowering Assistance.
Bioenergy Program for Advanced Biofuels.
Biodiesel Fuel Education Program.
Rural Energy for America Program.
Biomass Research and Development.
Feedstock Flexibility Program for Bioenergy
Producers.
Biomass Crop Assistance Program.

Title X--

Sec. 10106. Farmers' Market Promotion Program.
Sec. 10109. Specialty Crop Block Grants.
Sec. 10201. Plant Pest and Disease Management and Disaster
Prevention.
Sec. 10202. National Clean Plant Network.
Sec. 10301. National Organic Certification Cost-Share.
Sec. 10302. Organic Production and Market Data Initiatives.
Sec. 10404. Market Loss Assistance for Asparagus Producers.

Title XI--

Sec. 11009. National Sheep Industry Improvement Center.

Title XII--

Sec. 12034. Fisheries Disaster Assistance.\5\
---------------------------------------------------------------------------
\5\ This provision mandated a one time transfer of funds to the
Department of Commerce from CCC on May 1, 2008. Accordingly, once
transferred, these funds lost their identity as funds of CCC and are
subject to the provisions otherwise applicable to section 312(a) of the
Magnuson-Stevens Fishery Conservation and Management Act.

Title XIV--
Sec. 14004. Outreach and Technical Assistance for Socially
Disadvantaged Farmers or Ranchers.
Sec. 14012. Determination on Merits of Pigford Claims.
appendix 4
Sec. 11. Cooperation With Other Government Agencies.--

(a) In General.--

(1) Acceptance of services.--Subject to the limitations under
paragraphs (2) and (4), and excluding subsections (b) and (c),
the Corporation, on behalf of an agency of the Department of
Agriculture (Department), may accept and utilize, on a
compensated or uncompensated basis, services, information,
facilities, officers, or employees provided by--

(A) another bureau, office, division, agency, or
mission area of the Department of Agriculture;
(B) another agency of the Federal Government; or
(C) a political unit such as a state, the District of
Columbia, a territory or possession, or a political
subdivision of such political unit.

(2) Prior authorization.--Prior to receiving funding or other
assistance under this subsection, an agency of the Department
shall have statutory authorization to receive services,
information, facilities, officers, or employees covered under
paragraph (1) through the Corporation.
(3) Administrative expenses.--The Corporation may transfer
funds of the Corporation to any unit of Federal Government or
political unit to assist the governmental unit with
administrative expenses incurred in the conduct of its
assistance to the Corporation. The total amount of funds that
may be transferred under this section (including transfers for
automated data processing or information resource management
activities) for a fiscal year may not exceed $57,000,000.

(b) Transfers.--Notwithstanding subsection (a), the Secretary may,
transfer funds of the Corporation in accordance with:

(1) A plant or pest emergency under section 442 of the Plant
Protection Act (7 U.S.C. 7772);
(2) A livestock emergency under section 10417 of the Animal
Health Protection Act (7 U.S.C. 8316);
(3) Section 1469(a)(3) of the National Agricultural Research,
Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3315);
(4) Section 1240I of the Food Security Act of 1985 (16 U.S.C.
3839aa-9);
(5) Section 1240Q of the Food Security Act of 1985 (16 U.S.C.
3839bb-4);
(6) Section 1241(a) of the Food Security Act of 1985 (16
U.S.C. 3841(a));
(7) Section 7405(c)(7) of the Farm Security and Rural
Investment Act of 2002 (Pub. L. 107-171);
(8) Section 9008 of the Farm Security and Rural Investment
Act of 2002 (Pub. L. 107-171); and
(9) Section 1622 of the Food, Conservation, and Energy Act of
2008 (Pub. L. 110-246).

(c) Administrative Expenses.--Funds made available under subsection
(b) may, to the extent authorized in such provisions, be used to pay
expenses incurred in the administration of such activities.
Insert 2
Mr. Costa. Can you clarify the link between the pest and the
disease challenges, how in working with your partners in USDA
possible trade disruptions and the potential economic losses
that would occur to our agricultural producers are addressed
and hopefully minimized?
Ms. Bech. Well, I think if I can clarify, if I might ask a
clarifying question. Are you asking what we are doing with the
other USDA agencies in addressing the disease impacts on the
economics? Then we are providing, again, the assessments that
go into that economic analysis and working with our Foreign
Agriculture Service to address those issues.
Mr. Costa. Do you have any explanation as to why only \1/3\
of the SPS certificates or trade concerns have been addressed?
Ms. Bech. Well, I could get further information on it.

APHIS does work closely with its Federal partners in addressing any
SPS issues that arise. The U.S. Trade Representative publishes an
annual ``Report on Sanitary and Phytosanitary Measures'' that describes
significant barriers to U.S. food and farm exports arising from
measures that foreign governments apply on the grounds that they are
necessary to protect human, animal, or plant life or health from risks
arising from the entry or spread of pests, from plant- or animal-borne
pests or diseases, or from additives, contaminants, toxins, or disease-
causing organisms in foods, beverages, or feedstuffs.
APHIS and our Federal partners will continue to work with
colleagues from across the U.S. Government, as well as interested
stakeholders, to encourage governments around the world to remove their
unwarranted SPS rules to ensure a level playing field abroad for U.S.
ranch and farm products.
______

House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
Specialty Crop Block Grant Program.
2. Subprograms/Department Initiatives
Not applicable.
3. Brief History
The Specialty Crops Competitiveness Act of 2004 (P.L. 108-465; 7
U.S.C. 1621 note) authorized appropriations for Fiscal Years 2005-09 to
provide assistance for specialty crops to all 50 states, the District
of Columbia, and the Commonwealth of Puerto Rico. Specialty crop block
grant funds are meant to enhance the competitiveness of specialty
crops. Specialty crops were defined as fruits and vegetables, tree
nuts, dried fruits, and nursery crops (including floriculture).
From FY 2006 through FY 2008, the program was funded through
appropriations which were made available until expended and awarded in
the year subsequent to the appropriation. The FY 2008 appropriation
made $8.44 million available until expended for Specialty Crop Block
Grants, which were awarded in FY 2009. After all the eligible states
submitted their applications by the established deadline of March 5,
2009, fifty-two U.S. states and territories were awarded SCBGP funds.
The FY 2008 Farm Bill, Sec. 10109, extended the Specialty Crop
Block Grant program (SCBGP-FB) through FY 2012 and provided Commodity
Credit Corporation funding at the following levels: $10 million in FY
2008, $49 million in FY 2009, and $55 million for each of Fiscal Years
2010-2012. These funds are available on an annual basis and must be
obligated in the current year. The Act also amended the definition of
specialty crops by adding horticulture; and added Guam, American Samoa,
the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana
Islands to the list of ``states'' eligible to apply for grants. State
grants for each fiscal year are a minimum of $100,000 or \1/3\ of 1
percent of the total amount of available funding. AMS completed
rulemaking on these farm bill changes with publication of the final
rule in the Federal Register on March 27, 2009. The final rule requires
state departments of agriculture to describe their outreach efforts to
specialty crop producers, including socially disadvantaged and
beginning farmers; and to describe their efforts to conduct a
competitive process to ensure maximum public input and benefit.
4. Purpose/Goals
The purpose of the Specialty Crop Block Grant Program (SCBGP) is
solely to enhance the competitiveness of specialty crops. Specialty
crops are defined as ``fruits, vegetables, tree nuts, dried fruits,
horticulture, and nursery crops (including floriculture).''
5. Success in Meeting Programmatic Purpose/Goals
To date, the grant program has awarded over $110 million to fund
2,500 projects that benefit the specialty crop industry in all 50
states, the District of Columbia, American Samoa, Guam, the
Commonwealth of Puerto Rico, and the Commonwealth of the Northern
Mariana Islands. These projects have particularly enhanced specialty
crop efforts in education, research, marketing and promotion,
production, pest and plant health, and food safety.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
No-Year Budget Farm Bill Budget
Fiscal Year Authority ($ in Authority ($ in
thousands) thousands)
------------------------------------------------------------------------
2006 $6,930 --
2007 6,930 --
2008 8,400 $10,000
2009 -- 49,000
2010 -- 55,000
2011 -- 55,000
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
Appropriated No-Year Farm Bill Annual
Fiscal Year Annual Outlays ($ in Outlays ($ in
thousands) thousands)
------------------------------------------------------------------------
2006 -- --
2007 $5,147 --
2008 8,412 --
2009 7,744 $3,358
2010 44 14,404
2011 YTD 103 19,511
------------------------------------------------------------------------

Funds are expended over the lifetime of the grant, typically around
3 years, as the grantee incurs costs on the projects.
8. Annual Delivery Cost (FY 2002-FY 2011)

SCBG Farm Bill Funds--Delivery Costs ($ in thousands)
------------------------------------------------------------------------
FY 2011
FY 2008 FY 2009 FY 2010 Est.
------------------------------------------------------------------------
Program Oversight -- $328 $637 $667
Staff Years -- 3 4 4
------------------------------------------------------------------------

Program oversight for Specialty Crop Block Grants was not tracked
separately until FY 2009.
9. Eligibility Criteria
The agencies commissions or departments responsible for agriculture
within the 50 states, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, and the
Commonwealth of the Northern Mariana Islands are eligible to apply for
grant funds directly to the USDA. States may have specific or
additional application requirements such as: funding priorities,
deadlines, applicant eligibility criteria, project duration, funding
restrictions and maximum and minimum grant awards.
10. Utilization (Participation) Data
The Specialty Crop Block Grant Program is authorized to distribute
funds to the 56 eligible entities. In FY 2010, all 50 states, the
District of Columbia, the Commonwealth of Puerto Rico, Guam, and the
U.S. Virgin Islands applied for and received funding for 825 projects
meant to enhance the competitiveness of specialty crops.
11. Duplication or Overlap with Other Programs
The purpose of the Specialty Crop Block Grant Program is to enhance
the competitiveness of specialty crops (fruits, vegetables, tree nuts,
floriculture and horticulture). A grant program that has a similar
purpose is the Specialty Crop Research Initiative, which was
established to solve critical specialty crop industry issues through
research and extension activities.
Each project submitted to the USDA is reviewed to avoid duplication
with other Federal and state grant programs. In the event that a
project has been submitted to other Federal and/or state grant
programs, the Specialty Crop Block Grant Program requires that the
project indicate how Specialty Crop Block Grant Program funding will
supplement and not duplicate or overlap the purpose of the other
funding.
12. Waste, Fraud, and Abuse
No reports or findings of waste, fraud and abuse have occurred or
been published.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
National Organic Program (NOP).
2. Subprogram/Department Initiative
Not applicable.
3. Brief History
The Organic Foods Production Act (OFPA) of 1990 required USDA to
develop national standards for organically produced agricultural
products to assure consumers that agricultural products marketed as
organic meet consistent, uniform standards. Farms and handlers of
organic foods must be certified by a state or private agency that has
been accredited by USDA. All agricultural products sold, labeled, or
represented as organic in the United States must be in compliance with
these regulations. The NOP's objective is to enforce the mandated
requirements.
To comply with statutory requirements, and meet industry demands,
NOP activities consist of the following:

Develop new standards to accommodate requests from the
organic industry;

Enforce compliance and conduct audits to maintain labeling
credibility;

Operate and update website content, to keep certifying
agents and consumers informed with the latest developments;

Respond to public requests for information in a timely
manner;

Provide accreditation of certifying agents;

Oversee the certifying agents, including foreign-based
agents;

Ensure uniform regulatory decisions by the certifying
agents; and

Investigate complaints of organic standard violations

NOP is responsible for ensuring that organically produced products
meet consistent standards. To accomplish that, NOP accredits and
ensures the compliance of 100 domestic and foreign Accredited
Certifying Agents (ACAs). Theses ACAs certify that organic operations
are in compliance with USDA standards (regulations). Proper training is
essential for certifying agents to ensure that regulatory decisions are
uniform regarding the correct application of the standards.
4. Purpose/Goals
The NOP develops, implements, and administers national production,
handling, and labeling standards in accordance with the Organic Foods
Production Act (OFPA) of 1990 and regulations in Title 7, Part 205 of
the Code of Federal Regulations. OFPA gives NOP the authority to
respond to site-specific conditions by integrating cultural,
biological, and mechanical practices that foster cycling of resources,
promote ecological balance, and conserve biodiversity.
5. Selected Examples of Recent Progress
On February 17, 2010, the NOP published the long-awaited
access to pasture rule to clarify feed and living conditions
for livestock production that would qualify their milk and meat
for USDA organic certification. The rule establishes
enforceable pasture practice standards to satisfy consumer
expectations that ruminant livestock animals graze on pasture
during grazing season and are not confined.

In March 2010, the Office of Inspector General (OIG)
published an audit report on the NOP which recommended that the
program further improve administration and strengthens
management controls to ensure more effective enforcement of
program requirements. The report indicated the need to
strengthen oversight of certifying agents and organic
operations to ensure that organic products are consistently and
uniformly meeting NOP standards. The NOP has completed 13 out
of 14 corrective actions identified in the OIG audit.

The NOP developed a quality management system and a Quality
Manual to align the program's accreditation program with
international requirements outlined in ISO 17011. Furthermore,
the program initiated a peer review process to have its
accreditation program assessed by the National Institute of
Standards and Technology for compliance with ISO 17011.

On September 1, 2010, the NOP published the inaugural
edition of the NOP Program Handbook, designed for those who
own, manage, or certify organic operations by providing
guidance about the national organic standards and instructions
that outline best program practices.

In October 2010, the NOP published draft guidance on compost
and vermicompost in organic crop production; wild crop
harvesting; outdoor access for organic poultry; commingling and
contamination prevention in organic production and handling;
and use of chlorine materials in organic production and
handling.

The NOP published a number of rules on the National List of
Allowed and Prohibited Substances including materials
sunsetting in 2012; adding tetracycline and sulfurous acid to
the National List; and other National List substances.

The NOP developed new training seminars on liquid
fertilizers, access to pasture, adverse actions procedures,
labeling, certification, complaint handling, wine labeling, and
enforcement procedures. The NOP provided training in Germany,
Ghana, California, Colorado, Georgia, New York and Wisconsin.

The NOP recently held public meetings of the National
Organic Standards Board in Davis, California and Madison,
Wisconsin.

The NOP established a complaint database to improve the
handling of complaints to ensure they are handled in an
effective and timely manner.

Conducted on-site reviews of recognition agreements
currently in place with the governments of Denmark and Israel.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
Fiscal Year Budget Authority ($ in thousands)
------------------------------------------------------------------------
2002 $1,640
2003 1,494
2004 1,969
2005 1,975
2006 1,993
2007 2,001
2008 3,127
2009 3,867
2010 6,967
2011 6,919
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
Fiscal Year Budget Outlays ($ in thousands)
------------------------------------------------------------------------
2002 $1,384
2003 1,341
2004 1,918
2005 1,990
2006 1,807
2007 1,549
2008 2,871
2009 3,298
2010 5,736
2011 YTD 3,375
------------------------------------------------------------------------
Explanation: The budget authority may be different from outlays due to
timing of payments and the accounting process.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2011
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Organic Program 1,493 1,413 1,983 1,955 1,883 1,897 3,000 3,575 6,244 6,387
Indirect Costs 134 111 156 157 159 160 250 309 517 532
-----------------------------------------------------------------------------------------------------------------------
Total Costs 1,627 1,524 2,139 2,112 2,042 2,057 3,250 3,884 6,761 6,919
-----------------------------------------------------------------------------------------------------------------------
Staff Years 11 13 13 11 13 13 14 19 28 32
--------------------------------------------------------------------------------------------------------------------------------------------------------
Program Indirect costs as reported in the Explanatory Notes.

9. Eligibility Criteria

Not applicable to this program.

10. Utilization (Participation) Data

Certified Organic Operations:

27,000 worldwide

Approximately \2/3\ of USDA certified organic operations are located in the U.S.; \1/3\ are located in other countries

Acreage: reporting of organic acreage is currently not required by regulations. The USDA Economic Research Service estimated that U.S. producers
dedicated approximately 4.8 million acres of farmland--2.7 million acres of cropland and 2.1 million acres of rangeland and pasture--to organic
production systems in 2008.

11. Duplication or Overlap with Other Programs

There is no duplication with other programs. Certifying agents accredited by the National Organic Program certify eligible agricultural processing
and handling activities, both domestically and internationally, upon request.

12. Waste, Fraud and Abuse

NOP's Compliance & Enforcement Division (C&E) is responsible for processing and investigating complaints alleging violations of NOP regulations;
conducting proactive compliance and outreach activities; and enforcing organic production, handling, and labeling standards.

The NOP is increasing enforcement activities here in the United
States and monitoring recognition agreements with foreign countries.
The NOP conducted assessments in Egypt, Israel, Hungary, Denmark, China
and Ghana. AMS auditors have also conducted organic audits in
Argentina, Mexico, Costa Rica, Guatemala, Australia, Italy, Germany,
and Bolivia. Certified organic operations that are found in
noncompliance of the NOP organic standards may have their certification
suspended or revoked. Civil penalties of up to $11,000 per violation
are being used for willful violations of the standards.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
National Organic Certification Cost-Share Program.
2. Subprogram/Department Initiative
National Organic Program/2008 Farm Bill.
3. Brief History
The National Organic Certification Cost Share Program (NOCCSP) is
open to all state agencies in all 50 states, the District of Columbia
and the Commonwealth of Puerto Rico, Guam, American Samoa, the United
States Virgin Islands, and the Commonwealth of the Northern Mariana
Islands.
The NOCCSP is authorized under 7 U.S.C. 6523. The 2002 Farm Bill
provided $5 million for this program. Funding was exhausted before the
2008 Farm Bill made additional funds available. Section 10301 of the
Food, Conservation and Energy Act of 2008 mandated $22 million for the
program from CCC funding available until expended. The Act authorizes
the Department to provide certification cost-share assistance to
producers and handlers of organic agricultural products in
participating states who receive certification or continuation of
certification from a USDA accredited certifying agent. Assistance is
provided through participating states.
4. Purpose/Goals
Funds under this program are made available to all 50 states, all
U.S. Territories, the District of Columbia, and Puerto Rico to assist
producers and handlers of agricultural products in obtaining
certification under the Organic Foods Production Act of 1990. Payments
are limited to 75 percent of an individual producer or handler's
certification costs up to a maximum of $750 annually.
5. Success in Meeting Programmatic Purpose/Goals
In FY 2010, nearly $4.8 million was allocated to states to
partially reimburse producers and handlers for the cost of organic
certification through the National Organic Certification Cost Share
Program. The state agencies are responsible for dispersing the
allocated funds to producers and handlers. We estimate that these funds
can assist over 8,000 certified organic operations. Recent efforts by
the NOP to increase outreach and training have resulted in significant
growth, with at least ten states requesting additional funds to meet
their unexpected demand.
6. Annual Budget Authority (FY 2002-FY 2011)
$5 million authorized by the 2002 Farm Bill

$22 million authorized by the 2008 Farm Bill

------------------------------------------------------------------------
Fiscal Year Budget Authority ($ in thousands)
------------------------------------------------------------------------
2002 $5,000
2003 --
2004 --
2005 --
2006 --
2007 --
2008 $22,000
2009 --
2010 --
2011 --
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
Fiscal Year Budget Outlays ($ in thousands)
------------------------------------------------------------------------
2002 --
2003 $1,820
2004 $1,415
2005 $222
2006 $967
2007 $342
2008 --
2009 $3,446
2010 $4,182
2011 YTD $3,412
------------------------------------------------------------------------
Explanation of Variance: To ensure the availability of resources through
2012, a portion of this one-time no-year funding has been made
available each fiscal year.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in thousands)
------------------------------------------------------------------------
FY 2011
FY 2008 FY 2009 FY 2010 Est.
------------------------------------------------------------------------
Program Oversight -- $149 $136 $223
Staff Years -- 1 1 1
------------------------------------------------------------------------
For FY 2002-2007 program oversight was not tracked separately.

9. Eligibility Criteria
Producers and handlers who have received certification or a renewal
of certification from an accredited certifying agent (ACA) are eligible
to participate.
Certification is the process where a producer or handler is
approved by an Accredited Certifying Agent as being in compliance with
the NOP regulations and is then authorized to sell, label, or represent
products as being ``certified organic''.
10. Utilization (Participation) Data
NOCCSP:

2008: 4,966 participants

2009: 5,436 participants

2010: 6,128 participants

2011 year to date: 1,341 participants

(final figures will not be available until January
2012; \2/3\-\3/4\ of participants usually sign up in the
fourth quarter of the fiscal year)
11. Duplication or Overlap with Other Programs
The U.S. Department of Agriculture (USDA) administers two cost-
share programs to defray the costs of organic certification. The
programs are administered by the USDA Agricultural Marketing Service
(AMS) National Organic Program (NOP).
The AMA Program authorizes cost-share assistance to producers of
organic agricultural products in states that have a historically low
participation rate in the Federal Crop Insurance Program: Connecticut,
Delaware, Hawaii, Maine, Maryland, Massachusetts, Nevada, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Utah,
Vermont, West Virginia, and Wyoming. Conversely, the NOCCSP is open to
state agencies in all 50 the District of Columbia and the Commonwealth
of Puerto Rico, Guam, American Samoa, the United States Virgin Islands,
and the Commonwealth of the Northern Mariana Islands. In addition, the
NOCCSP provides cost-share assistance to both producers and handlers.
The NOCCSP and the AMA are the only Federal programs which provide
financial assistance to defray the cost of organic certification. To
reduce possible overlap between AMA and NOCCSP, producers participating
in the AMA program are not eligible to participate in the producer
portion of the national program.
12. Waste, Fraud and Abuse
No reports or finding of fraud or abuse have occurred or been
published.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Farmers Market Promotion Program (FMPP).
2. Subprograms/Department Initiatives
Not applicable.
3. Brief History
The Farmers Market Promotion Program was created by the 2002 Farm
Bill (Section 10605) which amended the Farmer-to-Consumer Direct
Marketing Act of 1976 (7 U.S.C. 3005). This program provides non-
construction grants that target improvements and expansion of domestic
farmers' markets, roadside stands, community-supported agriculture
programs, agri-tourism activities, and other direct producer-to-
consumer market opportunities. That Act authorized appropriations for
the program but did not provide funding. From Fiscal Year (FY) 2006 to
2008, appropriations of $1 million were made available each year for
this program. The 2008 Farm Bill further amended the Farmer-to-Consumer
Direct Marketing Act of 1967 and provided funding from Commodity Credit
Corporation (CCC) for Fiscal Years 2008-2012: $3 million in FY 2008, $5
million for each of FYs 2009 and 2010, and $10 million each year of FYs
2011 and 2012.
4. Purpose/Goals
The primary objective of the FMPP program is to help eligible
entities improve and expand domestic farmers markets, roadside stands,
community-supported agricultural programs, agri-tourism activities, and
other direct producer-to-consumer market opportunities. Eligible
entities include agricultural cooperatives, producer networks, producer
associations, local governments, nonprofit organizations, public
benefit corporations, economic development corporations, regional
farmers' market authorities, and tribal governments.
5. Success in Meeting Programmatic Purpose/Goals
In the past 3 years, incoming applications for FMPP grants have
increased with available funding. In Fiscal Year 2011, $10 million is
available for the grant program. Some of the program's accomplishments
include the following:
2010 Accomplishments:

Approximately 28% of the FY 2010 awards offer further
professional development opportunities for farmers to
strengthen their business management skills, including training
in risk management, certification, and good agricultural
practices.

AMS received 509 requests in 2010 from all 50 states and the
District of Columbia. The program awarded a total of 81 grants
to 35 states for a total of $4,099,897.

2009 Accomplishments:

Provided $4.5 million in competitive grants to nonprofit
corporations, regional farmers market authorities, Tribal
governments, local governments, agricultural cooperatives,
economic development corporations to expand direct farmer-to-
consumer sales.

Eighty-six projects from 49 states were selected for funding
out of the 225 proposals received from 37 states throughout the
United States.

2008 Accomplishments:

Awarded $3,445,000 in support to 85 projects across the
country, including $385,375 to 18 projects for establishment/
expansion of EBT capability.

2007 Accomplishments:

Provided support to 23 projects across the country with
$900,000 in funding, including $328,652 to eight projects for
establishment/expansion of EBT capability.

2006 Accomplishments:

Awarded $900,000 in support to 20 projects across the
country, including $202,480 to four projects for establishment/
expansion of EBT capability.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
Fiscal Year Budget Authority ($ in thousands)
------------------------------------------------------------------------
2006 * $1,000
2007 * $1,000
2008 * $4,000
2009 $5,000
2010 $5,000
2011 $10,000
------------------------------------------------------------------------
Note: * indicates budget authority from annual appropriations. FY 2008
includes both a $1 million annual appropriation and $3 million 2008
Farm Bill funding.

7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
Fiscal Year Budget Outlays ($ in thousands)
------------------------------------------------------------------------
2006 --
2007 $300
2008 $772
2009 $2,549
2010 $3,244
2011 YTD $2,789
------------------------------------------------------------------------
Funds are expended over the lifetime of the grant, typically around 3
years, as the grantee incurs costs of the project.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in thousands)
----------------------------------------------------------------------------------------------------------------
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Est.
----------------------------------------------------------------------------------------------------------------
Program Oversight -- -- $175 $437 $682 $776
Staff Years -- -- 1 3 4 4
----------------------------------------------------------------------------------------------------------------
For FY 2006 and 2007 program oversight was not tracked separately.

9. Eligibility Criteria
Eligible entities under FMPP are agricultural cooperatives,
producer networks or associations (added under 2008 Farm Bill); local
governments; nonprofit corporations; economic development corporations;
regional farmers' market authorities; and Tribal governments. All
entities must be owned, operated, and located within one of the 50 U.S.
or the District of Columbia.
10. Utilization (Participation) Data
FMPP has awarded grants for 285 projects. As of June 2011, the
Farmers Market Promotion Program is currently monitoring 157 active
grant awards.
11. Duplication or Overlap with Other Programs
Within USDA, there exists a small pool of grant opportunities that
are used heavily by small farmers and ranchers due to capacity and
other constraints that prevent them from participating in many other
programs. Among these are the (1) Farmers Market Promotion Program,
administered by the Agricultural Marketing Service, (2) the Community
Food Projects program administered by the National Institute of Food
and Agriculture (NIFA, formerly CSREES), and (3) the Risk Management
Education and Outreach Partnerships Program, administered by the Risk
Management Agency.
FMPP applicants are often consumers of other USDA programs that
appear similarly situated, including the Community Food Projects
Competitive Grant Program (CFPCGP), administered by National Institute
of Food and Agriculture. Since 1996, the CFPCGP has promoted self-
sufficiency and food security in low-income communities through
community food projects and training and technical assistance projects
(T&TA). CFPs unite the entire food system, assessing strengths,
establishing linkages, and creating systems that improve self-reliance
over food needs. T&TA helps successful applicants carry out and
evaluate their projects. The CFPCGP is designed to: meet the needs of
low-income people by increasing access to fresher, more nutritious food
supplies; increase the self-reliance of communities in providing for
their own food needs; promote comprehensive responses to local food,
farm, and nutrition issues; meets specific state, local, or
neighborhood food and agricultural needs for infrastructure improvement
and development; plans for long-term solutions; and create innovative
marketing activities that benefit both agricultural producers and low-
income consumers. These one-time grants require a dollar-for-dollar
match in resources.
Another program frequently used by FMPP stakeholders is the
Education and Outreach Partnerships Program housed within the Risk
Management Agency. This program combines the former ``Commodity
Partnerships for Small Agricultural Risk Management Education
Sessions'' and the `Community Outreach and Assistance Partnerships
Program.'' The purpose of this combined cooperative partnership
agreements program is to deliver crop insurance education and risk
management training to U.S. agricultural producers to assist them in
identifying and managing production, marketing, legal, financial and
human risk. The program gives priority to: (1) educating producers of
crops currently not insured under Federal crop insurance, specialty
crops, and underserved commodities, including livestock and forage; and
(2) providing collaborative outreach and assistance programs for
limited resource, socially disadvantaged and other traditionally
underserved farmers and ranchers.
12. Waste, Fraud and Abuse
No reports or findings of waste, fraud or abuse have occurred or
been published.
13. Effects of Administrative PAYGO
None.
______

1. Program Name
Section 32.
2. Subprograms/Department Initiatives
Specialty crop purchase requirements, Fresh Fruit and Vegetable
Program.
3. Brief History
Section 32 of the Act of 1935 (P.L. 74-320), amended through 7
U.S.C. 612(c), allocated the equivalent of 30% of annual customs
receipts to the Secretary of Agriculture. Much of these funds are
subsequently transferred to the Food and Nutrition Service (FNS) and
become part of the budget for USDA's Child Nutrition Programs; with a
smaller transfer to Commerce as directed by the Fish and Wildlife Act
of 1956 (16 U.S.C. 742a).
Funding Availability: The 2008 Farm Bill established an amount to
be retained for Section 32 activities each year beginning in 2009 at
$1.173 billion and increasing gradually to $1.322 billion in 2017 and
thereafter. The subsequent annual appropriations bills have limited the
Section 32 availability to levels lower than authorized in the farm
bill. AMS was also directed to transfer all funds in excess of the
amount identified (after the required transfer to Commerce) to FNS.
Specialty Crop Purchases: The 2002 Farm Bill established a
requirement to purchase at least $200 million in fruits and vegetables,
including at least $50 million in fresh fruits and vegetables. These
purchases were incorporated into entitlement purchases for the National
School Lunch Program. The 2008 Farm Bill established a requirement to
purchase additional fruits, vegetables, and nuts (specialty crops) each
year beginning in 2008 at $190 million and increasing gradually to $206
million in 2012 and thereafter. These additional commodities are
distributed through any of USDA's domestic food assistance programs.
Fresh Fruit and Vegetable Program: The 2008 Farm Bill also required
the use of Section 32 funds for the Fresh Fruit and Vegetable Program.
Under this program, FNS distributes funds to schools to purchase fresh
produce.
4. Purpose/Goals
The purpose is principally to alleviate surplus supplies of
commodities by diverting them from normal channels of trade and
commerce and increasing utilization by low income groups. Most of the
funds retained by AMS to carry out Section 32 are used to purchase non-
price supported commodities to meet entitlement needs of the child
nutrition programs; to purchase additional fruits, vegetables, and nuts
for use in domestic nutrition assistance programs; and to relieve
market surpluses to support agricultural producers. All commodities
purchased under Section 32 are distributed by FNS through USDA's
domestic food assistance programs.
Child Nutrition Entitlement Purchases: AMS purchases non-price
supported commodities to help meet the requirements of USDA child
nutrition programs.
Surplus Commodities: AMS purchases non-price supported commodities
under Section 32 authority based on economic analysis of production
costs and market supply. Demand for this support fluctuates with market
conditions.
Disaster Relief: In the event of Presidentially-declared disasters,
Section 32 funds may be used to provide commodities or replace
entitlement commodities.
5. Success in Meeting Programmatic Purpose/Goals
AMS has successfully met all Section 32 requirements, including
specialty crop purchases mandated by the 2002 and 2008 Farm Bills.

6. Annual Budget Authority (FY 2002-2011) (dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2011
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget Authority:
Section 32 Total Budget 995,714 1,460,006 1,287,849 1,180,858 1,523,470 1,463,888 1,095,069 963,530 1,098,000 1,065,000
Authority
Specialty Crop Requirements:
2002 Farm Bill Specialty Crop 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
minimum
2008 Farm Bill Specialty Crop 190,000 193,000 199,000 203,000
minimum
---------------------------------------------------------------------------------------------------------------------
Total Specialty Crop 200,000 200,000 200,000 200,000 200,000 200,000 390,000 393,000 399,000 403,000
requirement
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-2011) (dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2011
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Outlays:
Specialty Crops 239,874 279,675 304,712 233,557 246,115 232,391 390,292 472,780 511,128 411,600
Other 675,671 999,237 565,847 618,185 1,079,244 467,161 349,399 475,545 575,065 653,400
---------------------------------------------------------------------------------------------------------------------
Section 32 Total Outlays 915,545 1,278,912 870,559 851,742 1,325,359 699,552 739,691 948,325 1,086,193 1,065,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 32 program obligations are outlayed entirely in the current year. Reconciliation upon contract delivery can result in prior year recoveries
which impact total outlays in this account.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2011
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Delivery Cost:
Commodity Purchases Service a 6,906 11,199 10,266 10,848 28,866 31,146 32,595 31,092 22,276 27,110
FTE's 43 45 38 39 45 47 51 49 54 50
--------------------------------------------------------------------------------------------------------------------------------------------------------
a Beginning in FY 2006, costs for WBSCM, a USDA procurement system, are included.

9. Eligibility Criteria
AMS purchases commodities under authority of Section 32 and on
behalf of FNS to meet other entitlement needs. The qualification
requirements requested as part of the application package for a
prospective contractor (commodity vendor) are a reexamination and
revalidation of established qualification requirements as required by
the Federal Acquisition Regulations (FAR) Part 9 and are necessary for
AMS to carry out its procurement mission. A prospective vendor must be
determined to be qualified by the Contracting Officer prior to
submitting offers under an AMS solicitation. There are 142 vendors
selling product to USDA. This includes Small, Small Disadvantaged,
8(a), HUBZone, Service-Disabled Veteran-Owned, and Women-Owned
Businesses.
10. Utilization (Participation) Data
Commodities purchased with Section 32 funding are delivered to
recipients through FNS' domestic assistance programs, including the
National School Lunch Program, the Emergency Food Assistance Program,
the Food Distribution Program on Indian Reservations, the Commodity
Supplemental Food Program, and the Nutrition Services Incentive
Program.
11. Duplication or Overlap with Other Programs
AMS closely coordinates with FNS and FSA to avoid overlap or
duplication.
12. Waste, Fraud, and Abuse
No reports or findings of waste, fraud or abuse have occurred or
been published.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
APHIS Plant Protection and Quarantine Program (PPQ)--Specialty Crop
Pest and Disease Programs (General).
2. Subprograms/Department Initiatives
European Grapevine Moth (EGVM), Light Brown Apple Moth (LBAM),
Fruit Fly Exclusion and Detection Programs (FFED), Phytophthora
ramorum, Citrus Health Response Program (CHRP), Pale Cyst Nematode
(PCN), Golden Nematode (GN), Plum Pox Virus (PPV) and Glassy-winged
Sharpshooter (GWSS). Please Note: All of the programs listed above,
except for EGVM, were funded through the annual appropriations process
or access to emergency funding (Commodity Credit Corporation or Section
32) and not through the farm bill.

3. Brief History

APHIS' Plant Protection and Quarantine (PPQ) has been safeguarding
agriculture and natural resources from the risks associated with the
entry, establishment, or spread of animal and plant pests and noxious
weeds to ensure an abundant, high-quality, and varied food supply for
more than 30 years.
4. Purpose/Goals
APHIS-PPQ safeguards agriculture and natural resources--including
specialty crops--from the risks associated with the entry,
establishment, or spread of animal and plant pests and noxious weeds.
Fulfillment of its safeguarding role ensures an abundant, high-quality,
and varied food supply, strengthens the marketability of U.S.
agriculture in domestic and international commerce, and contributes to
the preservation of the global environment.
5. Success in Meeting Programmatic Purpose/Goals

European Grapevine Moth (EGVM)

APHIS is working closely with affected counties, industry, the
University of California, and other stakeholders to control EGVM which
is a significant pest of grapes and other specialty crops that is
threatening California's $3 billion wine/grape and stone fruit
industry. In 2010 the program was successful in mitigating all grape
export crop losses experienced in 2009 due to EGVM. Populations have
been significantly reduced in 2011 as compared to 2010; however,
several new detections in 2011 have resulted in the addition of new and
expanded quarantine areas.

Light Brown Apple Moth (LBAM)

The LBAM program focuses on the suppression and management of the
moth therefore reducing its impact on agriculture production and trade
of several specialty crops located in California. The program has
successfully maintained millions of dollars worth of specialty crop
exports to Mexico and Canada due to regulatory requirements that assure
our trade partners of pest free commodities.

Fruit Fly Exclusion and Detection Programs (FFED)

The FFED program protects the health and value of American
agricultural resources threatened by the establishment of exotic fruit
fly populations through (1) detection, exclusion, and emergency
response activities in the United States; (2) prevention of the spread
of Mediterranean fruit flies north of Chiapas, Mexico and eventually
the United States; and (3) eradication of the Mexican fruit fly in the
Lower Rio Grande Valley in Texas, Florida, and California. The market
value of exotic fruit fly host commodities protected by FFED activities
totaled about $6.5 billion in the United States in 2007, with
approximately $5.65 billion of that grown in California and $612
million in Florida.

Phytophthora ramorum (Sudden Oak Death)

The goal of the Sudden Oak Death Program is to prevent long-
distance human assisted spread of Phytophthora ramorum in nursery stock
and other commodities and preventing the establishment of Sudden Oak
Death beyond its current range. Program certification of nursery stock
has reduced Phytophthora ramorum in the nursery trade by 97 percent
(140 detections in 2004 to less than four in 2010), thereby
safeguarding the domestic and international trade in nursery stock, as
well protecting the forest products industry.

Citrus Health Response Program (CHRP)

APHIS established the Citrus Health Response Program (CHRP) to
sustain the citrus industry in the United States, to maintain growers'
continued access to export markets, and to safeguard citrus growing
states against a variety of citrus diseases and pests. The CHRP works
closely with regulatory officials in citrus-producing states, industry
stakeholders, university scientists, and other Federal agencies to
provide focus to citrus health research, provide domestic citrus
industries with production guidelines and best practices for fruit and
nursery stock production, and identify/implement appropriate survey,
diagnostic, and mitigation measures to reduce spread of citrus pests/
diseases. The implementation of the CHRP program has allowed APHIS and
stakeholders to facilitate safe movement of host plants, interstate
commerce, and international trade. During the 2007-08 citrus shipping
seasons, 17.6 million bushel cartons of fresh citrus fruit moved to
non-citrus states, while 14.7 million bushel cartons were exported
outside the United States. Citrus pests threaten just over 1 million
commercial acres (137 million trees) with an annual production value
for citrus fruit of $2.88 billion (packinghouse door equivalent--2010
NASS Citrus Fruits Summary) not taking into account backyard citrus
trees that also are affected.

Pale Cyst Nematode (PCN)

The goal of the PCN program is to detect and eradicate cyst
nematodes that cause significant damages along with impact the export
of U.S. potatoes from Idaho. The PCN program protects potato farmers
and farmland in 36 producing states--1 million acres growing 43 billion
pounds worth over $3 billion ($753 million in Idaho) and export markets
of $1 billion in potatoes and related products.

Golden Nematode (GN)

The goal of the GN program is to detect and control the movement
cyst nematodes that cause significant damage and impact the export of
U.S. potatoes from New York. The GN program protects potato farmers and
farmland in 36 producing states--1 million acres growing 43 billion
pounds worth more than $3 billion. APHIS has effectively removed areas
quarantined for GN in areas of New York through a cooperative effort
with growers to perform treatments and restrict the movement of
potentially infested machinery and growing media.

Plum Pox Virus (PPV)

The program's goal is to eradicate PPV which is a damaging disease
of stone fruit. APHIS, in coordination with the state and growers of
Pennsylvania, successfully eradicated PPV from the state in late 2009.
PPV is now located only in New York. APHIS is working with New York
state and growers to survey and place regulatory controls in place that
will stop the spread and lead to eradication. The U.S. stone fruit
industry is valued at an estimated $1.4 billion. PPV is considered one
of the most economically serious virus diseases of stone fruit
worldwide. Many varieties of peach, plum, apricot and nectarine produce
unmarketable fruit or prematurely lose their crop when infected with
PPV. Commercial stone fruit is the primary host of economic importance
but a number of alternate hosts have been reported including ornamental
Prunus and some herbaceous weeds and garden plants.

Glassy-winged Sharpshooter (GWSS)

The highly cooperative GWSS Program has successfully prevented
spread of the pest to valuable wine-growing regions of California, and
the program's rapid response methods have been very successful in
eliminating outlier outbreaks. Due to program control and regulatory
activities preventing further spread, the nearly 800,000 acres of grape
production in California is maintained in spite of the GWSS being
established in 10 of 58 counties. With GWSS present, the vine killing
Pierce's disease threatens California's wine grape, table grape and
raisin grape industries, valued at approximately $3 billion, and with
annual economic impacts of more than $61 billion to California's
economy, and more than $120 billion to the U.S. economy.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
Commodity Credit
Fiscal Year Appropriated Corporation Section 32
Funds Funds
------------------------------------------------------------------------
(Dollars in thousands)
------------------------------------------------------------------------
2002 $59,631 $45,953
2003 $108,430 $59,531
2004 $121,686 $47,298
2005 $127,704 $122,094
2006 $129,500 $14,433 $400,000
2007 $129,921 $22,827 $100,000
2008 $137,841 $69,539
2009 $140,360 $0
2010 $150,380 $0
2011 $150,078 $16,922
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
Fiscal Year Obligations Outlays
------------------------------------------------------------------------
(Dollars in thousands)
------------------------------------------------------------------------
Appropriated Funding
------------------------------------------------------------------------
2002 $64,295 $53,155
2003 $107,276 $88,268
2004 $119,714 $122,906
2005 $134,785 $128,384
2006 $127,731 $108,424
2007 $130,141 $126,561
2008 $141,526 $125,647
2009 $154,423 $141,505
2010 $172,048 $165,761
2011 (est.) $146,221 (est.) $124,288
------------------------------------------------------------------------
Commodity Credit Corporation
------------------------------------------------------------------------
2002 $86,259 $58,082
2003 $48,292 $50,794
2004 $46,023 $32,706
2005 $105,827 $49,647
2006 $17,406 $52,724
2007 $29,403 $21,112
2008 $53,044 $49,657
2009 $5,903 $11,161
2010 $22,207 $30,317
2011 (est.) $5,615 (est.) $5,053
------------------------------------------------------------------------
Section 32
------------------------------------------------------------------------
2006 $376,731 $376,731
2007 $107,105 $105,970
2008 $237 $238
------------------------------------------------------------------------

APHIS has authority to utilize three different sources of funding.
Annual appropriations acts provide appropriations funding as well as
access to Commodity Credit Corporation funding. Section 32 funding
authority, under the Agricultural Marketing Service, was established by
Congress to restore farmers' purchasing power in times of natural
disaster, either through direct payments to farmers or through the
Federal Government's purchase of surplus agricultural commodities.
APHIS used this authority to make payments to commercial citrus
producers who were negatively affected by the spread of citrus canker
that resulted from a series of hurricanes that hit Florida in 2004 and
2005.
Many of the programs included in the Specialty Crop Pests group
have no-year budget authority. In some years, obligations and outlays
may exceed the new budget authority for the year due to carryover
availability. These programs are cooperative efforts with state, local,
and industry partners; APHIS provides funding to these entities through
cooperative agreements to conduct a portion of the program activities.
Program partners usually have one year from the date the agreement was
signed to spend the funds. For this reason (and depending on the timing
of the agreement), outlays of obligated funds may occur in the next
budget year.

8. Annual Delivery Cost (FY 2007-FY 2011)
Annual Delivery Cost by Department Strategic Goals (Rev.)
(On basis of appropriated funds)
(dollars in thousands)

Strategic Goal 4--Ensure that all of America's children have access to safe, nutritious, and balanced meals.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Program
Program
Items--Di
scretiona
ry

Fruit Fly
Exclusion and
Detection

Indirect 4,778 4,824 4,986 5,034 5,024 4,794
Costs
Program 5,972 6,030 6,232 6,292 6,279 5,992
Operation
al Costs
FTEs 479 553 453 529 443 455
-----------------------------------------------------------------------------------------------
Plum Pox

Indirect 176 175 176 176 176 170
Costs
Program 220 218 220 221 220 212
Operation
al Costs
FTEs 5 5 5 5 5 5
-----------------------------------------------------------------------------------------------
Golden Nematode

Indirect 65 64 65 66 66 66
Costs
Program 81 80 82 83 83 83
Operation
al Costs
FTEs 7 7 7 7 7 7
-----------------------------------------------------------------------------------------------
Citrus Health
Response
Program

Indirect 2,916 2,825 2,831 3,572 3,565 3,572
Costs
Program 3,646 3,531 3,539 4,466 4,457 4,466
Operation
al Costs
FTEs 125 125 125 125 125 125
-----------------------------------------------------------------------------------------------
Glassy-winged
Sharpshooter

Indirect 1,930 1,841 1,836 1,839 1,835 1,622
Costs
Program 2,413 2,301 2,295 2,298 2,294 2,028
Operation
al Costs
FTEs 16 16 16 16 16 16
-----------------------------------------------------------------------------------------------
Phytophthora
ramorum/Sudden
Oak Death

Indirect 245 423 424 428 427 406
Costs
Program 306 529 531 535 534 507
Operation
al Costs
FTEs 19 19 19 19 19 19
-----------------------------------------------------------------------------------------------
Light Brown
Apple Moth

Indirect 0 79 80 81 80 881
Costs
Program 0 99 100 101 101 1,101
Operation
al Costs
FTEs 0 0 5 5 5 5
-----------------------------------------------------------------------------------------------
Pale Cyst
Nematode

Indirect 0 763 664 666 665 497
Costs
Program 0 953 829 833 831 622
Operation
al Costs
FTEs 0 15 15 15 15 15
-----------------------------------------------------------------------------------------------
Critical
Invasive Pest
Response/
Miscellaneous
Pests

Indirect 284 34 167 168 168 168
Costs
Program 355 42 209 210 210 210
Operation
al Costs
FTEs 11 4 8 8 8 8

9. Eligibility Criteria
Not applicable.
10. Utilization (Participation) Data

European Grapevine Moth (EGVM)

APHIS is working closely with affected counties, industry, the
University of California, and other stakeholders to control EGVM which
is a significant pest of grapes and other specialty crops that is
threatening California's $2.7 billion wine/grape and stone fruit
industry. Initial treatment efforts reduced the detections of moths in
affected areas from 66,000 in April 2010 to just 20 moths in August
2010.

Light Brown Apple Moth (LBAM)

The LBAM program works with the state and growers of several
specialty crops located in California. The program has successfully
maintained millions of dollars worth specialty crop exports to Mexico
and Canada due to regulatory requirements that assure our trade
partners of pest free commodities. The LBAM program did not receive
funding from the FY 2011 Farm Bill. This program measures performance
by tracking LBAM spread beyond the generally infested area. In FY 2010,
the program found three isolated populations, compared to five in FY
2009.

Fruit Fly Exclusion and Detection Programs (FFED)

The FFED program protects the health and value of American
agricultural resources through working with Florida, California,
Arizona, and Texas to assure citrus crops are protected from these
pests. In FY 2010, APHIS' long-term performance measure for the number
of exotic fruit flies outbreaks in the United States had a target of
two severe outbreaks per year. A severe outbreak is one that spreads
beyond its initial area. The program experienced three of these
outbreaks in FY 2010, but will have them eradicated by October 2011.

Phytophthora ramorum (Sudden Oak Death)

The goal of sudden oak death program is to prevent long-distance
human assisted spread of Phytophthora ramorum in nurserystock through
working with states that are affected such as California, Washington,
and Oregon along with states who might receive potentially infested
nursery stock. APHIS works with officials in the three states to
establish quarantines and require nursery inspections before host
plants may be shipped interstate. In FY 2010, the program worked with
the nursery industry to reduce the presence of the disease in the
nursery system. It detected 22 infested nurseries in California,
Oregon, and Washington, helping to prevent the spread of the disease.
APHIS is continuing to support the development, communication, and
implementation of best management practices in nurseries to reduce the
risk of P. ramorum introduction and establishment.

Citrus Health Response Program (CHRP)

APHIS works with the entire U.S. citrus industry sustain the citrus
industry in the United States while managing pest and disease threats.
APHIS works with the citrus mutuals, California, Texas, Arizona, and
Florida to ensure safe citrus and maintain foreign trade markets.
During the 2009-2010 shipping season, 12.4 million bushel cartons of
fresh citrus fruit were exported to foreign markets and 17.9 million
bushel cartons were shipped within the United States,

Pale Cyst Nematode (PCN)

The PCN program works with Idaho State and growers in the state to
detect and eradicate cyst nematodes that cause significant damages
along with impact the export of potatoes from Idaho. In FY 2010, the
program achieved a 90 percent reduction in viable PCN populations as a
result of eradication activities.

Golden Nematode (GN)

The GN program works with New York State and growers to detect and
control the movement cyst nematodes that cause significant damages
along with impact the export of U.S. potatoes from New York perform
treatments and restrict the movement of potentially infested machinery
and growing media. Surveys conducted through 2010 allowed from the
release of 43,000 acres from regulation, while continuing to prevent
the spread of the pest.

Plum Pox Virus (PPV)

The PPV program works with New York State and growers to assure
market access for stone fruit is maintained and mitigate the spread to
previously infested areas. In FY 2010, the program addressed outbreaks
in New York and continued monitoring for the disease in Pennsylvania
and Michigan, after declaring eradication in both states in 2009.

Glassy-winged Sharpshooter (GWSS)

The GWSS program works with specialty crop growers and state
officials in California particularly the grape and wine industry to
mitigate the damages and maintain foreign trade markets. This program
has contained GWSS within ten California counties where it is
established and conducted area-wide management programs in major
citrus-producing areas to suppress the pest. These programs were highly
successful at suppressing GWSS populations and maintaining citrus
shipments out of the regulated areas. In FY 2010, six GWSS
interceptions occurred on nursery shipments, with five egg masses, one
nymph, and one adult found among the shipments. This data compares to
23 interceptions in FY 2009 with 25 egg masses. These interceptions and
egg mass finds prevent the GWSS establishment in non-infested areas,
where mitigation efforts would be costly and time-consuming.
11. Duplication or Overlap with Other Programs
In instances when APHIS and another agency find it within their
mission to address a particular pest, APHIS will meet with the other
agency to determine the most effective combination of skills to address
the pest. For instance, APHIS coordinates its Phytophthora ramorum with
the Forest Service as the introduction of the disease into the National
Forest system would be highly disruptive to the Forest Service mission.
12. Waste, Fraud and Abuse
USDA's Office of Inspector General recently published an audit,
USDA Payments for 2005 Citrus Canker Tree Losses, March 2011, which
raised concerns over payments through the Canker Lost Production
Program and Citrus Canker Tree Replacement Program. APHIS is currently
working with OIG to address the concerns raised in the report.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Farm Bill Section 10201, Plant Pest and Disease Management and
Disaster Prevention.
2. Subprograms/Department Initiatives
Not applicable.
3. Brief History
The Plant Pest and Disease Management and Disaster Prevention
Program was authorized in the 2008 Farm Bill and has been implemented
by APHIS from 2009 through 2011. It is funded annually with Commodity
Credit Corporation (CCC) funding. Funding was set at $12 million in FY
2009, $45 million in FY 2010, and $50 million in FY 2011 and beyond.
4. Purpose/Goals
The purpose of the Pest and Disease Management and Disaster
Prevention Program is for APHIS to partner with states, industry,
universities, and other interested groups to prevent the entry of high-
consequence plant pests, quickly detect those that may enter into the
United States, and enhance our emergency response capabilities. The
program provides strong protection to America's agricultural and
environmental resources, and helps nursery and specialty crop growers
flourish.
Projects are organized around six goal areas: enhancing plant pest
analysis and survey; targeting domestic inspection activities at
vulnerable points in the safeguarding continuum; enhancing and
strengthening threat identification and technology; safeguarding
nursery production; enhancing mitigation capabilities; and conducting
outreach and education about these issues.
5. Success in Meeting Programmatic Purpose/Goals
Over the last 2 years, Section 10201 projects have played a
significant role in many USDA and partner successes to protect American
agriculture and educate the public about the threat of invasive
species. These successes include, among many others, the eradication of
plum pox virus in Pennsylvania and a recent Mediterranean fruit fly
outbreak in Florida, surveys for European grapevine moth in California,
the 2010 national survey of honey bee pests and diseases, the
monitoring of high-risk international and domestic pathways for
invasive species, applied research to combat citrus pests, and the
exploration of the feasibility of an audit-based certification system
to prevent the movement of infested nursery stock.
Selection was based on project alignment with Section 10201 goals,
the expected impact of the project, and the technical approach. In
addition, the reviewers considered how the suggestions would complement
ongoing USDA programs and other Section 10201 projects. APHIS made a
concerted effort to engage external stakeholders, such as the National
Plant Board, Specialty Crops Farm Bill Alliance and USDA's National
Institute of Food and Agriculture, Agricultural Research Service and
U.S. Forest Service, in designing the evaluation criteria for the
suggestions.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
Budget Authority (dollars in
Fiscal Year thousands)
------------------------------------------------------------------------
2009 $12,000
2010 $45,000
2011 $50,000
------------------------------------------------------------------------

Most Section 10201 projects are carried out by APHIS' partners
through cooperative agreements. Most cooperators have one year from the
date the agreement is signed to spend the funds so the funds are not
outlaid in full until the following fiscal year.

8. Annual Delivery Cost (FY 2007-FY 2011)
Annual Delivery Cost by Department Strategic Goals (Rev.)
(On basis of appropriated funds)
(dollars in thousands)

Strategic Goal 4--Ensure that all of America's children have access to safe, nutritious, and balanced meals.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Program
Program
Items--Ma
ndatory

Farm Bill:
10201--Plant
Pest & Disease
Mgt. & Disaster
Prevention

Indirect N/A N/A 582 1,401 2,425 2,425
Costs
Program N/A N/A 2,947 11,099 12,575 12,575
Operation
al Costs
FTEs N/A N/A 1 37 37 37

9. Eligibility Criteria

A 10201 evaluation team made up of government and non-government, stakeholders, and scientific members evaluate the technical factors of the
individual suggestions using the evaluation criteria described below. If a suggestion does not address a factor, it will be evaluated as ``Low.''
Strengths, weaknesses, deficiencies, and reviewer questions will be documented for each suggestion. At the conclusion of the independent review
period, the entire evaluation team will meet and discuss each technical evaluation factor and agree on a consensus rating for each suggestion.
FY 2011 suggestions have been rated in the following areas:

Criteria 1: Alignment with Section 10201 Goals:

The suggestion should clearly identify the goal area to be addressed and explain how the project will further the goals of the farm bill.
Suggestions should not list more than one of the six goal areas:

1. Enhance plant pest analysis and survey.

2. Target domestic inspection activities at vulnerable points in
the safeguarding continuum.

3. Enhance and strengthen threat identification and technology.

4. Safeguard nursery production.

5. Conduct outreach and education to increase public understanding,
acceptance, and support of plant pest and disease eradication
and control efforts.

6. Enhance mitigation capabilities.

Criteria 2: Impact:

The suggestion should clearly address the potential benefits from
the proposed activities or deliverables. Emphasis should be placed on
projects that will affect high-risk states/areas, address pests of
regulatory significance, and/or benefits specialty crop producers and
minority or underserved communities.

Criteria 3: Technical approach:

The suggestion should discuss the technical approach to be
employed, including a description of methodology and a summary of the
various tasks to be undertaken. The suggestion should also highlight
the cooperators (states, universities, and others) that will be working
together to complete the project and the role each will play.
10. Utilization (Participation) Data
In FY 2009, APHIS provided funding for 63 projects in 21 states.
In FY 2010, APHIS provided funding for more than 270 projects.
In FY 2011, APHIS is providing funding for more than 270 projects
with over 100 cooperators in 50 states. Note: In FY 2011, Section 10201
funding was not available until April, but APHIS is working diligently
to finalize and implement the spending plan. As a result, we anticipate
that participant numbers may change.
11. Duplication or Overlap with Other Programs
APHIS' Pest Detection program is funded through an annual budget
appropriation. It supports APHIS' goal of safeguarding U.S.
agricultural and environmental resources by ensuring that new
introductions of harmful plant pests and diseases are detected as soon
as possible, before they cause significant damage. These efforts engage
the scientific community, government entities, states, tribes,
universities, the public, nonprofit entities, and industry. The
Cooperative Agricultural Pest Survey (CAPS) program is the principle
means of providing funds to all states and other cooperators to survey
for pests that are not known to be in the U.S., as well as some that
are of limited distribution and of regulatory concern. Pest-free
regions are identified that allow the continued export of commodities
from particular areas of the country.
Farm Bill Section 10201 complements the Pest Detection program and
expands upon it by specifically providing funds and technical
assistance to specialty crop growers, organizations representing
specialty crop growers, and state and local agencies working with
specialty crop growers and organizations for the development and
implementation of audit-based certification systems and nursery plant
pest risk management systems, in collaboration with the nursery
industry, research institutions, and other entities to address plant
pests. This Section also provides funds for a threat identification and
mitigation program to determine and address threats to the domestic
production of crops. Risk assessments are being prepared of the
potential threat to the agricultural industry of the United States from
foreign sources, in collaboration with the National Plant Board, and
are implementing action plans for high consequence plant pests and
diseases.
12. Waste, Fraud and Abuse
The program is fairly young as it was created in the 2008 Farm
Bill. Auditing agencies, such as the Office of the Inspector General or
the Government Accountability Office, have not conducted audits to
date. The program is not aware of any instances of waste, fraud, or
abuse.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Farm Bill Section 10202, National Clean Plant Network (NCPN).
2. Subprograms/Department Initiatives
The National Clean Plant Network is coordinated jointly by three
USDA Agencies: the Animal and Plant Health Inspection Service (APHIS)
(quarantine programs), Agricultural Research Service (research
activities), and National Institute of Food and Agriculture (outreach
initiatives). In March 2009, the three USDA Agencies signed a
Memorandum of Understanding laying the foundation for the NCPN at the
national level and providing direction and guidance for newly forming
NCPN specialty crop networks.
3. Brief History
The National Clean Plant Network was first provided dedicated
funding in the 2008 Farm Bill. The farm bill provides NCPN with $5
million each year (FY 2009-2012) for a total of $20 million over 4
years. The NCPN currently funds 18 clean plant centers in 14 states
focusing on supporting existing state infrastructures. In FY 2010/2011,
five specialty crops were covered including fruit trees, grapes,
citrus, berries, and hops. Several new crops are under consideration
for the program including potatoes, sweet potatoes, olives, garlic,
roses, and other ornamentals.
4. Purpose/Goals
NCPN is a collaborative venture, composed of diagnostic,
therapeutic and horticultural expertise. NCPN's goal is to ensure the
availability of high quality propagated plant material that is free of
plant pests, helping to ensure the global competitiveness of specialty
crop producers. The NCPN promotes pest- and disease-free specialty
crops, the rapid and safe introduction of new varieties from foreign
sources, and hygienic U.S. products for export.
5. Success in Meeting Programmatic Purpose/Goals
Over the past 2 years, the NCPN has built national, regional and
crop-specific NCPN governing bodies composed of governmental,
University, and industry representatives nationwide. Due to this
initiative Clean Plant Centers were revitalized and foundation
plantings of clean nursery stock expanded. The NCPN is currently
supporting Clean Plant Network Centers for five specialty crops in
multiple states including:

Fruit Tree (Pomes and Stone Fruits): California, South
Carolina, and Washington.

Grape: California, Florida, Missouri, New York, and
Washington.

Citrus: Alabama, Arizona, California, Florida, Louisiana,
and Texas.

Berries (Strawberries, Blueberries, Cranberries, and Cane
Fruit): Arkansas, North Carolina, and Oregon.

Hops: centered out of Washington State.

Due to the efforts of these centers, clean plants were provided to
nurseries and growers to ensure planting sustainability and
productivity, and quality of products. In 2009, the initial year of
funding alone, 161 clean plant accessions consisting of fruit tree and
grape varieties were released. NCPN continues to contribute to the
economy by working with U.S. specialty crop producers to generate
desirable planting stock, increase yields of healthy, high quality
crops, and encourage competitive standards for domestic and
international trade.

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
Budget Authority (dollars in
Fiscal Year thousands)
------------------------------------------------------------------------
2009 $5,000
2010 $5,000
2011 $5,000
------------------------------------------------------------------------

The Farm Bill of 2008, Section 10202 provides that NCPN funding is
--available until expended' (no-year) since it is understood that a
certain `ramp-up' was anticipated for this program in its early years.
Additionally, the program uses a cooperative agreements process with
time built into the calendar for applicants to receive feedback from
APHIS to enhance their proposals. The program announces recipients and
signs the agreements near the end of the fiscal year, resulting in
outlays that lag behind obligations.

8. Annual Delivery Cost (FY 2007-FY 2011)
Annual Delivery Cost by Department Strategic Goals (Rev.)
(On basis of appropriated funds)
(dollars in thousands)

Strategic Goal 4--Ensure that all of America's children have access to safe, nutritious, and balanced meals.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Program
Program
Items--Ma
ndatory

Farm Bill:
10202--National
Clean Plant
Network

Indirect N/A N/A 242.5 243 243 243
Costs
Program N/A N/A 258 508 508 508
Operation
al Costs
FTEs N/A N/A 1 2 2 2

9. Eligibility Criteria
Parties eligible to receive NCPN program funding include Land-Grant
Universities, Non Land-Grant Colleges of Agriculture, State
Agricultural Experiment Stations, State Governments, and Federal
Agencies.
The following criteria are also considered when providing program
support:

Target Crops: Specialty crops, especially those considered
highly restricted due to pest pressures

Clean Plant Centers or Programs: Extant to the extent
practicable

Core Mission: Diagnostics, therapeutics, foundation
plantings

Secondary Mission: Networking and education/outreach

Performance Goals: Industry focus and consultation
10. Utilization (Participation) Data
In FY 2011, NCPN will be focusing its efforts on five specialty
crop groups (fruit trees, grapes, berries, citrus, and hops)
represented by 18 supported clean plant centers or associated programs
located in 14 states. Additionally, the NCPN national stakeholder
database has about 500 persons enrolled as expressing specific interest
in the program. This includes nursery and grower industries,
scientists, state regulatory officials, and educators.
11. Duplication or Overlap with Other Programs
We are not aware of any other program with a sufficiently similar
mission.
12. Waste, Fraud and Abuse
The program is fairly young as it was created in the 2008 Farm
Bill. Auditing agencies, such as the Office of the Inspector General or
the Government Accountability Office, have not conducted audits to
date. The program is not aware of any instances of waste, fraud, or
abuse.
13. Effect of Administrative PAYGO
None.

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF FOREIGN AGRICULTURE AND FOOD AID PROGRAMS)

----------

WEDNESDAY, JULY 13, 2011

Subcommittee on Rural Development,
Research, Biotechnology, and Foreign
Agriculture,
Committee on Agriculture,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:06 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Timothy
V. Johnson [Chairman of the Subcommittee] presiding.
Members present: Representatives Johnson, Stutzman, Scott,
Hultgren, Hartzler, Schilling, Costa, Cuellar, Sewell, Kissell,
and McGovern.
Staff present: Mike Dunlap, Tamara Hinton, John Porter,
Debbie Smith, Suzanne Watson, Andy Baker, Liz Friedlander, John
Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE
IN CONGRESS FROM ILLINOIS

The Chairman. This hearing of the Subcommittee on Rural
Development, Research, Biotechnology, and Foreign Agriculture
entitled, Agricultural Program Audit: Examination of Foreign
Agriculture and Food Aid Programs, will now come to order.
Good morning, and welcome to this hearing to examine our
trade, food aid and agricultural development programs operated
by USDA's Foreign Agricultural Service and the U.S. Agency for
International Development. This hearing is part of a series of
farm program audits to help us prepare for the next farm bill.
When we are finished here, I hope that we will all have a
better understanding of trade and food aid programs both
individually and as part of the broader picture of foreign
policy. Having detailed knowledge of these programs will help
us make better policy decisions when the time comes.
Today's hearing builds upon a discussion this Subcommittee
had on April 7th of this year where we looked at five export
programs in great detail. At that hearing, we reviewed how the
programs are being implemented and how our ag policy has
enabled the programs to expand our export of U.S. agricultural
products.
Along with learning more about our trade programs, we will
hear testimony describing how our humanitarian assistance is
meeting acute needs in the areas of crisis. As the largest
donor of food aid in the world, the United States has been at
the forefront of humanitarian assistance. Part of these efforts
include agricultural developmental programs which provide
technical assistance and training to help communities graduate
from reliance on food aid.
In our discussion this morning, we will take a close look
at the administrative side of our programs, carefully reviewing
the delivery costs and progress toward meeting the goals and
objectives set by the Committee. One of the objectives we have
to keep in mind for the next farm bill is reducing overall
spending while maintaining an effective level of support for
critical programs. In every corner of government, we are
looking for opportunities to streamline processes, ensure
Federal programs are delivered with maximum impact and with the
least cost possible. It is incumbent on the agencies to
effectively deliver each program in the most efficient manner
possible. And it is the purview of this Committee to ensure
that the agencies are fulfilling their responsibility. The
current economic and fiscal environment adds urgency to this
Committee's oversight responsibilities because it helps
prioritize limited funds to address our most important needs.
With us this morning, we have the operational leaders in
the agencies in charge of implementing our trade, food and
development programs. The two agencies represented here today
have unique capabilities but must act in concert to achieve
their objectives. We look forward to hearing how they are
coordinating their efforts around the world. From the Foreign
Agricultural Service, we are joined by Acting Administrator
Suzanne Heinen, and with us from USAID is the Assistant
Administrator for the Bureau for Democracy, Conflict and
Humanitarian Assistance. We appreciate all the efforts the
agencies have put into compiling a clear outline of how the
programs are being implemented. I anticipate that the
conversation this morning will be the beginning of a very frank
discussion that will continue throughout the development of the
next farm bill.
Thank you both for being here and I look forward to your
testimony.
[The prepared statement of Mr. Johnson follows:]

Prepared Statement of Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Good morning, and welcome to this hearing to examine our trade,
food aid, and agricultural development programs operated by USDA's
Foreign Agricultural Service and the U.S. Agency for International
Development.
This hearing is part of a series of farm program audits to help us
prepare for the next farm bill. When we are finished here, I hope that
we will all have a better understanding of trade and food aid programs
both individually and as part of the broader picture of farm policy.
Having detailed knowledge of these programs will help us make better
policy decisions when the time comes.
Today's hearing builds upon a discussion this Subcommittee had on
April 7th of this year, where we looked at five export promotion
programs in great detail. In that hearing, we reviewed how the programs
were being implemented, and how our agricultural industry has been able
to utilize the programs to expand U.S. agricultural exports.
Along with learning more about our trade programs, we will hear
testimony describing how our humanitarian assistance is meeting acute
needs in areas of crisis. As the largest donor of food aid in the
world, the U.S. has been at the forefront of humanitarian assistance.
Part of these efforts includes agricultural development programs which
provide technical assistance and training to help communities graduate
from a reliance on food aid.
In our discussion this morning we will take a close look at the
administrative side of our programs, carefully reviewing the delivery
costs and progress towards meeting the goals and objectives set by this
Committee.
One of the objectives we must keep in mind for the next farm bill
is reducing overall spending while maintaining an effective level of
support for critical programs. In every corner of government we are
looking for opportunities to streamline processes and ensure Federal
programs are delivered with maximum impact and with the least cost
possible. It is incumbent upon the agencies to effectively deliver each
program in the most efficient manner possible. And it is the purview of
this Committee to ensure the agencies are fulfilling this
responsibility.
The current economic and fiscal environment adds urgency to this
Committee's oversight responsibilities because it helps prioritize
limited funds to address our most important needs.
With us this morning we have the operational leaders of the
agencies in charge of implementing our trade, food aid, and development
programs. The two agencies represented here today have unique
capabilities, but must act in concert to achieve their objectives. We
look forward to hearing how they are coordinating their efforts around
the world.
From the Foreign Agricultural Service we are joined by Acting
Administrator Suzanne Heinen. With us from USAID is the Assistant
Administrator for the Bureau for Democracy, Conflict and Humanitarian
Assistance.
We appreciate all of the effort the agencies have put into
compiling a clear outline of how the programs are being implemented. I
anticipate that the conversation this morning will be the beginning of
a very frank discussion and will continue throughout the development of
the next farm bill. I thank both of you for being here today, and look
forward to your testimony.

The Chairman. I would then recognize the Ranking Member,
Mr. Costa, for whatever statement he would like to make.

OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA

Mr. Costa. Thank you very much, Mr. Chairman. I think that
our efforts this morning to focus on the rural development
research, biotechnology and foreign agriculture assistance is
key as we continue to focus on expanding our exports for
agricultural trade as well as our efforts to deal with food aid
and development in different parts of the world.
This hearing, Chairman Johnson, I think is appropriate
given the timing. The audit hearings are an important part of
Members' ability in the Subcommittee to focus on the United
States Department of Agriculture's programs that I think as any
good subcommittee we need to provide a regular review on.
Today, the programs that we are looking at, the Foreign
Agricultural Service which develops export markets for U.S.
agricultural products, is important. I think there are a number
of reasons why this program, as I have seen it implemented in
various parts of the world, is important. One, it connects
America and ag producers and value-added ag businesses of all
sizes and varieties to the world markets. I believe my
colleagues here on the Subcommittee who come from various parts
of the country feel similarly, that nobody does it better, to
take a title of a song, than our American farmers, ranchers and
dairymen in terms of the production of high-quality foods and
fibers at very abundant levels and of the safest level for
consumers.
But it also helps open those markets for long term while
working to expand new markets. It helps promote a free and fair
global trading system. I support free trade as long as it is
fair trade, that meaning a level playing field. Certainly in
the global economy, it gives us better access to those markets.
It also helps us to resolve non-tariff trade barriers,
particularly when other countries are trying to use sanitary
and phytosanitary standards. I believe this has been nothing
more than leverage to try to foster trade in a direction that
would be more favorable to them, and we all know numerous
examples. In the specialty crops, we see that having occurred
historically.
The five market development programs under Title III of the
farm bill, we will be discussing today, they have unique goals.
I would like to hear the witnesses explain to us how we are
reaching those goals and how well they complement each other.
Obviously we all have different interests from the agricultural
regions we represent in the country. Mine is fairly well known,
the specialty crops in California, some 300, are so much of
what we able to export, last year almost $38 billion a year at
the farm gate in California, farm gate being the gross receipts
to farmers, ranchers and dairymen.
So we have a lot of issues that we are focusing on. We know
we have tight budgets. We know the 2012 Farm Bill will be
smaller in funding than the 2008 Farm Bill, and so whether it
is with the FAS program or other related programs, we are going
to have to figure out how we can be as cost-effective as we
possibly can to ensure that we get the best bang for our buck.
So as we look at that, as we look at examining food aid and
development programs also administered by the Foreign
Agricultural Service and USAID. A couple years ago I was in
Sudan and Darfur. There are a lot of places around the world
where America's best foot forward and our ambassadorial efforts
is to provide that aid to those most in need. You know, it is
estimated by the U.N. that over 700 million people every night
go to bed hungry and we lose 10,000 children a week as a result
of malnutrition. So the USAID program I think is really a good
effort.
In conclusion, for over 55 years the United States has
provided food for emergency food relief to support
international developments, and I think we need to talk about
how we can build on that goodwill that we have been able to
provide. I am also reminded when we look at the Federal Food
Aid Assistance Program of one our Presidents, Ronald Reagan,
who once said that, and I am paraphrasing, that you can give a
person a fish to eat and they will be fed for the day, but if
you teach them how to fish, and I think that analogy holds
forward in the food assistance services efforts, then they can
sustain themselves, and certainly that is a lot of what that
program, in my view, is all about.
So I thank you. We look forward to the testimony and the
questions from this panel.
The Chairman. Thank you, Mr. Costa.
The chair would request that other Members submit their
opening statements for the record so the witnesses can begin
their testimony to ensure that there is adequate time for
questions.
We would then welcome our first and only panel of witnesses
to the table. Our first witness is Ms. Suzanne Heinen, Acting
Administrator, Foreign Agricultural Service, USDA, Washington.
You may proceed.

STATEMENT OF SUZANNE HEINEN, ACTING ADMINISTRATOR, FOREIGN
AGRICULTURAL SERVICE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.

Ms. Heinen. Thank you, Mr. Chairman.
Mr. Chairman, Members of the Subcommittee, I am very
pleased to appear today before you to discuss the trade, food
aid and capacity-building programs authorized by Congress and
administered by USDA's Foreign Agricultural Service. As
requested, my written testimony discusses the goals of each
program, how the program funds are allocated and how the goals
for each program are being met.
FAS attaches around the globe, bolstered by cooperative
public-private partnerships, have assisted U.S. farmers and
ranchers in achieving record agricultural export sales and have
increased food security for some of the poorest around the
world. In Fiscal Year 2011, we expect U.S. agricultural exports
to reach a record $137 billion and support over one million
American jobs. We expect to feed more than 5.2 million hungry
people and to build agricultural capacity in dozens of
countries around the world. Over numerous farm bills, Congress
has authorized and refined an effective combination of
programs. Allow me to expand on how Congress, FAS and the U.S.
agricultural community complement each other in delivering
effective results.
The largest market development program operated by FAS is
MAP, the Market Access Program. MAP forms partnerships between
nonprofit agricultural trade organizations, cooperatives,
nonprofit State Regional Trade Groups and small businesses to
share the costs of overseas marketing and promotional
activities. The 2008 Farm Bill makes available $200 million for
MAP in 2011. That amount is more than matched with industry
contributions. FAS allocates MAP funds through a competitive
process which allows applicants to request funding for various
FAS programs through a single strategically coordinated
proposal. This process allows for efficiencies in program
delivery while taking full advantage of the complementary
nature of the programs provided by Congress. In 2011, MAP
resources are being used to expand markets for food grains,
meat and poultry, seafood, dairy, horticultural products and
processed products in markets in every corner of the globe.
In addition to generic promotions, MAP has a brand
promotion component that provides funding to over 600 small
companies and agricultural cooperatives annually. For example,
WildRoots, a small healthy snack food company with two
production facilities in Illinois and one in Nebraska, matched
MAP funds to market their products in Canada. Export sales rose
from zero in 2008 to over $4 million in 2010. This company buys
blueberries from Michigan, corn and soy products from Illinois,
oats from Nebraska, cranberries from Massachusetts and almonds
from California. According to WildRoots, ``without the branded
program, we simply would never have been able to compete
internationally. It has moved our business to a new level and
has promoted U.S.-based agricultural products, creating jobs in
an economy that desperately needs them.''
The economic impact of the MAP and Foreign Market
Development programs, our second-largest market development
program, is striking. A recent cost-benefit analysis concluded
that for every dollar invested by government and industry,
exports increased by $35.
One of our most compelling challenges in the world is
eradicating chronic hunger and malnourishment. The food aid and
development programs administered by USDA and USAID are making
a difference in the lives of poor and hungry people. The
McGovern-Dole school feeding program was established to carry
out preschool and school food for education programs in foreign
countries to improve food security, reduce the incidence of
hunger and improve literacy and primary education, particularly
for girls, while also providing maternal, infant and child
nutrition programs for pregnant women, nursing mothers and
infants. This year, McGovern-Dole will provide benefits in 15
countries including Nepal, Haiti, Guatemala, Burkina Faso and
Senegal. Since 2003, the program has supported projects in 41
countries and fed up to five million schoolchildren each year.
USDA and implementing organizations developed graduation plans
and we have moved one program into full graduation in Moldova
and we have progress towards graduation in Kenya, Laos and
Guinea-Bissau.
As Administrator of FAS, I am very proud of our efforts in
administering the farm bill authorized programs. We look
forward to providing any support we can as Congress works on
the next farm bill.
This concludes my statement, and I look forward to
answering your questions.
[The prepared statement of Ms. Heinen follows:]

Prepared Statement of Suzanne Heinen, Acting Administrator, Foreign
Agricultural Service, U.S. Department of Agriculture, Washington, D.C.
Mr. Chairman, Members of the Subcommittee, I am pleased to appear
before you today. I welcome the opportunity to discuss trade, food aid,
and capacity building programs authorized by Congress and administered
by the Foreign Agricultural Service (FAS) of the U.S. Department of
Agriculture (USDA). As you requested, I am pleased to discuss the goals
of each program, outline how the program funds are allocated, and
describe how the goals for each program are being met. The efforts of
FAS personnel around the globe, bolstered by cooperative public-private
partnerships, have assisted U.S. farmers and ranchers in achieving
record agricultural export sales and have increased food security for
some of the poorest around the world. In Fiscal Year 2011, we expect
U.S. agricultural exports to reach a new record of $137 billion, we
expect to feed more than 5.2 million hungry people, and we expect to
build agricultural capacity in dozens of countries around the world.
We do much of our work in very close coordination with the U.S.
Agency for International Development (USAID). USAID plays an important
role in the countries in which we work.
Linking U.S. Agriculture to the World
FAS is USDA's lead agency for addressing the challenges and
opportunities of the dynamic global marketplace by expanding foreign
market access for U.S. products, building new markets, improving the
competitive position of U.S. agriculture, and addressing food security
and capacity building in foreign countries. FAS has the primary
responsibility within USDA for international market development and
export financing, trade agreements and negotiations, and the analysis
and dissemination of vital international market intelligence and data
to agricultural producers and exporters. FAS also administers food aid
programs and mobilizes USDA's unique resources and expertise in
agricultural development activities.
FAS relies on its global network of agricultural economists, market
development experts, negotiators and trade specialists in Washington,
DC, and its approximately 100 international offices that cover 156
countries. FAS' agricultural counselors and attaches serving at U.S.
Embassies are our eyes and ears around the world, providing the
agricultural expertise to identify and seize opportunities, by
capturing real-time information on emerging trade and market
development issues, and averting problems before they become trade
barriers that impede U.S. exports.
Complementary Market Development Efforts
Over numerous farm bills, Congress has authorized and refined an
effective combination of agricultural market development programs.
These programs that are designed to develop markets, facilitate
financing of overseas sales, and resolve market access barriers
dovetail with the FAS mission. We must open, expand, and maintain
access to foreign markets, where 95 percent of the world's consumers
live. Participants from all corners of the U.S. agricultural community
utilize FAS-administered trade programs to reach these consumers,
complementing Administration efforts to open and maintain markets
through trade negotiations, diplomacy, and enforcement of trade
agreements.
Market Access Program
The largest market development program operated by FAS is the
Market Access Program (MAP). The program originally known as the
Targeted Export Assistance Program was first authorized by Congress in
the 1985 Farm Bill. The 1996 Farm Bill renamed the program the MAP and
established the current statutory prohibitions on the use of MAP funds
to promote the products of large companies.
MAP is a cost-share program that uses funds from USDA's Commodity
Credit Corporation (CCC) to aid in the creation, expansion, and
maintenance of foreign markets for U.S. agricultural products. MAP
forms partnerships between nonprofit U.S. agricultural trade
organizations, U.S. agricultural cooperatives, nonprofit State Regional
Trade Groups, and small-sized U.S. commercial entities to share the
costs of overseas marketing and promotional activities, such as
consumer promotions, market research, and trade show participation. The
2008 Farm Bill makes available $200 million of CCC funds for MAP in FY
2011; that amount is matched with industry contributions. Applicants
submit MAP proposals to USDA as part of a competitive Unified Export
Strategy (UES) process, which allows applicants to request funding for
various USDA foreign market development programs through a single,
strategically coordinated proposal. One strength of the UES process is
that utilizing the complementary nature of the various market
development programs is emphasized.
In addition to generic promotions, MAP has a brand promotion
component that provides export promotion funding to over 600 small
companies and agricultural cooperatives annually. To conduct branded
product promotion activities, individual companies must provide at
least 50 percent of funding. Most small companies and agricultural
producer cooperatives access market development programming through one
of the four State Regional Trade Groups (SRTGs)--Food Export
Association of the Midwest USA, Food Export USA Northeast, Southern
United States Trade Association, and Western United States Agricultural
Trade Association. The SRTGs work closely with the State Departments of
Agriculture in their respective regions to identify eligible company
participants and export opportunities, and then bring the two together.
In that effort, SRTGs provide small companies with export readiness
training and organize trade missions, as well as branded programming
opportunities to directly access MAP funds for individual company
promotions and trade show participation.
WildRoots, a small healthy snack food company, with two production
facilities in Illinois and one in Nebraska, matched MAP branded funds
to market their products in Canada. Export sales soared from zero in
2008 to over $4 million in 2010. The company buys blueberries from
Michigan, corn and soy products from Illinois, oats from Nebraska,
cranberries from Massachusetts, and almonds from California. According
to a WildRoots' cofounder, ``Without the branded program, we simply
would never have been able to compete with Canadian producers. It has
moved our business to a new level and has promoted U.S.-based
agricultural products, creating jobs in an economy that desperately
needs them.''
Foreign Market Development Program
The Foreign Market Development (Cooperator) Program (FMD) had its
first participants (known as Cooperators) in 1954. FMD is currently
authorized by Title VII of the Agricultural Trade Act of 1978, which
directs the Secretary of Agriculture to ``establish and, in cooperation
with eligible trade organizations, carry out a foreign market
development cooperator program to maintain and develop foreign markets
for United States agricultural commodities and products . . .'' Funding
for FMD was most recently reauthorized by Congress in the 2008 Farm
Bill.
FMD is a cost-share program that aids in the creation, expansion,
and maintenance of long-term export markets for U.S. agricultural
products. The current farm bill makes available $34.5 million of CCC
funds for FMD this year. The program fosters a market development
partnership between USDA and U.S. agricultural producers and processors
who are represented by nonprofit commodity or trade associations known
as Cooperators. Under this partnership, USDA and each Cooperator pool
their technical and financial resources to conduct overseas market
development activities that are generic in nature. Activities must
contribute to the maintenance or growth of demand for U.S. agricultural
commodities and generally address long-term foreign import constraints
and export growth opportunities. Programs focus on matters such as
reducing infrastructural or historical market impediments, improving
processing capabilities, modifying codes and standards, and identifying
new markets or new applications or uses for the agricultural commodity
or product in the foreign market. Twenty-one organizations representing
a broad sample of U.S. agriculture, including peanuts, sunflower,
soybeans, livestock genetics, dry beans, wheat, poultry, and rice,
benefited from receiving a total of $34.15 million in Fiscal Year 2010
through the FMD program.
Through the FMD program, U.S. sunflower producers' activities in
Spain are paying dividends. To increase awareness of confectionary
sunflower seed and build demand in Spain, the National Sunflower
Association (NSA) used FMD funding to create and implement an
integrated and highly successful marketing program of trade
advertisements, newsletters, trade shows, seminars, and trade missions.
Through this work, U.S. sales to Spain reached nearly $270 million,
making Spain the top market for U.S. confectionary sunflower seeds, and
generating jobs in top sunflower producing states including Colorado,
Kansas, Minnesota, North Dakota, Oklahoma, South Dakota, and Texas.
Economic Impact of MAP and FMD Programs
The economic impact of the MAP and FMD programs is striking. USDA's
Foreign Agricultural Service commissioned a cost-benefit analysis in
March 2010 that concluded the programs effectively leveraged private
and public sector resources in a unique partnership to increase U.S.
food and agricultural exports. The analysis concluded for the time
period 2002 through 2009 that U.S. food and agricultural exports
increased by $35 for every dollar invested by government and industry
on market development. Additionally, U.S. agricultural exports in 2009
were $6.1 billion higher than they would have been without the
increased investment in market development. The study also found that
an estimated 47 percent of the programs' total trade impact accrued to
commodities not receiving market development assistance--a phenomenon
known as the ``halo'' effect. In other words, non-promoted U.S.
commodities benefited from increased promotion of other U.S.
commodities in the same market.
Emerging Markets Program
The Emerging Markets Program (EMP) provides funding for technical
assistance activities intended to promote exports of U.S. agricultural
commodities and products to emerging markets in all geographic regions,
consistent with U.S. foreign policy. The program is authorized by the
Food, Agriculture, Conservation, and Trade Act of 1990, as amended,
through the end of the current 2008 Farm Bill. Funding is set by
Congress at $10 million each fiscal year from the Commodity Credit
Corporation.
EMP was specifically designed by Congress to improve market access
and develop or promote exports of U.S. agricultural commodities and
products to low and middle income emerging markets through cost-share
assistance to eligible applicants for approved technical assistance
activities. For this program, Congress defined an emerging market as
any country that ``is taking steps toward a market-oriented economy
through the food, agriculture, or rural business sectors of the economy
of the country,'' and ``has the potential to provide a viable and
significant market for United States agricultural commodities or
products of United States agricultural commodities.'' EMP resources may
be used to support exports of U.S. agricultural commodities and
products only through generic activities, not specific brands. The EMP
statute provides that the Secretary establish a private sector advisory
committee to provide information and advice to USDA in developing
strategies for providing technical assistance and enhancing markets for
U.S. agricultural products in developing markets. More specifically,
EMP Committee members review, from a non-governmental perspective,
qualified proposals submitted for funding assistance. The Secretary of
Agriculture appoints members to the Committee for 2 year terms. For
Fiscal Year 2010, the EMP program supported 83 agricultural export
promotion projects with funding totaling $8.3 million.
In 2010, EMP assisted Wisconsin ginseng growers battle
counterfeits. For more than a decade, the Ginseng Board of Wisconsin
(GBW) has struggled with Chinese counterfeiters selling fake Wisconsin
Ginseng. With 90 percent of its exports going to China, the GBW moved
aggressively to regain control of its brand. Using EMP, GBW initiated
research to develop a technique to detect trace elements of ginseng's
valuable root to Wisconsin or where it was grown originally; initial
findings are promising.
Technical Assistance for Specialty Crops Program
The Technical Assistance for Specialty Crops Program (TASC) was
authorized by Congress in the Farm Security and Rural Investment Act of
2002. The 2008 Farm Bill reauthorized the Technical Assistance for
Specialty Crops (TASC) Program and provided mandatory Commodity Credit
Corporation (CCC) funds for the program. In FY 2010 the program was
funded at $8 million and for FY 2011 and FY 2012 program funding is set
at $9 million. Congress authorized the TASC program to assist U.S.
organizations by providing funding for specialty crops projects that
address sanitary, phytosanitary and related technical barriers that
prohibit or threaten the export of U.S. specialty crops. Using TASC,
USDA has successfully helped U.S. exporters regain market access for
millions of dollars of products from almonds to spinach. Examples of
project activities include seminars and workshops, study tours, field
surveys, pest and disease research, and pre-clearance programs. TASC
proposals are accepted from U.S. nonprofit trade associations,
universities, agricultural cooperatives, private companies, U.S.
Government agencies and state government agencies. FAS, which
administers the program, provides grant funds as direct assistance to
U.S. organizations. Applicant contributions are not required, but are
strongly encouraged.
Last year, TASC was instrumental in assisting the U.S. potato
exporters in overcoming a Thai phytosanitary protocol that was
preventing U.S. exports from certain states. Following several months
of negotiations between the Thailand Department of Agriculture and
USDA, the U.S. Potato Board (USPB) used TASC to arrange for Thai
officials to visit the U.S. and review U.S. seed certification
procedures, seed cultivation practices and phytosanitary mitigation
measures. Following this activity, Thailand agreed to additional market
access that more than doubles--to fourteen--the number of states
eligible to export seed potatoes to Thailand. Seed potatoes from
Colorado, Maine, Michigan, Minnesota, Montana, Nebraska, New York,
North Dakota, Wisconsin and Wyoming may now be exported to Thailand.
FAS estimates sales of $250,000 to $500,000 during the first year of
Thai market access, while the USPB estimates that expanded market
access could boost exports to Thailand to $1 million in 3 to 5 years.
Another example is U.S. hops exports to Canada. Canada buys more
than $18 million in U.S. hops, which makes it the fifth largest export
market for U.S. hops producers. In response to limited pesticide
tolerances in Canada that potentially threatened trade, TASC funds
supported U.S. hop industry efforts to work with regulators in Canada
in establishing five new hops-related maximum residue levels in Canada
for pesticides critical to U.S. hop production. The Canadian tolerances
were set at safe levels that allow U.S. hop growers to apply essential
U.S. crop protection tools that significantly reduce the risk of
shipping hops to Canada. Given that over half of U.S. hop production is
exported, the setting of pesticide tolerances in one of the industry's
most crucial export markets has been vital for this industry.
Export Credit Guarantee Program
Starting in 1981, the Export Credit Guarantee Program (GSM-102) was
originally administered under the Commodity Credit Corporation Charter
Act. In the 1990 Farm Bill GSM-102 became specifically authorized
under, and subject to the provisions of, the Agricultural Trade Act of
1978, as amended. It has been continuously authorized since that time,
but funding levels under the program were most recently authorized in
the 2008 Farm Bill. The GSM-102 program was developed to expand U.S.
agricultural exports by making available payment guarantees to
encourage U.S. private sector financing of foreign purchases of U.S.
agricultural commodities on credit terms. The payment guarantee issued
under GSM-102 is an agreement by CCC to pay the exporter, or the U.S.
financial institution that may take assignment of the payment
guarantee, specified amounts of principal and interest in case of
default by the foreign financial institution that issued the letter of
credit for the export sale covered by the payment guarantee. By
providing credit guarantees of up to 3 years to cover up to 100 percent
of loan principal and a portion of the interest, the financial risk to
U.S. lenders of foreign banks is greatly diminished. As Congress
intended, the reduced risk in financing under GSM-102 increases export
opportunities for U.S. exporters. This reduction in risk is most
important for exports to developing countries, where the lack of credit
often impedes a U.S. exporter's ability to sell and the buyer's ability
to purchase U.S. agricultural commodities. GSM-102 is an effective
response to the short windows of opportunity that U.S. agricultural
exporters face when financing trade based on market-based prices and
slim margins.
Applicable law mandates that CCC make available for each fiscal
year an amount of credit guarantees equal to the lesser of (a)
$5,500,000 or (b) an amount of guarantees that CCC can make available
using budget authority for an underlying subsidy amount of the sum of
$40 million per year plus any unobligated budget authority from prior
fiscal years. For the last 2 years, the program has operated at a
``negative subsidy,'' meaning that the cash flow into the program has
exceeded the funds needed to provide for expected losses.
From its inception in the early 1980's through June 2011, exports
facilitated through the use of GSM-102 have reached a total of more
than $100 billion. In FY 2010, guarantees covered $3.10 billion in
sales that ran the gamut from corn to Costa Rica to soybeans to
Indonesia and from wheat to Nigeria to wood chips to Turkey. During the
financial crisis of 2008 and 2009, FAS received a record number of
applications for GSM-102, attesting to the success of the program in
facilitating trade finance in times of tightened liquidity. In FY 2011,
USDA expects to make available the full farm bill-mandated allocation
of $5.5 billion in GSM-102 guarantees. These guarantees will facilitate
targeting by U.S. agricultural exporters of sales to over 100 eligible
country destinations.
Facility Guarantee Program
Authorized by Congress under the Food, Agriculture, Conservation
and Trade Act of 1990, the Facility Guarantee Program (FGP) was
designed to meet the financing needs for the establishment or
improvement of facilities in emerging markets that would benefit U.S.
agricultural exporters. By providing credit guarantees, FGP is intended
to reduce the financial risk to U.S. lenders of default by foreign
banks serving as borrowers, thus improving the ultimate buyer's ability
to acquire the agricultural-related infrastructure or services that
will enhance U.S. export sales. Emerging markets often lack the
infrastructure to support increased trade volume. Export sales of U.S.
equipment or expertise to improve ports, loading and unloading
capacity, refrigerated storage, warehouse and distribution systems, and
other related facilities may qualify for facility guarantees, as long
as these improvements are expected to increase opportunities for U.S.
agricultural exports.
From its inception, through June 2011, only one transaction has
been guaranteed under FGP. Prior to the amendments to the statutory
authority made in the 2008 Farm Bill, FGP required U.S. content on any
goods guaranteed. The 2008 Farm Bill allows for a waiver of the U.S.
content requirement, if such goods are unavailable or the use of such
goods is impracticable. FAS is currently reviewing how to implement
this provision. FGP operates as a subset of the GSM-102 Export Credit
Guarantee Program and under that authority is subsumed within the same
overall limitations on the amount of credit guarantees that CCC may
make available.
Dairy Export Incentive Program
The Dairy Export Incentive Program (DEIP) was enacted by Congress
under the Food Security Act of 1985 and most recently reauthorized in
the 2008 Farm Bill. The program provides a bonus or subsidy on a bid
basis to exporters of dairy products. By providing a subsidy on exports
of dairy products, Congress intended the DEIP to bridge the gap between
world market prices and U.S. domestic prices. Commodities eligible
under the DEIP are milk powder, nonfat dry milk, butterfat, and various
cheeses. The authorizing legislation for the DEIP provides that the
subsidy may be paid in cash or in commodities held by the CCC. As CCC
inventories diminished, the DEIP evolved into the sole use of cash
payments for the subsidy. The DEIP is subject to U.S. export subsidy
reduction commitments under the World Trade Organization's Uruguay
Round Agreements, and is therefore capped by both subsidy level and
quantity in accordance with those commitments.
The DEIP has helped to meet the needs of U.S. exporters and
expanding markets for U.S. dairy products when world prices are
depressed due to the application of subsidies by other nations,
particularly the European Union. Agricultural economists at FAS
continuously monitor the world dairy situation and have the
responsibility for recommending issuing allocations under the DEIP as
world dairy prices dictate. Since 2002, world dairy prices have
warranted issuing allocations under the DEIP five times. DEIP bonuses
were last awarded in Fiscal Year 2010 in an amount of $2.37 million. In
2010, the DEIP was used to facilitate U.S. dairy exports around the
globe, including mozzarella cheese to China and butter to Saudi Arabia.
International Food Assistance and Development
One of the most significant and compelling challenges the world
faces is eradicating chronic hunger and malnourishment. The food aid
and development programs administered by USDA's Foreign Agricultural
Service are making a difference in the lives of poor and hungry people.
These programs support international assistance and development
activities that alleviate hunger and improve nutrition, education, and
agriculture in some of the world's poorest countries.
McGovern-Dole Program
The McGovern-Dole International Food for Education and Child
Nutrition Program (McGovern-Dole Program) is authorized by the Farm
Security and Rural Investment Act of 2002. Congress established the
McGovern-Dole Program to carry out preschool and school food for
education programs in foreign countries to improve food security,
reduce the incidence of hunger, and improve literacy and primary
education, particularly among girls; and maternal, infant, and child
nutrition programs for pregnant women, nursing mothers, infants, and
children who are 5 years of age or younger. Under this program, USDA
donates U.S. agricultural products and provides financial and technical
assistance for school feeding and maternal and child nutrition projects
in low-income, food-deficit countries that are committed to universal
education. The 2002 Farm Bill provided $100 million of CCC funds for
the program and authorization of appropriations through 2007. This
authorization of appropriations has been extended through FY 2012. In
FY 2011, Congress appropriated $199.5 million for the program. In FY
2011, the McGovern-Dole Program will provide benefits to beneficiaries
in 15 countries, including, Nepal, Haiti, Guatemala, Burkina Faso, and
Senegal.
Since 2003, the McGovern-Dole Program has supported projects in 41
countries and has fed up to five million schoolchildren each year. USDA
enters into agreements with implementing organizations to carry out
activities under the program. In progress reports, implementing
organizations provide information about the number of children being
fed, the increases in attendance, and other benefits that lead to
improved literacy, better diet, and graduation of the programs.
Organizations frequently report gains in attendance of ten percent or
more in participating schools. USDA and the implementing organizations
develop graduation plans to ensure that progress is being made toward
the goal of having a local entity assume responsibility for the
program. The McGovern-Dole Program graduated a school feeding project
in Moldova, and the Government of Moldova has continued much of the
program since the U.S. funding ended. School feeding programs in Kenya,
Laos, and Guinea-Bissau are nearing full graduation.
USDA is implementing improvements in program management that will
allow for more intensive monitoring of results. In FY 2011, USDA
released a results framework for implementing organizations that
outlined the objectives for the program. Organizations will begin
reporting against these frameworks in FY 2012, and USDA will review the
results closely to keep organizations on track. The improvements
address a recent GAO recommendation for an improved monitoring process,
which we agree with and had recognized as appropriate.
Food for Progress Program
Authorized by Congress through the Food Security Act of 1985, the
Food for Progress Program (FFPr) provides commodities on credit terms
or on a grant basis to developing countries and emerging democracies to
assist in the introduction of elements of free enterprise into the
countries' agricultural economies. CCC may purchase commodities for use
in Food for Progress if the commodities are currently not held in CCC
inventory. The 2008 Farm Bill extends authority for the program through
2012.
Under FFPr, commodities are provided on a donation basis to foreign
governments, private voluntary organizations, nonprofit organizations,
cooperatives, or intergovernmental organizations. The implementing
organizations request commodities and USDA purchases those commodities
from the U.S. market. USDA donates the commodities to the implementing
organizations and pays for the freight to move the commodity to the
recipient country. In meeting the statutory requirements of the
program, USDA considers proposals for all developing countries and
territories with priority consideration given to proposals for
countries with: per capita income at lower or lower-middle income
standards (using World Bank statistics); greater than 20 percent
prevalence of undernourishment as a proportion of the total population
(World Health Organization (WHO) of the United Nations data); and
positive movement toward freedom, including political rights and civil
liberties (as defined by Freedom House). Depending on the agreement,
the commodities donated through FFPr may be sold in the recipient
country, and the proceeds used to support agricultural, economic, or
infrastructure development programs. Assistance is provided through
foreign governments, PVOs, nonprofit organizations, cooperatives, and
intergovernmental organizations.
The FFPr allocations for FY 2011 include more than 232,000 metric
tons of U.S. rice, wheat, vegetable oil, soybean meal, soybean oil, and
corn valued at more than $143 million. The commodity value for FFPr is
not limited, however the statute limits the amount UDSA can pay for
non-commodity costs to no more than $40 million annually. These
donations will reach more than 1.6 million beneficiaries in ten
countries, including Haiti, Bangladesh, Uganda, Malawi, and Honduras.
For example, in FY 2010, Land O'Lakes received an FFPr grant to improve
commercial milk production, processing and marketing in Tanzania. By
the end of the program, the gross value of milk produced in Tanzania is
projected to increase by $2.1 million. The project will also create 180
new dairy sector-related jobs in private sector enterprises.
P.L. 480 Title I Program
The P.L. 480 Title I program was authorized by Congress in 1954 to
allow concessional sales of U.S. agricultural commodities to developing
countries. It is now authorized under the Food for Peace Act.
Commodities provided under this program may be sold in the recipient
country, and the proceeds may be used to support agricultural,
economic, or infrastructure development projects in such country. The
primary goals of the Title I program are to provide economic assistance
and promote food security. Priority is given to countries coping with
limited foreign exchange reserves, chronic food shortages, poverty, and
underdevelopment in the agricultural sector. Past Title I programs have
targeted countries with food insecurity, countries with limited foreign
exchange, and countries working to alleviate poverty and develop their
agricultural economies.
Over the program's history, USDA made concessional sales in
response to requests from foreign governments. Concessional sales were
made to governments that were facing food insecurity or economic
problems or that were working to alleviate poverty and promote economic
development. Since Fiscal Year 2006, new funding has not been requested
or appropriated because demand for food assistance using credit
financing has fallen and grant programs have become a more appropriate
tool for providing food assistance.
Borlaug Fellowship Program
The Borlaug Fellowship Program (BFP) was initiated in March 2004 by
FAS in honor of the late Nobel Laureate Dr. Norman E. Borlaug, an
agronomist, humanitarian, and the father of the Green Revolution.
Congress provided statutory authorization for the program in the Food,
Conservation, and Energy Act of 2008. The BFP provides fellowships for
scientific training and research in the United States to potential
agricultural leaders with the goal of promoting food security and
economic growth.
Since its inception in 2004, the Borlaug Fellowship Program has
provided agricultural scientific training in the United States for 539
Fellows from 64 countries in sub-Saharan Africa, the Middle East, the
former Soviet Union, Asia and Latin America. Collaborative-research and
training have spanned such fields as the plant and animal sciences,
food safety, agricultural biotechnology, environmental sciences,
climate change, and food security. Women agriculturalists receive
priority consideration in the program and now comprise nearly 50
percent of participants. During FY 2011 it is anticipated that the
Borlaug Fellowship Program will sponsor approximately 34 individuals
from 26 countries.
The program has facilitated the adoption of modern agricultural
practices in targeted countries by strengthening human and
institutional capacity through U.S.-based training. The Borlaug
Fellowship Program periodically conducts surveys to gather information
from alumni about the impact of the fellowship program on their work.
Responses from Borlaug alumni received in Fiscal Year 2010
overwhelmingly reported that their fellowship had a positive impact on
one or more aspects of their work. Of the 100 surveys received, the
Fellows specifically reported that participating in the Borlaug
Fellowship Program positively impacted their research (92 percent),
teaching (74 percent), and policy objectives (14 percent), including
the adoption of one or more new techniques or technologies (52 percent)
in their home institutions.
Local and Regional Food Aid Procurement Pilot Project
The Local and Regional Food Aid Procurement Pilot Project is a 5
year, $60 million pilot project authorized and funded by Congress in
the 2008 Farm Bill. Congress authorized the pilot project for the
purpose of examining the timeliness and efficiency of local and
regional procurement (LRP) as a tool to enhance U.S. Government food
assistance programs. The 2008 Farm Bill established four requirements
that USDA has met or is on track to meet in regard to the pilot
project. First, a study of prior local and regional purchase programs
was required. USDA submitted this study to Congress in January 2009.
Next, in light of the study, USDA was tasked to develop project
guidelines. The guidelines were completed in FY 2009. A third
requirement was to implement field-based projects during FY 2009-FY
2011. During this period, six private voluntary organizations and one
international organization received funding to undertake 23 field-based
projects in 19 different countries. A sample of projects supported by
this program include: school feeding in Burkina Faso, relief for
drought-affected households in Niger, and income-generating
opportunities for women in Mali. At this time, all the available
funding for the field-based projects has been obligated and
implementation of the projects will be completed by September 30, 2011.
The LRP pilot project's fourth and final requirement, an independent
evaluation, is moving forward on time. USDA has a contract with an
independent evaluator to begin work on the LRP project evaluation and
deliver it to Congress as required in May 2012.
Conclusion
As Administrator of USDA's Foreign Agricultural Service, I am proud
of our efforts in administering the farm bill authorized trade, food
aid, and development programs of the U.S. Department of Agriculture. We
look forward to providing any support we can as Congress works on the
next farm bill.
This concludes my statement. I look forward to answering any
questions you may have. Thank you.

The Chairman. Thank you, Ms. Heinen.
We will proceed then to Ms. Nancy Lindborg, Assistant
Administrator for the Bureau of Democracy, Conflict, and
Humanitarian Assistance, U.S. Agency for International
Development, Washington, D.C.
Let me point out that with unanimous consent, unless I hear
otherwise, the gentleman from Massachusetts, Mr. McGovern, who
is not a Member of this Subcommittee, has joined us today. I
have consulted with the Ranking Member, and we are pleased to
welcome him in joining the questioning of witnesses.

STATEMENT OF NANCY LINDBORG, ASSISTANT
ADMINISTRATOR, BUREAU FOR DEMOCRACY, CONFLICT AND HUMANITARIAN
ASSISTANCE, U.S. AGENCY FOR
INTERNATIONAL DEVELOPMENT, WASHINGTON, D.C.

Ms. Lindborg. Thank you, Chairman Johnson and distinguished
Members of the Subcommittee. I appreciate very much the
opportunity to be here today to talk about the important
subject of food aid programs and those under Title II of the
Food for Peace Act in the farm bill.
For over 57 years, USAID Food for Peace programs have
allowed the United States to offer a helping hand to those in
need. Original recipients of food assistance include countries
like France and Belgium in the post-World War II era and more
recent graduates like India, who are now our friends, allies
and trading partners. With Congress assistance, we have built
over the years an enduring legacy that reflects the generosity
of the American people and recognizes the importance of food
security to our national security.
Through the years, I have encountered many individuals from
around the world, as I am sure you have, whose lives have been
profoundly altered by offering that important assistance at a
critical time in their lives. I remember well the farmer I met
in southern Serbia who greeted me warmly with thanks for the
Truman eggs he had received or my senior colleague at USAID who
grew up in India with food assistance.
The USAID's Office of Food for Peace provides assistance as
part of the Food for Peace Act and is responsible for both
emergency relief and development food aid programs using
donated U.S. agricultural commodities. These programs allow us
to provide emergency assistance in response to both natural
disasters, such as droughts or floods, as well as in complex,
protracted crises like Sudan. In 2010, these Title II emergency
programs enabled us to provide critical assistance to 46.5
million people in need in 27 countries around the world,
helping us to alleviate malnutrition and hunger. In Pakistan,
as you recall, epic flooding that began last year put millions
of people in danger. We were quickly able to move U.S.
commodities from pre-positioned warehouses, able to move our
shipping routes, and allow our NGO and U.N. partners to borrow
from Title II commodities already in the region. As a result,
we were able to provide urgently needed food assistance to
flood survivors quickly.
Similarly, in the aftermath of the Haiti earthquake, we
were able to get food to more than three million people
desperately in need. In those critical early days, we moved
food that was already on the ground in Haiti. We purchased
3,000 tons of American rice and we dispatched over 14,000 tons
of food aid from pre-positioned stocks in Texas to reach
earthquake survivors in one day.
Today, we are looking at a very serious drought in the Horn
of Africa. We have the lowest levels of rainfall in that region
in 60 years. This has resulted in severe food insecurity, water
shortages, failed crops, and dying livestock, with 11 million
people estimated to be in need. Of particular concern are the
800,000 Somali refuges arriving at camps in Ethiopia and Kenya
with global acute malnutrition rates well above the emergency
threshold. We were alerted about this impending drought last
fall through our early warning systems. We began pre-
positioning food stocks and have since been able to move food
into the region to reach an estimated 4.2 million people. We
remain very concerned about this drought, are working with our
international partners, but make no mistake that our food aid
has made a critical difference in the lives of millions.
The Horn is one of the best illustrations of why we are
also focusing on helping people move from food aid to more
sustainable productivity. We can't stop droughts and floods
from happening but we can enable farmers to be more productive
and people to be more resilient. We do that with our
development food aid, also part of Title II, which focuses on
the most food-insecure countries where stunting rates are the
highest and where people live on less than $1.25 per day. We
know that getting the right nutrition to children under 2 can
make the difference in a lifetime of a well-developed brain and
the kind of opportunities that they deserve, and we know that
agricultural productivity can help families sustainably provide
for themselves.
We work with U.S. non-governmental organizations, the World
Food Programme and other U.N. partners to implement development
food aid programs in 21 countries to assist eight million
people, address chronic malnutrition, boost agricultural
productivity and build resiliency. Globally, the Presidential
Feed the Future Initiative has a mission to sustainably reduce
hunger and poverty and ultimately enable people to move from
food assistance to long-term food security. Our Title II
programs complement and reinforce this initiative. Working
across the U.S. Government and in close partnership with USDA,
we are working to build the resiliency of vulnerable
populations and to enable people to move into the sustainable
productivity that will help them feed themselves. The Horn of
Africa is a good example of where we are working to bring all
of our resources to bear in meeting the challenges of repeated
drought through both our emergency, our development and our
Feed the Future resources.
Our food aid has never been more important. As mentioned,
somewhere between 700 million and a billion people go to bed
hungry every night, and 3.5 million children each year die from
malnutrition. The impacts of climate change, the severe weather
events that we are seeing combined with densely populated urban
centers are making people ever more vulnerable. At the same
time, we are seeing rising food prices. We are working hard to
increase effectiveness and efficiency and improving the quality
of our food products. As you hold farm bill discussions where
budgets are tight, food is more scarce and prices are high, we
are seeking maximum flexibility to ensure that we can make the
strategic choices for maximum impact.
Thank you again for the support from this Committee, and we
are very proud to have played a part in the extraordinary story
of Title II food aid. Thank you.
[The prepared statement of Ms. Lindborg follows:]

Prepared Statement of Nancy Lindborg, Assistant Administrator, Bureau
for Democracy, Conflict and Humanitarian Assistance, U.S. Agency for
International Development, Washington, D.C.
Introduction
Thank you Mr. Chairman and distinguished Members of the Committee.
I appreciate the opportunity to be here today to address the important
subject of food aid programs in Title II of the Food for Peace Act. I
will discuss the programs administered by the U.S. Agency for
International Development (USAID), the importance of the programs to
U.S. national security and to our moral values, some of the major
accomplishments of the programs, and the challenges and concerns we
face today.
For over 57 years, the USAID Food for Peace program has allowed the
United States to live up to our historic mission to help alleviate
hunger around the world. With Congress's assistance, we have fed
billions of the world's neediest people--perhaps the largest and
longest-running expression of humanity ever seen in the world. Some of
the countries that have received Title II assistance have become self-
sufficient or even food exporters and international donors themselves.
While we can look back on this unique American achievement with pride,
we must also look forward and address the challenges facing us in this
century. There are many.
Under the Food for Peace Act, USAID has responsibility to
administer Titles II, III, and V of the Trade portion of the farm bill.
The Office of Food for Peace is tasked with managing programs under
Title II of the Food for Peace Act, which consists of donating U.S.
agricultural goods for emergency relief and development. It is
administered through grants to U.S. nongovernmental organizations and
the United Nations World Food Program.
Emergency Response
Title II emergency programs aim to address two forms of
emergencies--natural disasters such as floods or droughts, and complex
emergencies characterized by a combination of natural disaster,
conflict, and insecurity.
In FY 2010, Title II emergency programs helped 46.5 million food-
insecure people in 27 countries by alleviating malnutrition and hunger.
In FY 2010, our emergency programs accounted for over \3/4\ of our base
funding.
In Pakistan, when epic flooding first began last year, Food for
Peace sourced U.S. commodities from prepositioned warehouses, altered
shipping routes, and allowed partners to borrow from Title II
commodities already in the region to assure a timely response.
In the aftermath of the Haiti earthquake, we were able to pull over
6,500 tons from food aid already on the ground, purchased over 3,000
tons of American rice, and dispatched over 14,000 tons of food aid from
prepositioned stocks in Texas to reach survivors.
In FY 2011, USAID has already provided significant food assistance
to the drought emergency affecting the Horn of Africa, particularly
Ethiopia and Somalia, where more than ten million people require
emergency assistance. This prolonged drought has resulted in severe
food insecurity conditions, water shortages, and acute malnutrition
rates above emergency thresholds, particularly among Somali refugees
arriving at camps in Ethiopia and Kenya. The rate of new arrivals has
significantly increased in recent weeks, with thousands of Somali
refugees arriving weekly at refugee camps along the border, including
the Dadaab refugee camp in northeastern Kenya. Humanitarian agencies
operating in border areas and camps report that individuals are
arriving in dire condition, requiring immediate life-saving support.
The situation will deteriorate further without increased international
attention. Even as we have provided more than $300 million in four
countries to respond to the drought, we are working with other donors
to help secure their contributions. Make no mistake, however, the Title
II program, with the American flag prominently displayed, is making a
difference for refugees and drought-affected populations in the Horn
today.
U.S. food aid has been critical in supporting millions of displaced
persons in Darfur and Sudanese refugees in Chad and elsewhere, as well
as saving lives, protecting livelihoods, and promoting the
reintegration of returning populations in South Sudan.
These are just a few of the examples of the live-saving work of our
emergency response program.
Development Food Aid
We are also focusing our development food aid programs in the most
food insecure countries, where stunting rates are highest and people
live on less than $1.25 per day. We have reduced the number of
countries we work in with development food aid by 25 percent since 2008
in order to focus and concentrate our resources for greater impact. The
programs address chronic malnutrition, boost agricultural productivity
and incomes, and help build resiliency. Targeted to disaster-prone
areas, the program helps people to withstand the next drought or flood
so they do not have to rely on emergency aid in the future.
In FY 2010, our U.S. nongovernmental organization (NGO) partners
implemented development food aid programs in 21 countries to benefit
some eight million people.
In Bangladesh, a country of 156 million people, 45 percent of the
population does not meet the minimum food requirements. Approximately
37 percent of children under five are underweight, and over 48 percent
suffer from stunting. Three Title II partners aim to assist over
580,000 households in some of the poorest and most marginalized
communities over the course of their multi-year development programs.
One program has already reduced stunting by 28 percent in targeted
communities. They have also provided business training for more than
6,000 female entrepreneurs and increased incomes by 128 percent, among
other successes.
Globally the President's Feed the Future initiative has a mission
to sustainably reduce hunger and poverty. It aims to link highly
productive geographic zones to more vulnerable areas, helping to
increase labor opportunities for households, strengthen value chains,
and increase rural jobs. Our Title II development programs complement
and reinforce this initiative. Through these programs, and in
combination with USAID's other governance, development, and disaster
mitigation programs, we aim to build the resiliency of the vulnerable
populations we serve.
Title III--Food for Development
USAID also has responsibility for Food for Development (Title III),
although funds have not been requested or appropriated for this program
for more than a decade. USAID is authorized to donate agricultural
commodities to a recipient country and to fund the transportation to
the point of entry in the recipient country. These commodities may be
monetized in least-developed countries' domestic markets and the
revenue generated from their sale used to support and implement
economic development and food security programs in those countries.
Title V--Farmer to Farmer Program
The John Ogonowski and Doug Bereuter Farmer-to-Farmer Program
(Title V) provides voluntary technical assistance to farmers, farm
groups, and agribusinesses in developing and transitional countries to
promote sustainable improvements in food security and agricultural
processing, production, and marketing. The program relies on the
expertise of volunteers from U.S. farms, land-grant universities,
cooperatives, private agribusinesses, and nonprofit farm organizations
to respond to the local needs of host-country farmers and
organizations.
In FY 2010, implementing agencies fielded 522 volunteers from 48
states and the District of Columbia. Volunteer assignments focused on
technology transfer, organizational development, business and
enterprise development, financial services, and environmental
conservation. Volunteers worked at various levels of the commodity
production and marketing chain, including rural services and input
supply, on-farm production, storage and processing, and marketing.
Trends and Concerns
Tonight, nearly one billion people will go to bed hungry and 3.5
million children will die this year of malnutrition. And unfortunately,
these numbers may only get worse. Food prices are projected to remain
high for at least the next several years. Thus, the U.S. commodities
that are at the heart of our food aid programs--wheat, corn, sorghum,
beans, vegetable oil--are projected to become more valuable over the
next few years. It is difficult to predict where commodity prices will
go in the long term.
The impacts of climate change and other extreme weather events,
combined with the growth of densely populated urban centers in areas
vulnerable to natural disasters, are increasing the risk of large-scale
displacement, damage and death due to natural disasters. In addition,
the number of people displaced from conflict or violence has increased
from 17.4 million in 1997 to 27.5 million in 2010, and displacements
are increasingly prolonged.
As Title II costs per metric ton have tripled, from a low of $390
per ton in 2001 to a current high of $1,180 per ton for FY 2011, we
expect to ship and program less Title II food aid in Fiscal Year 2011
than we did during Fiscal Years 2009 and 2010 for equivalent amounts of
funding.
In this regard, we are strongly concerned about the Fiscal Year
2012 Title II budget of $1.03 billion passed by the House. At this
funding level, approximately $590 million of Title II would be
available for emergency programs in FY 2012, given the requirement to
provide a minimum level of Title II funding for development food aid
programs, which must increase by $25 million each year (regardless of
appropriations levels). In FY 2012, the development food aid
requirement is $450 million. The House cut for Title II would require
reductions in the largest emergency food aid programs, to include
Ethiopia, Sudan, Haiti, Somalia, Afghanistan, and Pakistan.
It should be underscored that Title II food assistance is extended
to people in need regardless of the political regime they live under
and the actions of their countries' leaders, provided that adequate
access and monitoring of the food aid is allowed. Such a policy is a
long and proud American tradition that spans Administrations and one
that the Administration continues.
Monetization
While Title II provides funds for transport and distribution of
commodities, our partners also need cash to fund other components of
development food aid programs. Private voluntary organizations often
monetize the Title II development food aid, selling locally and using
the proceeds to implement activities that are part of the broader Title
II program, such as training agricultural extension workers. But there
are limits to the extent this can be done, and as recently recommended
by the Government Accountability Office (GAO), we need to be very
careful that monetization does not have negative effects on local
markets and production.
We have taken note of the recent GAO report on monetization. As
food assistance is becoming an increasingly precious resource, we need
to make sure that every food aid dollar counts in a world where hunger
is increasing. The use of monetization has to be targeted more
effectively.
As part of the Feed the Future Initiative, the Administration has
requested cash to fund integrated community development efforts that
would otherwise be resourced through Title II via monetization. The
community development fund would be especially useful when monetization
is not an appropriate tool.
We recognize that monetization practices can be improved, and we
will consider ways to continue to improve market analyses and
monitoring and evaluation of monetization as well as the returns we get
on monetized food.
In this regard, USAID continues to manage a project to help ensure
Title II programs comply with the Bellmon Amendment, which requires
that adequate storage facilities be available in a recipient country
upon arrival of a commodity to prevent spoilage or waste, and that
distribution of the commodity in the recipient country will not result
in substantial disincentive or interference with domestic production or
marketing in that country. The Bellmon Estimation for Title II (BEST)
Project is conducting independent market analyses to ensure that these
requirements are met. Studies have already been completed for a number
of countries, which are posted on the USAID public website.
My colleague from the U.S. Department of Agriculture (USDA) will be
sharing with you information on their programs. We work closely with
USDA on programming and commodity procurement. We are working to assure
that we regularly exchange solicitations for future activities, that
field-based staff increase collaboration, and that our monetization
activities are well coordinated.
More Efficient and Effective Food Assistance
Let me also mention several other measures we have taken to make
Title II assistance more effective and efficient to assist the most
vulnerable populations overseas.
For more effective decision making on emergency food aid
allocations, and to better link early warning and response to
emergencies, we developed a new Famine Early Warning System Network
resource (FEWS NET)--the Food Assistance Outlook Briefing--which
provides warning of food assistance needs 6 months in the future. These
predictions are critical because of the time required to purchase and
ship in-kind food aid from the United States. Already this system has
allowed us to preposition commodities near the Eastern Horn of Africa
to provide quick delivery of commodities in response to severe
droughts.
Globally, we have expanded our prepositioning to six sites,
allowing us to maintain a continuous flow of vital food aid and in some
cases reduce our response time significantly.
As you know, Administrator Rajiv Shah has embarked on a USAID
Forward reform effort that prioritizes evidence-based programming. As a
reflection of our commitment to understand and improve impact we are
undertaking a number of steps including:

Adding monitoring and evaluation technical experts to our
field team;

Offering workshops and training to partners on monitoring
and evaluation;

Refining indicators to better measure our effectiveness; and

Conducting research to better capture and summarize results
and make recommendations for improved programming.
Food Aid Quality
Looking ahead, I want to mention a new initiative underway to
improve the overall quality of our in-kind food aid.
Just 3 months ago, in partnership with Tufts University, we
released a 2 year food aid quality review produced in close
consultation with private sector stakeholders, nongovernmental
organizations, and leading nutritionists. We recognize and are grateful
to Congress for their support in this effort. The review identified
several ways to better match the nutritional quality of the food USAID
provides to help children reach their maximum potential. Nutrition
science now tells us that if a child does not receive certain basic
nutritional requirements in the first 1,000 days of life his or her
brain will never fully develop and he or she can never reach his or her
full intellectual potential.
We are targeting young children and their mothers in our food
programs, and we will now have a panoply of products better suited to
meet their nutritional needs. We will improve the micronutrient
fortification of vegetable oil and milled grains and are working on
development of a new blended product for preventing malnutrition in
children from 6 months to 2 years. New products will also include new
emergency bars, biscuits, and pastes that can quickly be distributed to
displaced, malnourished populations. Together with our partners in
academia, industry and other stakeholders, we are developing the next
generation of food aid commodities.
At the International Food Aid and Development conference in June,
we had an opportunity to discuss in detail the findings of the report
and to continue the exchange with both our domestic and international
food aid partners about how we can move forward together on this
important agenda.
Broader Food Aid Reform
As expressed earlier, to allow us to address these challenges we
will need to continue to seek improvements in the effectiveness and
efficiency of the food aid systems, as well as broader reform. The farm
bill represents the greatest opportunity to address the need for
broader food aid reform, to enable us to be more responsible stewards
of this important national resource.
The multiple legislative mandates for Title II in the Food for
Peace Act create a number of operational difficulties and hinder the
effectiveness of Title II. For example, 75 percent of development
commodities must be processed, fortified or bagged. It is very
difficult to meet this requirement, forcing USAID to make less than
optimal product selections--leading to supply- rather than demand-
driven programming. Other mandates instruct USAID to:

Monetize at least 15 percent of development food aid;

Increase by $25 million per year the value of development
programs, up to no less than $450 million in Fiscal Year 2012;

Provide no less than 1.875 million metric tons of
development food aid annually. (This is an unrealistic sub-
minimum that would require close to the full Title II annual
budget to meet.)

There are other technical requirements that are distinct and
separate from the Title II food aid program, including cargo preference
and the ``Great Lakes'' set-aside statutory requirement, where
clarifying language in legislation would allow Title II to be free from
such restrictions.
Congress will hold the forthcoming farm bill discussions in a
context where budgets are tighter than ever, food is scarcer, and
prices are high. In light of these challenges, we will be seeking
maximum flexibility to assure that we can make strategic choices that
yield maximum impact. We seek your support to reduce the complex and
inefficient directives that hamper our programming choices and minimize
our flexibility.
Conclusion
Food aid programs are complex, and the problems and issues that
Title II food aid must address are increasingly complex. USAID believes
that the area for greatest convergence of our interests is in ensuring
what we have long held as a basic principle: that the right food should
get to the right people at the right time, while doing no harm. As we
look ahead, let me assure you that USAID remains committed to its role
in supplying food aid to vulnerable people. With the support from
Congress, we have fought and won many battles in the fight against
hunger and malnutrition. Our programs have fed billions of the world's
neediest people, averted famines, and helped countries lift themselves
out of poverty and dependence.
Assisting in this effort are our partners. USAID has forged
tremendously important partnerships with private voluntary
organizations, as well as the UN World Food Program, to meet the food
assistance needs of people around the world. Their teams have carried
out their mission successfully and often at great personal risk. We
recognize both their commitment and their sacrifice, including the many
humanitarian aid workers who have lost their lives while assisting
others. Those partnerships are strong, and continue into the future.
We would also like to acknowledge our important partners in the
agriculture sector--the farmers (businessmen), grain elevator
operators, truckers, bargemen, freight forwarders, port operators,
carriers, and others--who form an unbroken chain of humanity stretching
from this country's fertile fields to hungry families half a world
away.
As we reflect back on the enduring legacy that Food for Peace has
had over the last 57 years, we should be proud of the impact we have
had on those we have assisted and those who remember the American food
that helped them and their families in times of need.
I would again like to thank you for the support the Agriculture
Committee has given to assist USAID in addressing food security needs
abroad, demonstrating to the world the great heart of the American
people. We should all be proud to have played a part in the
extraordinary story of Title II food aid. Thank you.

The Chairman. Thank you for your testimony.
Let me ask first of Ms. Heinen, what is the total amount,
total dollar amount that FAS has spent on salaries and expenses
out of the CCC since Fiscal Year 2009?
Ms. Heinen. I would say approximately $3 million. In the
last year, we were given permission to use the program money
instead of the CCC funds. I am trying to make a distinction
here between the CCC Section 11 money and the program funds,
and in the last 2 years we have used some program funds, a
small amount. Previous to that we used about $2 million a year
out of Section 11 funds.
The Chairman. How does that figure in Fiscal Year 2009
compare to the figure 2 years before, Fiscal Year 2007?
Ms. Heinen. In Fiscal Year 2007, I believe we were able to
cover our expenses for running the programs out of our
appropriated salaries and expenses.
The Chairman. Both the Fiscal Year 2011 Continuing
Resolution and our Fiscal Year 2012 appropriation bill give
authority for FAS to use mandatory program funds for salaries
and expenses. Could you detail for this Committee how much of
the program funds are being used for costs including, not
exclusive but including technical assistance, salaries,
expenses for the program which receive mandatory funding and
are operated by FAS?
Ms. Heinen. In the MAP program, I believe we have used
about $2 million a year out of the program funds since we had
permission to use program funds, about $300,000 under the FMD
program, and even smaller amounts for the smaller programs,
TASC, EMP.
The Chairman. Would you acknowledge that that is a fairly
unique, not totally unique but a fairly unique arrangement in
terms of funding?
Ms. Heinen. In our food assistance programs, we also use
that authorization, type of authorization to fund the salaries
of people who we use to administer the programs, so it is
unique for us in the last couple of years but looking across
programs in the U.S. Government, we do not believe that this is
unique.
The Chairman. Well, in the structure of how you are funding
various objectives, what are you doing, what are you
specifically doing to save money for the United States
Government?
Ms. Heinen. One way that we think is effective in saving
the government money is our unified export strategy. We have
one program, an electronic system that we have put in place
where program participants apply for any of the programs that
they want to use through one single entry point. This saves us
time in evaluating between programs, and it also minimizes the
number of people that we need to administer the programs
because each program, each proposal and each program is matched
with the most appropriate program that Congress has authorized
for us to use. In our food aid programs, we have also gone to
electronic-type systems to expedite and provide more
transparency to the program delivery.
The Chairman. Let me just ask quick question of Ms.
Lindborg. In your agency's response to the annual delivery cost
for Public Law 480, Title II, you gave us a figure of about
$730 per metric ton. This number doesn't really tell us very
much about the cost of implementing that program, Public Law
480. Could you describe in the limited time that you have in a
little more detail the individual elements of this figure such
as how much of the program delivery cost is salaries, how much
is administrative expenses, indirect costs, shipping, storage
and monitoring?
Ms. Lindborg. Mr. Chairman, I would be delighted to get you
that information in a written form. It is a complex list. It
does include our ocean freight, inland freight, internal
shipping and handling in our Section 202(e) funds. We do
continually seek to find the most effective way possible to
ship our food. As you may be aware, there was an independent
study done recently Cornell University that indicated that the
taxpayers pay an extra $140 million a year because of some of
the commodity cargo preferences approaches.
[The information referred to is located on p. 297.]
The Chairman. I have a few more philosophical questions
later but I defer to the distinguished Ranking Member from
California, Mr. Costa.
Mr. Costa. Thank you again, Mr. Chairman.
Ms. Lindborg, as you know, current law requires the
submission of the international aid report by the USDA and
USAID by April 1st. It is my understanding that that
information has not been provided on the type and the impacts
of the programs that have been conducted from the previous
year, and I would like to know when we are going to get it and
what has been the delay.
Ms. Lindborg. Thank you, and our apologies for the delay.
It is in its final stages, and I understand you will be
receiving it very, very soon.
Mr. Costa. All right.
Ms. Heinen, the first question deals with the Technical
Assistance for Specialty Crops, which as I noted in my opening
statement is very important to those who grow specialty crops
around the country but certainly in California. The 2008 Farm
Bill authorized funding at $4 million in Fiscal Year 2008,
increasing incrementally, as I understand it, for 2011 and
2012. How has this increased funding been allocated?
Ms. Heinen. As I mentioned, we have one portal for
administering our funds but we do have a special assistance for
the specialty crops of $9 million. We take applications from
cooperators who work with us----
Mr. Costa. Can you give us some idea of which countries,
which commodities, which examples have worked best?
Ms. Heinen. Probably any kind of horticultural crop that
you can name has applied for these funds. Anyone who applies
and meets the criteria does receive funds, and we work with
applicants to ensure that they have the proper applications.
Mr. Costa. I mentioned earlier how sometimes phytosanitary
standards are used. Has TASC been effective in breaking down
technical food or animal restrictions?
Ms. Heinen. Absolutely. Just yesterday, I was talking with
the Almond Board, and they told me that they use their TASC
funds to change some standards that were going to impede their
access to the Indian markets, saving them about $250 million in
exports. We have used them to face problems with changing
sanitary standards in countries around the globe--Mexico,
China, pretty much everywhere.
Mr. Costa. Well, I want to go on to some other questions,
but you did hit my sweet spot. Someone must have tipped you
off. I grow almonds.
A recent economic analysis conducted by Global Insight, I
am told, incorporating the multi-year impact of market
development expenditures from these programs from 2002 to 2009
indicated that for every dollar invested, there were $35 in
agricultural export gains. I think that is a significant
statistic, and 13 times greater than the average savings that
the taxpayers would see from funding the program. The Market
Access Program that you spoke of in your comments has a number
of areas that I think are very important that I would like to
continue in the reauthorization of the farm bill. It is under
question by some the need to have both the Foreign Market
Development Program and the Market Access Program. Some are
arguing that they are both branded generic commodities while
one program only promotes generic commodities. Why do we need
to have two programs? Can we combine them?
Ms. Heinen. Both programs I think serve different functions
really. The Foreign Market Development really looks at more
long-term things like trade servicing, which is necessary when
you are trying to----
Mr. Costa. But we have tight budgets and I think you are
going to have to----
Ms. Heinen. I understand.
Mr. Costa.--think out of the box, because this will be
something that the full Agriculture Committee will have to
consider next year.
The food assistance effort to promote market development
efforts by the private sector, how does the USDA ensure that
Federal funds for market promotion are not displacing these
funds?
Ms. Heinen. How does market promotion funds not displace--
--
Mr. Costa. From the private sector that otherwise would be
spent for overseas promotion.
Ms. Heinen. We match funds with the private sector. Our----
Mr. Costa. Can we leverage better?
Ms. Heinen. Can we leverage better? The private sector is
spending more than $1.50 for every dollar we put in now and in
some cases and in some industries much more than that. Can we
ask them to do more? Yes, we could ask them to do more. In some
cases, it may be difficult for new entrants into programs but I
think that they have shown their commitment to investing their
own funds and their own time into this effort.
Mr. Costa. Mr. Chairman, my time has expired, but I have
some additional questions that I am going to want to focus with
the panel as it relates to a host of our trade-related
assistance efforts. I think there is really value added for all
the reasons that were stated before, and as we look at the
reauthorization of the farm bill, I think we need to make sure
that when we talk about fair trade and giving American
agriculture the ability to access these markets, that we need
to ensure that we are as effective as we possibly can.
The Chairman. Thank you, Mr. Costa.
I would recognize then the gentleman from Indiana,
Congressman Stutzman.
Mr. Stutzman. Thank you, Mr. Chairman, and thank you,
ma'am, both of you ladies for being here today. I will direct
my questions first of all to Ms. Heinen.
Secretary Vilsack has said that record agricultural exports
should help support more than one million jobs across the
country. Does FAS have any statistics on how many private
sector jobs are created due to trade promotional programs?
Ms. Heinen. Yes, Congressman. Our research indicates that
for every billion dollars in exports, 8,400 jobs are generated
in the United States. So we believe that it is very important
to the rural economy especially.
Mr. Stutzman. Okay. Very good. A recent press release by
the USDA stated that overseas shipments of agricultural
products have totaled $75 billion in the first 6 months of the
fiscal year. Do you know what is the percentage of trade
promotion programs within the $75 billion?
Ms. Heinen. It is difficult to exactly say which ones but
we do know where we have interceded in markets that have made a
difference. We have recently concluded some programs in
Algeria, for example, that opened up $43 billion in dairy
exports or possibility for dairy exports. We recently concluded
agreements with, or met the standards using some of these funds
and partnership with agricultural community to meet a deadline
that would have prohibited about $150 million worth of our
trade and plant products into Vietnam. The combination of our
program, our partnership with the ag community and our
agricultural attaches overseas, we can trace and we can give
you some information later if you would like to see some of the
activities and programs that we know have made a significant
difference in the export numbers.
Mr. Stutzman. Sure, I would be very interested in that.
[The information referred to is located on p. 297.]
Ms. Lindborg, what is the total amount spent on ocean
freight for food aid before the MARAD reimbursements?
Ms. Lindborg. We spend--the annual delivery cost is about
$730 per metric ton, and that is inclusive of a variety of
costs including the internal transport shipping and handling
and the 202(e) costs, and we are happy to give you a more
detailed breakout.
Mr. Stutzman. Okay. Yes, that would be helpful as well. And
then also, could you describe the number of countries you are
focusing on with your development programs and then also how do
you choose which countries you are focused on?
Ms. Lindborg. Sure. As I mentioned, our development
programs, we work with our NGO partners in those countries that
have the people who live on less than $1.25 per day, and we are
working in 21 countries right now to assist about eight million
people, and we focus particularly on those who are most in need
and address chronic malnutrition, particularly in children
under 2, and seek to improve agricultural productivity to
create pathways out of the need for continued assistance.
Mr. Stutzman. How do you choose which development project
should move forward? I mean, if you see a malnutrition program,
I mean, there are a variety of places that you could obviously
be involved. How do you--is it people that approach you, you
approach them?
Ms. Lindborg. Obviously we can't be everywhere in the world
with the needs globally. We choose our countries on the basis
of where there are unmet needs, where we are able to make a
difference with the communities and populations we are serving
and where we have a trusted partner who is able to demonstrate
results.
Mr. Stutzman. And could you elaborate on some of those
locations?
Ms. Lindborg. On where we are currently doing those
programs?
Mr. Stutzman. Yes.
Ms. Lindborg. Certainly. And another criteria that we are
increasingly looking at is, are there ways that with that
program we can leverage our other assistance programs, either
through the Feed the Future Initiative or other of our aid
programs. So, for example, in countries like Sudan, we are
currently working, as that new nation is born, to work with
farmers and women to improve their ability to move from what
has been several decades of food assistance to growing crops
that can feed the families and sustain them more productively.
Oftentimes there are also components of increased water
sanitation that are so important, so one important aspect of
these programs is that they are able to work across a variety
of sectors in a particular community.
Mr. Stutzman. Thank you.
Mr. Chairman, I yield back.
The Chairman. Thank you.
The chair would recognize the gentleman from North
Carolina, Congressman Kissell.
Mr. Kissell. Thank you, Mr. Chairman, and we certainly do
welcome our witnesses here today.
Ms. Heinen, I read today where our trade deficit is
approaching a 3 year high, so we obviously welcome exports of
any kind, especially in agriculture. As the Ranking Member
said, nobody does it better than what we do. I asked this
question in a previous hearing where we were also talking about
agriculture exports. We know food prices are rising worldwide,
and we are not immune from that ourselves here in the United
States, and it does affect our families. So what are some
internal controls that we might use as we try to increase the
exports that we are not in some way creating supply and demand
problems that would cause our prices to go up here in and our
families to suffer for something that maybe we could use
internally that we don't have to export?
Ms. Heinen. Congressman, thank you for the question. We
believe--we monitor the market very closely but we believe that
we can satisfy both markets. Currently, our agricultural
industry does depend largely on exports. Twenty-five to 30
percent of our crop is exported. And in some cases, some
industries are even more dependent on the export market where
95 percent of the consumers are located. We work hard in
agriculture to increase productivity so that we can continue to
feed our own people at reasonable prices, prices that they have
come to expect. We think it is important to look outside as
well to ensure that our farmers have outlets for their product,
and we don't have to spend a lot to support prices in this
country. So we are in kind of a new epoch where the prices are
much higher but we think it is important to continue to raise
our productivity and to be a reliable supplier for our
important customers overseas.
Mr. Kissell. Well, I appreciate that and very much support
the export aspect of agriculture. It is very important that we
have these markets and the things you are doing there. We
appreciate also just keeping an eye on the supply and demand at
home to kind of balance that too. You are talking about the
need to increase our productivity, and there is another hearing
this Committee had recently on biotech, and we haven't made a
lot of progress in the last few years in introducing new
products. Ms. Lindborg, as we look to move some of our product
overseas, do we find resistance in terms of some of the
genetically altered foods that we are growing here with great
success and the seeds that would offer solutions to some of the
drought areas and other problem areas? Are we finding
resistance to these moves?
Ms. Lindborg. Different countries have different policies,
as you know, regarding the GMO crops. We are clearly concerned
about ensuring that our food can reach those who need it the
most in a timely manner, and believe that we are able to
consistently do that by focusing where we can make the most
difference.
Mr. Kissell. Well, one of the things our hearing pointed
out once again is that in the last few years, we haven't been
able to get many of these new ideas moved forward but we have a
pretty clean history in terms of these genetically altered
materials being proven to be safe. I know different parts of
the world are resistant to this but hopefully this is something
we can also use these needs and demands to translate to more of
these foods being available and helping these folks with
drought-resistant seeds and things like this solve their own
problems as you talked about. Mr. Chairman, I yield back.
The Chairman. Thank you.
The chair would recognize the gentleman from Georgia, Mr.
Scott.
Mr. Scott. Thank you, Mr. Chairman, and I will be asking to
be excused shortly because of an Armed Services Committee
meeting, so I will be brief.
Ms. Heinen, Ms. Lindborg, thank you for joining us today,
and I will stick to one question and one comment, if you will,
one promotion, maybe. What can you tell me about the
President's outlook for trade and the role that the USDA will
play in that? I mean, one of my primary concerns is that USDA
will not have the role in agricultural trade relationships
going forward that it currently does if we follow through with
his initiative. Can you speak to that briefly?
Ms. Heinen. Sure. As you know, OMB is in charge of this
process to look at efficiencies in government, but we did meet
with them and we did explain our programs and why we exist as
we do. Of course, we want to be helpful and we want to find
efficiencies but in going through the process, which I did
myself, I was more and more convinced of the importance of
having the Department of Agriculture maintain this role. We
work very close with our regulatory partners in USDA to solve
some of the SPS and some of the other kinds of unique issues
with agriculture. There are certification issues, there are
port regulatory--there are just a whole range of issues.
In addition, our reporting overseas is really critical to
our baseline products of supply and demand all around the
world, and that is part of a process every month that we go
through to determine where the needs are, where the markets
are, and it is important to supporting our farm community here.
We think that we have found one agency that can do a great deal
in all the different aspects of trade and so we would like to
maintain those efficiencies as we have. Of course, also our
legislation, our trade programs are all centered with CCC,
which is with the Secretary of Agriculture, so that is another
issue that we would have to look at if we were going into a
combined trade agency. The report, as we hear now, is
probably--or suggestions from the report due in September, so
we will wait to evaluate the suggestions that they have come up
with at that time.
Mr. Scott. My experience has been that if you are not from
the farm, you really don't understand agriculture. My fear is
that we have somebody outside of the USDA handling the trade
for agriculture, that we simply won't get an effective trade
agreement.
Ms. Lindborg, I am going to leave this for you. This is a
product that I came across. It is a mother-administered
nutrition aid, and UNICEF is using this. It is essentially a
peanut butter paste for malnourished children, and they are
headed out of North Carolina. It is manufactured in Fitzgerald,
Georgia. It is a charitable organization put together by
missionaries but it is three packs a day for a malnourished
child. It is packaged in a manner so that it would last for 2
years no matter what the climate it is in. I will have a staff
member bring you the information, the fact sheet on it, but if
you don't mind, I would appreciate if you would look at it and
just speak with me at your convenience over the next couple of
weeks about this product and see if we can establish a
relationship. I think it would be a very cost-effective way for
you to help achieve some of your goals. Thank you.
Ms. Lindborg. Thank you, Congressman. I would just note
that improving the food quality is one of our number one goals
to ensure that the right kind of nutritional foods are
available to those critical first thousand days, so I look
forward to talking to you further.
Mr. Scott. That is what it is designed for. Thank you.
The Chairman. The chair would recognize the gentleman from
Massachusetts, Mr. McGovern.
Mr. McGovern. Well, thank you, Mr. Chairman. I want to
thank you and the Ranking Member for allowing me to sit in on
this Subcommittee hearing. My interest for being here is that I
care very deeply about our food aid programs, and I appreciate
very much both USDA and USAID for a lot of the incredible work
that you are doing as we speak. I think the Feed the Future
Initiative is a good initiative because it connects all the
dots and comes up with a comprehensive plan to not only deal
with the issue of hunger but to deal with the issue of
sustainability. Too often in this country, we are expending
billions and billions of dollars responding to emergencies that
probably could have been prevented or could have been better
prepared for. And so in the long run, that will save us a great
deal of money.
But I was concerned during the debate on the ag
appropriations bill that a lot of these programs like the
McGovern-Dole program--and I should state for the record that I
am not the McGovern in the McGovern-Dole program, although I am
one of the primary authors of the bill. It is George McGovern
and Robert Dole. But programs like that, which are designed to
make sure that every child in the world gets at least one
nutritious meal a day in a school setting, and Food for Peace
came under attack. I realize that we are in tough budgetary
times but I think a lot of my colleagues on both sides of the
aisle don't quite appreciate the benefits of these programs.
Yes, none of them are perfect and they could be better run. I
cosponsored a request to GAO to do an audit and analysis of
both McGovern-Dole and Food for Peace with Don Payne of New
Jersey. There are some suggestions there that I know both USDA
and USAID have enthusiastically embraced, which is good because
we are always trying to improve the program. But there are
American jobs that are created as a result of these programs,
not just in farms but in trucking and in inspection, and on and
on and on and on. But I also think it also fulfills a moral
obligation we have to be proud of this global effort to end
hunger. I am worried because hunger is one of those things that
doesn't seem to be getting better. We are getting to the point
where there is close to a billion people in the world who are
hungry, and I am worried that in the Fiscal Year 2011
Continuing Resolution and in the appropriations bill, we have
made some cutbacks. Obviously we are making some tough choices
but I don't see that as saving money because it creates a whole
bunch of other problems--more refugees, more health costs, more
emergencies. And this is more than a humanitarian issue, it is
a national security issue. I always remind people that
protesters in Egypt that were protesting, food was one of the
reasons why they were protesting.
And so I would appreciate if you could help me with a
couple questions. One, the impacts of cutting back on these
programs, even though we have tough budgetary times, what are
the costs? The other thing is, some of the recommendations in
some of the reports that have been requested talk about putting
greater emphasis on better nutrition, which costs a little bit
more. How do you deal with that dilemma of trying to increase
the standards in terms of nutrition for hungry people around
the world but at the same time dealing with the costs?
But I think we need to do a better job of helping quantify
for Members of Congress that a little bit of investment up
front saves you a lot in the future. The one final thing is,
what are we doing to try to encourage our global partners to
step up to the plate and be as generous as we are on some of
these issues?
Ms. Lindborg. First of all, I thank you for your tireless
advocacy for the hungry around the world. It makes an
extraordinary difference, and please know that we very much
share your concern, both with ensuring that we are able to
continue to play the leadership role that we do in providing
food to those who are most in need, doing it in the most cost-
effective way and doing it in partnership with others. We have
worked closely to encourage emerging donors such as Brazil to
be able to join us in provision of food where the needs are far
greater than any one nation can do alone, in particular in
places like the Horn where we have 11 million currently in
need. We have indeed looked hard at how to improve our
effectiveness and efficiency of how we provide food assistance
as well as improving our monitoring and evaluation systems, and
continue to appreciate good suggestions on how to improve that.
On the food quality issue, thanks to the support of this
Committee, we have spent 2 years working with Tufts University
to look very closely at what is the nutritional composition
that most meets the needs of children under 2. When I was in
Kansas City at the International Food Aid Conference about a
month ago, we launched that study. We are working in
partnership with industry, shippers, growers and our NGO
partners to look not just at what is the composition, what is
the nutritional elements of the food, but how do we target that
more effectively. We believe that that is ultimately the most
cost-effective thing, cost-effective approach that we can take
in ensuring that in those critical 2 years, children are able
to get the nutrition they need. Thank you.
The Chairman. The chair would recognize the gentleman from
Illinois, Mr. Schilling.
Mr. Schilling. Thank you, Chairman.
I guess this could be for both of you or just one. I also
have to excuse myself because I need to go after this question
to the House Armed Services Committee meeting. Many of our
programs utilize public and private partnerships with nonprofit
organizations to implement individual projects. What is the
process your agency uses to evaluate and approve the
administrative costs for each project? How often does your
agency reevaluate these guidelines? What is the average
indirect support cost allowed as a percentage of the grant or
agreement?
Ms. Heinen. We have a number of programs, I think 13 under
this title, so we have some different criteria. Under our
market promotion programs, we have an open opportunity each
year for cooperators and those who want to participate to put
in proposals. We evaluate those and allocate the funds through
a single process. In the case of our food assistance programs,
each year we meet with the private voluntary organizations of
interest. We explain to them what we will be looking for in
programs including what are our priority countries are for that
year, which change. That is because we can't hit all the
countries all the years. We give them guidelines for what we
want in the way of proving and results, and we continue to
refine this process each year to try to make it more efficient
and more effective.
Mr. Schilling. Very good.
Ms. Lindborg. We have, with our NGO partners, particularly
working on development food aid programs, we have an open
competitive process and we work very closely in advance of the
guidelines being issued with our NGO partners, and then review
with some very specific guidelines and goals of the proposals
when we receive them. Through the course of those projects, we
have people on the ground or visiting those programs to do
close monitoring and evaluation, again in processes that we
develop in partnership with the NGOs.
Mr. Schilling. Very good. Thank you very much. With that, I
yield back.
The Chairman. The Chairman would recognize the lady from
Alabama, Ms. Sewell.
Ms. Sewell. Thank you, Mr. Chairman. I wanted to welcome
our witnesses here today.
I guess my question has to do with an industry that is very
dear and near to my heart and to the district that I represent
in Alabama, and that is catfish. I wanted to just ask you, Ms.
Heinen, if you could tell me a little bit about what I could
expect as far as future opportunities when it comes to catfish
in foreign markets. Specifically, as you know, the Food Safety
Inspection Service actually asked for comments on definition of
what is catfish. I personally, like most of my catfish farmers,
want a broader definition of catfish to ensure that we don't
have any fraudulent markets of catfish. Could you please speak
to what has been done by FAS to help ensure that catfish
farmers and growers like those located in my district are able
to tap into new foreign markets and expand their market share?
Ms. Heinen. Yes. As you probably know, the comment period
has closed now on the catfish definition, so we await FSIS's
answers on those. The Catfish Institute is one of our
cooperator groups that we work with every year to try to
develop markets. I think this year they received MAP funds in
excess of $300,000. Primarily, we look to the industry to give
us what they think are their primary market issues and primary
forward-looking markets, but we also use our people overseas to
try to find markets and opportunities for different products
that may be in demand.
I think our greatest success with catfish has been close to
home in Canada, which is true for many of our agricultural
commodities. Canada is our second largest market now, but we
are definitely working with them to try and look at new
opportunities. One of the things that we encourage is that
different cooperators work together to find ways that they
might have synergies that they can help the other entrants in
new markets where they have complementary products. So we are
in close contact. We also have a regional trade organization in
the South, so they work also with some of the individual
smaller companies that might be involved in the catfish
industry.
Ms. Sewell. I know that you are quite aware that the
President signed a Executive Order recently for government
reform and reorganization, and I really wanted to talk to you a
little if you could speak to the pros and cons of any type of
reorganization within FAS and how that would impact farmers.
Ms. Heinen. Well, certainly if we can find efficiencies,
that is an advantage for the taxpayer. It is possible in a
broader trade agency, maybe we would get more funding. On the
other hand, we are a little bit afraid that we would be
overwhelmed by larger agencies that might take more of the
funding. We are concerned that we would lose a lot of our
analysis capability that we think it is important both for
supporting farm programs in the United States and for informing
our farmers about what are the market opportunities overseas.
We believe very much that our attaches provide a unique service
to America's farmers and ranchers because agriculture exports
is more than just promoting agriculture, it is port entry, it
is knowing the people, it is having insights into the
regulations and knowing when they are going to change and
knowing how that minor word might destroy an opportunity for a
U.S. product because of the way our industry might be
structured and things like that. So we see some downside risks
with really having a close cooperator partnership with the
industry and one that can really inform us well of when things
are changing overseas that might have impact and have to weigh
that heavily against what efficiencies might be gained by
having a single agency for trade.
Ms. Sewell. Thank you.
The Chairman. I would now call on the Ranking Member, Mr.
Costa, who has a follow-up question or so.
Mr. Costa. To both our witnesses, I would like to refocus
on some comments that were made earlier regarding the Doha
round proposal. There is discussion about putting some of the
items developed during the Doha round into a Harvest Plus
package. I hope you are familiar with that. That would be
agreed upon by World Trade Organization members at the December
ministerial meeting. Among those identified for inclusion of
this package is the export competition pillar, I am told, for
agriculture in the 2008 draft modalities, which includes food
aid. That is why I think both of you I would like to have
respond. For the USDA, Ms. Heinen, what would the impact be of
the December 2008 draft food aid tax for the Food for Progress
Program under these circumstances?
Ms. Heinen. Thank you, Congressman. Well, in general at
this point, I don't think that we see a package for early
harvest that we think would be advantageous to the United
States but of course we are open to continuing that discussion.
Mr. Costa. I am told that under point 12 of the proposal
that the language is a problem and it is not acceptable. Do you
concur?
Ms. Heinen. On the monetization issue, we think that we
would have to make some significant changes in our program,
yes.
Mr. Costa. And what would be the impact, Ms. Lindborg, of
the 2008 language on the Food for Peace programs? Are you
familiar with that?
Ms. Lindborg. Yes, I am. We are working closely with USTR
and of course USDA to ensure that our emergency food aid
programs are not unduly constrained. As it is currently
framed----
Mr. Costa. As it is currently framed, the monetization, I
am told, to support ag development activities that support
mother nutrition programs would be impacted.
Ms. Lindborg. Monetization would be constrained. Emergency
food aid under the U.N. is currently protected, and we want to
ensure that NGOs are as well in their ability to deliver
assistance.
Ms. Heinen. If I might add, we do not think that the
McGovern-Dole program would be affected at this point.
Mr. Costa. I share my colleague, Congressman McGovern's
concern because as I said, anecdotally, I think all of us have
traveled abroad and seen the impact and the benefits of these
programs. We are also mindful of the fact that there are
challenges to getting the food to those who need it most, and
clearly this is something that I want to work with my
colleague, Congressman McGovern, and others on as we address
the 2012 Farm Bill.
Let me finally ask one more question, Ms. Heinen. The
Subcommittee held a hearing in April examining the export
programs. I referred to in my earlier questions, the Market
Access Program in particular. I suggested to the USDA at that
time, but I also think it is worth revisiting again today based
upon the comments that some have made regarding the Market
Access Program. Some have criticized it as a subsidy or
corporate welfare. Those of us who are familiar with the
program I think have a different view. Could you please explain
to the Subcommittee Members your own take on the benefits of
the Market Access Program?
Ms. Heinen. Yes, Congressman. When the program was
originally authorized by Congress, there were not constraints
on the size of companies and I think that there were some
recipients that people thought didn't need the assistance, but
that has been changed in subsequent farm bills and so that now
the monies go to nonprofit organizations, cooperatives that
benefit the whole range of farming who represent a broad group
of farmers.
Mr. Costa. And give us a greater opportunity to access
those markets to establish that fair trade that isn't always a
two-way street.
Ms. Heinen. Absolutely. They use these monies to look at
barriers, sanitary, phytosanitary barriers, many communication
barriers, all sorts of things, getting even on shelves in
supermarkets, the kinds of things that can make the difference
for consumers' choice.
Mr. Costa. Thank you.
The Chairman. Mr. McGovern, do you have a second round of
questions?
Mr. McGovern. Briefly, Mr. Chairman, because my commentary,
my question was so long, Ms. Heinen, I didn't get a chance to
allow you to respond, but just to clarify a couple things for
the record, in terms of administrative costs for the programs
we are talking about in terms of food aid, I mean, are they
higher than other administrative costs in other agencies or are
they about the same? I mean, how would you classify the
administrative costs of some of these programs?
Ms. Lindborg. We continually seek the flexibility that
enables us to make the most cost-effective choices in moving
the food because we do think it is so important that we have
the ability to provide emergency food assistance to those in
need.
Mr. McGovern. My understanding is that these programs are
pretty well run by independent analysis, and sometimes there is
this perception out there that all we need to do is cut more
overhead here and staff here. I mean, part of the reason why
you need adequate staff is because we are asking for you to do
more monitoring and to deliver things more effectively, and
that does require additional oversight and additional staff.
Ms. Lindborg. Absolutely, and we take the monitoring and
evaluation very seriously, and you had asked earlier about how
to quantify the impact, and I would say that we are very
concerned that at a time where the needs are rising around the
world, some of the projections for next year would leave us
with less than half of the funding that we currently have to
meet the needs of emergency food aid.
Mr. McGovern. Which means that thousands or tens of
thousands or millions of people will not be able to get food?
Ms. Lindborg. Yes. Since 2008, we have served 140 million
people globally. The average varies from year to year but it
would be in the magnitude of 11 million people who we would not
be able to reach.
Mr. McGovern. Go ahead.
Ms. Heinen. If I could just add that we are working closely
with USAID and we are coordinating more to try and find
efficiencies, but this is kind of an inherently risky
proposition in many places that you are providing food aid, so
those costs do go up. We are also working hard with the
industry in the United States, which we think has a very
important part to play in the provision of food aid and in
helping us find better ways to package, better ways to deliver,
better ways to serve the hungry of the world.
Mr. McGovern. Let me just say with regard to the McGovern-
Dole program, I mean, again, I was one of the primary authors
of that program although I am not related to the guy that it is
named after, but that is a program that I really have been
impressed with in terms of its ability to respond to some of
the suggestions, whether it is through internal audits or
whether it is through the Government Accountability Office to
try to find ways to continue to improve and to be more
effective and more cost-effective, if you will, but to reach
more people. I think both within USAID and within USDA, I mean,
that has been the case, and we need to make it clearer to
people as to why these programs are so important and why they
save us money, why they save lives, and why they are in our
national security interest. I mean, there is not an actual
constituency out there to tell Members, please continue to vote
for a robust food aid budget for international food aid
programs. So I appreciate your efforts in both agencies and I
want to continue to work with you and make them even better. I
think we need to do a better job of lifting this issue up and I
think USAID and the Secretary of State and Secretary Vilsack
have done a really good job with Feed the Future. People need
to know more about that. I thank you both.
Thank you, Mr. Chairman.
The Chairman. Let me just conclude by a specific and a
general question and then we will bring the hearing to a close.
Ms. Heinen, in regard to the Borlaug Fellowship Program,
you have highlighted that that program has provided training
opportunities for participants from a number of countries, I
think you said 64 countries in areas like biotechnology. Could
you expand for us on what types of training the Borlaug fellows
receive and how that training can be utilized to build
regulatory capacity in their home countries?
Ms. Heinen. Yes, Congressman. The Borlaug Fellowship
Program, of course named after the Nobel Laureate, Norman
Borlaug, is helping to bring science to countries that have not
invested in science in the past, and we have good examples of
bringing scientists here for 4 or 5 months and they go back and
they bring new technologies to their countries. We have
examples where they have passed new laws that can provide for
pilot technology, where they can do better testing for
aflatoxins; that ruins crops and poisons people in some of
these developing countries. So we find it to be a very
effective program to bring our science to the developing world
so that they can participate in feeding their people.
The Chairman. Let me just ask one concluding question that
is neither intended as either mean-spirited or politically
correct, and I am sure every district in the country, in my
district, people in Taylorville, Illinois, will ask me, we have
a fiscal crisis, huge national debt, and we have hungry people
here at home. How do these programs that the two of you
implement and analogous programs in our government not only
benefit the people for whom they are intended but how do they
benefit people here in Taylorville, Illinois, or in Boston,
Massachusetts?
Ms. Heinen. We have of course two kinds of programs. We
think directly our programs that help exports are bringing jobs
to those communities, bringing new opportunities to those
communities, and so we think there is a very direct benefit. As
far as our food assistance programs and helping countries
overseas, as they can take care of themselves better, we think
our costs for conflict and our costs for feeding the rest of
the world will be reduced. As we make our farmers more
efficient, we keep food prices down for our consumers here at
home, so in those three ways I believe our programs are very
helpful to your communities.
The Chairman. Well, thank you, Members of the Committee.
Thank you, Mr. McGovern, in particular for your courtesy of
being with us today. We greatly enjoyed and benefited from your
presence.
Under the rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any questions posed by a Member.
This hearing of the Subcommittee on Rural Development,
Research, Biotechnology, and Foreign Agriculture is adjourned.
[Whereupon, at 11:23 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Supplementary Material Submitted by Suzanne Heinen, Acting
Administrator, Foreign Agricultural Service, U.S. Department of
Agriculture
During the July 13, 2011 hearing entitled, Agricultural Program
Audit: Examination of Foreign Agriculture and Food Aid Programs, a
request for information was made to Suzanne Heinen. The following is
the information submission for the record.
Insert
Mr. Stutzman. Okay. Very good. A recent press release by the
USDA stated that overseas shipments of agricultural products
have totaled $75 billion in the first 6 months of the fiscal
year. Do you know what is the percentage of trade promotion
programs within the $75 billion?
Ms. Heinen. It is difficult to exactly say which ones but we
do know where we have interceded in markets that have made a
difference. We have recently concluded some programs in
Algeria, for example, that opened up $43 billion in dairy
exports or possibility for dairy exports. We recently concluded
agreements with, or met the standards using some of these funds
and partnership with agricultural community to meet a deadline
that would have prohibited about $150 million worth of our
trade and plant products into Vietnam, so the combination of
our program, our partnership with the ag community and our
agricultural attaches overseas, we can trace and we can give
you some information later if you would like to see some of the
activities and programs that we know have made a significant
difference in the export numbers.
Mr. Stutzman. Sure, I would be very interested in that.

We recently examined the impact and effectiveness of foreign market
development programs administered by FAS. In 2010, Global Insight,
Inc., a private economic and financial analysis research firm, updated
a cost-benefit analysis of two cost-share programs (the Market Access
Program [MAP] and Foreign Market Development Program [FMD]). The
analysis showed that for every dollar that the government and industry
invested on market development activities an additional $35 of U.S.
food and agricultural exports was generated. Global Insight's report
concluded that U.S. agricultural exports in 2009 were $6.1 billion--or
six percent--higher than they would have been without the increased
investment in market development.
Market development program investments can pay immediate dividends,
such as new sales at trade shows and on trade missions as I discussed
in my testimony. The investments can also build markets that result in
years of sustained sales. For example, in Nigeria, a 10 year combined
U.S. Wheat Associates and USDA investment of MAP and FMD funds
exceeding $2.5 million resulted in increased U.S. wheat sales of over
$750 million in FY 2010--a 265 percent increase over 2001 sales.
Through close public-private partnerships, USDA and American producers
can achieve real increases in market share and exports.
______

Supplementary Material Submitted by Nancy Lindborg, Assistant
Administrator, Bureau for Democracy, Conflict and Humanitarian
Assistance, U.S. Agency for International Development
During the July 13, 2011 hearing entitled, Agricultural Program
Audit: Examination of Foreign Agriculture and Food Aid Programs, a
request for information was made to Nancy Lindborg. The following is
the information submission for the record.
Insert
The Chairman. Let me just ask quick question of Ms. Lindborg.
In your agency's response to the annual delivery cost for
Public Law 480, Title II, you gave us a figure of about $730
per metric ton. This number doesn't really tell us very much
about the cost of implementing that program, Public Law 480.
Could you describe in the limited time that you have in a
little more detail the individual elements of this figure such
as how much of the program delivery costs is salaries, how much
is administrative expenses, indirect costs, shipping, storage
and monitoring?
Ms. Lindborg. Mr. Chairman, I would be delighted to get you
that information in a written form. It is a complex list. It
does include our ocean freight, inland freight, internal
shipping and handling in our Section 202(e) funds. We do
continually seek to find the most effective way possible to
ship our food. As you may be aware, there was an independent
study done recently Cornell University that indicated that the
taxpayers pay an extra $140 million a year because of some of
the commodity cargo preferences approaches.

Table containing information follows:

FY10 Title II Food for Peace Title II Associated Costs (to date) for FY
2010
------------------------------------------------------------------------

------------------------------------------------------------------------
Commodities $798,162,595 37.5%
Ocean Freight $431,097,863 20.3%
Inland Freight $196,838,908 9.2%
Section 202(e) $221,143,220 10%
Internal Transport, Shipping, Handling $445,827,166 21%
Personal Service Contractors $12,057,640 1%
Miscellaneous $23,523,963 1%
---------------------------------
Total $2,128,651,355 100%
------------------------------------------------------------------------
Note: Amounts reflect obligated to date. Miscellaneous includes
technical assistance, Famine Early Warning System (FEWS), office
space, International Food Relief Partnership (IFRP), information
technology (IT), etc.

______

Submitted Questions
Response from Suzanne Heinen, Acting Administrator, Foreign
Agricultural Service, U.S. Department of Agriculture *
---------------------------------------------------------------------------
* There was no response from the witness by the time this hearing
went to press.
---------------------------------------------------------------------------
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. Ms. Heinen, your testimony states that applicant
contributions are not required in the Technical Assistance for
Specialty Crops program when the grant funds are awarded, but
contributions are strongly encouraged. What percentage of approved
projects provide contributions? What type of contributions are
generally provided? Do you think it would be helpful to require
applicants to provide a contribution?
Question 2. USDA has announcement changes in the Market Access
Program and Foreign Market Development Program, yet we have not seen
any revisions in proposed changes. Have you heard from cooperators
about those proposed changes? Do you plan to put forward an updated
proposal after hearing from market participants' recommendations?
Question 3. Ms. Heinen, could you please elaborate for the record
the unique characteristics and functions of each of our export
promotion programs, and the distinct role each program plays in the
creation, expansion, and maintenance of international markets for U.S.
agricultural products? Do you see any overlap or duplication in what
these programs are designed to achieve?
Question 4. How much funding will be used this year from all
sources for purchasing commodities from local or regional suppliers for
food aid with U.S. program funds? What are your primary food safety and
quality challenges when purchasing locally?
Question Submitted By Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question. How has USDA/FAS participated in the OMB-directed study
related to trade reorganization of the Federal Government? How would
USDA administered programs for market development and export credit
guarantees be affected if they were merged into a larger, more broadly
focused trade agency?
Response from Nancy Lindborg, Assistant Administrator, Bureau for
Democracy, Conflict and Humanitarian Assistance, U.S. Agency
for International Development
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. How much funding will be used this year from all
sources for purchasing commodities from local or regional suppliers for
food aid with U.S. program funds? What are your primary food safety and
quality challenges when purchasing locally?
Answer. The Emergency Food Security Program (EFSP) was launched in
April 2010. It is managed by USAID's Office of Food for Peace (FFP).
EFSP provides grants for the local or regional procurement of food
commodities, or the use of cash or vouchers for the purchase of food in
response to an emergency overseas. In fiscal year 2011, $300 million in
International Disaster Assistance appropriated through the State,
Foreign Operations Appropriations Act was used for the Emergency Food
Security Program. As stated in the USAID International Emergency Food
Assistance Annual Program Statement (APS), locally and regionally
procured commodities under the EFSP must meet safety and quality
standards. For local and regional procurement, bulk grains, legumes,
and pulses must meet recipient country food safety standards. If the
recipient country does not have food safety guidelines for grains,
legumes, and pulses, then awardees must adhere to the Codex
Alimentarius Recommended International Code of Practice. All other food
products, including processed foods, fortified blended foods, and
enriched foods, also must comply with the Codex Alimentarius
Recommended International Code of Practice. Since the Emergency Food
Security Program was started, USAID has not received any complaints
regarding commodity safety or quality.

Question 2. Ms. Lindborg, in your testimony you mentioned the $450
million set-aside for development funds. Could you provide additional
details on how this provision may impact your ability to meet
humanitarian needs?
Answer. Under the Food for Peace Act, USAID must provide a minimum
level of Title II funding for development food aid programs, which must
increase by $25 million each year (regardless of appropriations
levels). In FY 2012, this development food aid requirement is $450
million. The House-passed FY 2012 agriculture appropriations bill
contained $1.032 billion for Title II, which would include the $450
million requirement for development food aid. USAID would have
approximately $580 million remaining for emergency programs in FY 2012.
Compared to the FY 2012 Title II emergency request of $1.240 billion,
this would be a cut of $660 million in emergency food aid. During FY
2008-2010, USAID programmed approximately $1.8 billion annually in
Title II emergency resources.

Question 3. Ms. Lindborg, the 2008 Farm Bill provided additional
authorities for prepositioning food aid to address urgent needs and
reduce costs. How much have you spent on these warehousing sites? Is
there a cost difference if the warehouse is empty?
Answer. Since FY 2008, USAID has spent a total of approximately
$12.9 million for overseas pre-positioning of Title II commodities. The
pre-positioned warehouses only cost money when USAID has cargo situated
within them. USAID does not hold leases on these warehouses. Rather,
USAID is billed for usage.

Question 4. Ms. Lindborg, your testimony mentioned your policy to
swiftly respond to any instances of fraud, waste, and abuse. Do you
feel the monitoring and evaluation of programs by your agency staff is
adequate to avoid instances of fraud in the first place?
Answer. USAID's Office of Food for Peace (FFP) is fully committed
to Administrator Shah's USAID Forward reforms that promote improved
monitoring, evaluation, and transparency of food assistance programs.
In part thanks to the additional flexibility provided in the 2008 Farm
Bill, FFP has increased the number of monitoring and evaluation field
staff stationed throughout the world to provide increased oversight and
monitoring assistance to Title II awardees. Awardees report quarterly
on lost and damaged commodities; and FFP is currently implementing a
series of commodity management workshops to ensure that Title II
awardees appropriately monitor the receipt and distribution of Title II
food aid.

Question 5. For FY 2010, could you please elaborate on the specific
cost components under P.L. 480 Title II, including:
The average cost and range of costs per delivered metric ton (MT)
for emergency food aid.
Answer. The average costs per delivered MT for Title II emergency
food aid during FY 2010 was $954. This includes awards made to both
U.S. non-governmental organizations (NGOs) and the World Food Program
(WFP). The figure includes commodity costs, shipping costs, and awardee
implementing costs, such as internal transport, storage, and handing
(ITSH), and section 202(e) administrative costs.

Question 5a. How much of P.L. 480 Title II funding was implemented
by the World Food Program (WFP), and how much was implemented by U.S.
non-governmental organizations (NGO)?

Answer. USAID awarded WFP $1,224,533,600 of Title II emergency
resources in FY 2010. A combination of U.S. based and non-U.S. based
NGOs were awarded $298,017,200 of Title II emergency resources. USAID
also awarded NGOs $401,015,000 for the implementation of Title II
development food assistance programs.

Question 5b. Is there a difference in the delivered cost per metric
ton between what the WFP implemented and that which NGOs implemented?
What criteria does USAID use to determine whether to provide funding
through WFP or an NGO?
Answer. WFP's global average delivered cost per metric ton is
$145.88 higher than NGO implemented programs. This variation is
primarily a factor of commodity and freight price volatility, program
locations, and programming considerations (ration mix, beneficiary
targeting, distribution timing and methodology), rather than a measure
of the operational efficiency of WFP or NGO partners.
While each country context is different, the main factors
considered when making funding decisions are:

b Timing--When must the food be called forward in order to reach
beneficiaries on time? Will there be significant pipeline
breaks at critical periods (such as the hunger season) that
require assistance be sent now?

b Nature of the needs--What are the main factors indicating a food
security emergency (acute malnutrition rates, significant crop
losses, etc.)? What is the extent or severity of the emergency/
food insecurity in the country or area in question?

b Appropriateness--Which or what combination of tools/resources
(i.e., EFSP or Title II) are most appropriate to address the
needs?

b Constraints--Are there other factors (e.g., host government
policies, implementing partner capacity, or USG policy
concerns) that should influence USAID support?

b Operational Capacity--Is the organization that submitted the appeal
or proposal to USAID capable of carrying out the program?

Question 5c. For the WFP emergency programs, please show a breakout of average cost per metric ton of the following components: commodity, ocean
freight, inland transportation, storage, handling, direct costs, any other specified costs, and the 7% overhead allowed for WFP indirect support costs.
Do these costs include all costs associated with delivering the food to the recipient, as well as reporting and monitoring?
Answer.

FY 2010 WFP Emergency Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
MT Total Emergency Commodity Price Ocean freight Inland freight ITSH 202(e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 1,283,900 $1,224,533,700 $458,435,400 $188,087,700 $106,131,300 $367,167,100 $104,712,200
Average $953.76 $357.06 $146.50 $82.66 $285.98 $81.56
Percent of Total Cost 37% 15% 9% 30% 9%
--------------------------------------------------------------------------------------------------------------------------------------------------------

The above table breaks down the cost of Title II emergency programs implemented by WFP into the following components: commodity price; ocean
freight; inland freight; internal transportation, storage, and handling (ITSH); and section 202(e). Cost does include monitoring and evaluation. Please
note that commodity and freight prices fluctuate throughout the year, and that not all programs incur inland freight costs. Section 202(e) funds
include direct and other specified costs as described in the Food for Peace Act. WFP's direct support costs and other direct operational costs are
covered through both ITSH and section 202(e) funds. The seven percent overhead allowed for WFP indirect support costs are reflected in the 202(e)
expense category.

Question 5d. When NGOs partner with WFP to deliver food aid to particular populations, do NGOs bear some of those costs?
Answer. WFP establishes sub-agreements with its NGO partners, which may include what costs may be reimbursed as a result of these partnerships.

Question 5e. Could you explain how the WFP seven percent overhead rate was determined?
Answer. WFP's financial regulations are governed by its Executive Board. Comprising 36 State Members of the United Nations or Member Nations of the
Food and Agriculture Organization, including the United States, the Executive Board establishes the overhead rate.

Question 5f. For the NGO-implemented emergency programs, please show a breakout of average cost per metric ton of the following components:
commodity, ocean freight, inland transportation, storage, handling, direct costs, any other specified costs, and the negotiated indirect cost recovery
(NICRA).

NGO Emergency Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
MT Total Emergency Commodity Price Ocean freight Inland freight ITSH 202(e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 368,890 $297,888,100 $120,412,400 $51,400,500 $27,830,400 $63,413,800 $34,831,000
Average $807.53 $326.42 $139.34 $75.44 $171.90 $94.42
Percent of Total Cost 40% 17% 9% 21% 12%
--------------------------------------------------------------------------------------------------------------------------------------------------------

The above table breaks out the cost of NGO implemented emergency programs into the following components: commodity price; ocean freight; inland
freight; internal transportation, storage, and handling (ITSH); and section 202(e). Please note that commodity and freight prices fluctuate throughout
the year, and that not all programs incur inland freight costs. Section 202(e) funds include direct and other specified costs as described in the Food
for Peace Act. Indirect costs, determined by each NGO's negotiated indirect cost rate agreement (NICRA), are included in section 202(e) funds.

Question 5g Could you please explain how NICRA is determined? Do these costs include all costs associated with delivering the food to the recipient
and reporting and monitoring? Does it include any other activities beyond food distribution?
Answer. Each NGO negotiates its indirect cost rate with one government agency that has been assigned cognizance. Usually the cognizant government
agency is that agency which has the largest dollar volume of contracts with the firm or organization. The resulting NICRA is binding on the entire
government. The NICRA contains both final rates for past periods and provisional (billing rates) for current and future periods. The Office of Food for
Peace (FFP) does not apply NICRA rates to ITSH costs, equipment purchases, or sub-awards valued at greater than $25,000. Some examples of indirect
costs are office space rental, utilities, and clerical and managerial staff salaries.

Question 5h What was the average cost per metric ton for the Title II non-emergency programs? Could you please show a breakout of the average cost
per metric ton of the following components: commodity, ocean freight, inland transportation, storage, handling, direct costs, any other specified
costs, and the associated NICRA?

FY10 Title II Development Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total
MT Development Commodity Price Ocean freight Inland freight ITSH 202(e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 500,150 $401,015,000 $171,694,400 $78,582,600 $27,466,800 $52,347,100 $70,924,100
Average $801.79 $343.29 $157.12 $54.92 $104.66 $141.81
Percent of Total Cost 43% 20% 7% 13% 18%
--------------------------------------------------------------------------------------------------------------------------------------------------------

The above table breaks out the cost of NGO implemented development programs into the following components: commodity price; ocean freight; inland
freight; internal transportation, storage, and handling (ITSH); and section 202(e). Please note that commodity and freight prices fluctuate throughout
the year, and that not all programs incur inland freight costs. Section 202(e) funds include direct and other specified costs as described in the Food
for Peace Act. Indirect costs, determined by each NGO's NICRA, are paid through section 202(e) funds.

______

House Committee on Agriculture Farm Bill Audit Questionnaire--U.S.
Department of Agriculture
1. Program Name
P.L. 480 Title I.
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The P.L. 480 Title I program was authorized in 1954 to allow
concessional sales of U.S. agricultural commodities to developing
countries. It is now authorized under the Food for Peace Act. The U.S.
Department of Agriculture and the recipient country enter into an
agreement, which may provide that the commodities may be re-sold by the
recipient country and the proceeds used to support agricultural,
economic, or infrastructure development projects. Since Fiscal Year
2006, new funding has not been requested or appropriated because demand
for food assistance using credit financing has fallen and grant
programs have been a more appropriate tool.
4. Purpose/Goals
Title I provides for government-to-government sales of agricultural
commodities to developing countries under long-term credit
arrangements. The primary goals of the Title I program are to provide
economic assistance and promote food security. Priority is given to
countries coping with limited foreign exchange reserves, chronic food
shortages, poverty, and underdevelopment in the agricultural sector.
Past Title I programs have targeted countries with food insecurity,
countries with limited foreign exchange, and countries working to
alleviate poverty and develop their agricultural economies.
5. Success in Meeting Programmatic Purpose/Goals
The Title I program account has not received funding since 2006.
Over the program's history, USDA made concessional loans in response to
requests from foreign governments. Concessional loans were made to
governments that were facing food insecurity or economic problems or
that were working to alleviate poverty and promote economic
development.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $146
2003 $140
2004 $132
2005 $117
2006 $64
2007 $3
2008 $3
2009 $3
2010 $3
2011 $3
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)

Please explain changes between budget authority and outlays.

------------------------------------------------------------------------
FY Outlays a
------------------------------------------------------------------------
2002 $182
2003 $88
2004 $121
2005 $116
2006 $66
2007 $60
2008 $27
2009 $25
2010 $17.4
2011 $16
------------------------------------------------------------------------
a Does not include subsidy reestimate.

Not all payments (outlays) are made during the year in which budget
authority is made available. Outlays could be made up to 5 years after
the appropriation is received. Most payments are made by the third
fiscal year after the appropriation. For most sales agreements under
Title I, CCC will pay ocean freight charges only to the extent of the
difference between U.S.-flag rates and foreign-flag rates when U.S.-
flag vessels are required to be used in order to meet cargo preference
requirements. The difference in rates is known as the ocean freight
differential and those costs are included the outlays above.
8. Annual Delivery Cost (FY 2002-FY 2011)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.

----------------------------------------------------------------------------------------------------------------
FTEs
FY Annual Cost -------------------------------------------------------
FTE Tech. Assist.
----------------------------------------------------------------------------------------------------------------
2007 $3.4 0.166 3.373
2008 $2.7 0 2.680
2009 $2.7 0 2.736
2010 $2.8 0 2.812
2011 $2.8 (est.) 0 2.806
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Title I does not have a strict set of eligibility criteria, which
allows the program to be flexible and to provide needs-based
assistance. Although Title I concessional sales may be made to private
entities, the vast majority have been made to sovereign governments.
When making funding decisions, USDA considers food security, economic,
and financial needs.
10. Utilization (Participation) Data
In 2006, USDA funded two Title I concessional sales to two
sovereign governments (Peru and the Philippines).
11. Duplication or Overlap with Other Programs
The Food for Peace Act contains several titles, including Title II
(administered by the U.S. Agency for International Development).
However, Title I and Title II avoid overlap because they have distinct
missions and goals. Title II programs target highly vulnerable
populations in very poor countries through food security interventions
and humanitarian assistance (including direct distribution). Title I,
on the other hand, assists sovereign governments with broader economic
needs and agricultural development.
12. Waste, Fraud and Abuse
FAS is proactive in monitoring Title I for any indications of
waste, fraud or abuse. FAS has not found any systemic problems in Title
I.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
McGovern-Dole International Food for Education and Child Nutrition
Program.
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The McGovern-Dole International Food for Education and Child
Nutrition Program (McGovern-Dole Program) was authorized by the Farm
Security and Rural Investment Act of 2002. Named in honor of Ambassador
and former Senator George McGovern and former Senator Robert Dole for
their efforts to encourage a global commitment to school feeding and
child nutrition, the program replaced the pilot Global Food for
Education Initiative, which fed nearly seven million children during
2001-2002. Since 2003, the McGovern-Dole Program has supported projects
in 41 countries and fed 4-5 million children each year. The 2002 Farm
Bill provided $100 million of Commodity Credit Funds for the program
and an authorization of appropriations through 2007. This authorization
of appropriations has been extended through FY12. In FY 2011, Congress
appropriated $199.1 million for the program.
4. Purpose/Goals
Congress established the McGovern-Dole Program to carry out
preschool and school food for education programs in foreign countries
to improve food security, reduce the incidence of hunger, and improve
literacy and primary education, particularly with respect to girls; and
maternal, infant, and child nutrition programs for pregnant women,
nursing mothers, infants, and children who are 5 years of age or
younger. Under this program, the U.S. Department of Agriculture (USDA)
donates U.S. agricultural products and financial and technical
assistance for school feeding and maternal and child nutrition projects
in low-income, food-deficit countries that are committed to universal
education.
5. Success in Meeting Programmatic Purpose/Goals
USDA enters into agreements with implementing organizations to
carry out projects under the McGovern-Dole Program. In progress
reports, implementing organizations provide information about the
number of children being fed, the increases in attendance, and other
benefits that lead to improved literacy, better diet, and graduation of
the programs. Organizations frequently report gains in attendance of
ten percent or more in participating schools. Teachers indicate that
children are more attentive, have more energy, and will attend school
for the whole day.
One example is a program with International Partnership and Human
Development in Guinea-Bissau. Activities include the provision of
nutritious meals, nets and medicines to reduce malaria, and furniture
for the schools. Infrastructural improvements are also underway for the
school buildings and water and sewage systems. IPHD is focused on
graduating or transferring responsibility for the program and is
providing training and other support to build the country's capacity.
The program contributed to a 15 percent increase in school enrollment
and an 11 percent reduction in absenteeism and dropout rates during the
first 2 years. The children have more incentive and desire to attend
school. Parents and local community members are realizing the benefits
of education, and PTA participation is on the rise. The government has
taken notice of IPHD's successful strategy, and the Ministry of
Education has stationed one of its top officials in its offices.
USDA and the implementing organizations develop graduation plans to
ensure that progress is being made toward the goal of having a local
entity assume responsibility for the program. The projects in 41
countries are at different stages in achieving graduation. The
McGovern-Dole Program graduated a school feeding project in Moldova,
and the Government of Moldova has continued much of the program since
the U.S. funding ended. School feeding programs in Kenya, Laos, and
Guinea-Bissau are nearing full graduation.
USDA is implementing improvements in program management that will
allow for more intensive monitoring of results to ensure that
implementing organizations are contributing to the desired results. In
FY 2011, USDA released results frameworks that outlined the objectives
for the program and the desired results. Organizations will begin
reporting against these frameworks in FY 2012, and USDA will review the
results closely to keep organizations on track or to make course
corrections.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $0
2003 $100
2004 $50
2005 $87
2006 $98
2007 $99
2008 $99
2009 $85
2010 $210
2011 $199.5
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)

Please explain changes between budget authority and outlays.

------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $0
2003 $100
2004 $43
2005 $93
2006 $91
2007 $96
2008 $91
2009 $104
2010 $83
2011 $2
------------------------------------------------------------------------

Not all payments (outlays) are made during the year in which budget
authority is made available. Outlays could be made up to 5 years after
the appropriation is received. Most payments are made by the third
fiscal year after the appropriation
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.

------------------------------------------------------------------------
FY Annual Cost FTE
------------------------------------------------------------------------
2007 $1.000 8
2008 $1.500 12
2009 a $3.000 13
2010 a $2.300 13
2011 a $3.500 (est.) 13 (est.)
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
administrative costs but does not include miscellaneous indirect
costs.

9. Eligibility Criteria
By statute, eligible entities are ``private voluntary
organizations, cooperatives, intergovernmental organizations,
governments of developing countries and their agencies, and other
organizations.'' Under regulations, to be eligible to participate in
the McGovern-Dole Program an organization must have the capacity to
implement, monitor, and report on an award; experience working in the
targeted country; an adequate financial framework to carry out the
program; representation in the United States; and an operating
financial account in the proposed target country. In addition, USDA
publishes an annual list of McGovern-Dole priority countries in order
to focus its resources where they are most needed. Priority countries
must have a per capita income below $3,945; have a child growth
stunting rate greater than 20 percent; have adult literacy rates below
80 percent; have government commitment to education; be free of civil
conflict; and have USDA post coverage (to facilitate monitoring).
10. Utilization (Participation) Data
In FY 2010, the McGovern-Dole Program provided $174.1 million to 23
organizations to implement school feeding and nutrition programs,
assisting 4.3 million beneficiaries in 18 countries. Approximately $3.5
million was used to cover administrative costs and an additional $10
million was allocated to fund the Micronutrient Fortified Food Aid
Products Pilot, as required by Congress. The remaining $21.9 million
was rolled into FY 2011 to support programs in Haiti and Afghanistan,
which were announced October 1, 2010.
In FY 2011, the McGovern-Dole Program will provide $198 million to
eight organizations in 15 countries to implement school feeding and
nutrition programs, assisting 3.59 million beneficiaries. A detailed
table of the FY 2011 is attached.
11. Duplication or Overlap with Other Programs
The McGovern-Dole Program's purpose and goals do not overlap with
those of other USDA food assistance programs. The U.S. Agency for
International Development's Title II program also provides school
feeding in emergency situations. The McGovern-Dole Program provides
school feeding over a longer period with a goal of graduating the
program by having the government or other entities in the recipient
country assume responsibility for the program.
12.Waste, Fraud and Abuse
The Foreign Agricultural Service (FAS) closely monitors the
McGovern-Dole Program to ensure that participating organizations carry
out agreements in accordance with program regulations. In recent years,
financial, programmatic and compliance controls have been strengthened
to identify and address any problematic issues or potential violations.
FAS has also increased monitoring at the field level and invested in
information systems to better implement program controls. Where any
indications of waste, fraud and abuse have been found, FAS has been
aggressive in pursuing corrective action, including criminal
prosecution, to secure the recovery of funds and prevent recurrence.
However, vigorous monitoring and oversight procedures have kept such
indications to a minimum, and FAS has not found any systemic problems
in the McGovern-Dole Program. The FAS Compliance staff routinely
reviews McGovern-Dole Program agreements to document compliance and to
ensure the effectiveness of FAS's internal controls. The McGovern-Dole
Program also is frequently audited by both the USDA Office of Inspector
General and the Government Accountability Office, each of which
provides detailed reports and recommendations for improvement. The most
recent GAO report was released on May 19, 2011 (GAO-11-544). Finally,
the McGovern-Dole Program is included in the Commodity Credit
Corporation's annual audit, and is subject to additional government-
wide oversight and reporting requirements as well, including the
Improper Payments Information Act of 2002.
13. Effect of Administrative PAYGO
None.
attachment
Fiscal Year 2011

Fiscal Year 2011 McGovern-Dole International Food for Education and
Child Nutrition (McGovern-Dole)
McGovern-Dole Program: Approved Fiscal Year 2011 Allocations
------------------------------------------------------------------------
Participant/Commodity Est. Value
Country * Beneficiaries (Million $)
------------------------------------------------------------------------
Bangladesh World Food Program/ 350,000 $30.0
Wheat
Burkina Faso Catholic Relief 130,000 $13.5
Services/Bulgur,
Cornmeal, Lentils,
Vegetable Oil
Congo International 110,000 $14.0
Partnership for Human
Development/Beans,
Dehydrated Potatoes,
Milled Rice,
Vegetable Oil
Guatemala SHARE/Beans, Milled 160,000 $23.0
Rice, Soybean Meal,
Vegetable Oil
Guinea-Bissau International 110,000 $16.0
Partnership for Human
Development/Beans,
Dehydrated Potatoes,
Milled Rice,
Vegetable Oil
Laos World Food Program/ 250,000 $10.0
Corn Soy Blend,
Milled Rice,
Vegetable Oil
Mali Catholic Relief 180,000 $18.0
Services/Milled Rice,
Peas, Vegetable Oil
Nepal World Food Program/ 270,000 $6.0
Vegetable Oil, Wheat
Nicaragua Food for the Poor/ 100,000 $12.5
Beans, Nonfat Dry
Milk, Milled Rice,
Textured Soy Protein,
Vegetable Oil
Afghanistan World Vision/Milled 80,000 $11.9
Rice, Peas, Vegetable
Oil
Haiti Haiti Vision/Beans, 30,000 $4.5
Milled Rice,
Vegetable Oil
Haiti World Food Program/ 250,000 $6.0
Lentils, Milled Rice,
Vegetable Oil
Kenya World Food Program/ 650,000 $9.4
Bulgur, Corn Soy
Blend, Peas,
Vegetable Oil
Liberia World Food Program/ 350,000 $6.4
Bulgur, Peas,
Vegetable Oil
Malawi World Food Program/ 300,000 $8.3
Corn Soy Blend
Senegal Counterpart 270,000 $8.5
International/Bulgur,
Lentils, Vegetable
Oil
-------------------------------
Total McGovern-Dole Program 3,590,000 $198.0
Allocations
------------------------------------------------------------------------

______

1. Program Name
Local and Regional Food Aid Procurement Projects.
2. Subprograms/Department Initiatives
None.
3. Brief History
The USDA Local and Regional Food Aid Procurement Pilot Project
(USDA LRP Project) is a 5 year, $60 million pilot authorized and funded
by Congress in Section 3206 of the Food, Conservation, and Energy Act
of 2008 (Farm Bill) for the purpose of examining the timeliness and
efficiency of local and regional procurement (LRP) as a tool to enhance
U.S. Government food assistance programs. The LRP pilot provides cash
grants for the purchase of food from surplus-producing areas in the
country or region to respond to a natural disaster or other food
crisis.
4. Purpose/Goals
The goal of the USDA LRP Project is to produce an independent
evaluation of field based LRP projects, which will help inform
Congressional discussions regarding the future use of local and
regional procurement in U.S. Government food assistance programming.
The evaluation is specifically to examine: the benefits to local
agriculture; the impact on markets and consumers; the period of time
required for procurement and delivery; quality and safety assurances;
and implementation costs.
5. Success in Meeting Programmatic Purpose/Goals
To achieve the goal of the USDA LRP, the authorizing law
established four objectives that have been met or are on course to be
met.. The first objective required a study of prior local and regional
purchases, which USDA completed and submitted to Congress in January
2009. The second objective called for development of project
guidelines, and these were completed in FY 2009. The third objective
concerned implementing field-based projects during FY 2009-2011. All
available funding for the projects has been obligated, and
implementation will be completed by September 30, 2011. The fourth
objective called for an independent evaluation of the project to be
completed by June 2012. USDA has contracted with Management Services
International has to conduct the evaluation.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $0
2003 $0
2004 $0
2005 $0
2006 $0
2007 $0
2008 $0
2009 $5
2010 $25
2011 $25
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)

Please explain changes between budget authority and outlays.

------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $0
2003 $0
2004 $0
2005 $0
2006 $0
2007 $0
2008 $0
2009 $0
2010 $1
2011 $39
------------------------------------------------------------------------

Not all payments (outlays) are made during the year in which the
program agreement is entered into. Outlays could be made up to 5 years
after the project is implemented. Most payments are made by the third
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.

------------------------------------------------------------------------
Annual Cost FTE
----------------------------------------------------------
Section 11 &
FY General Prog. Funds
appropriations for Admin. FTE Tech Assist
Admin. Cost Support
------------------------------------------------------------------------
2007
2008
2009 a $.3 1 1
2010 a $1.0 2 1
2011 a $0 $1.6 2 (est.) 1
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
administrative costs but does not include miscellaneous indirect
costs.
This program began in FY 2009.
Beginning in FY 2009, Section 103 of the American Recovery and
Reinvestment Act (ARRA) exempts program funds used to pay authorized
administrative costs from counting against the CCC section 11 cap. In
FYs 2010 and 2011 Appropriations Act provisions continued to allow
program funds to be used for administrative costs.

9. Eligibility Criteria
By statute, private voluntary organizations and international
organizations are eligible.
10. Utilization (Participation) Data
During FY 2009 to FY 2011, six private voluntary organizations and
one international organization (the World Food Program) received
funding. The participants implemented 23 projects in 19 different
countries. About 1.7 million beneficiaries received assistance.
11. Duplication or Overlap with Other Programs
While the pilot aspect of the USDA LRP Project is unique the
individual emergency response field-based projects funded under the
USDA LRP Project can be similar to projects funded by USAID's Food for
Peace Office (FFP) under the Emergency Food Security Program. The USDA
LRP Project team actively shares information, and collaborates, with
FFP to avoid duplication or overlap with their programs. In addition to
the emergency response projects, the USDA LRP Project allows for
funding of projects that focus on the development of suppliers in
recipient countries. USAID's program funds emergency response projects
only.
12. Waste, Fraud and Abuse
None identified.
13. Effect of Administrative PAYGO
None.

attachment
USDA Local and Regional Procurement Project Funding Allocations FY 2009-2011
----------------------------------------------------------------------------------------------------------------
Recipient Program Funding Total
FY Organization Country Type Awards Available Admin. Unobligated
----------------------------------------------------------------------------------------------------------------
1 2009 WFP Mali Develop $1,049,752
ment
2 2009 WFP Malawi Develop $1,700,001
ment
3 2009 WFP Tanzania Develop $2,000,185
ment
---------------------------------------------------------------------------------------------------
FY 2009 Sub-total $4,749,938 $5,000,000 $250,062 $0
---------------------------------------------------------------------------------------------------
4 2010 Mercy Corps Niger Emergen $4,577,747
cy
5 2010 Land O'Lakes Bangladesh Develop $2,619,919
ment
6 2010 CRS Guatemala Emergen $1,751,205
cy
7 2010 CRS Mali Develop $106,098
ment
8 2010 CRS Benin Develop $1,278,694
ment
9 2010 CRS Burkina Develop $985,965
Faso ment
10 2010 IRD Cambodia Develop $710,138
ment
11 2010 Land O'Lakes Zambia Develop $3,624,017
ment
12 2010 WFP Mali Develop $1,104,906
ment
13 2010 Fabretto Nicaragua Develop $675,147
ment
14 2010 WFP Congo, Emergen $2,449,128
Republic cy
of
15 2010 WFP Cameroon Emergen $819,885
cy
16 2010 WFP Chad Emergen $3,107,000
cy
---------------------------------------------------------------------------------------------------
FY 2010 Sub-total $23,809,851 $25,000,000 $1,178,000 $12,149
---------------------------------------------------------------------------------------------------
17 2011 World Vision Uganda Develop $3,965,025
ment
18 2011 WFP Cameroon Emergen $2,180,808
cy
19 2011 UMCOR Zimbabwe Emergen $1,623,177
cy
20 2011 WFP Mozambique Emergen $3,498,791
cy
21 2011 WFP Pakistan Emergen $5,719,963
cy
22 2011 CRS Niger Emergen $4,465,632
cy
23 2011 World Vision Kenya Emergen $1,871,750
cy
---------------------------------------------------------------------------------------------------
FY 2011 Sub-total $23,325,146 $25,000,000 $1,573,000 $101,854
===================================================================================================
Total Funded $51,884,934 $55,000,000 $3,001,062 $114,004
----------------------------------------------------------------------------------------------------------------

______

1. Program Name
Food for Progress.
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The Food for Progress (FFPr) program was authorized by the Food for
Progress Act of 1985. Most recently, it was reauthorized through 2012
in the 2008 Farm Bill. Since 1985, FFPr has provided donated U.S.
agricultural commodities to developing countries and emerging
democracies committed to introducing and expanding free enterprise in
their agricultural sectors. Donated commodities are typically
``monetized'' (or sold on the local market), and the proceeds are used
to support agricultural development activities.
4. Purpose/Goals
The FFPr program uses the food resources of the United States to
support market-based agricultural development to improve agricultural
productivity and to expand trade of agricultural products in food-
deficit developing countries and emerging democracies.
5. Success in Meeting Programmatic Purpose/Goals
During FY 2010, the FFPr program funded 12 programs in 11
countries. These programs are reaching approximately 3,985,000
beneficiaries through agricultural development activities including
construction of irrigation systems, agricultural production training,
microfinance, and dairy value chain development. For example, Land
O'Lakes received an FFPr grant to improve commercial milk production,
processing and marketing in Tanzania. By the end of the program, the
gross value of milk produced in Tanzania is projected to increase by
$2.1 million. The project will also create 180 new dairy sector-related
jobs in private sector enterprises.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $126
2003 $137
2004 $138
2005 $122
2006 $131
2007 $147
2008 $155
2009 $216
2010 $146
2011 $192
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)

Please explain changes between budget authority and outlays.

------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $202
2003 $203
2004 $113
2005 $93
2006 $154
2007 $120
2008 $219
2009 $155
2010 $117
2011 $189
------------------------------------------------------------------------

Not all payments (outlays) are made during the year in which the
program agreement is entered into. Outlays could be made up to 5 years
after the program is implemented. Most payments are made by the third
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.

------------------------------------------------------------------------
Annual Cost FTE
----------------------------------------------------------
Section 11 &
FY General Prog. Funds
appropriations for Admin. FTE Tech Assist
Admin. Cost Support
------------------------------------------------------------------------
2007 $2.1 3 4.62
2008 $0 0 4.62
2009 a $0.009 1 4.62
2010 a $2.1 2 4.62
2011 a $0 $3.4 (est.) 5 4.62
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
administrative costs but does not include miscellaneous indirect
costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
Reinvestment Act (ARRA) exempted CCC program funds used to pay
authorized administrative costs for FFPr from counting against the cap
on CCC funds used to pay for salaries and administrative costs imposed
by Section 11 of the CCC Charter Act. The Department of Defense and
Full-Year Continuing Appropriations Act of 2011 continued the
exemption from the CCC section 11 cap for CCC funds used to pay
authorized administrative costs of FFPr.

9. Eligibility Criteria
Consistent with CFR 1499.3, to be eligible to participate in the
FFPr program an organization must have: the capacity to implement,
monitor, and report on an award; experience working in the targeted
country; an adequate financial framework to carry out the program;
representation in the United States; and an operating financial account
in the proposed target country. Additionally, USDA publishes an annual
list of FFPr priority countries in order to focus its resources where
they are most needed. Priority countries must: have a per capita income
below $3,945; have a malnutrition rate greater than 20 percent; be
ranked free or partly free by Freedom House; and have USDA post
coverage (to facilitate monitoring).
10. Utilization (Participation) Data
In FY 2011 the FFPr program will fund 13 projects reaching
approximately 1,678,000 beneficiaries. A table of the FY 2011
allocations is attached.
11. Duplication or Overlap with Other Programs
Food for Progress is similar in scope to the Multi-year Assistance
Programs (MYAPs) funded under Title II of the Food for Peace Act
(administered by USAID). Both programs monetize agricultural
commodities to support development activities. However, these programs
complement and do not duplicate one another because of their difference
in mission. Title II programs target highly vulnerable populations in
very poor countries through food security interventions. FFPr, on the
other hand, works to promote private sector agricultural development in
emerging democracies. Additionally, these programs further avoid
overlap by coordinating closely to ensure that their different
activities complement and do not duplicate one another.
12. Waste, Fraud and Abuse
FAS closely monitors all food aid programs to ensure that
participating organizations carry out agreements in accordance with
program regulations. In recent years, financial, programmatic and
compliance controls have been strengthened to identify and address any
problematic issues or potential violations. FAS has also increased
monitoring at the field level and invested in information systems to
better implement program controls. Where any indications of waste,
fraud and abuse are found, FAS has been aggressive in pursuing
corrective action, including criminal prosecution, to secure the
recovery of funds and prevent recurrence. However, vigorous monitoring
and oversight procedures have kept such indications to a minimum, and
FAS is not aware of any systemic problems in FFPr. The FAS Compliance
staff routinely reviews FFPr agreements to document compliance and to
ensure the effectiveness of FAS's internal controls. In FY2010
Compliance reviewed $330,471,030 across all FAS programs and disallowed
$227,159, which was returned by participants. The FFPr program also is
frequently audited by both the USDA Office of Inspector General and the
Government Accountability Office, each of which provides detailed
reports and recommendations for improvement. Finally, FAS programs are
subject to the same oversight and documentation requirements common to
all USDA programs, including the Improper Payments Information Act.
13. Effect of Administrative PAYGO
None.
attachment
Fiscal Year 2011

Fiscal Year 2011 Food for Progress (FFPr)
Food for Progress: Fiscal Year 2011 Allocations
------------------------------------------------------------------------
Participant/Commodity Est. Value
Country * Beneficiaries (Million $)
------------------------------------------------------------------------
Bangladesh Small Enterprise 13,200 $17.5
Assistance Funds/
Wheat
Bangladesh Winrock International/ 411,600 $4.3
Wheat
Benin Partners for 30,000 $5.5
Development/Soybean
Oil, Rice
Burkina Faso International Relief 213,840 $8.6
and Development/Rice
Haiti FINCA International/ 148,500 $6.1
Wheat
Haiti Inter-American 126 $8.5
Institute for
Cooperation on
Agriculture/Soybean
Oil, Wheat
Honduras Government of Honduras/ 36,000 $11.0
Corn, Wheat, Soybean
Meal
Kenya TechnoServe/Wheat 10,090 $14.8
Liberia Land O'Lakes/Rice, 11,650 $16.6
Vegetable Oil
Malawi Land O'Lakes/Wheat, 564,542 $18.1
Soybean Oil
Philippines Catholic Relief 64,648 $13.9
Services/Soybean Meal
Uganda Mercy Corps/Wheat 83,200 $11.2
Uganda National Cooperative 90,215 $12.0
Business Association/
Soybean Oil
-------------------------------
Total 1,677,611 $148.1
------------------------------------------------------------------------
* Commodities and tonnages are subject to change, pending negotiation of
food aid agreements with program participants.
Grant will improve inspection facilities, estimated to benefit six
million people in the agricultural sectors of Haiti and the Dominican
Republic.

______

1. Program Name
Bill Emerson Humanitarian Trust (BEHT).
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The trust was originally authorized by the Agricultural Act of 1980
as the Food Security Wheat Reserve and the BEHT was later established
in 1998 by the Bill Emerson Humanitarian Trust Act. The 2002 Farm Bill
extended the authority through 2007, and the 2008 Farm Bill extends the
authority through Fiscal Year 2012. The BEHT complements the
traditional P.L. 480 food aid programs, particularly Title II. The
trust can be replenished only through open market purchases (requiring
either appropriations or transfer of P.L. 480 funds as reimbursement
for prior releases) or by designation of Commodity Credit Corporation
stocks of eligible commodities. Cash held in the BEHT may be used to
purchase commodities to meet emergency food needs overseas. By statute,
the funds and commodities held in the trust shall be made available on
a determination by the USAID Administrator that funds available for
emergency needs under Title II for a fiscal year are insufficient to
meet emergency needs. The trust has undergone significant
transformation over the years and has evolved from being an all-wheat
reserve to an all-cash reserve today. The trust currently holds $311
million in cash.
4. Purpose/Goals
The purpose of the trust is to meet humanitarian food needs in
developing countries by using BEHT assets during periods of tight
supply to meet unanticipated emergency food aid needs.
5. Success in Meeting Programmatic Purpose/Goals
Assets from the BEHT are used to meet unanticipated emergency food
aid needs on an as-needed basis. They were used most recently in 2008
to avoid famine in the Democratic Peoples' Republic of Korea (North
Korea).

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $175
2003 $212
2004 $0
2005 $377
2006 $0
2007 $0
2008 $266
2009 $7
2010 $0
2011 $0
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $175
2003 $212
2004 $0
2005 $377
2006 $0
2007 $0
2008 $188
2009 $83
2010 $0
2011 $0
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.

------------------------------------------------------------------------
FY Annual Cost FTEs
------------------------------------------------------------------------
2007 $.1 1
2008 $.1 1
2009 $.1 1
2010 $0 0
2011 $0 0
------------------------------------------------------------------------

9. Eligibility Criteria
Any country in need of P.L. 480 title II emergency food aid from
the United States is eligible. USAID requests the release of BEHT
assets.
10. Utilization (Participation) Data
There are currently no countries (or beneficiaries) that are
receiving food under the BEHT.
11. Duplication or Overlap with Other Programs
The BEHT is the only emergemny food reserve program of the U.S.
Government for international assistance.
12. Waste, Fraud and Abuse
There have not been any instances of waste, fraud, or abuse,
including overpayments, which USDA or other government agencies have
determined to be problems.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Export Credit Guarantee Program, GSM-102.
2. Subprograms/Department Initiatives
N/A.
3. Brief History
Currently authorized by Congress under section 202 of the
Agricultural Trade Act of 1978, as amended, the GSM-102 program of the
Commodity Credit Corporation (CCC) was developed to expand U.S.
agricultural exports by making available payment guarantees to
encourage U.S. private sector financing of foreign purchases of U.S.
agricultural commodities on credit terms. The program has been in
continuous operation since 1981.
4. Purpose/Goals
By providing credit guarantees of up to 3 years that cover 98
percent of loan principal and a portion of the interest, the financial
risk to U.S. lenders (banks or exporters) of foreign banks is greatly
diminished. This reduced risk in financing increases export
opportunities in primarily developing countries, where the lack of
credit impedes an exporter's ability to sell and a buyer's ability to
acquire U.S. agricultural commodities.
5. Success in Meeting Programmatic Purpose/Goals
From inception through June 2011, exports facilitated through the
use of the program have reached $100 billion. During the financial
crisis of 2008 and 2009, the program experienced record applications,
attesting to its value in facilitating trade finance in times of
tightened liquidity.

------------------------------------------------------------------------
Fiscal Year Guarantees Issued ($ billions)
------------------------------------------------------------------------
2002 $2.93
2003 $2.54
2004 $2.93
2005 $2.17
2006 $1.36
2007 $1.44
2008 $3.12
2009 $5.36
2010 $3.10
2011 * $5.4
------------------------------------------------------------------------
* Full year (est.).

6. Annual Budget Authority (FY 2002-FY 2011)
Applicable law mandates that CCC make available for each fiscal
year an amount of credit guarantees equal to the lesser of (a)
$5,500,000 or (b) an amount of guarantees that CCC can make available
using budget authority for an underlying subsidy amount of the sum of
$40 million per year plus any unobligated budget authority from prior
fiscal years. For the last 2 years, the program has operated at a
``negative subsidy,'' meaning that the cash flow into the program has
exceeded the funds needed to provide for expected losses.
7. Annual Outlays (FY 2002-FY 2011)
Under Credit Reform legislation, budget authority is reflective of
the ``subsidy'' or estimated level of yearly funding provisioned to
cover the expected losses incurred by the government on issuance of a
direct loan or guarantee--not the dollar value of the loans disbursed
or guaranteed. Since 2010, the GSM-102 program has operated with a
negative subsidy--meaning that the cash flows into the program are in
excess of the funds needed to provision for expected losses.
8. Annual Delivery Cost (FY 2002-FY 2011)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.
A separate appropriation of $6.8 million (FY 2011) is used to
cover the salaries and other administrative costs of the program (S&E).
An additional $1.6 million (FY 2011) of Commodity Credit Corporation
funds is used to maintain the program's information technology support
for web interface, system of records and database to preserve claims
status and pursue recoveries from defaulting parties.
9. Eligibility Criteria
Please explain who is eligible for participation in this program.
Also list any special considerations (for example priority areas or
carve-outs for certain eligible producers).
All potential participants--exporters, U.S. financial
institutions, foreign banks and countries can participate--provided
they are not suspended, debarred or otherwise prohibited from
participation in U.S. Government programs. In addition, exporters must
have an office in the United States; U.S. financial institutions must
be regulated; and foreign banks are subject to extensive individual
financial review to determine creditworthiness. By law, credit
guarantees cannot be issued to any country that cannot adequately
service the debt associated with particular export sales.
10. Utilization (Participation) Data
Please provide the number of participants in the program. If there
is a backlog, please explain that as well. Where appropriate, please
include additional information, such as the number of acres enrolled in
the program.
At this time, 159 foreign banks have approved credit lines and 52
U.S. banks are approved for participation. Exporters who have been
issued guarantees by year are shown below.

------------------------------------------------------------------------
Number of Participants
Fiscal Year (exporters)
------------------------------------------------------------------------
2002 116
2003 110
2004 90
2005 91
2006 74
2007 64
2008 59
2009 77
2010 77
2011 76
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
If the purpose/goals or mission of this program are similar to
those of other programs, please list those other programs along with an
explanation.
In establishing guidelines for the program, Congress saw the need
to offer U.S. Government supported finance options that are responsive
to the financing needs of exporters of U.S. agriculture and the unique
way their products are traded on international markets. GSM-102 evolved
to respond efficiently and quickly to the short windows of opportunity
available on products traded on market-based prices and slim margins as
compared to industrial and other goods. GSM-102 is a niche program that
complements other U.S. Government trade finance programs.
12. Waste, Fraud and Abuse
Please provide examples of waste, fraud, and abuse including
overpayments that the Department or other government agency has
determined is a problem and how the Department is combating such
problems.
USDA is proactive in reviewing this program and its participants.
Where there is any indication of waste, fraud and abuse, the Department
is aggressive in investigating those incidents. At this time we have no
confirmed evidence of waste, fraud and abuse under GSM-102. This
program has fully implemented, documented and tests at least annually
its internal controls in accordance with both, OMB Circular A-123,
which implements requirements of the Federal Managers' Financial
Integrity Act of 1982, and the Improper Payments Information Act of
2002 (IPIA).
13. Effect of Administrative PAYGO
See PAYGO table attached.

attachment
Administrative PAYGO Scorecard
(In Millions of Dollars)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Savings:
GSM-102 implementation of risk based (139.0) (139.0) (139.0) (139.0) (139.0)
approach (FAS/GSM)
RMA Terminations not previously counted (4.6) (23.0) (23.4) (23.7) (24.1)
(RMA/Crop Ins.)
Forest Service Increase Timber and (51.0)
Payment to State Receipts (FS/KV)
2008 $2 CRP Maintenance Reduction-- (0.1) (0.6) (24.6) (28.7) (31.6)
present & future (FSA/CRP)
2009 Reduction in CRP Maintenance (43.6) (1.5)
payments (FSA/CRP)
2010 CRP Modification (Duck, Quail, SAFE/ 0.0 0.0 0.0 0.0 0.0 (2.9)
Reduction in bottomland hardwood) (FSA/
CRP)
Crop Insurance Standard Risk Agreement (2,000.0)
(RMA/Crop Ins.)
Costs:
Title XIX Treatment Facilities (FNS/ 3.0 4.0 6.0 6.0 6.0
SNAP)
Forest Service Change in K-V Trust Fund 51 18
Spending (FS/KV)
Factor Removal (RMA/Crop Ins.) 0.4 2.7 8.3
RMA Crop Expansions (RMA/Crop Ins.) 0.6 12.8
CCC Section 4 Limit (FSA/CCC) 7.5 10.8 6.9 5.3
Food Aid Commodity Swaps (FSA/CCC) 77.0 60.0 111.0 67.0
Federal Base Acre reinstatement (FSA/ 5.0
Direct and Countercyclical)
Wetlands Incentives (FSA/CRP) 7.8 14.6 17.3 19.2 20.8
CREP Incentives (FSA/CRP) 0.7 2.3 7.3 9.5 10.8
ACRE Sign-up extension (FSA/ACRE) 30.0
2009 CRP extensions (FSA/CRP) 19.0
July 2009 Increase in minimum dairy 7.0
prices (CCC/Dairy Product Price
Support)
RMA--PRF-RI in MT (Board Approved) (RMA/ 4.6 23.0 23.4 23.7 24.1
Crop Ins.)
CRP Initiatives (FSA/CRP) 500.0
Crop Insurance Initiatives (FSA/Crop 1,500.0
Ins.)
-------------------------------------------------------------------------------------------------------------
Available Savings (128.5) (29.2) (65.7) (17.6) (0.0) 0.0 0.0 (0.0) 0.0 (2.9)

______

1. Program Name
Market Access Program.
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The Market Access Program (MAP), previously known as the Market
Promotion Program, is administered by the Foreign Agricultural Service
and uses funds from the Commodity Credit Corporation (CCC). The
Targeted Export Assistance Program was originally authorized in the
Food Security Act of 1985 and was subsequently reauthorized and renamed
as the Market Promotion Program in the 1990 Farm Bill. The 1996 Farm
Bill renamed the program as MAP and established a prohibition on the
use of MAP funds to promote the products of large companies. Today,
only small companies and agricultural cooperatives may promote their
brands with MAP funding. MAP funding was re-authorized through 2012 by
the 2008 Farm Bill.
4. Purpose/Goals
Goals of the MAP are to encourage the creation, expansion, or
maintenance of foreign agricultural export markets. Under the MAP, the
CCC enters into agreements with eligible participants to share the cost
of certain overseas marketing and promotion activities. MAP helps
United States commercial entities conduct brand promotion activities
including advertising, trade shows, in-store demonstrations, and trade
seminars. Under MAP, program participants are reimbursed for their
expenses in carrying out approved promotional activities.
5. Success in Meeting Programmatic Purpose/Goals
MAP applications undergo a competitive review process based on
criteria as specified in the MAP regulations and an annual Federal
Register announcement. Funds are awarded to applicants that demonstrate
effective performance based on a clear, long-term strategic plan. FAS
also considers the extent to which a proposed project targets markets
with the greatest growth potential. The FAS allocates funds in a manner
that effectively supports the strategic decision making initiatives of
the Government Performance and Results Act (GPRA) of 1993. In 2007, FAS
commissioned a cost-benefit analysis of USDA's market development
programs with an independent economic analysis firm, Global Insight
Inc., and recently received the results of an update of that study. The
study reported that U.S. agricultural exports were $6.1 billion higher
in 2009, compared to what they would have been without the increased
investment in market development. Every dollar of increased investment
in the MAP and FMD resulted in $35 in exports.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $100
2003 $110
2004 $125
2005 $140
2006 $200
2007 $200
2008 $200
2009 $200
2010 $200
2011 $200
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)

Please explain changes between budget authority and outlays.

------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $97
2003 $103
2004 $124
2005 $139
2006 $158
2007 $184
2008 $179
2009 $219
2010 $202
2011 $207
------------------------------------------------------------------------

Not all payments (outlays) are made during the year in which the
program agreement is entered into. Outlays could be made up to 5 years
after the project is implemented. Most payments are made by the third
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.

------------------------------------------------------------------------
Annual Cost FTE
---------------------------------------------------------
FY Prog. Funds
Section 11 for Admin. FTE Tech Assist
Admin. Cost Support
------------------------------------------------------------------------
2007 $2 5 1
2008 $2 5 1
2009 a $0 $1.75 5 1
2010 a $0 $2.10 5 1
2011 a $0 $2.1 (est.) 5 1
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
administrative costs but does not include miscellaneous indirect
costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
Reinvestment Act (ARRA) exempted CCC program funds used to pay
authorized administrative costs for MAP from counting against the cap
on CCC funds used to pay for salaries and administrative costs imposed
by Section 11 of the CCC Charter Act. The Department of Defense and
Full-Year Continuing Appropriations Act of 2011 continued the
exemption from the CCC section 11 cap for CCC funds used to pay
authorized administrative costs of MAP.

9. Eligibility Criteria
To participate in the MAP, an applicant must be a nonprofit U.S.
agricultural trade organization, a nonprofit state regional trade group
(SRTG), a U.S. agricultural cooperative, or a state government agency.
In addition, small-sized U.S. commercial entities may receive MAP
funding to promote their branded products. To conduct branded product
promotion activities, individual companies must provide at least 50
percent of funding. For generic promotion activities, trade
associations and others must meet a minimum ten percent match
requirement.
10. Utilization (Participation) Data
For FY 2011 there were 70 applicants competing for $200 million in
program funding. Attached is a chart of FY 2011 Market Access Program
allocations.
11. Duplication or Overlap with Other Programs
MAP is complementary to other FAS/USDA market development programs
whereby funding is made available to address priority, market-specific
issues or to undertake activities not already serviced by or unsuitable
for funding under other FAS marketing programs, such as the Foreign
Market Development Program, the Emerging Market Program, the Technical
Assistance for Specialty Crops Program, and the Quality Samples
Program.
12. Waste, Fraud and Abuse
FAS is proactive in monitoring its programs for any indications of
waste, fraud and abuse. Where such indications are found, FAS has been
aggressive in pursuing corrective action, including criminal
prosecution, to secure the recovery of funds and prevent recurrence.
For example, in 2006 an incarceration and ongoing restitution payments
were secured for fraud involving MAP funds. However, vigorous
monitoring and oversight procedures have kept such indications to a
minimum, and FAS is not aware of any systemic problems in MAP. The FAS
Compliance staff routinely reviews MAP agreements to document
compliance and to ensure the effectiveness of FAS's internal controls.
FAS programs also are audited by both the USDA Office of Inspector
General and the Government Accountability Office, each of which
provides detailed reports and recommendations for improvement. Finally,
FAS programs are subject to the same oversight and documentation
requirements common to all USDA programs, including the Improper
Payments Information Act.
13. Effect of Administrative PAYGO
None.
attachment

Fiscal Year 2011
Fiscal Year 2011 Market Access Program Program Allocations (MAP)
------------------------------------------------------------------------
MAP Participant Allocation
------------------------------------------------------------------------
AHEC, APA, SEC, SFPA * $8,568,725
Alaska Seafood Marketing Institute $4,326,996
American Biomass Trade Cooperative $145,000
American Peanut Council $2,414,321
American Seed Trade Association $90,419
American Sheep Industry Association $381,466
American Soybean Association $4,465,558
Blue Diamond Growers/Almond Board of California $3,079,916
Brewers Association Inc. $385,015
California Agricultural Export Council $993,079
California Asparagus Commission $114,709
California Cherry Advisory Board $743,127
California Cling Peach Board $353,475
California Fresh Tomato Growers/Florida Tomato $505,603
Committee
California Kiwifruit Commission $184,268
California Pear Advisory Board $378,267
California Prune Board $3,339,658
California Strawberry Commission $789,070
California Table Grape Commission $3,494,622
California Tree Fruit Agreement $2,053,685
California Walnut Commission $4,614,261
Cherry Marketing Institute $259,988
Cotton Council International $20,234,954
Cranberry Marketing Committee $1,767,921
Distilled Spirits Council $211,127
Florida Department of Citrus $4,937,966
Food Export Association of the Midwest USA $10,919,428
Food Export USA Northeast $8,152,605
Georgia Pecan Growers $200,000
Ginseng Board of Wisconsin $209,597
Hawaii Papaya Industry Association $173,027
Hop Growers of America $177,301
Intertribal Agriculture Council $741,009
National Association of State Departments of $2,750,562
Agriculture
National Confectioners Association $1,685,845
National Hay Association $32,445
National Potato Promotion Board $4,870,824
National Renderers Association $831,676
National Sunflower Association $1,218,250
National Watermelon Promotion Board $254,406
New York Wine and Grape Foundation $376,215
Northwest Wine Promotion Coalition $805,130
Organic Trade Association $435,293
Pear Bureau Northwest $3,632,830
Pet Food Institute $1,601,375
Raisin Administrative Committee $2,677,594
Southern United States Trade Association $5,831,384
Sunkist Growers, Inc. $3,107,359
Texas Produce Export Association $95,654
The Catfish Institute $335,605
The Popcorn Board $319,607
U.S. Apple Export Council $685,480
U.S. Dairy Export Council $4,529,746
U.S. Dry Bean Council $1,150,793
U.S. Grains Council $8,621,582
U.S. Hide, Skin & Leather Association $140,228
U.S. Livestock Genetics Export, Inc. $1,097,601
U.S. Meat Export Federation $16,261,732
U.S. Wheat Associates $6,798,051
USA Dry Pea and Lentil Council $1,122,955
USA Poultry and Egg Export Council $5,461,208
USA Rice Federation/U.S. Rice Producers Association $3,758,042
Washington Apple Commission $5,199,788
Washington State Fruit Commission $1,192,087
Welch Foods, Inc. $907,824
Western Pistachio Association/Cal-Pure Pistachios $770,497
Inc.
Western United States Agricultural Trade Association $10,859,171
Wine Institute $5,585,230
-------------------
Reserve $5,589,768
===================
Total Available FY 2011 Funding $200,000,000
------------------------------------------------------------------------
* American Hardwood Export Council, APA--The Engineered Wood
Association, Softwood Export Council, Southern Forest Products
Association.

______

1. Program Name
Technical Assistance for Specialty Crops (TASC).
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The Farm Security and Rural Investment Act of 2002 authorized the
TASC program and authorized the use of $2 million of Commodity Credit
Corporation (CCC) resources in each fiscal year (FY) from 2002 through
2007. The Food, Conservation, and Energy Act of 2008 continued the TASC
program through 2012. The 2008 Farm Bill authorized the TASC program at
$4 million in FY 2008, $7 million in FY 2009, $8 million in FY 2010,
and $9 million for FY 2011 and FY 2012.
4. Purpose/Goals
The legislation calls for the TASC program to assist U.S.
organizations by providing funding for projects that address sanitary,
phytosanitary (SPS) and related technical barriers that prohibit or
threaten the export of U.S. specialty crops.
5. Success in Meeting Programmatic Purpose/Goals
The TASC review and allocation process is especially thorough with
each proposal undergoing both a sufficiency check for adherence to
program regulations and policy and content review by three reviewers
from different divisions. Further, FAS has several application and
reporting requirements to assure program effectiveness. When submitting
proposals, applicants must include performance measures and objectives
in their applications as evaluation criteria. FAS also requires
quarterly and final project reports and a final financial report that
fully describes and analyzes the effectiveness of each project. Future
awards are contingent upon successful completion of the project and
acceptance of performance and financial reports. The TASC program has
successfully funded research for developing pest mitigations, technical
visits by foreign officials to observe industry export practices, and
export preclearance programs that have assisted in addressing SPS
barriers to trade. Many of these projects would not likely have taken
place without TASC program assistance.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $2
2003 $2
2004 $2
2005 $2
2006 a $2
2007 $1
2008 $4
2009 $7
2010 $8
2011 $9
------------------------------------------------------------------------
a An additional $0.6 million was made available through FAS direct
appropriations.

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)

Please explain changes between budget authority and outlays.

------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $0
2003 $1
2004 $2
2005 $2
2006 $2
2007 $1
2008 $1
2009 $2
2010 $3
2011 $7
------------------------------------------------------------------------

------------------------------------------------------------------------
Annual Cost FTE
---------------------------------------------------------
FY Section 11 & Prog. Funds
General for Admin. FTE Tech Assist
Admin. Cost Support
------------------------------------------------------------------------
2007 $.1 1 .29
2008 $.1 1 .29
2009 a $0 $0.1 1 .29
2010 a $0 $.03 1 .29
2011 a $.2 (est.) $.4 (est.) 1 .29
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
administrative costs but does not include miscellaneous indirect
costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
Reinvestment Act (ARRA) exempted CCC program funds used to pay
authorized administrative costs for TASC from counting against the cap
on CCC funds used to pay for salaries and administrative costs imposed
by Section 11 of the CCC Charter Act. The Department of Defense and
Full-Year Continuing Appropriations Act of 2011 continued the
exemption from the CCC section 11 cap for CCC funds used to pay
authorized administrative costs of TASC.

9. Eligibility Criteria
Any U.S. organization, including, but not limited to, U.S.
Government agencies, state government agencies, nonprofit trade
associations, universities, agricultural cooperatives, and private
companies are eligible to receive TASC funding. The term ``specialty
crop'' is defined as all cultivated plants and the products thereof
produced in the United States except wheat, feed grains, oilseeds,
cotton, rice, peanuts, sugar, and tobacco.
10. Utilization (Participation) Data
To date, for Fiscal Year 2011, funding has been allocated to 26
organizations for 32 TASC projects. In a typical year, between 25 and
35 projects are funded. Attached is a chart of FY 2010 TASC Program
allocations.
11. Duplication or Overlap with Other Programs
TASC does not duplicate other programs. TASC is an excellent tool
that facilitates USDA and the horticultural industry working in
partnership with USDA to resolve sanitary and phytosanitary barriers
and successfully maintaining and increasing export market opportunities
for U.S. horticultural products.
12. Waste, Fraud and Abuse
FAS is not aware of any examples of waste, fraud, and abuse in this
program, including overpayments that the Department or other government
agency has determined is a problem. FAS program areas closely monitor
all agency agreements to ensure that participants carry out activities
in accordance with program regulations. In addition, the FAS Compliance
staff routinely reviews FAS agreements agency-wide to document
compliance, and to ensure that FAS maintains sufficient internal
controls. Further, FAS programs are audited by both the USDA Office of
Inspector General and the Government Accountability Office, each of
which provides detailed reports and recommendations for improvement.
Finally, FAS programs are subject to the same oversight and reporting
requirements common to all USDA programs, including testing of
transactions under the Improper Payments Improvement Act. Together
these internal and external monitoring and evaluation practices serve
to catch and correct instances of waste, fraud, and abuse before they
result in loss of public funds.
13. Effect of Administrative PAYGO
None.
attachment

Fiscal Year 2011
Fiscal Year 2010 Technical Assistance for Specialty Crops (TASC) Program
Allocations
------------------------------------------------------------------------
Participant Project Title Amount
------------------------------------------------------------------------
Almond Board of California European Union Health and $24,750
Port Authorities Seminar and
Tour
Bryant Christie, Inc. Maximum Residue Level $450,662
Database Funding for
Specialty Crops and Hawaiian
Papayas
California Citrus Quality California Navel Valencia $124,562
Council Exports to Korea Program,
Korea Inspectors' Visit
California Department of Minimizing Trade Barriers $500,000
Food and Agriculture through Field Surveys for
the European Grapevine Moth
California Dried Plum Board Retaining Export and Food $1,458,772
Security of U.S. Specialty
Crops: Low-Emission Methyl
Bromide Fumigation for
Quarantine and Pre-Shipment
Uses
California Fig Advisory Encourage Japanese Government $100,000
Board To Allow Potassium Sorbate
Treatment on High-Moisture
Figs
California Grape and Tree To Develop Efficacy Data $54,388
Fruit League Through a Pilot Systems
Approach for Peach Twig
Borer for U.S. Stone Fruit
to Australia
California Pistachio Export Improve Navel Orange Worm $1,195,500
Council Control in Pistachios To
Overcome Sanitary and
Phytosanitary Barriers in
Major Export Markets
California Specialty Crops Global Maximum Residue Levels $98,000
Council Engaging Specialty Crops in
Priority Setting, Planning,
and Compliance
California Strawberry Spotted Wing Drosophila $46,989
Commission Impacts in Strawberry
Exports
California Table Grape Post-Harvest Control of Light $90,000
Commission Brown Apple Moth on Fresh
Grapes
California Table Grape Australian Phytosanitary $150,000
Export Association Preclearance Program
California Walnut Commission Development of Technical $66,836
Brochures
Citrus Research Board of Mortality of Asian Citrus $216,303
California Psyllid, Diaphorina Citri,
in California Citrus During
Packaging and Export to
Australia
Florida Citrus Packers Determination of Canker $489,447
Survival and Transmission
via Canker-Blemished Fruit
Relative to International
Market Access
Florida Fruit and Vegetable Management, Maintenance, and $389,464
Association Expansion of the U.S.-Canada
Pesticide Harmonization
Database
Georgia Peach Council/South Export of Fresh, Systems- $240,000
Carolina Peach Council Protected Georgia and South
Carolina Peaches to Mexico
Indian River Citrus League Best Post-Harvest Handling $120,000
Practices to Assure Canker-
Free Fresh Citrus Fruit
Exports
Northwest Horticultural Changing India's $66,060
Council Phytosanitary Access
Requirements for Pacific
Northwest Cherries; OFM
Monitoring and Verification
at Origin Program for the
Export of Peaches and
Nectarines to Mexico; Study
of Potential Health Effects
Associated with the Use of
Wax Coatings on Produce
Rutgers University, IR-4 Actions To Facilitate Global $627,199
Project Maximum Residue Levels for
Priority Use on Specialty
Crops
U.S. Apple Export Council Apple Maggot and Other Pests $158,122
of Concern--Identification
Treatment Methodologies and
Data Collection
USDA, Agricultural Research Classical Biological Control $155,710
Service of the Invasive White Peach
Scale on Papaya in Hawaii;
Phosphine Fumigation
Treatment for Post-Harvest
Inspect Control on Lettuce;
Evaluating the Efficacy of
Systems Approach Components
for the Western Cherry Fruit
Fly
USDA, Animal and Plant Development of Irradiation $175,000
Health Inspection Service Treatment for High-Impact
(APHIS) Invasive Species and
Evaluation of Commodity
Tolerance to Irradiation
Treatments
USDA, APHIS, Center for Development of Infrastructure $165,000
Plant Health Science and and Capacity for U.S. Export
Technology (CPHST) Specialty Crops Irradiation
Treatments
USDA, APHIS, Plant A Prototype Electronic $133,907
Protection and Quarantine Identification Resource To
and CPHST Support Agricultural
Commodity Trade: California
Table Grapes
Washington State Department Establishment of Japan $38,000
of Agriculture ``Import Tolerance'' Maximum
Residue Level for Bifenezate
in Red Raspberries
------------
Total $7,334,671
------------------------------------------------------------------------
Foreign Agricultural Service (November 2010).

______

1. Program Name
Emerging Markets Program (EMP).
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The original 1990 legislation authorized an annual program to
promote U.S. agricultural exports by providing technical assistance to
emerging democracies. The program, which was referred to as the
Emerging Democracies Program, initially focused on central and eastern
Europe and the former Soviet Union. In 1996, legislation refocused the
program on all emerging markets (defined as countries that USDA
determines have the potential to provide viable and significant markets
for U.S. agricultural products). Funding is made available for
programming through three channels: (1) the Central Fund, the principal
means of funding, made available through a public announcement; (2) the
Technical Issues Resolution Fund (TIRF), to address technical barriers
to those issues that are time sensitive and are strategic areas of
longer term interest; and (3) the Quick Response Marketing Fund (QRMF),
to assist with short-term time-sensitive marketing opportunities.
4. Purpose/Goals
EMP helps improve market access and develop or promote exports of
U.S. agricultural commodities and products to emerging markets. Through
cost-share assistance to eligible applicants, EMP funds may be approved
for generic technical assistance activities and projects that assess
the food and rural business systems needs of such markets and identify
and carry out specific opportunities and projects to enhance the
effectiveness of those systems. Emerging markets are defined as those
individual target countries or regional country groupings with per
capita income of less than $11,115 (the current ceiling on upper middle
income economies as determined by the World Bank) and populations
greater than one million. The program is not intended for projects
targeted at end-user consumers.
5. Success in Meeting Programmatic Purpose/Goals
The EMP review and allocation process is especially thorough with
each proposal undergoing both a sufficiency check for adherence to
program regulations and policy and content review by no less than five
reviewers. Further, FAS has several application and reporting
requirements to assure program effectiveness. When submitting
proposals, applicants must include performance measures and objectives
in their applications as evaluation criteria. FAS also requires a final
project report and financial report that fully describes and analyzes
the effectiveness of each project. The final 15 percent of a
participant's funding is withheld until an acceptable final report is
approved by FAS. Future awards are contingent upon successful
completion of the project and acceptance of performance and financial
reports. The EMP program has successfully funded assessments of the
food and agricultural business systems of emerging markets for many
agricultural commodities including vitamin-enriched rice in El Salvador
and seed potatoes in Egypt. Further, EMP funds have been used to train
emerging market importers or provide technical assistance on the use
and high quality nature of U.S. agricultural products. These projects
would not likely have taken place without EMP program assistance.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $10
2003 $10
2004 $10
2005 $10
2006 $10
2007 $4
2008 $10
2009 $10
2010 $9
2011 $10
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)

Please explain changes between budget authority and outlays.

------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $2
2003 $14
2004 $5
2005 $6
2006 $10
2007 $9
2008 $17
2009 $3
2010 $9
2011 $7
------------------------------------------------------------------------

------------------------------------------------------------------------
Annual Cost FTE
---------------------------------------------------------
FY Section 11 & Prog. Funds
General for Admin. FTE Tech Assist
Admin. Cost Support
------------------------------------------------------------------------
2007 $0.6 2 0.39
2008 $0.6 2 0.39
2009 a $0 $0.1 2 0.39
2010 a $0 $0.3 2 0.39
2011 a $0.4 $0.8 (est.) 2 0.39
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
administrative costs but does not include miscellaneous indirect
costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
Reinvestment Act (ARRA) exempted CCC program funds used to pay
authorized administrative costs for EMP from counting against the cap
on CCC funds used to pay for salaries and administrative costs imposed
by Section 11 of the CCC Charter Act. The Department of Defense and
Full-Year Continuing Appropriations Act of 2011 continued the
exemption from the CCC section 11 cap for CCC funds used to pay
authorized administrative costs of EMP.

9. Eligibility Criteria
Any U.S. private or public entity with a role or interest in the
exports of U.S. agricultural commodities or products is eligible to
participate in the Emerging Markets Program. Preference is given to
proposals indicating significant support and involvement by private
industry. Proposals are considered from research and consulting
organizations only as long as they can demonstrate evidence of
substantial participation by U.S. industry. For-profit entities are
also eligible, but may not use program funds to conduct private
business, promote private self-interests, supplement the costs of
normal sales activities, or promote their own products or services
beyond specific uses approved for a given project.
10. Utilization (Participation) Data
For FY 2011 to date, FAS has evaluated 59 proposals from the
private sector and 72 proposals from the public sector. Through the
course of eight tranches, FAS has approved funding for 41 private
sector and 34 public sector projects obligating $9,923,737. In a
typical year, between 75 and 100 projects are awarded funded. Attached
is a chart with a complete list of FY 2010 EMP allocations.
11. Duplication or Overlap with Other Programs
EMP is complementary to other USDA/FAS market development programs
whereby funding may be approved to address priority, market-specific
issues or to undertake activities not already serviced by or are
unsuitable for funding under other FAS market development programs,
such as the Foreign Market Development Program (FMD) and Market Access
Program (MAP).
12. Waste, Fraud and Abuse
FAS is proactive in monitoring its programs for any indications of
waste, fraud and abuse. Where such indications are found, FAS has been
aggressive in pursuing corrective action, including criminal
prosecution, to secure the recovery of funds and prevent recurrence.
However, vigorous monitoring and oversight procedures have kept such
indications to a minimum, and FAS is not aware of any systemic problems
in EMP. The FAS Compliance staff routinely reviews EMP agreements to
document compliance and to ensure the effectiveness of FAS's internal
controls. FAS programs also are audited by both the USDA Office of
Inspector General and the Government Accountability Office, each of
which provides detailed reports and recommendations for improvement.
Finally, FAS programs are subject to the same oversight and
documentation requirements common to all USDA programs, including the
Improper Payments Information Act.
13. Effect of Administrative PAYGO
None.
Attachment

Fiscal Year 2011
Fiscal Year 2010 Emerging Markets Program Allocations (EMP)
------------------------------------------------------------------------
Market Activity Title Amount
------------------------------------------------------------------------
Bangladesh Cotton USA Technical Assistance $200,000
Initiative in Bangladesh for
the Cotton Council
International
Brazil Brazil Craft Beer School $30,000
Seminars for the Brewers
Association
Brazil Market Feasibility Study of $15,041
Brazil for the Alaska Seafood
Marketing Institute
China Food Consumption in China's $468,600
Second-Tier Cities: The New
Frontier for U.S. Agricultural
Export Opportunities for the
University of Florida
China Exporting U.S. Dairy Genetics to $277,632
China for Cooperative Resources
International
China Hotel, Restaurant, and $212,000
Institutional Sector
Development for USDA/Foreign
Agricultural Service/Chengdu
China Distributor Development Program $183,000
for Emerging City Markets for
USDA/Foreign Agricultural
Service
China Global Food Safety Forum: China $174,431
Exchange for the GIC Group
China Phase Three of the China Moon $120,000
Cake Project for the California
Agricultural Export Council
China Fresh Produce in China: $101,011
Identifying Logistic
Constraints and Consumer Trends
for SIAM Professionals, LLC
China Turkey Market Development in $90,000
China--Expanding Demand for
U.S. Turkey in China by
Increasing its Use in Local
Cuisine for the Minnesota
Department of Agriculture
China China Familiarization Tour of $90,000
Organic Farms, Retail, and
Processors for the Organic
Trade Association
China China Pecan Project for the
Georgia Pecan Growers
Association$70,800
China Implementation of Science-based $52,560
Principles in Risk Management
for USDA/Foreign Agricultural
Service
China Assessment of Exports of Hawaii $79,818
Fresh and Processed
Agricultural Products to China
Markets Under a Memorandum of
Understanding with the Chinese
Ministry of Commerce, Beijing
International Brand Management
Center for the Hawaii
Department of Agriculture
China China Beer Distributors $35,000
Education Program for the
Brewers Association
China China Food Safety Law Training $27,406
for USDA/Foreign Agricultural
Service
China Reverse Trade Mission of Chinese $14,400
Tanneries for the U.S. Hide,
Skin and Leather Association
Egypt Food and Drug Administration $4,690
Middle East and North Africa
Food Safety Workshop for
Regulators for USDA/Foreign
Agricultural Service
El Salvador U.S. Rice Market Research for $31,000
the U.S. Rice Producers
Association
Ghana Ghana Lake Volta Soy in $96,475
Aquaculture Program for the
American Soybean Association
Global Emerging Markets Exploratory Market Research To $259,000
Identify Opportunities and
Launch Preliminary Trade
Servicing, Education, and/or
Promotional Activities in
Emerging Markets for the U.S.
Apple Export Council
Global Emerging Markets Exporting Genomic-Proven U.S. $206,100
Dairy Genetics, Enhancing
Producer Product Knowledge,
Demonstrating U.S. Genomic Sire
Proofs and the New Generation
of Dairy Sires for Cooperative
Resources International
Global Emerging Markets Global Pesticide Tolerance $196,770
Initiative for U.S. Specialty
Crops: Technical and Policy
Guidance to Emerging Markets
for USDA/Foreign Agricultural
Service
Global Emerging Markets Technical Support for U.S. Seed $195,000
Potato Exports, Introduction of
Cut Seeds to Foreign Markets
for the National Potato
Promotion Board
Global Emerging Markets Foreign Country Audits of U.S. $184,400
Red Meat Facilities for the
U.S. Meat Export Federation
Global Emerging Markets Worldwide Market Development for $60,000
the Northwest Wine Promotion
Coalition
Global Emerging Markets Access and Benefit Sharing for $55,566
Genetic Resources Used in U.S.
Food and Agriculture Exports
for USDA/Foreign Agricultural
Service
Global Emerging Markets Translations of Foreign World $52,000
Trade Organization Sanitary and
Phytosanitary and Technical
Barriers to Trade Notifications
for USDA/Foreign Agricultural
Service
Global Emerging Markets Advancing U.S. Positions on $9,880
Pesticide Regulatory Standards
for USDA/Foreign Agricultural
Service
Guatemala U.S. Rice Market Research for $31,000
the U.S. Rice Producers
Association
India India Food Safety Seminars for $89,175
USDA/Foreign Agricultural
Service
India Reverse Trade Mission for $75,438
Retailers and Wholesalers from
India for the Produce Marketing
Association
India India Export Market Opportunity $75,000
Assessment and Familiarization
Tour for the Organic Trade
Association
India India Retail Education $60,000
Activities Reverse Mission
Retail Training Seminars for
the Pear Bureau Northwest
India India Pecan Project for the $55,200
Georgia Pecan Growers
Association
Indonesia Indonesia-U.S. Partnership: $51,000
Agricultural Technology and
Investment Forum for the Texas
A&M Norman Borlaug Institute
Indonesia Technical Assistance for the $41,014
Republic of Indonesia's
National Agency for Drug and
Food Control to Better
Understand the U.S. System To
Ensure the Safety of Processed
Foods for USDA/Foreign
Agricultural Service
Indonesia Product Introduction, Care and $14,000
Handling, and Merchandising
Technique Seminars for Fresh
Sweet Cherries for the
Washington State Fruit
Commission
Iraq Trade Mission to Iraq for USDA/ $137,352
Foreign Agricultural Service
Jamaica U.S. Technical and Regulatory $17,676
Orientation for Jamaican Food
Import Authorities for USDA/
Foreign Agricultural Service/
Dominican Republic
Malaysia Agricultural Biotechnology $130,535
Outreach to Malaysian Officials
for USDA/Foreign Agricultural
Service/Kuala Lumpur
Malaysia Technical Workshop on Coated $56,086
Foods Applications for the USA
Dry Pea and Lentil Council
Mongolia 2010 Microbiology and $21,650
International Residue Training
Seminars for International
Government Laboratory Officials
for USDA/Foreign Agricultural
Service/Beijing
Mongolia Food Safety and Inspection $21,650
Service Meat and Poultry
Inspection Seminar for USDA/
Foreign Agricultural Service/
Beijing
Nigeria, Senegal, Increasing Access to U.S. Soy $250,000
Cameroon Products in Nigeria, Senegal,
and Cameroon for the American
Soybean Association
Pakistan U.S. Soy Food Product Promotion $152,224
in Pakistan for the American
Soybean Association
Pakistan Opening Pakistan to U.S. Dairy $111,755
and Genetics for World Wide
Sires, Ltd.
Philippines Philippines Agricultural $63,584
Biotechnology Regulatory
Outreach for USDA/Foreign
Agricultural Service/Manila
Poland Second Phase of Market $100,000
Development in Poland for
California Almonds for the
Almond Board of California
Regional: Asia-Pacific APEC High-Level Policy Dialogue $153,936
Economic Cooperation Workshop on Approaches and
(APEC) Tools To Promote Investment in
Agricultural Biotechnology for
USDA/Foreign Agricultural
Service
Regional: APEC APEC Export Certification $108,800
Roundtable for USDA/Foreign
Agricultural Service
Regional: APEC APEC High-Level Policy Dialogue $187,174
on Agricultural Biotechnology
for USDA/Foreign Agricultural
Service
Regional: Caribbean Basin Central American Microbiological $142,356
Standards Program for USDA/
Foreign Agricultural Service
Regional: Caribbean Basin Maintaining Access for U.S. $96,270
Exports to the Caribbean for
USDA/Foreign Agricultural
Service
Regional: Caribbean Basin Caribbean Food Safety Program $93,300
for USDA/Foreign Agricultural
Service
Regional: Central America- Food Safety Standard-Setting $97,400
Dominican Republic Free Training for Participants in
Trade Agreement (CAFTA- CAFTA-DR for USDA/Foreign
DR) Agricultural Service
Regional: Latin America Furthering Approvals of $413,785
Genetically Engineered Plants
Through Promotion of Data
Transportability for the
International Life Sciences
Institute Research Foundation
Regional: Latin America U.S. Outreach Effort To $157,378
Influence Negotiation by
Parties to the Cartagena
Protocol for Biosafety for USDA/
Foreign Agricultural Service
Regional: Latin America Inter-American Institute for $72,140
Cooperation on Agriculture
Workshop for Latin America
Countries on the Annex (LLP
Annex) to the Codex Guideline
for the Conduct of Food Safety
Assessment of Foods Derived
from Recombinant-DNA Plants for
USDA/Foreign Agricultural
Service
Regional: Latin America Promotion of Consumer-Oriented $56,462
Agricultural Products for Latin
America through the
International Supermarket
Management Class for IGA
International, Inc.
Regional: Latin America, Western Hemisphere Codex $103,310
Caribbean Basin Delegates' Colloquium for USDA/
Foreign Agricultural Service
Regional: Latin America, Enhancing Latin American and $100,000
Caribbean Basin Caribbean Participation in
Codex for USDA/Foreign
Agricultural Service
Regional: Southeast Asia Southeast Asia Fruit and $223,218
Vegetable Consumer Trends,
Preferences Research for the
Washington Apple Commission
Regional: Southeast Asia Increasing Understanding of U.S. $137,850
and International Flavor Safety
Evaluation Processes for the
Flavor and Extract
Manufacturers Association
Regional: Southeast Asia Baking with Pea Flour in $63,573
Southeast Asia for the USA Dry
Pea and Lentil Council
Regional: Southeast Asia Nutritional and Technical $46,820
Information on Dry Beans for
Southeast Asian Buyers for the
U.S. Dry Bean Council
Regional: Southeast Asia Second Phase of U.S. Dairy in $37,667
Selected Asian Bakery Markets
Project for the California Milk
Advisory Board
Russia Review of U.S. Poultry Slaughter $120,000
and Cold Storage Facilities for
the USA Poultry and Egg Export
Council
Russia Russia Retail Education $87,200
Activities Reverse Mission
Retail Training Seminars for
the Pear Bureau Northwest
Russia Research To Identify $70,000
Opportunities and Launch Trade
Servicing, Education, and
Promotion in Russia for the
California Prune Board
Russia U.S.-Russia Bilateral $26,342
Consultative Mechanism on
Biotechnology Technical
Exchange Meeting for USDA/
Foreign Agricultural Service
South Africa, Mauritius, Southern Africa Biotechnology $109,265
Zimbabwe, Mozambique Outreach for South Africa,
Mauritius, Zimbabwe, and
Mozambique for USDA/Foreign
Agricultural Service/Pretoria
Sri Lanka Prospecting for U.S. Feedstuff $84,206
and Soymeal Sales in Sri Lanka
for the Iowa Soybean
Association
Sri Lanka Biotechnology Training for $5,000
Senior Level Sri Lankan
Officials for USDA/Foreign
Agricultural Service
Thailand Thailand Importer Developer $185,535
Program for the Southern United
States Trade Association
Thailand Technical Support to U.S. Frozen $84,235
Potato Tariff Reduction Efforts
in Thailand for the National
Potato Promotion Board
Thailand Restrictive Labeling $36,450
Requirements for Alcoholic
Beverages to Thailand for USDA/
Foreign Agricultural Service
Turkey Biotech Speakers for Istanbul $38,680
Seminar and Public Outreach for
USDA/Foreign Agricultural
Service/Ankara
Turkey U.S. Dairy Genetics to Turkey, $22,551
Overcoming Unjustifiable
Regulatory Barriers for the
National Association of Animal
Breeders
Turkey Expanding Indiana Hardwood $20,900
Exports in Turkey for the
Indiana State Department of
Agriculture
Vietnam Vietnamese Wet Blue Buyers Team $32,450
to the United States for the
Leather Industries of America
------------
Total $8,361,172
------------------------------------------------------------------------
Foreign Agricultural Service (November 2010).

______

1. Program Name
Foreign Market (Cooperator) Development Program.
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The Foreign Market (Cooperator) Development Program (FMD), also
known as the Cooperator program, is administered by the Foreign
Agricultural Service and uses funds from the Commodity Credit
Corporation (CCC). FMD's first participants entered into agreements
with FAS in 1954 The program is currently authorized by Title VII of
the Agricultural Trade Act of 1978. Funding for FMD was reauthorized
through 2012 by the 2008 Farm Bill.
4. Purpose/Goals
The purpose of the program is to create, expand, and maintain
foreign markets for U.S. agricultural commodities and products through
cost-share assistance. FMD benefits U.S. farmers, processors, and
exporters by assisting their organizations in maintaining or increasing
market share in existing markets by addressing long-term foreign market
import constraints and by identifying new markets or new uses for the
agricultural commodity or product in the foreign market. Overseas
promotions focus on generic U.S. commodities, rather than brand-name
products, and are targeted toward long-term development. Projects under
the Cooperator Program are jointly funded by the U.S. Government and
industry groups.
5. Success in Meeting Programmatic Purpose/Goals
FMD applications undergo a competitive review process based on
criteria as specified in the FMD regulations and an annual Federal
Register announcement. Funds are awarded to applicants that demonstrate
effective performance based on a clear, long-term strategic plan. The
FAS also considers the extent to which a proposed project targets
markets with the greatest growth potential and a program effectiveness
time line against which results can be measured at specific intervals
using quantifiable product or country goals. The FAS allocates funds in
a manner that effectively supports the strategic decision making
initiatives of the Government Performance and Results Act (GPRA) of
1993. In 2007, FAS commissioned a cost-benefit analysis of USDA's
market development programs with an independent economic analysis firm,
Global Insight Inc., and recently received the results of an update of
that study. The study analyzed the impact of the increase in foreign
market development investment that took place under the 2002 Farm Bill
through 2009. The study reported that U.S. agricultural exports were
$6.1 billion higher in 2009, compared to what they would have been
without the increased investment in market development. Every dollar of
increased investment in the MAP and FMD resulted in $35 in exports.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $34
2003 $34
2004 $34
2005 $34
2006 $34
2007 $34
2008 $34
2009 $34
2010 $34
2011 $34
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)

Please explain changes between budget authority and outlays.

------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $31
2003 $32
2004 $37
2005 $36
2006 $36
2007 $36
2008 $33
2009 $36
2010 $32
2011 $37 (est.)
------------------------------------------------------------------------

Not all payments (outlays) are made during the year in which the
program agreement is entered into. Outlays could be made up to 5 years
after the project is implemented. Most payments are made by the third
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.

------------------------------------------------------------------------
Annual Cost FTE
----------------------------------------------------------
Section 11 &
FY General Prog. Funds
Appropriations for Admin. FTE Tech Assist
Admin. Cost Support
------------------------------------------------------------------------
2007 $0.3 1 0.29
2008 $0.3 1 0.29
2009 a $0.3 1 0.29
2010 a $0 $0.3 1 0.29
2011 a $0 $0.4 1 0.29
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
administrative costs but does not include miscellaneous indirect
costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
Reinvestment Act (ARRA) exempted CCC program funds used to pay
authorized administrative costs for FMD from counting against the cap
on CCC funds used to pay for salaries and administrative costs imposed
by Section 11 of the CCC Charter Act. The Department of Defense and
Full-Year Continuing Appropriations Act of 2011 continued the
exemption from the CCC section 11 cap for CCC funds used to pay
authorized administrative costs of FMD.

9. Eligibility Criteria
To participate in the FMD program an applicant must be a nonprofit
U.S. trade organization. An applicant must agree to contribute
resources to its proposed promotional activities. The contribution must
be at least 50 percent of the value of resources provided by CCC for
activities conducted under the project agreement.
10. Utilization (Participation) Data
For FY 2011 there were 22 applicants competing for $34.5 million in
appropriated funding. Attached is a chart of FY 2011 Foreign Market
Program Development allocations.
11. Duplication or Overlap with Other Programs
FMD is complementary to other FAS/USDA market development programs
whereby funding to address priority, market-specific issues or to
undertake activities not already serviced by or unsuitable for funding
under other FAS marketing programs, such as the Market Access Program,
the Emerging Market Program, the Technical Assistance for Specialty
Crops Program, and the Quality Samples Program.
12. Waste, Fraud and Abuse
FAS is not aware of any examples of waste, fraud, and abuse in this
program, including overpayments that the Department or other government
agency has determined is a problem. FAS program areas closely monitor
all agency agreements to ensure that participants carry out activities
in accordance with program regulations. In addition, the FAS Compliance
staff routinely reviews FAS agreements agency-wide to document
compliance, and to ensure that FAS maintains sufficient internal
controls. Further, FAS programs are audited by both the USDA Office of
Inspector General and the Government Accountability Office, each of
which provides detailed reports and recommendations for improvement.
Finally, FAS programs are subject to the same oversight and reporting
requirements common to all USDA programs, including testing of
transactions under the Improper Payments Improvement Act. Together
these internal and external monitoring and evaluation practices serve
to catch and correct instances of waste, fraud, and abuse before they
result in loss of public funds.
13. Effect of Administrative PAYGO
None.
attachment

Fiscal Year 2011
Fiscal Year 2011 Foreign Market Development Program (FMD)
------------------------------------------------------------------------
Cooperator Allocation
------------------------------------------------------------------------
AHEC, APA, SEC, SFPA * $2,796,545
American Peanut Council $628,631
American Seed Trade Association $219,486
American Sheep Industry Association $161,354
American Soybean Association $6,648,054
Cotton Council International $4,532,356
Leather Industries of America $135,224
Mohair Council of America $8,808
National Hay Association $80,110
National Renderers Association $837,791
National Sunflower Association $252,192
North American Millers Association $23,833
U.S. Dairy Export Council $595,464
U.S. Dry Bean Council $103,611
U.S. Grains Council $4,386,866
U.S. Hide, Skin and Leather Association $98,092
U.S. Livestock Genetics Export, Inc. $670,213
U.S. Meat Export Federation $1,612,357
U.S. Wheat Associates $5,033,535
USA Dry Pea and Lentil Council $157,319
USA Poultry and Egg Export Council $1,262,021
USA Rice Federation $1,457,865
-------------------
Reserve $2,798,273
===================
Total Available FY 2011 Funding $34,500,000
------------------------------------------------------------------------
* American Hardwood Export Council, APA--The Engineered Wood
Association, Softwood Export Council, Southern Forest Products
Association.

______

1. Program Name
Facility Guarantee Program.
2. Subprograms/Department Initiatives
N/A.
3. Brief History
Authorized by Congress under section 1542 of the Food, Agriculture,
Conservation and Trade Act of 1990 to meet the financing needs for the
establishment or improvement of facilities or the provision of services
in emerging markets that would primarily benefit the export of U.S.
agricultural commodities.
4. Purpose/Goals
By providing credit guarantees consistent with the Organisation for
Economic Co-operation and Development's (OECD) ``Arrangement on
Officially Supported Export Credits'', for loan tenors of up to 10
years, the financial risk to U.S. lenders (banks or exporters) of
foreign banks is greatly diminished. This reduced risk in financing
increases export opportunities in those emerging markets where the lack
of credit impedes an exporter's ability to sell and a buyer's ability
to acquire agriculture-related infrastructure or services that will
primarily enhance sales of U.S. agricultural commodities.
5. Success in Meeting Programmatic Purpose/Goals
From inception through June 2011, only one transaction has been
guaranteed. Prior to the 2008 Farm Bill statutory amendments, FGP
required U.S. content on any goods guaranteed. The 2008 Farm Bill,
however, allowed for a ``waiver'' of U.S. content requirement if such
goods were unavailable or the use of such goods is not practicable. The
program also requires a determination of downstream benefit to the
export of U.S. agricultural commodities. As the FGP program is required
to adopt a premia structure consistent with the OECD Arrangement on
Officially Supported Export Credits, capital goods programs offered by
the U.S. Export-Import Bank were more attractive, as exporters did not
need to develop rational trade arguments for the downstream benefits to
U.S. agriculture. In light of the waiver provision for U.S. content, we
are reviewing ways to use such authority with as little impact on U.S.
manufacturing concerns as possible. FGP operates as a subset of the
GSM-102 Export Credit Guarantee Program and under that authority is
subsumed within the same overall limitations on the amount of credit
guarantees that CCC may make available, which is now effectively capped
in each fiscal year at $40 million of annual budget authority for
``subsidy.'' FGP subsidy estimates, because of much longer average loan
tenors, have been historically higher than those of the GSM-102
program, which in turn requires an evaluation of the best way for USDA
to satisfy immediate demand for credit guarantees.
6. Annual Budget Authority (FY 2002-FY 2011)
Applicable law mandates that CCC make available for each fiscal
year an amount of credit guarantees (both GSM-102 and FGP) equal to the
lesser of (a) $5,500,000 or (b) an amount of guarantees that CCC can
make available using budget authority for an underlying subsidy amount
of the sum of $40 million per year plus any unobligated budget
authority from prior fiscal years.
7. Annual Outlays (FY 2002-FY 2011)
N/A.
8. Annual Delivery Cost (FY 2002-FY 2011)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.
FGP delivery costs fall under the separate appropriation of $6.8
million (FY 2011) used to cover the salaries and other administrative
costs (S&Es) of the Export Credit Guarantee Program (GSM-102). The
program's information technology support for web interface, system of
records and database are included in the overall costs to maintain the
Export Credit Guarantee program information technology.
9. Eligibility Criteria
Please explain who is eligible for participation in this program.
Also list any special considerations (for example priority areas or
carve-outs for certain eligible producers).
All potential participants--exporters, U.S. financial
institutions, foreign banks and countries--can participate provided
they are not suspended, debarred or otherwise prohibited from
participation in U.S. Government programs. Loan terms will be in
accordance with OECD guidelines. In addition exporters must have an
office in the United States, U.S. financial institutions must be
regulated and foreign banks are subject to extensive individual
financial review to determine creditworthiness. By law, credit
guarantees cannot be issued to any country that cannot adequately
service the debt associated with particular export sales.
10. Utilization (Participation) Data
Please provide the number of participants in the program. If there
is a backlog, please explain that as well. Where appropriate, please
include additional information, such as the number of acres enrolled in
the program.
From inception through June 2011, only one transaction has been
guaranteed.
11. Duplication or Overlap with Other Programs
If the purpose/goals or mission of this program are similar to
those of other programs, please list those other programs along with an
explanation.
The Export Import Bank offers very similar programs--but is
absolutely limited to the guarantee of U.S. origin capital goods and
U.S. services Ex-Im's primary mission is to expand the export of the
U.S. capital goods or services, while the primary mission of the FGP is
to enhance the export of U.S. agricultural commodities.
12. Waste, Fraud and Abuse
Please provide examples of waste, fraud, and abuse including
overpayments that the Department or other government agency has
determined is a problem and how the Department is combating such
problems.
USDA is proactive in reviewing this program and its participants.
Where there is any indication of waste, fraud and abuse, the Department
is aggressive in investigating those incidents. This program when
operational will fully implement, document and test at least annually
its internal controls in accordance with both, OMB Circular A-123,
which implements requirements of the Federal Managers' Financial
Integrity Act of 1982, and the Improper Payments Information Act of
2002 (IPIA).
13. Effect of Administrative PAYGO
N/A.
______

1. Program Name
Dairy Export Incentive Program (DEIP).
2. Subprograms/Department Initiatives
3. Brief History
Authorized by Congress under Sec. 153 of the Food Security Act of
1985, the program provides a bonus or subsidy on a bid basis to
exporters of eligible dairy products (butterfat, nonfat dry milk, whole
milk powder and various cheeses). The payments may be made in cash or
in commodities held by the Commodity Credit Corporation (CCC).
Initially, the program provided the bonuses ``in-kind'' from surplus
stocks of dairy products held by CCC. This `in-kind' payment was
replaced by the issuance of ``generic certificates'' redeemable for any
inventory held by the CCC. As inventories diminished, the program
evolved into the sole use of cash payments for the subsidy. As this
program provides an export subsidy, it is subject to the subsidy
reduction commitments of the United States under the Uruguay Round
Agreements of the World Trade Organization (WTO). The program is
therefore subject to both budget and quantity limits in accordance with
those reduction commitments.
4. Purpose/Goals
By providing a subsidy on exports of eligible dairy products, an
amount intended to bridge the gap between world market prices and the
U.S. domestic price, DEIP enables exporters to meet the lower world
market prices, often influenced by the application of subsidies by
other exporting countries--primarily the European Union (EU).
5. Success in Meeting Programmatic Purpose/Goals
The program has been very successful in meeting the needs of
exporters and expanding markets for U.S. dairy products when world
prices are depressed due to the application of subsidies by other
countries. This was most evident leading up to and during the
implementation period of the Uruguay Round subsidy reduction
commitments. At that time, the EU was aggressively subsidizing dairy
exports. Almost 250,000 metric tons of dairy products were exported
under DEIP in Fiscal Year 1995 and $162 million in bonus payments were
committed under DEIP in Fiscal Year 1993.
6. Annual Budget Authority (FY 2002-FY 2011)
This is a mandatory program with spending capped by our commitments
under the WTO Uruguay Round Agreements. These are product specific and
follow:

------------------------------------------------------------------------
Dairy Product Budgetary Cap ($Mil) Quantity Cap (MT)
------------------------------------------------------------------------
Nonfat dry milk $82.46 68,201
Butterfat $30.49 21,097
Cheese $3.63 3,030
Other (whole milk powder) $0.021 34
-------------------------------------------
Total..................... $116.601 N/A
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
Please explain changes between budget authority and outlays:

------------------------------------------------------------------------
Subsidy Awarded
Fiscal Year ($Mil) Quantity (MT)
------------------------------------------------------------------------
2002 $54.62 86,473
2003 $32.52 86,155
2004 $2.68 48,498
2005 0 0
2006 0 0
2007 0 0
2008 0 0
2009 $18.89 50,886
2010 $2.37 4,811
2011 0 0
------------------------------------------------------------------------

The budget authority is restricted to the budgetary limits of our
subsidy reduction commitments under the Uruguay Round Agreements. DEIP
is designed to meet, not set, world market prices. Years where there
has been limited use of DEIP reflect the United States' competitiveness
in the world market without the need for a subsidy. This condition
exists today.
8. Annual Delivery Cost (FY 2002-FY 2011)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.
Delivery costs are a function of collateral duty when the program
is operating. When not operating, program delivery costs are estimated
at 0.10 FTE--largely a function of closing outstanding performance
issues. When operational, USDA estimates that no more than two FTE
equivalents are utilized to operate the program. In fiscal 2010, the
program operated for one month and estimated delivery costs were under
$40,000. In 2011, estimated delivery costs are under $10,000. The
software costs for the program are under $1,000 per year.
9. Eligibility Criteria
Please explain who is eligible for participation in this program.
Also list any special considerations (for example priority areas or
carve-outs for certain eligible producers).
All potential exporters of U.S. dairy products can participate
provided they have an agent in the United States and they are not
suspended, debarred or otherwise prohibited from participation in U.S.
Government programs.
10. Utilization (Participation) Data
Please provide the number of participants in the program. If there
is a backlog, please explain that as well. Where appropriate, please
include additional information, such as the number of acres enrolled in
the program.
To date 115 exporters of dairy products have participated in DEIP
since inception.
The following is a list of the number of participants for the
period 2002-2011:

------------------------------------------------------------------------
Fiscal Year Participants
------------------------------------------------------------------------
2002 17
2003 12
2004 4
2005 0
2006 0
2007 0
2008 0
2009 17
2010 12
2011 0
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
If the purpose/goals or mission of this program are similar to
those of other programs, please list those other programs along with an
explanation.
None.
12. Waste, Fraud and Abuse
Please provide examples of waste, fraud, and abuse including
overpayments that the Department or other government agency has
determined is a problem and how the Department is combating such
problems.
USDA is proactive in reviewing this program and its participants.
Payments are not made until the exporters provide appropriate export
documentation that is reviewed for compliance with program
requirements. Where there is any indication of waste, fraud and abuse,
the Department is aggressive in investigating those incidents. At this
time we have no confirmed evidence of waste, fraud or abuse under DEIP.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
The Cochran Fellowship Program.
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The Cochran Fellowship Program was established in September 1984
and was authorized in section 1543 of the Food, Agriculture,
Conservation, and Trade Act of 1990, as amended. The program provides
short-term agricultural fellowships in the United States for senior and
mid-level specialists and administrators working in such areas as
agricultural trade and policy, agribusiness development, management,
animal, plant, and food sciences, extension services, and agricultural
marketing. Since its start the Cochran Fellowship Program has trained
over 14,300 international participants from 123 countries.
4. Purpose/Goals
The purpose of the Cochran Fellowship Program is to provide
agricultural fellowships to individuals from middle-income countries,
emerging markets and emerging democracies. By statute, the goals are
for participants to gain knowledge and skills through training that
will: ``(1) assist eligible countries to develop agricultural systems
necessary to meet the food and fiber needs of their domestic
populations; and (2) strengthen and enhance trade linkages between
eligible countries and agricultural interests in the United States.''
5. Success in Meeting Programmatic Purpose/Goals
The more than 14,000 Cochran alumni comprise an impressive network
of agricultural specialists that have both enhanced food security in
their home countries and strengthened trade linkages with the United
States. Alumni include the current President of Albania and several
Ministers of Agriculture from different regions of the world. The
Cochran Fellowship Program can play an important role in resolving
agricultural trade issues. For example, in March 2011 the Minister of
Agriculture in Iraq lifted the import ban of U.S. livestock genetics
shortly after a Cochran training demonstrated the quality of U.S.
bovine genetics to three Iraqi agricultural specialists. A Cochran
Fellow from China trained in U.S. food retailing practices in 1996 now
runs a high-end supermarket chain in Shanghai that carries nearly 3000
American products with annual sales of $44 million.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2002 $4
2003 $5
2004 $4
2005 $4
2006 $4
2007 $4
2008 $3
2009 $5
2010 $5
2011 $3
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2002 $4
2003 $4
2004 $5
2005 $3
2006 $4
2007 $5
2008 $4
2009 $3
2010 $5
2011 $3 (est.)
------------------------------------------------------------------------

Not all payments (outlays) are made during the year in which budget
authority is made available. Outlays could be made up to 5 years after
the appropriation is received. Most payments are made by the third
fiscal year after the appropriation.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
To the best of the Department's ability, please outline costs
associated with delivery of program, including FTE's, technical
assistance, software, etc.

------------------------------------------------------------------------
FY Annual Cost FTEs
------------------------------------------------------------------------
2007 5.2 14
2008 4.0 12
2009 2.6 12
2010 4.9 12
2011 4.5 (est.) 13 (est.)
------------------------------------------------------------------------

These funds not only support personnel cost, but participants'
travel and training cost.
9. Eligibility Criteria
The Cochran Fellowship Program is open to the staff of
agribusinesses, government departments, universities, and other
agricultural organizations. In their own countries, applicants may be
private agricultural producers, managers, technicians, scientists,
specialists, professors, administrators, and/or policy makers from both
the public and private sectors. Country eligibility includes middle-
income countries, emerging democracies, and emerging markets.
10. Utilization (Participation) Data
Between 2002 and 2010 the program provided fellowships to 5835
individuals from 107 countries. During FY 2011 it is anticipated that
the Cochran program will sponsor approximately 425 individuals from 60
countries. The yearly totals are as displayed below:

----------------------------------------------------------------------------------------------------------------
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Number of Cochran Fellows 969 853 864 501 551 706 520 395 476 425
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
The Cochran Fellowship Program distinguishes itself from 1031 other
project grants listed in the Catalog of Federal Domestic Assistance
through its targeted audience, scope of training, approach and goals.
Fellows from middle-income and countries in transition are
strategically targeted, based on self-identified agricultural needs in
their own countries and the priorities of FAS's strategy. Candidates
are often mid-level professionals--from both the public and private
sector--and receive specialized training related to trade capacity or
market access needs. Cochran's short-term training for 2 to 3 weeks
differs from other fellowship programs that are year-long (or longer)
programs (Fulbright, Humphrey, USAID-sponsored development assistance
scholarships) or targeted to academia (Borlaug, Faculty Exchange
Program, Agricultural Research & Development (AWARD) Fellowship
Program--USAID).
12. Waste, Fraud and Abuse
All funding for the Cochran Fellowship Program is obligated
according to FAS agency-wide fund control procedural and policy
guidance. Obligations are recorded on a timely basis in agency and
departmental financial systems to ensure that program implementation
can proceed in order to meet program objectives over the required
timeline. A separate accounting code is established for each discrete
Cochran training, ensuring that all expenditures are tied to a specific
country and/or training focus. Each training budget is reviewed and
modified by program staff to ensure that the amounts expended are
appropriate. In addition, Federal travel guidelines are adhered to
regarding lodging and per diem, as well as daily salary rates. Federal
regulatory requirements relating to administration, cost principles and
audits are included with each cooperative agreement. Reconciliation of
all obligations and expenditures is performed at various intervals to
be sure official accounting records are accurate. Timely reviews of
unliquidated balances are performed based on OMB Circular A123,
Management and Accountability Act.
FAS is proactive in monitoring the Cochran program for any
indications of waste, fraud and abuse. FAS has not found any systemic
problems in the Cochran Program.
13. Effect of Administrative PAYGO
N/A.
______

1. Program Name
The Borlaug International Agricultural Science and Technology
Fellowship Program (Borlaug Fellowship Program).
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The Borlaug Fellowship Program (BFP) was initiated in March 2004 in
honor of the late Nobel Laureate Dr. Norman E. Borlaug, an agronomist,
humanitarian, and the father of the Green Revolution. Congress provided
statutory authorization for the program in the Food, Conservation and
Energy Act of 2008 (7 U.S.C. 3319j). The BFP provides fellowships for
scientific training and research in the United States to potential
agricultural leaders from eligible countries to promote food security
and economic growth. Since its inception in 2004, the BFP has enhanced
the scientific, regulatory and agribusiness knowledge and skills of
over 500 Borlaug Fellows from 64 developing countries.
4. Purpose/Goals
The Borlaug Fellowship Program helps developing countries
strengthen food security and improve agricultural productivity by
providing U.S.-based scientific training and collaborative research
opportunities to visiting scientists, policymakers, and university
faculty. Training for Borlaug Fellows increases their scientific
knowledge and promotes long-term collaboration with mentors at U.S.
land-grant universities, USDA and other government agencies, and
international research centers. The program also strives to help
developing countries strengthen agricultural practices through the
transfer of new science and agricultural technologies, including those
related to production, processing and marketing; addresses obstacles to
the adoption of technology, such as ineffective policies and
regulations; and promotes the extension of knowledge gained by Fellows
to ``users and intermediaries in the marketplace.''
5. Success in Meeting Programmatic Purpose/Goals
The program has facilitated the adoption of modern agricultural
practices in targeted countries by strengthening human and
institutional capacity through U.S.-based training. The Borlaug
Fellowship Program periodically conducts surveys to gather information
from Borlaug alumni about the impact of the fellowship program on their
work. Responses from Borlaug alumni received in Fiscal Year 2010
overwhelmingly reported that their fellowship had a positive impact on
one or more aspects of their work. Of the 100 surveys received, the
Fellows specifically reported that participating in the Borlaug
Fellowship Program positively impacted their research (92 percent),
teaching (74 percent), and policy objectives (14 percent), including
the adoption of one or more new techniques or technologies (52 percent)
in their home institutions. For example, A 2008 African Woman in
Science Borlaug Alumnus trained in dairy management and nutrition
reported that her training resulted in significant increases in milk
production and calf births at the Kakoma Estate, a medium size Malawian
dairy cooperative enterprise, where she is managing director. A Borlaug
Alumnus from Romania with the University of Agricultural Science in
Timisoara, Romania, reported that the lab experience he gained through
his 2006 Fellowship allowed him to spearhead a research program at his
home institution in applied microbiology and biofuels.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY BA
------------------------------------------------------------------------
2004-2006 $2
2007 $2
2008 $2
2009 $2
2010 $2
2011 $1.5
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY Outlays
------------------------------------------------------------------------
2004-2006 $2
2007 $2
2008 $2
2009 $2.3
2010 $2.1
2011 $1.5 (est.)
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
FY Annual Cost FTEs
------------------------------------------------------------------------
2007 $1.400 4
2008 $.974 6
2009 $1.625 6
2010 $1.785 8
2011 $1.500 (est.) 8 (est.)
------------------------------------------------------------------------

These funds support personnel cost and participants' travel and
training cost such as training at Texas A&M University and Prairie View
A&M University.
9. Eligibility Criteria
Individuals, who specialize in agricultural education, research and
extension, from the public and private sectors in developing countries
that are eligible for U.S. economic assistance.
10. Utilization (Participation) Data
Since 2004, the Borlaug Fellowship Program has trained Fellows from
64 countries in sub-Saharan Africa, the Middle East, the former Soviet
Union, Asia and Latin America to receive scientific agricultural
training in the United States. Collaborative-research and training have
spanned such fields as the plant and animal sciences, food safety,
agricultural biotechnology, environmental sciences, climate change, and
food security. Women agriculturalists receive priority consideration in
the program and now comprise nearly 50 percent of participants. During
FY 2011 it is anticipated that the Borlaug Fellowship Program will
sponsor approximately 34 individuals from 26 countries. The yearly
totals are displayed below:

------------------------------------------------------------------------
Year 2004-2006 2007 2008 2009 2010 2011
------------------------------------------------------------------------
Number of Borlaug Fellows 268 94 66 63 48 34
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
There is no duplication or overlap with other Federal programs.
12. Waste, Fraud and Abuse
All funding for the Borlaug Fellowship Program is obligated
according to FAS agency-wide fund control procedural and policy
guidance. Obligations are recorded on a timely basis in agency and
departmental financial systems to ensure that program implementation
can proceed in order to meet program objectives over the required
timeline. A separate accounting code is established for each discrete
Borlaug training, ensuring that all expenditures are tied to a specific
country and/or training focus. Each training budget is reviewed and
modified by program staff to ensure that the amounts expended are
appropriate. In addition, Federal travel guidelines are adhered to
regarding lodging and per diem, as well as daily salary rates. Federal
regulatory requirements relating to administration, cost principles and
audits are included with each cooperative agreement. Reconciliation of
all obligations and expenditures is performed at various intervals to
be sure official accounting records are accurate. Timely reviews of
unliquidated balances are performed based on OMB Circular A123,
Management and Accountability Act.
13. Effect of Administrative PAYGO
None.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--U.S.
Agency for International Development
1. Program Name
Food for Peace Act/USAID Title II, III, and V.
2. Subprograms/Department Initiatives
A. Title II: Emergency and Private Assistance Programs

Under Title II, USAID provides emergency food aid to address needs
arising from natural disasters, such as floods or droughts, and complex
emergencies often characterized by insecurity and population
displacement. USAID also provides development food aid as part of
multi-year, development (non-emergency) programs integrated with USAID
strategies to address the underlying causes of chronic food insecurity.

B. Title III: Food for Development

Title III is a USAID-administered program for enhancing food
security and supporting long-term economic development in least-
developed countries. USAID is authorized to donate agricultural
commodities to a recipient country and funds the transportation to the
point of entry in the recipient country. These commodities may be sold
on the domestic market and the revenue generated from their sale is
used to support and implement economic development and food security
programs. Funds have not been requested or appropriated for Title III
for more than a decade.

C. Title V: Farmer to Farmer Program

The John Ogonowski and Doug Bereuter Farmer-to-Farmer Program
provides voluntary technical assistance to farmers, farm groups, and
agribusinesses in developing and transitional countries to promote
sustainable improvements in food security and agricultural processing,
production, and marketing. The program relies on the expertise of
volunteers from U.S. farms, land-grant universities, cooperatives,
private agribusinesses, and nonprofit farm organizations to respond to
the local needs of host-country farmers and organizations.
3. Brief History
On July 10, 1954, President Dwight D. Eisenhower signed the
Agricultural Trade Development Assistance Act--or Public Law (P.L.)
480--into law. Since that day, the lasting benefits President
Eisenhower envisioned have come to pass. The more than 120 million
metric tons of American food the United States has sent overseas over
the past 57 years under Title II, the largest part of P.L. 480, have
kept billions of people overseas from hunger, malnutrition, and
starvation.
Early in his Administration, President John F. Kennedy underlined
the importance of P.L. 480 to the United States--and the rest of the
world--by renaming it ``Food for Peace'' and placing it in the newly
created U.S. Agency for International Development. ``Food is strength,
and food is peace, and food is freedom, and food is a helping hand to
people around the world whose good will and friendship we want,''
Kennedy said. Since its inception, Food for Peace has adapted several
times to accommodate changing needs around the world. Programs
currently focus primarily on sub-Saharan Africa and Asia. Despite these
changes, the objectives have remained the same: fighting hunger and
malnutrition and promoting sustained economic growth and development.
For over 57 years, the Food for Peace program has brought hope and
nourishment to the hungry corners of the world. Over three billion
people in over 150 countries have benefited directly from our food.
Upon reaching its destination, the food is used in a variety of
ways, and always for the people most vulnerable to the effects of
hunger: children under age 5, pregnant women, the elderly, and the
poorest families in a community. During an emergency in which people
face threat of imminent starvation, food--wheat, sorghum, corn and
other commodities--are distributed to save their lives. If the symptoms
of extreme malnutrition have already appeared, a nutritionally
fortified ration with blended, fortified, and processed food is
provided. In less dire circumstances, food can be used to compensate
people for work, such as building roads or repairing water and
irrigation systems. In turn, these projects help protect communities
from future hunger by providing them access to local markets for their
produce, keeping them healthy, and improving their harvests.
Title II programs have an immediate impact of protecting lives and
maintaining consumption levels, while also contributing to longer-term
impacts, including enhancing community and household resilience to
shocks, helping people build more durable and diverse livelihood bases
(enhancing assets, resources, and infrastructure), and enhancing the
capabilities of individuals through improvements in health, nutrition
and education.
Title V, the Farmer-to-Farmer Program, exemplifies this U.S.
helping hand in food aid. Since the program's inception in 1985, over
12,000 volunteer assignments have been completed in over 80 countries.
Over one million farmer families (representing about five million
people) have directly benefitted from the Farmer-to-Farmer Program.
Volunteers help host individuals and organizations build local
institutions and linkages to resolve local problems and have provided
direct hands-on training to over 80,000 people. Approximately 43
percent of all individuals trained by Farmer-to-Farmer volunteers are
women. Under the current program, 15 organizations are providing
volunteer services in 25 core countries. Current programs field
approximately 600 volunteers per year.
4. Purpose/Goals
The Food for Peace Act, as the statute has been renamed, states the
following with respect to the programs authorized under the Act:

It is the policy of the United States to promote its foreign
policy by enhancing the food security of the developing world
through the use of agriculture commodities and local currencies
accruing under this Act to:

(1) Combat world hunger and malnutrition and their
causes;
(2) Promote broad-based, equitable and sustainable
development, including agricultural development;
(3) Expand international trade;
(4) Foster and encourage the development of private
enterprise and democratic participation in developing
countries; and
(5) Prevent conflicts.

The Farmer-to-Farmer Program goal is to help promote agricultural
sector growth and food security in developing countries and to increase
international understanding of the United States and U.S. development
programs by involving American citizens in people-to-people exchanges
for work on agricultural development.
5. Success in Meeting Programmatic Purpose/Goals

Title II: Emergency and Private Assistance (Development) Programs

Administered by the USAID Office of Food for Peace in the Bureau
for Democracy, Conflict, and Humanitarian Assistance, in FY 2010, Title
II programs (emergency and development (non-emergency)) provided more
than 2.1 million tons of commodities, with a program cost of
approximately $1.9 billion, to assist approximately 55 million people
in 46 countries.
For more information on Food for Peace Title II program
accomplishments, please see attached text from the FY 2010
International Food Assistance Report (Attachment B), as well as the FY
2007-2009 International Food Assistance Reports (attached).

Title V: Farmer to Farmer Program

The USAID Bureau for Food Security administers this program. In FY
2010, implementing agencies fielded 522 volunteers from 48 states and
the District of Columbia. The top five states providing volunteers
were: California (58 assignments), Wisconsin (50 assignments), North
Carolina (28 assignments), Florida (25 assignments), and Minnesota (19
assignments). Of these assignments, 433 were completed by men (83
percent) and 89 by women (17 percent). In FY 2010, 522 volunteer
assignments focused on technology transfer (68%), organizational
development (12%), business/enterprise development (17%), financial
services (2%), and environmental conservation (1%). Volunteers worked
at various levels of the commodity production and marketing chain,
including: rural services and input supply (35%), on-farm production
(40%), storage and processing (14%), and marketing (11%).
See attached examples (Attachment C) of the program's successes in
meeting the goals and purposes.
6. Annual Budget Authority (FY 2002-FY 2011)
For USAID's annual budget authority (FY 2002-2011), please see
Attachment A.
7. Annual Outlays (FY 2002-FY 2011)
For USAID's annual Title II outlays (FY 2002-2011), please see
Attachment A.
8. Annual Delivery Cost (FY 2002-FY 2011)
The annual average Title II delivery cost (FY 2002-FY2011) is $730
per metric ton.
9. Eligibility Criteria
Those eligible for Title II emergency resources are:

A private voluntary organization or cooperative that is, to
the extent practicable, registered with the USAID
Administrator, or

A Public International Organization (PIO), such as the U.N.
World Food Program.

Pursuant to section 402 of the Food for Peace Act, this includes
U.S. and non-U.S. nonprofit organizations.
Title V, the Farmer-to-Farmer Program, is implemented by U.S.
private voluntary organizations, cooperatives, and universities. During
FY 2010, eleven private voluntary organizations and four universities
participated in the program.
10. Utilization (Participation) Data
Food for Peace (Title II) assisted the following number of
beneficiaries in FY 2008 through FY 2010:

------------------------------------------------------------------------
FY Emergency Development
------------------------------------------------------------------------
2008 37.9 million 7.6 million
2009 55 million 7.1 million
2010 46.5 million 7.9 million
------------------------------------------------------------------------

During FY 2010, the Farmer to Farmer Program (Title V) provided
assistance to 455 local organizations (cooperatives, farmer groups,
agribusinesses, rural financial organizations and others), directly
assisting 34,080 people. The program provided training to 16,853
people.
11. Duplication or Overlap with Other Programs
Food for Peace Title II is the largest USG international food aid
program and the only program with a primary responsibility for
emergency food assistance. Title II development programs are integrated
into country level strategic plans and as such are designed to
complement other mission development objectives. Emergency food aid
complements food security programs by addressing the most vulnerable
populations.
At the country level, the Farmer-to-Farmer Program (Title V)
generally works with and through partners' programs. Frequently, these
partners' programs are other on-going USAID agricultural and rural
development projects. Implementing private voluntary organization
country program arrangements and USAID country Missions collaborate to
ensure coordination with national development efforts and on-going
programs. Coordination and sustainability are ensured through working
closely with local host organizations on their farm and business
development efforts.
12. Waste, Fraud and Abuse
The USAID Office of Food for Peace works aggressively to avoid
waste, fraud, and abuse, and works closely with the USAID Office of
Inspector General (OIG) to review Title II, III or V audit findings and
respond accordingly with management decisions and actions, as
applicable.
13. Effect of Administrative PAYGO
N/A.

attachment a
Budget Authority and Outlays--Title II
Total Funding Availability
(in Hundred Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 To
Final Final Final Final Final Final Final Final Final Date
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appropriations 958.8 1,809.6 1,185.0 1,413.0 1,488.5 1,664.7 2,060.9 2,320.9 1,840.0 1,497.0
Base Enacted 863.8 1,192.2 1,185.0 1,173.0 1,138.5 1,214.7 1,210.9 1,225.9 1,690.0 1,497.0
Supplemental Appropriations 95.0 * 617.4 0.0 240.0 350.0 450.0 850.0 1,095.0 150.0 0.0
---------------------------------------------------------------------------------------------------------------------
Outlays ** 922.0 1,063.0 1,535.0 1,339.0 1,294.0 2,550.0 2,618.5 2,013.0 1,639.0 N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------
* $69 million was legislated to be transferred to the Bill Emerson Humanitarian Trust.
** as reported in the President's annual budget appendix.

attachment b
Excerpts from FY 2010 International Food Assistance Report
U.S. International Food Assistance Overview
U.S. international food assistance has long played a critical role
in responding to global food insecurity. This tradition continued in FY
2010, with the USG providing more than 2.5 million metric tons (MT) of
commodities to more than 65 million beneficiaries in 73 countries
worldwide. Current U.S. international assistance programs stretch from
sub-Saharan Africa to the former Soviet Union and from Latin America
and the Caribbean to south Asia. These programs have been adaptable and
flexible as food needs have evolved around the world.
Expanded Prepositioning of Commodities
USAID announced a major expansion of its global food aid
prepositioning system in Fall 2010. USAID awarded contracts for six
prepositioning sites, in the United States (Texas), Sri Lanka,
Djibouti, Kenya, South Africa, and Togo.
USAID's prepositioning system operates as part of a modern supply
chain management system. When food aid is needed somewhere, USAID first
uses commodities from the global prepositioning system--either in
warehouses or in transit to them--and then reorders commodities to
replace them. This process allows USAID to maintain a continuous flow
of vital food aid in response to emergencies. Food aid supplies are
stockpiled in or near regions of the world with historically high
emergency food aid needs. This system allowed USAID to respond to the
floods in Pakistan, for example, by dispatching food aid from its
prepositioning warehouse in Djibouti.
Response to Disasters in Haiti and Pakistan
The continued need for humanitarian food assistance was
demonstrated throughout FY 2010, particularly in response to the
earthquake in Haiti and the floods in Pakistan.
After the devastating earthquake in Haiti in January, USAID was the
driving force in rapidly expanding the food aid response to assist
Haitians in need.
USAID's abilities to divert over 6,500 tons of food aid already on
the ground as part of ongoing programs, as well as to purchase 3,564
tons of commercial rice of U.S. origin in Haiti with assistance from
USDA, were critical to jump-starting the large-scale distributions.
USAID also dispatched 14,550 tons of food aid from USAID prepositioned
stocks in Texas. After the initial emergency food response, USAID
transitioned to more targeted distributions to vulnerable groups (e.g.,
women and children under 5) assisting approximately three million
beneficiaries.
After the July floods in Pakistan, USAID dispatched peas and
vegetable oil from USAID's prepositioning site in Djibouti and
contributed approximately $130 million of Title II and Emergency Food
Security Program (EFSP) resources to the World Food Program (WFP) to
ensure food distributions at the start of the floods. With an
additional USAID contribution of $90 million at the end of 2010, WFP
worked to assist more than seven million flood-affected people.
Contribution of Food Aid to Feed the Future
USAID and USDA continue to improve the management of the food aid
programs and to link the programs to the Feed the Future Initiative.
USAID and USDA have increased coordination at both the headquarters and
field levels to ensure that the programs supported country-led
strategies and a whole-of-government approach. Both USAID and USDA have
required applicants for development food aid programs to demonstrate
how proposed projects would support country-led investment plans.
Monitoring and evaluation (M&E) are an increasingly important
component of program management. USDA and USAID continue to review and
update indicators so that, where appropriate, results of food aid
programs can be reported against the Feed the Future Strategic Results
Framework.
Bellmon Estimation for Title II (BEST) Project
The USAID BEST Project continues to conduct independent market
analyses to ensure that USAID complies with the Bellmon Amendment,
which requires that adequate storage facilities be available in a
recipient country upon arrival of a commodity to prevent spoilage or
waste, and that distribution of the commodity in the recipient country
will not result in substantial disincentive or interference with
domestic production or marketing in that country. The USAID BEST
Project has conducted 13 independent market analyses to ensure that
these requirements are met. Studies can be found at http://
www.usaid.gov/our_work/humanitarian_assistance/ffp/bellmonana.html.
New Famine Early Warning Tool
To better link early warning and response to emergencies, USAID
developed a new Famine Early Warning System Network (FEWS NET)
resource--the Food Assistance Outlook Briefing--which provides warning
of potential food assistance needs 6 months in the future. These
predictions are critical because of the time required to purchase and
ship in-kind food aid from the United States. This tool also creates
evidence-based analysis that is useful to USAID and national decision-
makers as they take measures to respond to potential food insecurity.
This monthly outlook can be found at www.fews.net.
USAID's Famine Early Warning Systems Network (FEWS NET)
USAID's Famine Early Warning Systems Network exemplifies the U.S.
commitment to anticipating and responding to humanitarian
vulnerabilities and crises. Using interagency agreements with the U.S.
Geological Survey, National Aeronautics and Space Administration,
National Oceanic and Atmospheric Administration, and USDA, FEWS NET
continues to monitor, collect and analyze, and disseminate critical
data and information on conditions of food availability and access in
the most food insecure countries. FEWS NET provides decision-makers in
the U.S. Government, host country governments, and a variety of other
regional and international partners timely, unbiased, and insightful
early warning and vulnerability information. FEWS NET information
products can be found at www.fews.net.
In response to rising needs for more and better food security
monitoring information in countries not covered by a FEWS NET presence,
and where global drivers of food security are ever more present, USAID,
through FEWS NET, defined, tested, and is currently implementing an
innovative non-presence-based ``remote monitoring'' strategy. This
strategy uses FEWS NET partners to assist in the identification and
early warning of significant changes in food availability and food
access that might potentially lead to a food security crisis. Sectoral
monitoring priorities for remote monitoring include weather and
climate, crop condition and output, food markets and trade, and
livelihoods. Data to monitor these priority areas is gathered from FEWS
partners NOAA, NASA, USDA and the USGS, as well as satellite imagery
and in-country sources.
FEWS NET also uses remote monitoring for some countries where
direct monitoring does not occur. This light form of monitoring has
already provided important evidence for decision-making in Yemen, where
it challenged the accuracy of nutritional surveys in the north, and in
Tajikistan where it provided important context for understanding the
limited food security implications of a drop in remittances to the
country.
Monitoring and Evaluation (M&E)
In 2010, through its cooperative agreement with the Food and
Nutrition Technical Assistance project (FANTA), USAID's Office of Food
for Peace launched Discussion-TIIME, a free e-mail listserv and website
where Food for Peace Title II monitoring and evaluation practitioners
can learn from each other and have access to technical expertise. The
listserv and website are geared especially to those practitioners in
the field working on USAID Title II development and emergency
assistance programs. The goals of Discussion-TIIME are to promote the
professional development of development and emergency food assistance
M&E staff; to help introduce new staff to Title II M&E and to keep
experienced staff abreast of emerging issues; and to improve the
quality of Title II M&E.
Food Aid Quality
In December 2010, USAID's Office of Food for Peace issued a draft
report with recommendations for public comment from a 2 year Food Aid
Quality Review (FAQR). The review, a collaborative effort undertaken
with Tufts University Friedman School of Nutrition, and in consultation
with industry, PVOs, technical experts, UN agencies, and others, aimed
to identify ways to better match the nutritional quality of Title II
food aid with the nutritional requirements of vulnerable populations
overseas.
Given new understandings in nutrition science and the importance of
nutrition during the 1,000 days between a child's conception and 2
years of age, the review identified the need to focus on the
nutritional requirements of older infants, young children, and pregnant
and lactating women. The recommendations focused on:

Reformulating fortified, blended foods by enhancing
micronutrient content and adding animal protein to improve both
absorption and growth;

Improving both composition and use of fortified vegetable
oil;

Improving fortified cereals used in general food
distributions;

Using ready-to-use products when appropriate;

Modifying programming guidance so that the quality
improvements can be used more cost-effectively to achieve
specific nutritional outcomes; and

Changing the processes used to approve new products, develop
specifications, procure, and monitor the use of food aid
commodities.

The final report will be issued in April 2011. The implementation
of these recommendations should dramatically enhance the nutritional
impact of food aid rations in both emergency and development settings.
Technical Capacity Building
In 2010, USAID awarded a Technical and Operational Performance
Support (TOPS) Program to advance networking among Title II emergency
and development partners through training and information sharing on
best practice and lessons learned. The near term priorities of TOPS are
commodity management, nutrition and food technology, social and
behavior change, and gender equity. TOPS works closely with and
complements the work of FANTA, which is engaged in a number of
important research studies on issues such as household dietary
diversity and developing exit strategies that will inform future
programming guidance.
Gender
During 2009-2010, USAID, with the support of the FANTA, led a
process to develop a framework that will enable Food for Peace to
enhance its focus on gender integration into Title II programs. The
review and consultative process, as well as recommendations that
emerged, are summarized in Occasional Paper #7 Gender Integration in
USAID/DCHA Office of FFP Operations. This Occasional Paper is located
at www.fantaproject.org. Some key recommendations include developing
comprehensive guidelines specific to gender and food security for
effective monitoring and evaluation of Title II programming,
strengthening staff competencies on gender integration in food
security, and supporting pilot efforts to determine how best to empower
women in food assistance programming.
Program Descriptions and Fiscal Year 2010 Accomplishments
2. Title II: Emergency and Private Assistance (Development)
Programs:

Administered by the USAID Office of Food for Peace in the Bureau
for Democracy, Conflict, and Humanitarian Assistance (DCHA), in FY
2010, Title II programs (emergency and development) provided more than
2.1 million MT of commodities, with a program cost of approximately
$1.9 billion, to assist approximately 55 million people in 46
countries.
Title II programs focus to reduce food insecurity in vulnerable
populations and improve resiliency to shocks--an essential first step
toward household self-sufficiency and economic independence. In support
of this approach, Title II development programs incorporate many
activities to strengthen local capacity to respond to natural
disasters.

a. Title II: Emergency Programs:

Title II emergency programs aim to address two forms of
emergencies: natural disasters, such as floods or droughts, and complex
emergencies characterized by a combination of natural disaster,
conflict, and insecurity. All of these elements pose substantial
programmatic and operational challenges in responding effectively to
the needs of food-insecure populations.
In FY 2010, Title II emergency programs provided more than 1.6
million MT of emergency food aid, with a program cost of more than $1.5
billion, to help alleviate malnutrition and hunger in 27 countries. In
all, Title II emergency programs reached approximately 46.5 million
food-insecure people in 27 countries in FY 2010.

Food for Peace Title II: Emergency Program Highlights:

Ethiopia: Throughout the first 9 months of 2010, most regions
experienced normal to above normal rainfall, thus improving the overall
food security situation, even resulting in suspension of emergency
distributions in the south as of September. However, in parts of the
Amhara, Afar, Oromiya, Tigray, Gambella, and Somali regions the rains
also brought devastating floods and related mudslides that destroyed
crops and displaced people, requiring emergency food rations. In FY
2010, the bulk of Title II assistance, totaling more than $319 million,
was in the form of relief food assistance to flood victims, primarily
distributed through WFP and a relief consortium led by Catholic Relief
Services (CRS).
USAID also continued its support of the Government of Ethiopia's
Productive Safety Net Program (PSNP), by providing approximately $132
million of food assistance through PVO partners to chronically food
insecure populations. In exchange for food (or cash) transfers,
beneficiaries of the PSNP engage in public works projects such as soil
and water conservation, water development, and rural feeder road
construction and maintenance, in order to address the underlying
factors for food insecurity in the beneficiary communities--mainly lack
of availability, access to, and utilization of food resources. As one
example, CRS undertook public works projects for water development,
including excavation of more than 27,000 m3 for ponds, 88 km of
irrigation canals, and more than 7,000 km of trenches for pipelines.
Programs also included crop and livestock management training, training
community focal persons on child malnutrition, and training in
agribusiness skills, among others.
Niger: Due to severe drought, Niger's 2010 harvest could meet less
than a quarter of the country's annual food requirements. A Niger
household food security survey in early 2010 estimated that 3.3 million
people in Niger, representing approximately 22 percent of the overall
population, would be highly or extremely food insecure and require
emergency food assistance to meet basic food needs through September
2010. As a result, in 2010 the Government of Niger launched a large
humanitarian intervention to prevent the worst effects of the food
crisis.
Beginning in November 2009, based on early warning of the crisis,
USAID ordered U.S. food aid for a FY 2010 total of $48.8 million, or
approximately 46,000 MT, which it distributed through WFP and two PVOs.
In addition, USAID made three awards, totaling $26.8 million, under
the EFSP to complement the Title II assistance already given. These
grants helped assist 1.7 million individuals affected by drought by
providing beneficiaries with locally purchased food and vouchers for
the purchase of food in local markets. This EFSP program gave USAID and
its partners the flexibility to fill a critical food aid gap in
response to emergency food aid needs in Niger.
Continued food assistance will be needed in 2011 in order to
address the high acute malnutrition rates and to build capacity within
Niger's agricultural sector to be able to prevent and respond to future
crises.

b. Title II: Private Assistance Programs (Development):

In FY 2010, 16 awardees implemented 42 Title II development food
aid programs in 21 countries. Approximately 500,000 MT of food
assistance, valued at more than $400 million, was used to support
programs that benefited more than 7.9 million people.

Food for Peace Title II: Development Program Highlights:

Guatemala: Guatemala has the highest national level of chronic
malnutrition in the Western Hemisphere and one of the highest in the
world. Food insecurity is most severe in the highlands and some areas
in the east where drought is recurrent and many people eke out a living
on non-irrigated subsistence agriculture.
The USAID Guatemala Food Security Program is one of the largest
Title II food security programs in the Western Hemisphere. It
coordinates with other USAID programs in health, local governance,
enterprise and trade as well as with Government of Guatemala entities,
international organizations and PVOs to reduce food insecurity among
at-risk Guatemalans.
In target municipalities with the highest chronic childhood
malnutrition, the program integrates income generation and maternal/
child health interventions that reduce food insecurity while improving
the family's livelihood and health. USAID implementing partners use
food aid rations for targeted supplementary feeding for 6 to 36 month
old children and pregnant/lactating women, while they work with
families to improve and diversify agricultural production (i.e., soil
management and conservation practices), micro-enterprise, and marketing
activities that augment farm income sources. In just one program
implemented by SHARE, more than 450 farmers were supported with micro-
loans, technical assistance, and commercial relationships in order to
develop their market access. Using food for work, activities are
underway to improve infrastructure in food insecure areas, to ease
communities' access to markets, and to lower business transaction
costs. Through these initiatives, USAID reaches approximately 400
communities and helps 56,000 families each year.
Liberia: Seven years after the end of the conflict in Liberia, the
country is on the road to recovery. Yet threats remain to Liberia's
food security, including residual effects of the war, population
displacement, limited infrastructure, and poor sanitation and water
quality. Countrywide, 30 percent of children are stunted, and 19
percent are underweight. With its agricultural capacity severely
diminished by the conflict, Liberia is working to rebuild its
agricultural sector, with the aim to transition from food aid to
market-driven development.
Building upon the successes of the Catholic Relief Services-led
Liberia Integrated Assistance Program supported by USAID, which ended
in 2010, USAID awarded ACDI/VOCA $40 million over 5 years to implement
the Liberian Agricultural Upgrading, Nutrition and Child Health
(LAUNCH) project to reduce food insecurity. The project will build the
technical and business management skills of Liberian farmers, as well
as work to prevent malnutrition through interventions at the household,
community and facility levels. This will be complemented by
Opportunities Industrialization Centers International's (OICI) program
Health, Agriculture and Nutrition Development for Sustainability
(HANDS) in two of the most food insecure counties of Liberia, Grand
Geddeh and River Ghee. Combined, these projects aim to assist over
300,000 Liberians in the first year of the awards.
Uganda: The hunger situation in Uganda has generally improved over
the last several years. However, hunger challenges remain in distinct
areas, with the northeastern Karamoja region considered the most food
insecure. The combination of frequent natural disasters, gun violence,
severe environmental degradation, extreme poverty, poor hygiene, and
other factors has eroded people's capacity to cope with repeated
shocks. One particular population vulnerable to food insecurity is
displaced persons returning to their land, who may not have the
agricultural inputs necessary to begin farming again.
To respond to the chronic food insecurity, USAID has given multi-
year development awards to ACDI/VOCA and Mercy Corps. In 2010, USAID
allocated $25 million to assist more than 320,000 individuals.
Projects undertaken in 2010 have included improving agricultural
yields, creating food producer groups and women's gardening groups,
improving sanitation and hygiene through construction of latrines and
water wells, and opening of access roads to assist farmers in taking
their products to market. As just two examples, in 2010 Mercy Corps
established 95 new producer groups in the Kitgum and Pader districts,
and 54 km of road were constructed in these same districts using food
for work. Together with other initiatives, these projects take a
holistic approach to addressing food insecurity.
In addition, USAID awarded $15 million of emergency assistance to
WFP in 2010 for drought-stricken areas and refugee assistance.
Bangladesh: In a country of 156 million people, 45 percent of the
population does not meet their minimum food requirements. Approximately
37 percent of children under 5 are underweight, and over 48 percent
suffer from stunting.
In 2010, USAID contributed $42 million of Title II development
funds, amounting to 94,340 MT of food aid, to develop the agricultural
sector, improve maternal and child health and nutrition, strengthen
livelihoods and entitlements, empower women, increase disaster
preparedness, and other initiatives. Three Title II partners in
Bangladesh--CARE, ACDI/VOCA, and Save the Children--aim to assist over
580,000 households in some of the poorest and most marginalized
communities over the course of their multi-year development programs.
As one example, CARE's Strengthening Household Ability to Respond to
Development Opportunities (SHOUHARDO) program has already reduced
stunting by 28 percent in targeted communities. It has also provided
business training for over 6,000 female entrepreneurs, and increased
income by 128 percent, among other successes.

c. International Food Relief Partnership:

In November 2000, the U.S. Congress passed the International Food
Relief Partnership (IFRP) Act. The law, which was renewed and extended
under the 2008 Farm Bill, enables USAID to award grant agreements to
eligible U.S. nonprofit organizations to produce and stockpile shelf-
stable, prepackaged commodities. Through the IFRP program, commodities
are made available to eligible nonprofit U.S. organizations and
international organizations for transportation, delivery and
distribution in emergency food aid relief programs.
In FY 2010, FFP awarded approximately $8.9 million in Title II IFRP
production and distribution grants. Over the course of the FY, 24 IFRP
distribution grants were awarded to 17 U.S.-based nonprofit
organizations. IFRP awardees distributed commodities to over 312,415
beneficiaries in 17 countries.
The organizations that received grants in FY 2010 to transport and
distribute the commodities were: Food for the Hungry, ADRA, Amigos
Internacionales, Batey Relief Alliance, Church of Bible Understanding,
CitiHope International, Counterpart International, Cross International,
Evangelical International Ministries, International Partnership for
Human Development, International Relief Teams, Medical Missionaries,
Nascent Solutions, Planet Aid, Project Concern International, Resource
and Policy Exchange, and World Help.

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, Recipient, and Tonnage--Fiscal Year
2010
----------------------------------------------------------------------------------------------------------------
Recipients Total Cost
Country Awardee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burundi WFP Cornmeal, Corn Soy Blend, 3 3,240 $3,578.1
Vegetable Oil, Yellow Peas
Cameroon WFP Rice 81 3,350 $4,550.1
Central African WFP Cornmeal, Corn Soy Blend, Yellow 1,538 3,830 $5,953.1
Republic Split Peas
Chad WFP Cornmeal, Corn Soy Blend, Rice, 5,614 70,310 $98,217.6
Sorghum, Vegetable Oil, Wheat,
Wheat Flour, Yellow Split Peas
Democratic Republic WFP Cornmeal, Corn Soy Blend, 445 59,280 $85,699.3
of the Congo (DRC) Vegetable Oil, Yellow Split Peas
Djibouti WFP Corn Soy Blend, Rice, Wheat Flour, 365 2,040 $2,128.7
Yellow Peas
Ethiopia CARE Vegetable Oil, Wheat, Yellow Split 31 290 $125.2
Peas
CRS Corn Soy Blend, Sorghum, Vegetable 24 227,870 $126,796.9
Oil, Wheat, Yellow Split Peas
REST Vegetable Oil, Wheat, Yellow Split 696 45,730 $23,544.6
Peas
SCF Vegetable Oil, Wheat, Yellow Split 215 11,080 $9,027.6
Peas
WFP Corn Soy Blend, Pinto Beans 644 324,200 $230,048.1
Vegetable Oil, Wheat, Yellow
Split Peas
Kenya WFP Cornmeal, Corn Soy Blend, Sorghum, 2,121 109,840 $101,975.4
Vegetable Oil, Wheat Flour,
Yellow Split Peas
Madagascar WFP Sorghum, Yellow Peas, Yellow Split 1,501 5,630 $4,511.6
Peas
Niger CRS Bulgur, Corn Soy Blend, Great 194 8,060 $8,909.9
Northern Beans, Lentils,
Vegetable Oil
CPI Corn Soy Blend, Rice, Vegetable 42 2,310 $2,851.9
Oil
WFP Bulgur, Corn Soy Blend, Lentils, 13 20,340 $36,974.5
Rice, Sorghum, Vegetable Oil
Republic of Congo WFP Rice, Vegetable Oil, Yellow Split 195 2,980 $4,793.8
Peas
Rwanda WFP Corn, Cornmeal, Corn Soy Blend, 537 2,980 $4,167.2
Pinto Beans, Vegetable Oil
Somalia WFP Corn Soy Blend, Sorghum, Vegetable 4 18,650 $15,002.6
Oil, Yellow Split Peas
Sudan NPA Lentils, Sorghum, Vegetable Oil 123 2,660 $5,493.0
WFP Corn Soy Blend, Lentils, Sorghum, 49 315,840 $270,162.3
Vegetable Oil, Yellow Split Peas
Tanzania WFP Cornmeal, Corn Soy Blend, Green 198 5,950 $6,051.2
Split Peas, Vegetable Oil
Uganda WFP Corn Soy Blend, Cornmeal, Pinto 3,837 15,530 $15,334.5
Beans, Sorghum, Vegetable Oil,
Yellow Split Peas
Zimbabwe CRS Bulgur, Pinto Beans, Vegetable -- 6,460 $22,713.9
Oil, Yellow Split Peas
WFP Bulgur, Sorghum, Vegetable Oil, 11 24,470 $38,428.8
Yellow Peas, Yellow Split Peas
WVUS Unspecified Commodities -- -- $18,308.3
-------------------------------------------------------------------------------------------
Sub-Total Africa 18,481 1,292,920 $1,145,348.2
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan WFP Wheat, Wheat Flour, Vegetable Oil 29 43,810 $42,630.3
Algeria WFP Great Northern Beans, Lentils, 125 6,550 $6,212.6
Rice, Vegetable Oil, Wheat Flour
Laos WFP Rice 175 3,280 $3,342.7
Nepal WFP Garbanzo Beans, Rice, Vegetable 549 4,620 $4,130.3
Oil, Yellow Split Peas
Pakistan WFP Rice, Vegetable Oil, Wheat Flour, 43 110,210 $96,850.8
Yellow Split Peas
Philippines WFP Rice, Vegetable Oil 3 15,200 $15,757.8
Sri Lanka WFP Lentils, Vegetable Oil, Wheat, 4 22,230 $17,821.5
Wheat Flour, Yellow Split Peas
Yemen WFP Great Northern Beans, Pinto Beans, 995 13,880 $12,699.7
Vegetable Oil, Wheat, Wheat
Flour, Yellow Split Peas
-------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 1,923 219,780 $199,445.7
----------------------------------------------------------------------------------------------------------------
Central Asia
----------------------------------------------------------------------------------------------------------------
Tajikistan SCF Lentils, Vegetable Oil, Wheat 90 5,970 $9,817.1
Flour
-------------------------------------------------------------------------------------------
Sub-Total Central Asia 90 5,970 $9,817.1
----------------------------------------------------------------------------------------------------------------
Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Colombia WFP Pinto Beans, Rice, Vegetable Oil, 1,590 8,260 $9,057.8
Wheat Flour
Ecuador WFP Lentils, Vegetable Oil, Wheat 19 820 $814.3
Flour
Guatemala CRS Corn Soy Blend, Pinto Beans, Rice, 207 4,440 $7,404.4
Vegetable Oils
SCF Corn Soy Blend, Pinto Beans, Rice, 10 3,190 $7,436.7
Vegetable Oil
WFP Black Beans, Corn Soy Blend, 470 2,090 $2,572.1
Vegetable Oil
Haiti ACDI/VOCA Bulgur, Corn Soy Blend, Yellow 150 2,430 $3,184.3
Peas
CRS Bulgur, Corn Soy Blend, Green 128 18,000 $19,563.6
Peas, Pinto Beans, Vegetable Oil
WFP Black Beans, Corn Soy Blend, Pinto 6 64,490 $85,066.8
Beans, Rice, Vegetable Oil,
Yellow Peas
WVUS Bulgur, Corn Soy Blend, Lentils, 10 30,400 $32,839.8
Pinto Beans, Vegetable Oil
-------------------------------------------------------------------------------------------
Sub-Total Latin America/Caribbean 2,590 134,120 $167,939.8
=========================================
Worldwide Total 23,084 1,652,790 $1,522,550.8
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Final Budget Summary Report, January 11, 2011.
Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from Food for
Peace Information System report, January 3, 2011. Recipient values are reflective of commodity rations and are
derived separately from program beneficiary totals. Recipient values reported as zero or low typically are due
to either monetization of commodities (thus no recipients), or the late distribution of commodities carried
over from the previous fiscal year that prevented reporting.
Table does not include IFRP awardees. See page 14 for a list of awardees and page 38 for the country list.

Appendix 5: USAID Title II Development Activities: Summary Budget, Commodity, Recipient and Tonnage--Fiscal Year
2010
----------------------------------------------------------------------------------------------------------------
Recipients Total Cost
Country Awardee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso CRS Bulgur, Cornmeal, Lentils, Rice, 103 8,920 $12,957.5
Vegetable Oil
Burundi CRS Bulgur, Cornmeal, Corn Soy Blend, 430 12,690 $7,510.8
Vegetable Oil, Wheat, Yellow Peas
Chad Africare Bulgur, Wheat Flour Bread 27 4,840 $5,675.0
Democratic Republic ADRA Cornmeal, Green Peas, Wheat 20 12,660 $4,991.1
of the Congo
FHI Cornmeal, Vegetable Oil, Wheat 24 12,310 $5,577.2
MCI Cornmeal, Vegetable Oil, Wheat, 87 10,150 $5,006.1
Yellow Split Peas
Ethiopia CARE Lentils, Vegetable Oil, Wheat, 185 18,490 $13,072.0
Yellow Peas
CRS Bulgur, Corn Soy Blend, Rice, 224 25,040 $14,981.8
Vegetable Oil, Wheat, Yellow
Split Peas
FHI Vegetable Oil, Wheat, Yellow Peas 187 18,840 $11,662.6
REST N/A -- -- $3,239.4
SCF-UK * Lentils, Vegetable Oil, Wheat, 557 32,660 $19,159.1
Yellow Peas
Liberia ACDI Bulgur, Corn Soy Blend, Rice, 106 8,150 $8,427.4
Vegetable Oil, Wheat, Yellow
Split Peas
OICI Rice, Soybeans, Soy Flour, Wheat 208 7,100 $6,572.8
Flour
Madagascar CRS Corn Soy Blend, Rice, Sorghum, 260 14,340 $17,111.0
Vegetable Oil
Malawi CRS Corn Soy Blend, Crude Vegetable 29 17,190 $18,000.1
Oil, Pinto Beans, Wheat,
Vegetable Oil
Mali Africare Bulgur, Vegetable Oil 32 1,650 $2,434.5
CRS Bulgur, Corn Soy Blend, Green 72 4,800 $7,806.1
Split Peas, Vegetable Oil
Mauritania CPI Bulgur, Corn Soy Blend, Lentils, 62 7,820 $5,000.1
Vegetable Oil, Wheat
Mozambique ADRA Wheat -- 10,000 $4,042.8
FHI Wheat -- 8,820 $3,413.6
SCF Wheat -- 17,480 $7,309.0
WVUS Wheat -- 12,740 $4,789.9
Niger Africare Bulgur, Corn Soy Blend, Red Beans, 40 4,510 $4,054.6
Rice
Counterpart Corn Soy Blend, Rice, Vegetable 5 3,380 $3,754.1
Oil
CRS Bulgur, Rice 16 7,260 $7,191.3
Sierra Leone ACDI/VOCA Corn Soy Blend, Rice, Vegetable 10 10,800 $11,999.9
Oil, Wheat Flour
Sudan ADRA Lentils, Vegetable Oil 47 2,030 $30,293.1
Uganda ACDI/VOCA Corn Soy Blend, Wheat, Vegetable 504 20,010 $16,046.4
Oil
MCI Corn Soy Blend, Cornmeal, Green 8 10,170 $8,953.6
Split Peas, Wheat, Vegetable Oil
Zambia CRS Bulgur, Lentils 10 930 $7,254.2
-------------------------------------------------------------------------------------------
Sub-Total Africa 3,253 325,780 $278,287.1
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan WVUS Rice, Vegetable Oil, Wheat Flour, 2,233 10,290 $15,500.0
Yellow Peas
Bangladesh ACDI/VOCA Lentils, Vegetable Oil, Wheat 45 19,270 $9,000.0
CARE Wheat -- 57,010 $23,000.0
SCF Vegetable Oil, Wheat, Yellow Split 174 18,060 $10,000.1
Peas
India CRS Bulgur, Vegetable Oil 125 7,000 $3,733.7
-------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 2,577 111,630 $61,233.8
----------------------------------------------------------------------------------------------------------------
Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Guatemala
CRS Corn Soy Blend, Crude Vegetable 26 5,760 $5,773.5
Oil, Pinto Beans, Rice, Vegetable
Oil
MCI Corn Soy Blend, Crude Vegetable 102 9,490 $9,458.8
Oil, Pinto Beans, Rice, Vegetable
Oil
SCF Corn Soy Blend, Crude Vegetable 12 4,890 $4,733.1
Oil, Pinto Beans, Rice, Vegetable
Oil
SHARE Corn Soy Blend, Crude Vegetable 16 4,960 $5,034.4
Oil, Pinto Beans, Rice, Vegetable
Oil
Haiti ACDI/VOCA Bulgur, Corn Soy Blend, Wheat 43 8,040 $10,125.2
Flour, Vegetable Oil, Yellow Peas
CRS Bulgur, Corn Soy Blend, Green 90 11,610 $10,498.7
Peas, Vegetable Oil, Wheat Flour
WVUS Bulgur, Corn Soy Blend, Lentils, 127 17,990 $15,870.4
Vegetable Oil, Wheat Soy Blend
-------------------------------------------------------------------------------------------
Sub-Total Latin America 416 62,740 $61,494.1
=========================================
Worldwide Total 6,246 500,150 $401,015.0
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Final Budget Summary Report, January 11, 2011.
Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from Food for
Peace Information System report, January 3, 2011. Recipient values are reflective of commodity rations and are
derived separately from program beneficiary totals. Recipient values reported as zero or low typically are due
to either monetization of commodities (thus no recipients), or the late distribution of commodities carried
over from the previous fiscal year that prevented reporting.

attachment c
Farmer to Farmer Program Examples of Success in Meeting Programmatic
Purpose/Goals
Mr. El-Feki's wife, Neamat, who milks the cows and cares for the
calves, is also following the recommendations to produce clean milk.
The income from the milk production is used to purchase all the grocery
needs for the family. Neamat is now confident that her family and
especially her grandchildren now always have access to clean, healthy
milk.
Volunteer Unites Two Agribusiness Groups
The Carrot Growers Association (CAGA) is an organization of
vegetable producers at Ashanti-Mampong in the Sekyere West District of
the Ashanti Region of Ghana. The association was established in 2007
with a membership of 50 farmers. CAGA members produce 5,000 bags of
carrots each week and market their produce in 50 kg bags in the retail
market. Oftentimes the members are exploited with low prices from the
market women. The leadership of the association lacked adequate
knowledge of how associations should operate to function as a business
entity. An organizational development volunteer, Diana Lilla, worked
with CAGA to develop a strategic business plan with step-by-step
implementation procedures for the association. Diana also trained the
leadership on methods to improve services rendered to their members.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Diana Lilla with members of CAGA.

With the lobbying efforts of the volunteer, CAGA was able to secure
100 acres of land from the local chief, Nana Osei Bonsu, for the
farmers to expand their activities. Diane also succeeded in uniting
CAGA with a sub association, the carrot marketing association, to form
the Carrot Growers and Marketers Association. This combination will
further increase services available to members of the new association.
The increased opportunity to access services through the association
enticed more farmers to enroll as members of the group, and the
membership has grown from 50 to 211 farmers.
Volunteer Introduces a New Product to Improve Children's Health and
Nutrition in Rural Mali
Malnutrition threatens the life of many Malian children. With 72%
of the country living off of less than $1/day, many families do not
have access to nutritious food to feed their children. In turn, these
children are underweight and lethargic, and some even face the
inevitable--death.
In order to provide nourishment for Malian people and to cut the
import costs on milk and dairy products, the Government of Mali sought
to develop local milk production and collection points. The government
accomplished this by creating milk centers throughout the country to
produce higher concentrations of fresh milk and to meet the demand for
fresh milk during the dry season. While this venture was very
successful, producers and retailers were faced with the problem of
spoilage due to the short shelf life of fresh milk. For this reason,
the FtF program created a volunteer assignment for the Women's Local
Milk Stockist Cooperative and recruited Dr. Poul Hansen for his first
visit in September 2009. Hansen introduced new technologies, which
enabled the cooperative to handle excess milk and develop new products.
Returning to Mali just one year later in August 2010, Hansen was
asked to focus on infant yogurt to supplement infant milk for newborn
orphans and infants who are in need of alternative feeding. Hansen
visited with many of the women members of the Women's Local Milk
Stockist Cooperative around the city of Bamako to assess their
potential and provide a tailor-made, hands-on, technical training. He
taught the co-op members how to process clean and safe regular yogurt,
infant yogurt, as well as Indian ``paneer'' cheese using a thermometer,
particular yogurt cultures, and an incubator. Hansen also talked with
the co-op members about necessary hygiene and sanitation measures. He
went door-to-door to see many of the members at work in their own
households, to determine if they were putting what they learned into
practice. Now, the members of the cooperative are able to produce the
yogurt on their own and can supplement their children's diet with this
important source of nutrition.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Dr. Hansen provides hands-on training to women processors in
the hygiene and sanitation measures of preparing child.

Hansen's assignment received extensive radio and TV coverage for
everyone to follow. At the end of the training sessions, the President
of the Cooperative, Dana Niangadou, proclaimed, ``This is what we've
been talking about--some new ideas to make a difference! Now with this
new infant formula, the nutrition and health status of our children in
need will change for the better, as will the income of women
processors.''
``We wasted a lot of resources on many different training modules
and, so far, none of them compares to the hands-on Volunteer Technical
Assistance we received thanks to the USAID funded Farmer-to-Farmer
Program,'' notes coordinator Moussa Diabate during the closing
ceremony.
Dr. Hansen's last words to Mr. Diabate just before departing Mali
summed up his commitment to the FtF Program, ``This is, with no doubt,
the best assignment I've ever had in all my life, and I would
appreciate Winrock/Mali recruiting me once more to transfer some other
important technologies wherever needed.''
Reducing Post Harvest Losses and Increasing Food Security
Nigerian Farmers Learn to Make New Nutritional Products
Fifty percent of the population in Kaduna State, Nigeria is living
in poverty. Many farmers depend on crops such as yam as both an income
source as well as an important nutrition source for their families.
Nevertheless, despite reasonable productivity, many families still
struggle to feed their children.
During the dry season, fresh yams do not last long. Without proper
post harvest processing and preservation techniques, farmers face the
double consequences of having to discard leftover yam and living with
food insecurity during several months of the year.
Fortunately, for a group of farmers in Kaduna State, this is no
longer a problem.
After identifying the need for post-harvest processing and
preservation training, Land O'Lakes, engaged international agriculture
and food science expert, Dr. Ramana Govin, to provide assistance. Dr.
Govin worked with Nehemiah Foundation International, a local service
provider working with 5,250 farmers in four Nigerian states, and a
selected group of 65 farmers in Kaduna, to provide training and
technical assistance on yam processing. He demonstrated methods for
washing, slicing, drying, and pounding the yam into flour. He also
showed the farmers how to apply the same techniques to cassava.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Farmers in Kaduna State practice making yam flour for the first
time.

These techniques reduce post-harvest losses and increase the number
of months that families have a reliable food source. Instead of leaving
leftover yam to rot, farmers can process the yam into flour, which can
be used throughout the year. Immediately after the training, farmers
already started realizing the benefits of what they had learned. After
the first day of the training, one farmer went home, dug some yams, and
processed the yams to make flour, just as Dr. Govin had demonstrated.
He brought the flour to the workshop the next day and stated, ``I never
believed it was possible because of how simple the method seemed, until
I tried it myself.''
Emmanuel Nehemiah of the Nehemiah Foundation states, ``Dr. Govin's
assignment was successful. Before he came, the farmers did not have any
method of processing and preserving yam. The methodologies used are so
simple yet the farmers didn't know about it before now. It has been
very effective for them and beneficial. Many of them are right now
processing and preserving their yams with the new method and they are
happy about it.''
The impacts of this assignment go beyond the 65 farmers who
directly participated. Immediately after Dr. Govin's training, the
farmers met with Nehemiah Foundation and decided to appoint trainers
who will go out and train others in nearby villages. One month later,
25 of these trainers are now branching out into rural communities and
offering instruction in indigenous languages on Dr. Govin's techniques
to additional farmers, enabling even more people to improve their
family's food security.
attached reports
U.S. International Food Assistance Report 2007_January 2008
Under Public Law 480, Section 407(f), ``the President shall prepare
an annual report concerning the programs and activities implemented
under this law for the preceding fiscal year.'' As required, this
report is hereby submitted to Congress.

This Report May Be Ordered From:

USAID Development Experience Clearinghouse
8403 Colesville Road, Suite 210
Silver Spring, MD 20910-6368
Telephone: (301) 562-0641
Fax: (301) 588-7787
URL: http://www.dec.org/
Table of Contents
Executive Summary
Introduction
I. Food Security
II. U.S. International Food Assistance

A. Public Law 480

P.L. 480 Title I: Trade and Development Assistance
P.L. 480 Title II: Emergency and Non-Emergency Assistance
P.L. 480 Title III: Food for Development
P.L. 480 Title V: John Ogonowski Farmer-to-Farmer Program

B. Section 416(b) of the Agricultural Act of 1949: Surplus
Commodities
C. Food for Progress
D. McGovern-Dole International Food for Education and Child Nutrition
Program
E. Bill Emerson Humanitarian Trust

III. Appendices

Appendix 1: List of Abbreviations
Appendix 2: List of Partner Organizations
Appendix 3: USDA Title I Program: Food for Progress Grants--Fiscal
Year 2007
Appendix 4: USAID Title II Emergency Activities: Summary Budget,
Commodity, andTonnage--Fiscal Year 2007
Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget,
Commodity,Recipient, and Tonnage Tables--Fiscal Year 2007
Appendix 6: USDA Food for Progress Program--CCC-funded Grants--Fiscal
Year 2007
Appendix 7: McGovern-Dole International Food for Education and Child
Nutrition Program--Fiscal Year 2007: Donations by Country and
Cooperating Sponsor
Appendix 8: Public Law 480 Title II Congressional Mandates--Fiscal
Year 2007
Appendix 9: Countries with Approved U.S. Food Assistance Programs--
Fiscal Year 2007
Executive Summary
The United States is committed to the goal of global food security
through its international food assistance and other foreign assistance
programs. In Fiscal Year (FY) 2007, the United States provided more
than $2.1 billion of food aid to 78 developing countries, reaching tens
of millions of people worldwide. The following summary shows U.S. food
assistance allocated by legislative authority for FY 2007.\1\
---------------------------------------------------------------------------
\1\ All costs represent commodities plus freight and distribution.

------------------------------------------------------------------------
U.S. Dollars
Program Tonnage (MT) (Millions)
------------------------------------------------------------------------
P.L. 480 Title II * 2,127,804 $1,870
------------------------------------------------------------------------
Subtotal P.L. 480 Title II 2,127,804 $1,870
------------------------------------------------------------------------
Food for Progress:
Title I-funded 23,210 $17
CCC-funded 240,630 $113
------------------------------------------------------------------------
Subtotal Food for Progress 273,840 $130
------------------------------------------------------------------------
Section 416(b) ** 5,000 $20
------------------------------------------------------------------------
Subtotal 416(b) 5,000 $20
------------------------------------------------------------------------
Food for Education 103,230 $99
------------------------------------------------------------------------
Subtotal Food for Education 103,230 $99
------------------------------------------------------------------------
Bill Emerson Humanitarian Trust -- --
Farmer-to-Farmer (FTF) -- $10
------------------------------------------------------------------------
Subtotal Bill Emerson and FTF -- $10
=====================================
Grand Total 2,509,874 $2,129
------------------------------------------------------------------------
* Values provided for P.L. 480 Title II include $25 million in 202(e)
for WFP, $16 million in general contribution to WFP, $20 million in
freight overruns. These costs are offset by $201 million in funding
adjustments ($192.3 million of carry-in and $9.6 million in MARAD
reimbursements).
** Commodities shipped in FY 2007 were associated with prior year
agreements on an ``as available'' basis. There was no new 416(b)
programming approved in FY 2007.

Over the course of FY 2007, USAID and USDA international food
assistance programs have proven increasingly responsive to global
efforts at reducing food insecurity and targeting those most in need.
By responding to assessment and situational information, focusing on
reducing risk and vulnerability, targeting the poorest of the poor, and
better integrating individual programs into larger--often
international--efforts, the U.S. Government aims to improve the
effectiveness of aid and to reach global targets for reducing hunger,
malnutrition and poverty.
This aid is essential in emergency situations, including the
ongoing crisis in Sudan. In FY 2007, more than 354,630 MT of USAID
Title II commodities, valued at $356 million, were provided to an
estimated 6.4 million beneficiaries in Sudan alone. Meanwhile, in
Zimbabwe, 88,900 MT of emergency food assistance helped almost 700,000
people cope with the dual burdens of a deteriorating economic situation
and poor agricultural performance. Finally, recognizing the importance
of linking development opportunities within a relief setting,
Ethiopia's Productive Safety Net Program continued to implement
activities that targeted both chronic and acute malnutrition, to the
benefit of over seven million individuals. In all, over 32 million
people benefited from emergency food aid activities provided through
Title II.\2\
---------------------------------------------------------------------------
\2\ Updated as of April 21, 2008.
---------------------------------------------------------------------------
At the same time, USAID non-emergency programs continued to focus
on increasing agricultural production, and supporting programs to
address health, nutrition, HIV and others aimed at investing in people.
Special emphasis is placed on combating the root causes of hunger and
malnutrition, and interventions are often multi-sectoral in nature as a
result. Over the course of the year, more than 8.6 million people in 26
countries benefited from USAID Title II non-emergency food assistance.
USDA Title I, 416(b), and Food for Progress programs provided
commodities to food-insecure populations through The World Food
Programme (WFP), private voluntary organizations (PVOs) and foreign
governments. These resources supported a variety of food security
objectives in developing countries, such as humanitarian assistance,
HIV mitigation, and agricultural and rural development. In FY 2007,
USDA continued the McGovern-Dole International Food for Education and
Child Nutrition Program, providing commodities for school feeding as
well as nutrition programs for mothers, infants, and children under 5,
positively impacting the lives of more than 3.3 million beneficiaries.
Introduction
Since the passage of P.L. 480 in 1954, U.S. international food
assistance programs have evolved to address multiple objectives. The
most recent changes came with the Farm Security and Rural Investment
Act of 2002. The `2002 Farm Bill' restated the objectives that guide
U.S. food assistance programs. These objectives are:

Combat world hunger and malnutrition and their causes;

Promote broad-based, equitable, and sustainable development,
including agricultural development;

Expand international trade;

Develop and expand export markets for U.S. agricultural
commodities;

Foster and encourage the development of private enterprise
and democratic participation in developing countries; and

Prevent conflicts.
U.S. International Food Assistance
The U.S. international food assistance program is established by
several legislative authorities implemented by two Federal agencies.
USAID administers Titles II, III, and V of P.L. 480. USDA administers
Section 416(b) of the Agricultural Act of 1949, Title I of P.L. 480,
Food for Progress, and McGovern-Dole International Food for Education
and Child Nutrition. The list below provides a brief description of
each activity.

1. P.L. 480: Agricultural Trade Development and Assistance Act of
1954 (Food for Peace)--the principal mechanism for U.S.
international food assistance.

P.L. 480 Title I: Trade and Development Assistance--
concessional sales of U.S. agricultural commodities to
developing countries and private entities.

P.L. 480 Title II: Emergency and Development
Assistance--direct donation of U.S. agricultural
commodities for emergency relief and development.

P.L. 480 Title III: Food for Development--government-to-
government grants of agricultural commodities tied to
policy reform.

P.L. 480 Title V: Farmer-to-Farmer (FTF) Program--
voluntary technical assistance to farmers, farm groups and
agribusinesses.

2. Section 416(b) of the Agricultural Act of 1949--overseas
donations of surplus food and feed grain owned by the USDA
Commodity Credit Corporation (CCC).

3. Food for Progress Act of 1985--commodity donations available to
emerging democracies and developing countries committed to the
introduction or expansion of free enterprise in their
agricultural economies.

4. McGovern-Dole International Food for Education and Child
Nutrition Program (authorized in the 2002 Farm Bill)--donations
of U.S. agricultural products, as well as financial and
technical assistance, for school feeding and maternal and child
nutrition projects in low-income countries.

5. Bill Emerson Humanitarian Trust (originally authorized by the
Agricultural Trade Act of 1980)--food reserve administered
under the authority of the Secretary of Agriculture. This
reserve is available to meet emergency humanitarian food needs
in developing countries, allowing the United States to respond
to unanticipated food crises.
I. Food Security
Defining a Long-Term Global Strategy
U.S. international food assistance has long played a critical role
in responding to global food insecurity. This tradition continued in FY
2007, with the U.S. Government providing over 2.5 million metric tons
of commodities. The implementing programs have also evolved to reflect
greater understanding of (and a focus on addressing) the causes of
famine, food emergencies, and large-scale hunger around the world. In
the 1990 Farm Bill, for example, food security was narrowly defined as
dependent primarily on the availability of food at the national level.
It was broadened in a 1992 policy paper to begin to address
distribution and nutritional quality, calling for ``all people at all
times [to] have both physical and economic access to sufficient food to
meet their dietary needs for a productive and healthy life.'' \3\ This
definition includes three elements judged essential to achieving food
security, and forms the basis for much of the U.S. Government's
international food assistance activity:
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\3\ USAID Policy Determination Number 19, April 1992.

Food availability: sufficient quantities of food from
household production, other domestic output, commercial imports
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or food assistance.

Food access: adequate resources to obtain appropriate foods
for a nutritious diet, which depends on income available to
households and on the price of food.

Food utilization: a diet providing sufficient calories and
essential nutrients, potable water and adequate sanitation, as
well as household knowledge of food storage and processing
techniques, basic principles of nutrition and proper child care
and illness management.

In recent years, attention has focused on the continued challenges
that hamper efforts at reducing global food insecurity. Progress has
been uneven across the developing world, with some countries in all
regions gaining and others losing ground. International food assistance
programs also face increasingly frequent and severe natural and man
made disasters with growing humanitarian demands on both U.S. and
international humanitarian assistance resources.
Improving the Efficiency and Effectiveness of International Food
Assistance
In April 2007, the Government Accountability Office (GAO) issued a
report entitled ``Foreign Assistance: Various Challenges Impede the
Efficiency and Effectiveness of U.S. Food Aid.'' \4\ This report
captured the results of extensive assessments of U.S. Government
international food assistance programs and contained recommendations
for USAID and USDA to improve the efficiency and effectiveness of their
food aid programs. Since the document was released, USAID and USDA have
taken a number of steps to address the issues highlighted in the
report. These include:
---------------------------------------------------------------------------
\4\ ``Foreign Assistance: Various Challenges Impede the Efficiency
and Effectiveness of U.S. Food Aid'' (GAO-07-560) (April 2007).

expanding monitoring of food aid in the two largest, most
complex emergency programs (Sudan and Zimbabwe) and formally
requesting that Congress provide authority to use Title II to
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support monitors for non-emergency programs;

reviewing how to improve food aid logistics by awarding a
contract for an independent review of various logistics options
and exploring long-term maritime service contracts;

improving assessments by collecting and starting to index
PVO assessment tools to expand utility; and

updating food aid specifications by issuing a solicitation
for an independent review of the nutritional quality and cost
effectiveness of food aid commodities.

FY 2007 saw increased inter-agency cooperation between USAID and
USDA in several critical actions. In an effort to make the Food Aid
Consultative Group (FACG) more consultative, USDA and USAID spearheaded
the creation of an Executive Committee (EXCOM), providing leadership
for the overall agenda and critical discussion points for FACG members.
EXCOM is composed of two representatives from USAID, USDA, the
commodities industry and PVOs, plus observers from the transportation
industry.
USAID and USDA also began collaborating on a comprehensive review
of food aid specifications and products, including: a thorough
initiation of contracting procedures; an evaluation of USDA product
specifications; and a review of options on nutritional quality and cost
effectiveness of commodities currently provided as food aid, in order
to ensure that the food meets the nutritional requirements necessary to
address beneficiaries' needs.
USAID's Famine Early Warning System (FEWS NET)
Saving lives and preventing famine are key objectives of the U.S.
Government. FEWS NET is a USAID-funded activity that collaborates with
international, national and regional partners to monitor, collect and
disseminate critical data on conditions of food availability and
access, as well as the environmental and socioeconomic hazards that
lead to food insecurity and famine. The goal of FEWS NET is to inform
efforts to manage the risk of food insecurity through the provision of
timely and analytical early warning and vulnerability information, so
that decision makers have ample time to prepare and take preventive
action. In 2007, FEWS NET had 23 offices that covered 25 countries.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

FEWS NET exemplifies the U.S. commitment to anticipating and
responding to humanitarian vulnerabilities and crises. FEWS NET has
interagency agreements with U.S. Geological Survey (USGS), National
Aeronautics and Space Administration (NASA), National Oceanic and
Atmospheric Administration (NOAA) and USDA that provide information to
the U.S. Government, local governments and a variety of other regional
and international partners to assist in averting famine.
Food for Peace's Institutional Capacity Building Grants
FFP's Institutional Capacity Building grants (ICBs) give PVOs funds
to build their organizational capacity. This pertains to both
headquarters and field management of Title II programming. ICB grants
allow groups to enrich their knowledge, enhance their Title II program
management and practices, and better serve their communities.
Currently, the funds are used for training, travel, workshops,
assessments, equipment, tool development and activities that enable
each organization to strengthen itself from within and also to mentor
and to partner with other Title II PVOs and/or sub-recipients. The 14
participating organizations began their programs in FY 2004 and will
conclude at the end of FY 2008.\5\
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\5\ ACDI/VOCA, Adventist Development & Relief Agency International
(ADRA), Africare, American Red Cross, CARE, Catholic Relief Services
(CRS), Counterpart International (CPI), Food for the Hungry (FHI), Land
O'Lakes, Inc. (LOL), Mercy Corps International (MCI), Opportunities
Industrialization Centers International (OICI), Project Concern
International (PCF), Save the Children Federation (SCF) and World
Vision, Inc. (WV).
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To capitalize on positive achievements and capture projects already
in development, FFP has encouraged the grantees to focus on exit
strategies and how to preserve the results of their success.
Additionally, FFP created an index that captures all of the tools that
have been developed by the PVOs using ICB funds. The index will be
distributed to the PVOs and be posted in two online databases.
In FY 2007, FFP conducted extensive reviews of the grantees' mid-
term evaluations, annual performance reports, annual work plans and
plans for a final evaluation. Following these reviews, the findings,
common themes and suggested areas for greater focus and attention in
the future were noted and shared with grantees. For example, grantees
were encouraged to prioritize their ICB activities and increase
linkages to Title II programs for greater impact. In addition, the
findings stressed the importance of capturing lessons learned and
success stories, to both enhance and foster program performance and
innovation.
A Conceptual Framework for Integrating Food Aid and HIV Programs
In many countries, there is a complex interface between chronic
food insecurity and HIV. While there is already close collaboration
between FFP P.L. 480 Title II food aid and the President's Emergency
Plan for AIDS Relief (PEPFAR) programs, in mid-FY 2007, FFP and PEPFAR
developed a Conceptual Framework to establish and facilitate a
programmatic continuum to address the nutrition, dietary
supplementation and food security needs of HIV-infected and -affected
populations.\6\ The Conceptual Framework, to be implemented in 2008,
provides guidance to target Title II food aid and to increase
collaboration and joint programming with PEPFAR where possible. For
example, FFP and PEPFAR are mapping program locations so as to identify
priority areas, gaps, and develop a clearer vision of coverage needs,
and working to determine standardized eligibility and exit criteria.
---------------------------------------------------------------------------
\6\ This report is available at http://www.usaid.gov/our_work/
humanitarian_assistance/ffp/pepfar_conceptual.pdf.
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II. U.S. International Food Assistance Program Descriptions and Fiscal
Year 2007 Accomplishments
A. Public Law 480
The primary mechanism of U.S. international food assistance is the
Agricultural Trade Development and Assistance Act of 1954 (P.L. 480),
commonly known as Food for Peace.

1. P.L. 480 Title I: Trade and Development Assistance

The P.L. 480 Title I authority provides funding for both a
concessional sales program, supporting Trade and Development, and for
the Food for Progress grant program, supporting Agricultural
Development in emerging democracies. In FY 2007, no new concessional
sales agreements were made.
The USDA-administered Food for Progress Program, authorized under
the Food for Progress Act of 1985, assists developing countries,
particularly emerging democracies ``that have made commitments to
introduce or expand free enterprise elements in their agricultural
economies through changes in commodity pricing, marketing, input
availability, distribution, and private sector involvement.'' The
program authorizes the Commodity Credit Corporation (CCC) to carry out
the sale and exportation of U.S. agricultural commodities on credit
terms or on a grant basis, with the use of either CCC financing or P.L.
480 Title I funds. Grants under the Food for Progress program are
awarded to governments or PVOs, nonprofit agriculture organizations,
cooperatives, intergovernmental organizations or other private
entities.

a. P.L. 480 Title I: Food for Progress Highlights

In FY 2007, P.L. 480 Title I funding provided 23,210 MT in Food for
Progress assistance, with an estimated value of $17 million. The
summaries below provide examples of Title I-funded Food for Progress
agreements signed in FY 2007.

Afghanistan: USDA donated 8,210 MT of soybean oil to the
Government of the Islamic Republic of Afghanistan. The
government will sell the oil and use the proceeds to finance
agricultural and rural development activities with the
objective of alleviating poverty, creating employment and
promoting economic and agricultural development. This will be
accomplished through support for higher education, rural
extension services, plant and animal disease diagnostics and
control, food safety and natural resource management.

Ethiopia: USDA donated approximately 15,000 MT of wheat to
the Government of Ethiopia to replenish the grain stocks of the
Ethiopian Food Security Reserve Agency, which provides
assistance to food-insecure Ethiopians in times of crisis.

2. P.L. 480 Title II: Emergency and Non-Emergency Assistance

More than 85% of U.S. international food aid is used to respond to
emergency situations and to implement development projects under Title
II, administered by the USAID Office of Food for Peace in the Bureau
for Democracy, Conflict, and Humanitarian Assistance.\7\ In FY 2007,
approximately $1.87 billion, or 2.13 million MT of commodities, was
administered under Title II. In the process, FFP partnered with
cooperating sponsors (CSs) to implement activities in 64 countries
worldwide. These programs benefitted over 40 million people.\8\
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\7\ Total value equivalent. Metric tonnage equivalent is 84%.
\8\ Updated as of April 21, 2008.
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The focus of Title II programs is to reduce food insecurity in
vulnerable populations. This focus on vulnerability to food insecurity
targets improving resiliency to shocks, an essential first step for
household self-sufficiency and economic independence. In support of
this strategy, as well as USAID's overarching goal of saving lives and
reducing suffering, many Title II emergency programs encompass a number
of development-relief transition activities. Similarly, the non-
emergency development portfolio incorporates activities to strengthen
local capacity to respond to famine, natural disasters and complex
emergencies, as well as to provide safety nets in some cases.

a. P.L. 480 Title II: Emergency Programs

Title II emergency programs aim to address two forms of
emergencies: natural disasters, such as floods or droughts; and complex
emergencies characterized by a combination of natural disaster,
conflict and insecurity, a collapse in civil society and/or political
stability. All of these elements pose substantial program and operating
challenges in responding effectively to the needs of food-insecure
populations.
In FY 2007, Title II emergency programs provided 1.5 million MT of
emergency food aid, at a cost of $1.4 billion, to help alleviate
malnutrition and hunger in 30 countries.\9\ In all, Title II emergency
programs reached approximately 32.2 million food-insecure people in FY
2007.\10\
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\9\ Does not include IFRP programming. See page 11 for details.
\10\ Updated as of April 21, 2008.

---------------------------------------------------------------------------
P.L. 480 Title II: Emergency Program Highlights

C-SAFE/Zimbabwe:

C-SAFE is the Consortium for the Southern Africa Food Security
Emergency, and includes the PVO organizations World Vision, CARE and
Catholic Relief Services (CRS). During FY 2007, the Consortium operated
under exceedingly difficult circumstances that included crop failure,
drought, the world's highest rate of inflation and extreme logistical
difficulties. Although the food security situation in Zimbabwe
continued to deteriorate, C-SAFE worked to prevent a further decline of
the nutritional situation among its 688,000 beneficiaries.
In FY 2007, FFP provided 88,900 MT of food to C-SAFE for
distribution in Zimbabwe. Utilizing six distinct feeding programs, C-
SAFE carried out short-term food transfers through interventions
including food for assets (FFA), safety net feeding, food support for
the chronically ill, supply of subsidized food to urban markets,
emergency school-based feeding and institutional feeding.

WFP/Sudan:

As in previous years, Title II emergency activities played a key
role in the prevention of famine in Darfur, Sudan. In FY 2007, FFP
provided 50 percent of WFP's Sudan appeal, representing more than 67
percent of all contributions received by WFP from all donors. Sizable
and timely contributions from FFP ensured that WFP was able to meet 100
percent of its prepositioning targets for Darfur and Southern Sudan in
2007. This achievement prevented WFP from having to airlift any
commodities to the region, lowering program cost and ensuring timely
commodity deliveries during the most critical time of the year. In
total, WFP reached more than 3.1 million people in Darfur with food
assistance during the critical hunger gap from July-September 2007, and
met, on average, more than 92 percent of its monthly target caseload in
Darfur throughout all of 2007--despite rampant insecurity and regular
attacks on humanitarian staff.
Additionally, Title II emergency assistance was provided to more
than 170,000 newly displaced persons fleeing violence in Eastern Chad
in 2007, while continuing to meet the needs of over 232,000 refugees
from Darfur.

Productive Safety Net Program/Ethiopia:

Working in one of the world's most food-insecure countries,
Ethiopia's Productive Safety Net Program (PSNP) represents an
innovative approach toward combating both chronic and acute
malnutrition. Taking into account the short- and long-term challenges
faced by food-insecure households, the program attempts to
simultaneously stabilize incomes--thus preventing the sale of assets
during hunger periods--and to increase community productivity through
public works projects such as soil and water conservation.
In FY 2007, donor coordination with the Government of Ethiopia
(GOET) continued to be a vital part of the success of the PSNP. The
program reached approximately 7.3 million beneficiaries in chronically
food-insecure households. These beneficiaries received food (45 percent
of beneficiaries) or cash (55 percent of beneficiaries) in return for
participating in public works programs in their communities during the
6 months of the year between harvest and planting season. Results to
date have been promising.
During the year, work centered on establishing graduation criteria
for the 2008 PSNP cycle and discussions on an increase of the wage
rate. Donor/GOET working groups have also established guidelines for
pilot PSNP programs for pastoralist areas that will roll out in 2008 in
Afar, parts of Oromiya, and selected zones of Somali Region. In FY
2007, USAID contributed 244,310 MT worth--to eight cooperating sponsors
implementing the PSNP: CARE, CRS, FHI, Relief Society of Tigray (REST),
SCF, SCF-UK, WV and WFP.

b. P.L. 480 Title II: Non-Emergency Programs

The P.L. 480 Title II development (non-emergency) food aid program
constitutes the single largest source of USAID funding in promoting
long-term food security in such areas as:

1. Agriculture and Natural Resource Management activities.

2. Health and household nutrition activities.

3. Education, Humanitarian Assistance, and Microenterprise.

In FY 2007, 16 cooperating sponsors implemented 78 Title II non-
emergency activities in 26 countries. Approximately 594,840 MT, valued
at $348 million, of food assistance was used to support programs that
benefited an estimated 8.6 million people.

P.L. 480 Title II: Non-Emergency Program Highlights

The examples below illustrate the breadth of Title II non-emergency
food resources implemented by cooperating sponsors as well as how these
activities have helped in allaying food insecurity and fostering self-
sufficiency.

World Vision/Uganda:

World Vision's Development Assistance Program for Gulu and Kitgum
districts of northern Uganda combats high rates of food insecurity
prevalent in that region. In FY 2007, two main areas of programming
were health and nutrition monitoring and agricultural technology and
practices. Activities included 82 nutritional and hygiene-focused
training sessions, with almost 2,500 beneficiaries, mothers and foster
parents participating. Additionally, using improved seeds and
technology, a total of 228,335 tree seedlings were raised at central
demonstration nurseries and community tree planting groups. The
community nurseries scaled up production by 150 percent compared with
FY 2006.

Catholic Relief Services (CRS)/Malawi:

In Malawi, CRS aims to reduce food insecurity of vulnerable
populations by improving agricultural techniques and practices. In FY
2007, the Improving Livelihoods through Increased Food Security (I-
LIFE) DAP program focused on improving program quality and scale by
fine-tuning strategies and realigning interventions based on lessons
learned over its first 2 years of implementation. The program delivered
13,360 MT of commodities and achieved success across all indicators and
results beyond set targets. For example, agricultural production
increased due to improved agriculture practices, use of quality seeds
and increased uptake of winter cropping through small-scale irrigation.
As a result, almost 95 percent of beneficiaries planted improved crop
varieties, representing an impressive (91 percent increase from almost
50 percent last year) adoption of sound agricultural practices. The
value of agricultural production per vulnerable household for the 2
seasons was equivalent to $402.87--a 113 percent increase in income per
vulnerable household from the previous fiscal year.

Save the Children Federation (SCF)/Bangladesh:

During FY 2007, SCF's Jibon-O-Jibika program assisted more than 2.8
million beneficiaries in the Division of Barisal, Bangladesh. Focusing
on enhancing household food security, the program matches critical
health and nutrition interventions alongside activities such as
homestead gardening, vulnerability mapping, emergency preparedness
planning and basic health education services. Some of the greatest
impact was demonstrated in the health sector: Jibon-O-Jibika pioneered
one-stop service delivery to ensure antenatal care, expanded program
for immunization (EPI) and growth monitoring and promotion (GMP) in
combined outreach sessions through joint planning with the Ministry of
Health and PVOs. Combining immunization and growth monitoring
interventions resulted in outcomes that often exceeded program targets:
GMP sessions reached 100 percent coverage (101 percent of goal
achieved) and EPI coverage went up from 87 percent in FY 2005 to 99
percent during FY 2007 (115 percent of goal achieved). SCF delivered
65,440 MT at an approximate value of $10 million.

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Food Assistance in the Fight against HIV

HIV-affected populations often cite food as one of their greatest
needs. HIV can cause and worsen food insecurity and malnutrition among
infected and affected populations, including orphans and vulnerable
children (OVCs). In particular, the infection affects metabolism and
causes wasting, especially in more advanced stages and in the absence
of anti-retroviral therapy (ART). Food insecurity can also lead people
to adopt livelihood strategies that increase the risk of HIV
transmission. During FY 2007, there was increased recognition of the
interrelationship between food and nutrition security and HIV. During
the year, FFP partners continued to provide support to HIV-infected and
-affected food-insecure families in a number of countries including
Ethiopia, Ghana, Kenya, Rwanda, Uganda and Malawi. In addition, FFP and
the PEPFAR collaborated on a conceptual framework for joint work in HIV
and Food Security.
Beginning a new program focusing on the reintegration of Internally
Displaced Persons in Northern Uganda, ACDI/VOCA worked with The AIDS
Service Organization to develop a client eligibility survey for direct
food support. In the first year of this effort, 13,400 beneficiaries
were identified to receive food supplements designed to support their
care. A number of these beneficiaries have since improved their health
enough to be incorporated into agricultural activities and \2/3\ of
these families no longer need to receive food supplementation.
During FY 2007 programming in Malawi, the I-LIFE consortium reached
more than 9,000 households who hosted orphans or had chronically ill
household members. With the inclusion of these vulnerable households in
a range of development activities such as home gardening, irrigation
and Village Savings and Loans groups, beneficiaries were able to
improve their livelihood capacities to a level where they could
graduate from food assistance. In a partnership with PEPFAR and UNICEF,
meanwhile, I-LIFE supported home-based care for the chronically ill,
and staff were trained to improve program quality.
------------------------------------------------------------------------

c. International Food Relief Partnership
In an effort to expand and diversify P.L. 480's sources of food aid
commodities and FFP's current base of implementing partners, the U.S.
Congress created the International Food Relief Partnerships (IFRP)
Initiative in November 2000. This initiative enables USAID to award
grant agreements to eligible U.S. nonprofit organizations to produce
and stockpile shelf-stable, pre-packaged commodities. Through the IFRP
program, commodities are made available to eligible nonprofit U.S.
organizations and international organizations for transportation,
delivery, and distribution in emergency food aid relief programs.

In FY 2007, the Office of Food for Peace awarded approximately $7
million in Title II IFRP supplier and distribution grants. The
program's primary supplier, Breedlove Dehydrated Foods, produced a
micronutrient-fortified, dried vegetable soup mix which is used as a
meal supplement for humanitarian relief operations overseas. Over the
course of the year, 32 nonprofit U.S.-based organizations distributed
the commodity to beneficiaries in 32 countries.\11\ A list of these
countries is provided in Appendix 9.
---------------------------------------------------------------------------
\11\ Represents IFRP organizations with program agreements in FY
2007. These organizations include: Amigos Internacionales, Batay Relief
Alliance, Bless the Children, CRS, Center for International Health,
Child Life International, Church of Bible Understanding, CitiHope
International, Convoy of Hope, Coprodeli, Evangelistic International
Ministry, Fabretto Children's Foundation, Family Outreach, Feed the
Children, Haiti Vision, Healing Hands International, Hope Education
Foundation, International Crisis Aid, International Partnership for
Human Development, International Relief and Development, Inc.,
International Relief Teams, Legacy World Missions, Medical
Missionaries, Nascent Solutions, NOAH Project, OICI, PCI, Project Hope,
Resource & Policy Exchange, Salvation Army World Service, Share Circle
and Uplift International.

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3. P.L. 480 Title III: Food for Development

The P.L. 480 Title III program is a USAID-administered tool for
enhancing food security and supporting long-term economic development
in the least-developed countries. The U.S. Government donates
agricultural commodities to the recipient country and funds their
transportation to the point of entry in the recipient country. These
commodities are sold on the domestic market and the revenue generated
from their sale is used to support and implement economic development
and food-security programs. Funds were not appropriated for Title III
in FY 2007.

4. P.L. 480 Title V: John Ogonowski Farmer-to-Farmer Program

The Farmer-to-Farmer (FTF) Program provides voluntary technical
assistance to farmers, farm groups and agribusinesses in developing and
transitional countries, in an effort to promote sustainable
improvements in food processing, production and marketing. The program
relies on the expertise of volunteers from U.S. farms, land-grant
universities, cooperatives, private agribusinesses and nonprofit farm
organizations to respond to the local needs of host-country farmers and
organizations. In general, these volunteers are not overseas
development professionals, but rather individuals who have domestic
careers, farms and agribusinesses, or are retired persons who want to
participate in development efforts. Typically, volunteers spend about
20 to 30 days in the host country.
The FTF Program was initially authorized by Congress in the 1985
Farm Bill and funded through Title V of Public Law 480. It was re-
authorized by the 2002 Farm Bill to operate from FY 2004 until FY 2008.
The Program has been renamed the John Ogonowski Farmer-to-Farmer
Program to honor the pilot on American Airlines Flight 11 that crashed
into the World Trade Center in New York City on September 11, 2001.

P.L. 480 Title V: FTF Highlights

During FY 2007, USAID provided $10.1 million for FTF programs of
eight cooperating sponsors. The FTF programs funded 734 volunteer
assignments (up from 690 volunteers in FY 2006) in 37 countries.
Volunteers provided developing country organizations with technical
assistance services which directly benefited over 148,700 women and men
in FY 2007. The following examples illustrate the types of activities
undertaken by the program:

Improving Quality of Products for Export/El Salvador:

In order to assist El Salvadoran dairy farmers and processors with
preparing their products to market abroad, a FTF volunteer with more
than 50 years of experience in processing cheeses in Wisconsin,
traveled to El Salvador to share his knowledge with local cheese
industries. Working with managers, technicians, and owners of various
cheese factories, the volunteer helped demonstrate improved cheese and
yogurt formulations and processes. Such techniques will enable cheese
manufacturers to develop new high-value products and reinvent
traditional ones for high-end markets abroad. Manufacturers in
Agrosania, for example, have improved the flavor of their Monterey Jack
cheese, while in La Salud they are now using bean gum to improve their
cream cheese and fresh cheese.

Introduction of New Products and Techniques/Moldova:

In Moldova, a FTF volunteer introduced the idea of growing seedless
watermelons to the ``AgroAccess'' Vegetable Marketing Cooperative, and
a survey confirmed the market viability of the unique product.
Cooperative members were trained in appropriate soil mixes, tray
preparation, seeding, and optimal conditions for greenhouse growing of
healthy seedlings. Even though hail in July 2007 affected 50 percent of
the planned yield, local farmers plan to expand cultivation of seedless
watermelons to 15,000 (an increase from 1,200) seedlings and a drip-
irrigation system. New crops and progressive production methods are
creating new opportunities and generating higher incomes for many hard-
working farmers.

Farmer-to-Farmer Volunteer Assignments: FY 2007
------------------------------------------------------------------------

------------------------------------------------------------------------
Angola 6
Ethiopia 26
Ghana 24
Guinea 6
Kenya 13
Malawi 13
Mali 9
Mozambique 10
Nigeria 17
South Africa 30
Uganda 25
Zambia 13
---------------------
Subtotal Africa................................. 192
---------------------
Bolivia 4
El Salvador 22
Guatemala 20
Guyana 25
Haiti 23
Honduras 30
Jamaica 22
Nicaragua 12
Peru 3
---------------------
Subtotal Latin America/Caribbean................ 161
---------------------
Armenia 17
Azerbaijan 19
Belarus 16
Georgia 19
Moldova 27
Russia 92
Ukraine 35
---------------------
Subtotal Europe/Eurasia......................... 225
---------------------
Bangladesh 9
India 16
Indonesia 8
Kazakhstan 22
Kyrgyzstan 41
Nepal 22
Tajikistan 25
Turkmenistan 11
Vietnam 2
---------------------
Subtotal Asia/Near East......................... 156
=====================
Total......................................... 734
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B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities
The Agricultural Act of 1949 authorizes the donation by USDA of
surplus food and feed grain owned by the CCC. Section 416(a) authorizes
surplus food assistance to be distributed domestically, and surplus
food shipped to developing countries for assistance programs is covered
under Section 416(b). Surplus commodities acquired by the CCC as a
result of price-support operations may be made available under Section
416(b) if they cannot be sold or otherwise disposed of without
disrupting price-support programs or at competitive world prices. These
donations are prohibited from reducing the amounts of commodities
traditionally donated to domestic feeding programs or agencies, from
preventing the fulfillment of any agreement entered into under a
payment-in-kind program, or from disrupting normal commercial sales.

1. Section 416(b): Surplus Commodities Highlights

During FY 2007, USDA provided approximately 5,000 MT of non-fat dry
milk and associated freight, valued at $20 million. All of these
shipments were associated with prior year agreements whereby USDA would
provide milk in FY 2007 only if surplus commodity became available.
There was no new programming in FY 2007 under this program.
C. Food for Progress
The USDA-administered Food for Progress Program, authorized under
the Food for Progress Act of 1985, assists developing countries,
particularly emerging democracies ``that have made commitments to
introduce or expand free enterprise elements in their agricultural
economies through changes in commodity pricing, marketing, input
availability, distribution, and private sector involvement.'' The
program authorizes the CCC to carry out the sale and exportation of
U.S. agricultural commodities on credit terms or on a grant basis, with
the use of either CCC financing or P.L. 480 Title I funds. Agreements
for Food for Progress are awarded to governments or PVOs, nonprofit
agriculture organizations, cooperatives, intergovernmental
organizations or other private entities.
The 2002 Farm Bill extended the authority for the Food for Progress
Program to provide assistance in the administration and monitoring of
food assistance programs to strengthen private-sector agriculture in
recipient countries through FY 2007. The CCC is authorized to use $15
million for administrative costs under the grants and $40 million for
transportation expenses.

1. CCC-funded Food for Progress Highlights

In FY 2007, CCC funding financed the purchase and shipment of
250,630 MT of commodities to 13 countries, with an estimated value of
$113 million. The summaries below provide examples of CCC-funded Food
for Progress agreements signed in FY 2007.

Bolivia: USDA donated 11,500 MT of wheat to Food for the
Hungry International (FHI), for use in Bolivia. FHI will sell
the wheat and use the proceeds to establish: supply chains for
higher value agricultural products; develop commodity-producer
associations and micro-enterprises; increase agricultural
productivity and post-harvest system efficiency; improve access
to financial services; and, create strategic alliances with
public and private sector organizations in Bolivia. The program
will directly benefit 2,500 farmers and 2,500 households
indirectly.

Mozambique: USDA donated 21,060 MT of wheat to TechnoServe
(TS), a private voluntary organization, for use in Mozambique.
TS will sell the wheat in Mozambique and use the proceeds to
carry out development work in the poultry industry. TS will
expand capacity for poultry farmers, train poultry industry and
related government agencies in bio-security and disease
prevention, and provide matching grants to large-scale
processors to help upgrade facilities. TS will also provide
marketing services to promote improved market access and work
with government ministries to improve analysis of policy,
regulatory and administrative issues impacting the poultry
industry.

Niger: USDA donated 5,600 MT of agricultural commodities,
including rice and soy-fortified bulgur to International Relief
and Development, Inc. (IRD) for use in Niger. IRD will sell the
rice in Niger and use the proceeds to help pastoralists
reconstitute goat herds, expand water sources for animals,
develop pasture reserves, increase vegetable production, and
build capacity of local NGOs. This program also includes a food
for work (FFW) component, in which 1,600 MT of soy-fortified
bulgur will be distributed to workers participating in the
water source expansion and pasture development activities.

Nicaragua: USDA donated 15,000 MT of wheat and 1,000 MT of
crude degummed soybean oil to FINCA International for use in
Nicaragua. FINCA will sell the commodities and use the proceeds
over a 3 year period to increase loan capital and microfinance
services to micro-entrepreneurs in agriculture-related
businesses. This program will directly benefit 8,415 farmers
and indirectly benefit 37,867 family members.
D. McGovern-Dole International Food for Education and Child Nutrition
Program
An estimated 120 million children around the world do not attend
school, due in part to hunger or malnourishment. The majority of them
are girls. Following the success of the Global Food for Education
Initiative, created in July 2000, the United States has demonstrated
its continued commitment to education and child nutrition with the 2002
Farm Bill's authorization of the McGovern-Dole International Food for
Education and Child Nutrition Program (FFE) through FY 2007.
Modeled on the U.S. Government's school meals program, the program
is named in honor of former Senators George McGovern and Robert Dole
for their tireless efforts to promote education and school feeding. The
FFE program uses U.S. commodities and financial assistance to provide
incentives for children to attend and remain in school, as well as to
improve child development through nutritional programs for women,
infants and children under 5. In its inaugural year, FFE provided
119,320 MT of commodities, worth $93.1 million, to support programs
implemented by WFP and PVOs in 20 countries. In FY 2007, the FFE
program provided more than 103,000 MT of commodities to support child
nutrition and school feeding programs in 15 countries, the total value
of which was over $98 million. The following are examples of new FFE
programs that were funded in FY 2007:

Mozambique: USDA donated 23,670 MT of corn-soy blend and
rice to Joint Aid Management (JAM) for a child education
program in Mozambique. From 2007 to 2009, JAM will implement
school feeding for 220,000, 242,000 and 271,000 beneficiaries
respectively, construct 610 school warehouses and kitchens, and
provide a tri-annual take-home incentive ration for 16,000,
19,000 and 21,000 girls, respectively, and 20,000 orphans and
vulnerable children. Complementary projects under this program
include water and sanitation improvements, the provision of 180
water wells, and a school gardens initiative in 45 schools. All
of these projects include community and student education
activities on nutrition, sanitation and health.

Liberia: USDA donated 600 MT of vegetable oil, rice and
beans to Visions in Action (VIA) for a school feeding program
in Liberia. During 2007 and 2008, VIA will use the resources in
a comprehensive program which covers many aspects of education.
VIA will improve the quality of the primary school education
environment in community schools in underprivileged areas by:
paying teachers supplemental salaries; providing needed school
supplies, benches and textbooks; building new schools in
underserved areas; and, providing seeds and tools for school
gardens. The program aims to increase student continuation and
promotion by providing monthly take-home rations to students
with high attendance levels, and to improve the overall quality
of education by establishing a teacher training certificate
program for primary school teachers at centers run by the
Ministry of Education. Finally, the program includes the goal
of improving student nutrition and health through educational
posters, the organization and implementation of nutrition
workshops, and a take-home ration to teachers who incorporate
health and nutrition into the school curriculum.

Cambodia: USDA donated 11,130 MT of commodities to the WFP
for a school feeding program in Cambodia. WFP will use the
vegetable oil and peas as part of a larger, internationally-
sponsored program that provides hot lunches at schools with the
aim of increasing school enrollment and attendance rates and
reducing dropout rates in primary schools. The program also
provides take-home rations to girls during the last three
grades of primary school, to encourage parents to keep their
daughters in school until completion. WFP's school feeding
program also provides community support to women's groups,
Parent Teacher Associations and School Canteens Management
Committees.
E. Bill Emerson Humanitarian Trust
Although the Bill Emerson Humanitarian Trust (BEHT) is not a food
aid program, it is a valuable resource that can be used to respond to
unforeseen humanitarian food crises in developing countries. The
Emerson Trust is a food reserve of up to 4 million MT of wheat, corn,
sorghum, and rice administered under the authority of the Secretary of
Agriculture. When an unanticipated emergency arises that cannot be met
with P.L. 480 resources, the Secretary of Agriculture may authorize the
release of commodities from the reserve in order to meet those
immediate needs. Each year, 500,000 MT may be released, plus up to
another 500,000 MT that was not released in prior years.
The reserve was originally authorized by the Agricultural Trade Act
of 1980 as the Food Security Wheat Reserve and was later broadened to
include a number of other commodities. In 1998 the reserve was renamed
the Bill Emerson Humanitarian Trust and was reauthorized through 2007
under the 2002 Farm Bill. In FY 2007, the Emerson Trust held 900,000 MT
of wheat; however, no commodities were released.
III. Appendices

Appendix 1: List of Abbreviations
------------------------------------------------------------------------

------------------------------------------------------------------------
BEHT Bill Emerson Humanitarian Trust
CCC Commodity Credit Corporation
CS cooperating sponsor
C-SAFE Consortium for Southern Africa Food Security
Emergency
DAP Development Assistance Program
EPI Expanded Program for Immunization
EXCOM Executive Committee (for the FACG)
FAC Food Aid Convention
FACG Food Aid Consultative Group
FEWS NET Famine Early Warning System Network
FFA food for assets
FFE McGovern-Dole International Food for Education
and Child Nutrition Program (formerly Global
Food for Education Initiative)
FFP Office of Food for Peace (USAID)
FFP/W Food for Peace Washington Office
FFW Food for work
FTF Farmer-to-Farmer Program of P.L. 480, Title V
FY fiscal year
GAO Government Accountability Office
GMP Growth monitoring promotion
HBC Home-based care
HIV Human Immunodeficiency Virus
ICB Institutional Capacity Building
IDPs Internally Displaced Persons
IFRP International Food Relief Partnership
I-LIFImproving Livelihoods through Increased Food
Security
MARAD Maritime Administration
MT metric ton
NASA National Aeronautics and Space Administration
NGO non-governmental organization
NOAA National Oceanic and Atmospheric
Administration
OVC Orphans and Vulnerable Children
P.L. U.S. Public Law 480
PEPFAR President's Emergency Plan for AIDS Relief
PLWHPeople Living with HIV
PSNP Productive Safety Net Program (Ethiopia)
PVO private voluntary organization)
UN United Nations
USAID U.S. Agency for International Development
USDA U.S. Department of Agriculture
USGS U.S. Geological Survey
WFP United Nations World Food Programme
------------------------------------------------------------------------

Appendix 2: List of Partner Organizations
------------------------------------------------------------------------

------------------------------------------------------------------------
The following organizations implemented U.S. Government food
assistance programs in Fiscal Year 2007:
------------------------------------------------------------------------
ACDI/VOCA Agriculture Cooperative Development
International/ Volunteers in Overseas
Cooperative Assistance
ADRA Adventist Development and Relief Agency
International, Inc.
Africare Africare
AI Amigos Internacionales
ARC American Red Cross
BRA Batay Relief Alliance
BC Bless the Children
Caritas Caritas
CARE Cooperative for Assistance and Relief
Everywhere, Inc.
CBU Church for Bible Understanding
CIH Center for International Health
Citihope Citihope International
CLI Child Life International
CH Convoy of Hope
Coprodeli Coprodeli
CPI Counterpart International
CRS Catholic Relief Services
EFSRA Ethiopian Food Security Reserve Agency
EIM Evangelistic International Ministry
FCF Fabretto Children's Foundation, Inc.
FO Family Outreach
FHI Food for the Hungry International
FINCA FINCA International
FTC Feed the Children
GOAF Government of Afghanistan
GOB Government of Bangladesh
GOET Government of Ethiopia
Haiti Vision Haiti Vision
HHI Healing Hands International
HEF Hope Education Foundation
ICA International Crisis Aid
IPHD International Partnership for Human
Development
IRD International Relief and Development, Inc.
IRT International Relief Teams
JAM Joint Aid Management
LOLLand O'Lakes
LWMLegacy World Missions
MM Medical Missionaries
MCI Mercy Corps International
Nascent Nascent Solutions
NOAH NOAH Project
NPA Norwegian People's Aid
OICI Opportunities Industrialization Centers
International
PCI Project Concern International
PH Project Hope
PRISMA Asociacion Benefica PRISMA
REST Relief Society of Tigray
RPX Resource & Policy Exchange
Salvation Army Salvation Army World Service
SCF Save the Children Federation
SCF-UK Save the Children UK
Share Circle Share Circle
SHARE SHARE Guatemala
TASO The AIDS Service Organization
TS TechnoServe
Uplift Uplift International
VIA Visions in Action
WFP United Nations World Food Programme
WS World Share
WVI World Vision International, Inc.
UNDP United Nation Development Program
UNICEF United Nations Children's Fund
------------------------------------------------------------------------

Appendix 3: USDA Title I Program: Food for Progress Grants_Fiscal Year
2007
Title I Programs
Food for Progress Grants
------------------------------------------------------------------------
Tonnage
Country Sponsor (MT)
------------------------------------------------------------------------
Africa
------------------------------------------------------------------------
Ethiopia GOET 15,000
------------------------------------------
Subtotal Africa 15,000
------------------------------------------------------------------------
Near East
------------------------------------------------------------------------
Afghanistan GOAF 8,210
------------------------------------------
Subtotal Near East 8,210
============
Total 23,210
------------------------------------------------------------------------

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, and Tonnage_Fiscal Year 2007
----------------------------------------------------------------------------------------------------------------
Cooperating Recipients * Total Cost
Country Sponsor Commodities (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso WFP Corn Soy Blend, Veg. Oil 668.5 2,500 $2,280.9
Burundi WFP Cornmeal, Corn Soy Blend, 2.5 11,380 $10,071.5
Veg. Oil, Yellow Peas,
Yellow Split Peas
Cameroon WFP Bagged Corn, Corn Soy Blend, 30.0 970 $797.8
Red Beans, Veg. Oil
Central African WFP Corn Soy Blend, Cornmeal, 204.0 14,860 $14,149.0
Republic Green Peas, Veg. Oil, Yellow
Split Peas
Chad WFP Corn Soy Blend, Soft White 1,000.1 37,270 $37,735.6
Wheat, Sorghum (bulk),
Sorghum (bagged), Veg. Oil,
Yellow Split Peas
Congo WFP Rice (bagged), Veg. Oil, 308.5 1,220 $1,196.8
(Brazzaville) Yellow Split Peas
Congo (DRC) FHI Corn Soy Blend, Cornmeal, -- 5,350 $6,175.4
Green Peas, Veg. Oil
WFP Corn Soy Blend, Cornmeal, 3,368.3 28,470 $31,662.2
Lentils, Veg. Oil, Yellow
Peas, Yellow Split Peas
Cote d'Ivoire WFP Cornmeal 922.5 6,810 $5,000.1
Djibouti WFP Corn Soy Blend, Lentils, 57.2 1,350 $994.9
Wheat Flour
Ethiopia CARE Corn Soy Blend, Hard Red 545.3 25,280 $12,700.4
Winter Wheat, Veg. Oil
CRS Bulgur, Corn Soy Blend, Hard 449.9 17,480 $9,375.7
Red Winter Wheat, Lentils,
Rice (Bagged), Veg. Oil
FHI Green Peas, Green Split Peas, 802.9 17,110 $8,945.6
Hard Red Winter Wheat, Veg.
Oil, Yellow Peas
WFP Corn Soy Blend, Hard Red 7.0 195,940 $101,916.5
Winter Wheat, Veg. Oil,
Yellow Peas, Yellow Split
Peas
REST Green Peas, Hard Red Winter 952.6 67,610 $33,453.5
Wheat, Veg. Oil
SCF Hard Red Winter Wheat 89.1 3,970 $1,684.3
SCF-UK Green Peas, Hard Red Winter 835.8 19,270 $9,472.8
Wheat, Lentils, Yellow Peas,
Yellow Split Peas
WV Corn Soy Blend, Hard Red 210.3 6,880 $3,988.2
Winter Wheat, Veg. Oil,
Yellow Peas
Guinea WFP Bulgur, Veg. Oil, Yellow 1,234.7 1,760 $1,519.4
Split Peas
Kenya WFP Bulgur, Corn Soy Blend, 961.1 112,429 $80,870.0
Cornmeal, Green Split Peas,
Veg. Oil, Wheat Flour,
Yellow Split Peas
Lesotho WV Cornmeal, Pinto Beans, Veg. 138.7 12,040 $14,605.0
Oil, Yellow Peas, Yellow
Split Peas
Liberia WFP Bulgur, Corn Soy Blend, Veg. 1,330.7 10,700 $9,146.7
Oil, Yellow Split Peas
Madagascar WFP Green Peas, Pinto Beans, Rice 337.5 6,460 $4,563.0
, Sorghum
Mali WFP Cornmeal, Veg. Oil, Yellow 740.0 4,390 $4,138.9
Split Peas
Mauritania WFP Corn Soy Blend, Hard Red 254.0 4,890 $3,510.9
Winter Wheat, Soft White
Wheat, Soy-Fortified Sorghum
Grits, Wheat Soy Blend, Veg.
Oil
Niger WFP Corn Soy Blend, Veg. Oil 2.9 6,890 $5,763.1
Rwanda WFP Corn Soy Blend, Cornmeal, 1,085.0 3,260 $2,996.3
Veg. Oil, Yellow Peas
Somalia CARE Corn Soy Blend, Lentils, 460.0 13,250 $10,289.2
Sorghum, Veg. Oil
WFP Corn, Corn Soy Blend, Hard 4.3 36,740 $25,016.8
Red Winter Wheat, Sorghum,
Veg. Oil, Yellow Peas,
Yellow Split Peas
Southern Africa WFP Black Beans, Bulgur, Corn Soy 5,534.0 122,915 $102,601.3
Region Blend, Cornmeal, Kidney
Beans, Lentils, Pink Beans,
Pinto Beans, Red Beans,
Sorghum, Veg. Oil, Yellow
Peas, Yellow Split Peas
Sudan ADRA Lentils, Sorghum, Veg. Oil 83.5 780 $774.0
CARE Corn Soy Blend, Lentils, 164.3 3,550 $2,625.6
Sorghum, Veg. Oil
WFP Corn Soy Blend, Lentils, 12.2 341,070 $339,805.9
Sorghum, Veg. Oil
NPA Lentils, Sorghum, Veg. Oil 196.8 9,230 $12,938.7
Tanzania WFP Corn Soy Blend, Cornmeal, 580.0 14,210 $11,731.3
Pinto Beans, Veg. Oil,
Yellow Split Peas
Uganda WFP Black Beans, Corn Soy Blend, 10.5 64,210 $44,413.7
Cornmeal, Kidney Beans,
Pinto Beans, Sorghum, Veg.
Oil, Yellow Split Peas
Zambia WFP Sorghum 67.0 1,330 $795.0
Zimbabwe WV Bulgur, Cornmeal, Great 10.0 88,920 $95,800.7
Northern Beans, Sorghum,
Veg. Oil
------------------------------------------------------------------------------------------------
Sub-Total Africa 23,661.8 1,322,744 $1,065,506.7
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan WFP Green Peas, Soft White Wheat, 6.6 89,250 $59,996.0
Veg. Oil
East-Timor WFP Corn Soy Blend, Red Beans, 165.0 2,290 $2,171.6
Veg. Oil
Lebanon WFP Red Hard Winter Wheat -- 700 $444.2
Nepal WFP Garbanzo Beans, Lentils, 333.2 6,470 $6,056.3
Rice, Veg. Oil
Sri Lanka WFP Lentils, Soft Red Winter 1,423.9 24,200 $14,085.9
Wheat, Veg. Oil, Wheat Flour
Syria WFP Lentils, Rice, Veg. Oil 30.0 820 $644.2
West Bank/Gaza WFP Garbanzo Beans, Veg. Oil, 665.0 27,090 $19,487.7
Wheat Flour
------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 232,623.7 23150,820 23$102,885.9
----------------------------------------------------------------------------------------------------------------
Latin America
----------------------------------------------------------------------------------------------------------------
Colombia WFP Green Peas, Lentils, Veg. Oil 725.0 4,830 $4,858.4
El Salvador WFP Pinto Beans, Veg. Oil 470.0 160 $176.9
Guatemala WFP Pinto Beans, Veg. Oil 470.0 240 $263.0
WS Corn Soy Blend, Pinto Beans, 58.8 1,100 $1,057.7
Rice, Veg. Oil
Honduras WFP Pinto Beans, Veg. Oil 470.0 260 $286.9
Nicaragua WFP Pinto Beans, Veg. Oil 470.0 210 $229.5
------------------------------------------------------------------------------------------------
Sub-Total Latin America 2,663.8 6,800 $6,872.4
----------------------------------------------
Unallocated Preposition plus Unallocated -- 52,600 $36,501.2
----------------------------------------------
Pending Approval -- -- $183,233.8
----------------------------------------------
Funding Adjustments (IFRP, PSCs, Prepositioning and CSB -- -- $42,000.0
Mitigation)
==============================================
Worldwide Total 28,949.3 1,532,964 $1,437,000.0
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and 202(e) totals derived from FFP Preliminary Final Budget Summary Report, January
2008. Commodities and Recipients derived from Food for Peace Information System report, January 9, 2008.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
totals.
Table does not include International Food Relief Partnership activities. See page 11 for specific details.

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, Recipient, and Tonnage
Tables_Fiscal Year 2007
----------------------------------------------------------------------------------------------------------------
Cooperating Recipients * Total Cost
Country Sponsor Commodities (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso Africare Defatted Soy Flour, Pinto 7.0 5,710 $4,914.3
Beans, Potato Flakes, Rice,
Soy-Fortified Bulgur, Veg.
Oil
CRS Lentils, Soy-Fortified 356.8 14,760 $11,693.9
Bulgur, Soy-Fortified
Cornmeal, Rice, Veg. Oil
Chad Africare Rice, Wheat Flour -- 4,120 $3,722.4
Ghana ADRA Soy-Fortified Bulgur 2,667.0 400 $1,926.0
CRS Corn Soy Blend, Northern 204.8 22,070 $12,075.8
Spring Wheat, Soy-Fortified
Bulgur, Soy-Fortified
Sorghum Grits, Veg. Oil,
OICI Northern Spring Wheat, Soy- 4.0 9,580 $4,107.3
Fortified Bulgur, Soy-
Fortified Sorghum Grits,
Veg. Oil, Wheat Soy Blend
Guinea OICI Green Peas, Soy-Fortified 10.7 2,330 $2,494.9
Cornmeal, Veg. Oil
Kenya ADRA Corn Soy Blend, Green Peas, 79.1 7,120 $2,569.6
Hard Red Winter Wheat, Soy-
Fortified Bulgur, Veg. Oil
CARE Corn Soy Blend, Hard Red 4.5 5,960 $2,145.0
Winter Wheat, Veg. Oil,
Yellow Split Peas
FHI Corn Soy Blend, Green Split 8.8 6,960 $2,844.5
Peas, Hard Red Winter Wheat,
Soy-Fortified Bulgur, Veg.
Oil
Liberia CRS Bulgur, Hard Red Spring 17.9 9,170 $6,998.4
Wheat, Lentils, Rice, Veg.
Oil, Wheat Flour
Madagascar ADRA Corn Soy Blend, Crude De- 12.4 8,620 $4,707.7
Gummed Veg. Oil, Hard Red
Winter Wheat, Rice, Veg. Oil
CARE Corn Soy Blend, Crude De- 68.2 11,700 $6,607.4
Gummed Veg. Oil, Great
Northern Beans, Rice, Veg.
Oil
CRS Corn Soy Blend, Crude De- 65.4 8,870 $5,494.5
Gummed Veg. Oil, Great
Northern Beans, Hard Red
Winter Wheat, Rice, Veg. Oil
Malawi CRS Corn Soy Blend, Cornmeal, 21.4 13,360 $15,000.1
Crude De-Gummed Veg. Oil,
Pinto Beans, Veg. Oil
Mauritania CPI Corn Soy Blend, Hard Red 25.3 9,510 $3,849.5
Winter Wheat, Veg. Oil,
Yellow Split Peas
Mozambique ADRA Hard Red Winter Wheat, -- 5,290 $1,967.1
Northern Spring Wheat
Africare Hard Red Winter Wheat, -- 3,230 $1,187.6
Northern Spring Wheat
CARE Hard Red Winter Wheat, -- 7,720 $2,743.2
Northern Spring Wheat
FHI Hard Red Winter Wheat, -- 5,920 $2,143.6
Northern Spring Wheat
SCF Hard Red Winter Wheat, -- 4,720 $1,841.9
Northern Spring Wheat
WV Hard Red Winter Wheat, -- 22,970 $8,177.1
Northern Spring Wheat
Niger Africare Rice, Soy-Fortified Bulgur 19.0 3,280 $3,334.3
CRS Rice, Soy-Fortified Bulgur 40.5 6,040 $4,650.6
Rwanda ACDI/VOCA Corn Soy Blend, Soy-Fortified 2.0 2,930 $4,337.5
Bulgur, Veg. Oil
CRS Bulgur, Corn Soy Blend, Veg. 26.9 2,940 $3,101.2
Oil
WV Corn Soy Blend, Soy-Fortified 5.9 2,760 $4,015.8
Bulgur, Veg. Oil
Senegal CPI Corn Soy Blend, Lentils, 44.1 6,560 $4,832.1
Potato Flakes, Rice, Soy-
Fortified Bulgur, Veg. Oil
Sierra Leone CARE Bulgur, Hard Red Winter 30.4 14,290 $9,734.4
Wheat, Kidney Beans, Rice,
Veg. Oil
Uganda ACDI/VOCA Corn Soy Blend, Hard Red 21.2 14,650 $9,579.2
Winter Wheat, Veg. Oil
SCF Corn Soy Blend, Hard Red 4.9 4,800 $3,534.5
Winter Wheat, Lentils, Soy-
Fortified Cornmeal, Veg. Oil
WV Hard Red Winter Wheat -- 2,510 $1,262.3
Zambia CRS Bulgur, Hard Red Winter 5.3 8,410 $6,807.7
Wheat, Lentils, Sorghum
LOL Northern Spring Dark Wheat -- 4,500 $3,044.3
------------------------------------------------------------------------------------------------
Sub-Total Africa 3,753.6 263,760 $167,445.7
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Bangladesh CARE Hard Red Winter Wheat, Soft 129.7 65,440 $25,567.4
Red Winter Wheat, Soft White
Wheat, Veg. Oil, Yellow
Split Peas
SCF Hard Red Winter Wheat, Soft 160.0 24,760 $10,040.0
White Wheat, Veg. Oil,
Yellow Split Peas
India CARE Green Peas, Veg. Oil -- 22,060 $16,531.4
CRS Bulgur, Veg. Oil 718.0 21,410 $14,506.4
Indonesia CARE Green Split Peas, Northern 15.3 1,870 $1,837.8
Spring Dark Wheat, Veg. Oil
CRS Corn Soy Blend, Lentils, 93.0 2,940 $1,568.8
Northern Spring Dark Wheat,
Veg. Oil
MCI Green Split Peas, Northern 26.1 3,670 $3,322.2
Spring Dark Wheat, Veg. Oil
SCF Northern Spring Dark Wheat, 52.0 3,430 $2,895.0
Veg. Oil
WV Green Split Peas, Hard White 37.2 2,580 $1,327.5
Wheat, Northern Spring Dark
Wheat, Veg. Oil
------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 1,231.1 148,160 $77,596.5
----------------------------------------------------------------------------------------------------------------
Central Asia
----------------------------------------------------------------------------------------------------------------
Tajikistan CARE Lentils, Veg. Oil, Wheat 47.6 5,660 $8,477.6
Flour
------------------------------------------------------------------------------------------------
Sub-Total Central Asia 47.6 5,660 $8,477.6
----------------------------------------------------------------------------------------------------------------
Latin America
----------------------------------------------------------------------------------------------------------------
Bolivia ADRA Corn Soy Blend, Green Peas, 17.7 6,330 $4,079.4
Lentils, Soy-Fortified
Bulgur, Wheat Flour
CARE Corn Soy Blend, Green Peas, 7.9 8,320 $5,391.3
Lentils, Soy-Fortified
Bulgur, Wheat Flour
FHI Corn Soy Blend, Green Peas, 15.8 8,960 $5,704.1
Lentils, Soy-Fortified
Bulgur, Wheat Flour
SCF Corn Soy Blend, Green Peas, 31.6 7,520 $4,874.2
Lentils, Wheat Flour
Guatemala CRS Corn Soy Blend, Crude De- 84.0 5,220 $3,971.8
Gummed Veg. Oil, Pinto
Beans, Rice, Veg. Oil
SCF Corn Soy Blend, Crude De- 12.7 4,630 $3,534.4
Gummed Veg. Oil, Pinto
Beans, Rice, Veg. Oil
WS Corn Soy Blend, Crude De- 12.7 5,940 $4,488.8
Gummed Veg. Oil, Pinto
Beans, Rice, Veg. Oil
Haiti CARE Hard Red Winter Wheat, 46.2 11,316 $5,048.3
Lentils, Soy-Fortified
Bulgur, Veg. Oil, Wheat Soy
Blend
CRS Cornmeal, Crude De-Gummed 227.5 21,421 $12,008.0
Veg. Oil, Hard Red Winter
Wheat, Lentils, Soy-
Fortified Bulgur, Veg. Oil,
Wheat Soy Blend
SCF Hard Red Winter Wheat, 127.1 12,567 $5,787.4
Lentils, Soy-Fortified
Bulgur, Veg. Oil, Wheat Soy
Blend
WV Hard Red Winter Wheat, 53.1 24,036 $9,514.9
Lentils, Soy-Fortified
Bulgur, Veg. Oil, Wheat Soy
Blend
Honduras ADRA Corn Soy Blend, Northern 10.9 9,220 $3,835.0
Spring Wheat, Red Beans,
Rice, Veg. Oil
CARE Corn Soy Blend, Red Beans, 1.5 120 $86.3
Rice, Veg. Oil
SCF Corn Soy Blend, Northern 5.3 8,555 $3,637.3
Spring Wheat, Red Beans,
Rice, Veg. Oil
WV Corn Soy Blend, Kidney Beans, 8.4 10,555 $5,169.0
Northern Spring Wheat, Red
Beans, Rice, Veg. Oil
Nicaragua ADRA Corn Soy Blend, Lentils, 1.9 8,500 $3,490.8
Northern Spring Wheat, Rice,
Veg. Oil
CRS Corn Soy Blend, Lentils, 8.5 6,650 $2,672.9
Northern Spring Wheat, Rice,
Veg. Oil
PCI Corn Soy Blend, Lentils, 11.0 6,440 $2,490.5
Northern Spring Wheat, Rice,
Veg. Oil
SCF Corn Soy Blend, Cornmeal, 6.4 6,520 $2,584.5
Crude De-Gummed Veg. Oil,
Lentils, Northern Spring
Wheat, Rice, Veg. Oil
Peru ADRA Crude De-Gummed Veg. Oil -- 1,630 $2,131.1
PRISMA Crude De-Gummed Veg. Oil -- 410 $3,138.2
Caritas Inc. Crude De-Gummed Veg. Oil -- 2,400 $3,138.2
------------------------------------------------------------------------------------------------
Sub-Total Latin America 690.2 177,260 $94,273.3
----------------------------------------------
Pending Approval -- -- $706.9
==============================================
Worldwide Total 5,722.6 594,840 $348,500.0
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and 202(e) totals derived from FFP Preliminary Final Budget Summary Report, January
2008. Commodities and Recipients derived from Food for Peace Information System report, January 9, 2008.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
totals.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements.

Appendix 6: USDA Food for Progress Program_CCC-funded Grants_Fiscal Year
2007
------------------------------------------------------------------------
Cooperating Tonnage Donated
Country Sponsor (MT)
------------------------------------------------------------------------
Africa
------------------------------------------------------------------------
Kenya LOL 25,000
WOCCU 26,610
Liberia ACDI 10,000
Madagascar LOL 12,450
CRS 6,190
Malawi PAI 10,000
Mozambique TS 21,060
PAI 10,000
GOMZ 4,500
IRD 5,600
Niger GONI 17,000
Tanzania FINCA 20,000
-------------------------------------
Subtotal Africa 168,410
------------------------------------------------------------------------
Europe and Eurasia
------------------------------------------------------------------------
Armenia WFP 920
ATG 2,500
Azerbaijan VRF 10,800
Georgia IRD 15,000
-------------------------------------
Subtotal Europe and Eurasia 29,220
------------------------------------------------------------------------
Latin America and the Caribbean
------------------------------------------------------------------------
Bolivia FFTH 11,500
El Salvador GOEL 15,500
Nicaragua FINCA 16,000
-------------------------------------
Subtotal Latin America and the Caribbean 43,000
==================
Worldwide Total 240,630
------------------------------------------------------------------------

Appendix 7: McGovern-Dole International Food for Education and Child
Nutrition Program_Fiscal Year 2007: Donations by Country and Cooperating
Sponsor
------------------------------------------------------------------------
Cooperating Tonnage Donated
Country Sponsor (MT)
------------------------------------------------------------------------
Africa
------------------------------------------------------------------------
Benin CRS 480
Congo (Brazzaville) IPHD 6,300
Guinea WFP 11,460
Guinea-Bissau IPHD 4,710
Kenya WFP 14,350
Liberia VA 600
Madagascar CARE 3,190
Malawi WFP 8,280
Mali CRS 7,380
Mozambique JAMGT 5,890
Senegal CPI 3,240
-------------------------------------
Subtotal Africa 65,880
------------------------------------------------------------------------
Asia
------------------------------------------------------------------------
Cambodia SM 1,750
Cambodia WFP 11,130
Pakistan WFP 7,170
-------------------------------------
Subtotal Asia 17,300
------------------------------------------------------------------------
Latin America and the Caribbean
------------------------------------------------------------------------
Guatemala FFTP 10,060
Guatemala SHARE 6,500
Nicaragua GLIM 740
-------------------------------------
Subtotal Latin America and the Caribbean 20,050
==================
Grand Total 103,230
------------------------------------------------------------------------

Appendix 8: Public Law 480 Title II Congressional Mandates_Fiscal Year 2007
----------------------------------------------------------------------------------------------------------------
Bagged in United
Minimum Subminimum Monetization Value-added States
----------------------------------------------------------------------------------------------------------------
FY 2007 Target 2,500,000 1,875,000 15.0% 75.0% 50.0%
Status September 2,573,215 682,353 74.3% 44.8% 54.8%
2007
----------------------------------------------------------------------------------------------------------------
Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report
against target.

Subminimum: Metric tons for approved non-emergency programs through PVOs and community development organizations
and WFP. Metric ton grain equivalent used to report against target.

Monetization: Percentage of approved Title II programs that are monetization programs.

Value-added: Percentage of approved non-emergency programs that are processed, fortified, or bagged.

Bagged in U.S.: Percentage of approved non-emergency bagged commodities that are whole grain to be bagged in the
United States.
----------------------------------------------------------------------------------------------------------------
Source: USAID Bureau for Democracy, Conflict, and Humanitarian Assistance, Office of Food for Peace, FY
2007Preliminary Budget Summary Overview, January 9, 2008.

Appendix 9: Countries with Approved U.S. Food Assistance Programs_Fiscal
Year 2007

------------------------------------------------------------------------
Title I (0 countries)
------------------------------------------------------------------------
Title III (0 countries)
------------------------------------------------------------------------
CCC-Funded Food for Progress (13 countries)
------------------------------------------------------------------------
Armenia Azerbaijan Bolivia El Salvador
Georgia Kenya Liberia Madagascar
Malawi Mozambique Nicaragua Niger
Tanzania
------------------------------------------------------------------------
Title I-Funded Food for Progress (2 countries)
------------------------------------------------------------------------
Afghanistan Ethiopia
------------------------------------------------------------------------
Title II * (64 countries)
------------------------------------------------------------------------
Afghanistan Angola Armenia ** Azerbaijan
Bangladesh Benin Bolivia Burkina Faso
Burundi Cambodia ** Cameroon Cape Verde
Central African Chad Colombia Congo
Rep. (Brazzaville)
**
Congo (DRC) Cote d'Ivoire Djibouti Dominican Rep.
**
East Timor Ecuador ** El Salvador ** Ethiopia
Gambia Ghana Guatemala Guinea
Haiti Honduras India Indonesia
Kenya Kosovo ** Kyrgyzstan ** Lebanon
Lesotho Liberia Madagascar Malawi
Mali Mauritania Mozambique Nepal
Nicaragua Niger Peru Philippines **
Romania ** Rwanda Senegal Sierra Leone
Somalia South Africa ** Sri Lanka Sudan
Swaziland Syria Tajikistan ** Uganda
Uzbekistan ** West Bank/Gaza Zambia Zimbabwe
------------------------------------------------------------------------
Food for Education (15 countries)
------------------------------------------------------------------------
Benin Cambodia Congo Guatemala
(Brazzaville)
Guinea Guinea-Bissau Kenya Liberia
Madagascar Malawi Mali Mozambique
Nicaragua Pakistan Senegal
------------------------------------------------------------------------
Farmer-to-Farmer (37 countries)
------------------------------------------------------------------------
Angola Armenia Azerbaijan Bangladesh
Belarus Bolivia El Salvador Ethiopia
Georgia Ghana Guatemala Guinea
Guyana Haiti Honduras India
Indonesia Jamaica Kazakhstan Kenya
Kyrgyzstan Malawi Mali Moldova
Mozambique Nepal Nicaragua Nigeria
Peru Russia South Africa Tajikistan
Turkmenistan Uganda Ukraine Vietnam
Zambia
------------------------------------------------------------------------
* Represents Title II programs with commodities approved in FY 2007, or
that remain active with resources allocated in the prior fiscal year.
Represents IFRP programs with commodities approved in FY 2007, or that
remain active with resources allocated in the prior fiscal year.
** Title II countries served by IFRP programming only.

______

U.S. International Food Assistance Report 2008
Under Food for Peace Act Section 407(f)(1)(A), ``Not later than
April 1 of each fiscal year, the Administrator [of USAID] and the
Secretary [of Agriculture] shall jointly prepare and submit to the
appropriate committees of Congress a report regarding each program and
activity carried out under this Act during the prior fiscal year.'' As
required, this report is hereby submitted to Congress.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

USAID-supported school feeding program for refugee children
from Cote d'Ivoire in Liberia, October 2007. Photo by Anne
Shaw, USAID.

This Report May Be Ordered From:

A. Food for Peace Act

Food for Peace Title I: Trade and Development Assistance

Food for Peace Title II: Emergency and Private Assistance Programs

Food for Peace Title III: Food for Development

Food for Peace Title V: John Ogonowski and Doug Bereuter Farmer-to-
Farmer Program

III. Appendices

Appendix 1: List of Abbreviations
Appendix 2: List of Grantees
Appendix 3: USDA Title I Program: Food for Progress Grants--Fiscal
Year 2008
Appendix 4: Food for Peace Title II Emergency Activities: Summary
Budget, Commodity and Tonnage--Fiscal Year 2008
Appendix 5: Food for Peace Title II Non-Emergency Activities: Summary
Budget, Commodity, Recipient and Tonnage Tables--Fiscal Year
2008
Appendix 6: Bill Emerson Humanitarian Trust: Summary Budget,
Commodity, Recipient and Tonnage Tables--Fiscal Year 2008
Appendix 7: USDA Food for Progress Program--Commodity Credit
Corporation-funded Grants by Country and Commodity--Fiscal Year
2008
Appendix 8: McGovern-Dole International Food for Education and Child
Nutrition Program--Fiscal Year 2008: Donations by Country and
Commodity
Appendix 9: Food for Peace Title II Congressional Mandates--Fiscal
Year 2008
Appendix 10: Countries with Approved U.S. Food Assistance Programs--
Fiscal Year 2008
Executive Summary
The United States is committed to the promotion of global food
security through its international food assistance and other foreign
assistance programs. In Fiscal Year (FY) 2008, the United States
provided more than $2.8 billion from U.S. food aid programs to
developing countries, reaching tens of millions of people worldwide.
The following summary shows U.S. food assistance allocated by
legislative authority for FY 2008.\1\
---------------------------------------------------------------------------
\1\ All costs represent commodities plus freight and distribution.

------------------------------------------------------------------------
Program Metric Tons Total Cost (000)
------------------------------------------------------------------------
Food for Peace Title II 2,306,110 $2,350,693.3
Bill Emerson Humanitarian Trust 323,820 $265,781.5
Food for Progress 220,890 $166,000
Section 416(b) -- --
Food for Education 86,860 $99,000
Farmer-to-Farmer -- $10,000
---------------------------------------
Grand Total................... 2,937,680 $2,891,474.8
------------------------------------------------------------------------

Over the course of FY 2008, the United States Agency for
International Development (USAID) and the United States Department of
Agriculture (USDA) international food assistance programs have proven
increasingly responsive to global efforts at reducing food insecurity
and targeting those most in need. By responding to assessment and
situational information, focusing on reducing risk and vulnerability,
targeting the poorest of the poor and better integrating individual
programs into larger--often international--efforts, the U.S. Government
aims to improve the effectiveness of aid and to reach global targets
for reducing hunger, malnutrition and poverty.
This aid is essential in emergency situations, which in FY 2008
included a regional drought in the Horn of Africa, exacerbated by
conflict in Somalia and Kenya; an ongoing crisis due to conflict and
displacement in Sudan and the Democratic Republic of the Congo; drought
in Afghanistan; hyperinflation and poor harvests in Zimbabwe;
hurricanes in Haiti; and a cyclone in Burma. In all, approximately 43
million people in 38 countries benefited from emergency food aid
activities provided through Food for Peace Title II programs.
At the same time, USAID non-emergency programs continued to focus
on increasing agricultural production and supporting programs to
address health, nutrition, HIV and others aimed at investing in people.
Special emphasis is placed on combating the root causes of hunger and
malnutrition. Over the course of the year, more than 7.2 million people
in 28 countries benefited from USAID Title II non-emergency food
assistance.
Food for Progress and McGovern-Dole International Food for
Education and Child Nutrition programs, both implemented by USDA,
provided commodities to food-insecure populations through the World
Food Program (WFP), private voluntary organizations (PVOs) and foreign
governments. These resources supported a variety of food security
objectives in developing countries, such as agricultural sector
development, rural development, humanitarian assistance, HIV mitigation
programs, school feeding and maternal and child health programs. In FY
2008, USDA's McGovern-Dole International Food for Education and Child
Nutrition Program provided commodities for in-school feeding, take-home
rations to keep girls enrolled in school, as well as nutrition programs
for mothers, infants and children under age 5, positively impacting the
lives of more than 2.6 million beneficiaries.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Student eating U.S.-provided school lunch in Kyrgyzstan. Photo
by Mercy Corps.
Introduction
Since the passage of Public Law 480 (the Agricultural Trade
Development and Assistance Act of 1954, renamed the Food for Peace Act
in 2008), U.S. international food assistance programs have evolved to
address multiple objectives. The most recent changes came with the Food
for Peace Act of the Food, Conservation, and Energy Act of 2008.
Commonly known as the 2008 Farm Bill, the Food, Conservation, and
Energy Act of 2008 restated the objectives that guide U.S. food
assistance programs. These objectives are:

Combat world hunger and malnutrition and their causes;

Promote broad-based, equitable and sustainable development,
including agricultural development;

Expand international trade;

Foster and encourage the development of private enterprise
and democratic participation in developing countries; and

Prevent conflicts.
U.S. International Food Assistance
The U.S. international food assistance program was established by
several legislative authorities implemented by two Federal agencies.
USAID administers Titles II, III and V of the Food for Peace Act. USDA
administers Section 416(b) of the Agricultural Act of 1949, Title I of
the Food for Peace Act, Food for Progress, and McGovern-Dole
International Food for Education and Child Nutrition Program. The list
below provides a brief description of each activity.

1. Food for Peace Act (formerly the Agricultural Trade Development
and Assistance Act of 1954)--the principal mechanism for U.S.
international food assistance.

Title I: Economic Assistance and Food Security--
concessional sales of U.S. agricultural commodities to
developing countries and private entities.

Title II: Emergency and Private Assistance Programs--
direct donation of U.S. agricultural commodities for
emergency relief and development.

Title III: Food for Development--government-to-
government grants of agricultural commodities tied to
policy reform.

Title V: John Ogonowski and Doug Bereuter Farmer-to-
Farmer (FTF) Program--voluntary technical assistance to
farmers, farm groups and agribusinesses.

2. Section 416(b) of the Agricultural Act of 1949--overseas
donations of surplus food and feed grain owned by the USDA
Commodity Credit Corporation (CCC).

3. Food for Progress Act of 1985--commodity donations available to
emergingdemocracies and developing countries committed to the
introduction or expansion of freeenterprise in their
agricultural economies.

4. McGovern-Dole International Food for Education and Child
Nutrition Program--donations of U.S. agricultural products, as
well as financial and technical assistance, for school feeding
and maternal and child nutrition projects in low-income
countries.

5. Bill Emerson Humanitarian Trust--food reserve administered under
the authority of the Secretary of Agriculture. This reserve is
available to meet emergency humanitarian food needs in
developing countries, allowing the United States to respond to
unanticipated food crises. Under the 2008 Food for Peace Act,
the Administrator of USAID oversees release and use of these
funds.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

A USAID-supported World Food Program initiative in eastern Sri
Lanka assisted these conflict-affected children in FY 2008.
Photo by Kathryn Schein, USAID.
I. Food Security
Defining a Long-Term Global Strategy
U.S. international food assistance has long played a critical role
in responding to global food insecurity. This tradition continued in FY
2008, with the U.S. Government providing more than 2.8 million metric
tons (MT) of commodities. The programs have also evolved to reflect
greater understanding of--and a focus on addressing--the causes of
famine, food emergencies and large-scale hunger around the world. In
the Food, Agriculture, Conservation, and Trade Act of 1990, for
example, food security was narrowly defined as dependent primarily on
the availability of food at the national level. It was broadened in a
1992 policy paper to begin to address distribution and nutritional
quality, calling for ``all people at all times [to] have both physical
and economic access to sufficient food to meet their dietary needs for
a productive and healthy life.'' \2\ This definition includes three
elements judged essential to achieving food security and forms the
basis for much of the U.S. Government's international food assistance
activity:
---------------------------------------------------------------------------
\2\ USAID Policy Determination Number 19, April 1992.

Food access: adequate resources to obtain appropriate foods
for a nutritious diet, which depends on income available to
households and on the price of food.

In recent years, attention has focused on the continued challenges
that hamper efforts at reducing global food insecurity. International
food assistance programs also face increasingly frequent and severe
natural and manmade disasters with growing humanitarian demands on both
U.S. and international humanitarian assistance resources.
Food Price Crisis Response
In FY 2008, prices of major food commodities increased
significantly worldwide, pushing an estimated 40 million more people
into hunger, according to the United Nations Food and Agriculture
Organization. This brought the total population of undernourished
people to an estimated 963 million in 2008. Multiple factors
contributed to higher food prices, including low world grain stocks,
poor harvests in traditional exporting countries and food export
controls.
In response, President George W. Bush in April 2008 directed the
Secretary of Agriculture to draw down on the Bill Emerson Humanitarian
Trust, a U.S. food reserve of up to 4 million MT of commodities, to
meet emergency food aid needs abroad. With this action, USAID provided
emergency food aid to Afghanistan, Ethiopia, Kenya and Zimbabwe.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Unloading corn-soy blend at the port in Djibouti for delivery
to Ethiopia, January 2008. Photo by Suzanne Poland, USAID.

In addition, President Bush in May 2008 asked Congress for $350
million in supplemental FY 2008 funding for Title II emergency food
aid. Congress in June 2008 appropriated $850 million in the
Supplemental Appropriations Act of 2008 for additional Title II
emergency food aid for FY 2008. On June 30, 2008, President Bush signed
the Supplemental Appropriations Act. Within days, USAID and USDA
collaborated to expedite commodity procurement procedures to ensure
rapid arrival of lifesaving assistance where it was needed most. This
significant U.S. Government response to the food price crisis enabled
delivery of substantial and timely food aid.
The Supplemental Appropriations Act of 2008 included $200 million
in development assistance funding in FY 2009 to help developing
countries address the international food crisis. As required under the
Act, the Secretary of State submitted a report to the Committees on
Appropriations within 45 days of enactment on the proposed uses of the
funds. As noted in that report, U.S. Government strategy targets
increasing food productivity in sub-Saharan Africa--where the world's
food needs are greatest--focusing on countries where significant
expansion of food production is feasible and then reducing barriers to
the movement and procurement of food throughout sub-Saharan Africa.
The development assistance funds are being used largely to support
urgent agricultural and trade measures to address high food prices.
These include actions to increase agricultural productivity; alleviate
transportation, distribution and post harvest supply-chain bottlenecks;
and promote sound market-based principles. Development assistance funds
are also being used to support local and regional procurement of food
simultaneously to meet emergency humanitarian needs and address urgent
measures to improve markets for African smallholder farmers.
USAID Food Security Task Force
In April 2008, then-USAID Administrator Henrietta H. Fore
established a USAID Food Security and Food Price Increase Task Force
responsible for coordinating USAID policy and new programs, developing
a new USAID food security strategy and interacting with interagency and
multilateral groups and initiatives related to the impact of global
food price increases on the most vulnerable.
In addition to coordinating additional emergency assistance in
response to the global food price increases, the Task Force served as a
coordination point for information sharing and joint planning among
USAID bureaus and with other government agencies on food security and
food price increase impacts.
Title II Food Security Programming Frameworks
Title II non-emergency food aid programs are increasingly being
initiated with development of a comprehensive framework indicating how
Title II resources could be targeted, programmed and integrated with
other resources to reduce food insecurity among vulnerable populations.
These Food Security Programming Frameworks define objectives,
approaches, geographic foci and institutional partnerships for
effective use of U.S. Government resources to reduce food insecurity.
The frameworks inform country-specific guidance to grant applicants
developing new non-emergency proposals, and support integration of
various U.S. Government resources dedicated to reducing food
insecurity.
Local and Regional Procurement of Food Aid
The ability to procure food aid commodities locally (in the country
where the food aid is needed) and regionally (in a country in the same
region where food aid is needed) offers an exceptional opportunity to
meet humanitarian needs in an efficient and timely fashion, fill
pipeline gaps prior to the arrival of food shipped from the United
States and increase the total amount of lifesaving food aid U.S.
assistance resources can provide.
Local and regional procurement also has the potential to strengthen
and expand commercial markets, stimulate local and regional food
production and economies, and ultimately, reduce emergency food aid
requirements.
For several years, the Administration has requested from Congress
the authority to use up to 25 percent of Title II funds for the local
or regional purchase of food aid commodities to assist people
threatened by a food security crisis.
The 2008 Food for Peace Act authorized and directed the Secretary
of Agriculture to implement a 5 year, $60 million pilot local and
regional purchase program for food aid.
Improving the Effectiveness and Efficiency of International Food
Assistance
In August 2008, Food for Peace (FFP) issued a Request for
Information (RFI) on Increasing the Effectiveness and Efficiency of
Title II Food Aid Program Management. The RFI sought information from
potential grantees as to their interest, priorities and capacities to
participate in or undertake Cooperative Agreements to increase the
effectiveness and efficiency of Title II food aid programs. The purpose
of the Cooperative Agreements is to improve the FFP program technical
and operational procedures and to promote best practices through
coordination and delivery of capacity building and technical assistance
for current and prospective Title II food aid grantees and programs
worldwide.
The principal objectives of the proposed Cooperative Agreements
are:

1. Identify best practices in FFP program management and capacity
building;

2. Design and undertake training in best practices in program
management and capacity building;

3. Communicate and disseminate information on best practices in
program management and capacity building; and

4. Strengthen the coordination and collaboration among current and
prospective Title II grantees.
Monitoring and Oversight
The 2008 Food for Peace Act gave FFP the flexibility and the
mandate to improve oversight of non-emergency programs. As a result,
FFP is implementing a number of steps, including increasing food aid
staff levels in the field, with 12 additional staff in chronically
highly food-insecure countries. This will enhance monitoring capability
to anticipate emergency needs.
FFP is helping Missions and governments to plan and implement in-
depth food security assessments as they relate to the programming of
Title II non-emergency resources. Working with Missions, governments
and other stakeholders, FFP is applying assessment results to prepare
food security strategies that define objectives, approaches and
institutional partnerships for effective use of Title II non-emergency
resources to reduce food insecurity.
In addition, FFP is expanding the Layers monitoring system, which
uses hand-held computers to collect and analyze program information
from a random sample of program sites. Once the data are collected,
Layers generates a report on the performance of grantees in
implementing Title II programs. A wide variety of issues can be
evaluated, ranging from the conditions of storage in commodity
warehouses and record keeping for commodity losses, to the quality of
services delivered by Title II grantees. Layers is currently utilized
in Ethiopia, Haiti and Madagascar, and will be expanded to other
countries that receive Title II non-emergency assistance, including
Guatemala, Mali and Uganda.
FFP is also analyzing lessons learned when programs end. Factors
that lead to success in sustaining program benefits after Title II non-
emergency food assistance has ended are being examined, with the goal
of deriving recommendations for effective Title II non-emergency exit
strategies.
FFP has launched a 3 year pilot project to help USAID comply with
the Bellmon Amendment, which requires that adequate storage facilities
would be available in a recipient country upon arrival of a commodity
to prevent spoilage or waste, and that distribution of the commodity in
the recipient country will not result in substantial disincentive or
interference with domestic production or marketing in that country. The
Bellmon Estimation for Title II (BEST) Project is conducting
independent market analyses to ensure that these requirements are met.
Studies have already been completed and published for Malawi and
Madagascar, and more are underway.
Finally, FFP is offering training in the field on monitoring and
evaluation for non-emergency program grantees to help them harmonize
impact and output indicators and design baseline assessments.
USAID's Famine Early Warning Systems Network
Saving lives and preventing famine are key objectives of the U.S.
Government and the international community. The Famine Early Warning
Systems Network (FEWS NET) is a USAID-funded activity that collaborates
with international, national and regional partners to monitor, collect
and disseminate critical data on conditions of food availability and
access, as well as the environmental and socioeconomic hazards that
lead to food insecurity and famine. The goal of FEWS NET is to manage
the risk of food insecurity through the provision of timely and
analytical early warning and vulnerability information, so that
decision makers have ample time to prepare and take preventive action.
In 2008, FEWS NET covered 20 countries in Africa, Central America,
Central Asia and the Caribbean. Its reporting products, maps, data and
satellite imagery are posted to the website www.fews.net, which
receives an average of approximately 20,000 page hits per month.
To more closely track changes in food prices, FEWS NET in FY 2008
launched a monthly ``Price Watch'' publication that reports on staple
food prices in key markets in urban and town centers in food-insecure
countries. This price information provides advance warning to better
target U.S. food aid resources to the most vulnerable.
FEWS NET exemplifies the U.S. commitment to anticipating and
responding to humanitarian vulnerabilities and crises. FEWS NET has
interagency agreements with the U.S. Geological Survey, National
Aeronautics and Space Administration, National Oceanic and Atmospheric
Administration and USDA that provide information to the U.S.
Government, host country governments and a variety of other regional
and international partners to assist in averting famine.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

A demonstration garden in Lira District, northern Uganda, where
VEDCO, a local partner of USAID grantee ACDI/VOCA, instructs
farmers on improving agricultural production practices. Photo
by Anne Shaw, USAID.
A Conceptual Framework for Integrating Food Aid and HIV Programs
FFP and the Office of the U.S. Global AIDS Coordinator, which leads
implementation of the President's Emergency Plan for AIDS Relief
(PEPFAR), continued to work together during 2008, increasing their
coordination to address the links between nutrition and HIV. In Uganda,
for example, USAID supported a proposal to develop a food-by-
prescription policy (supplementary or therapeutic food is provided
according to clinical assessment) that included FFP grantees with a
focus on the most food-insecure areas in the country. In Haiti, USAID
has developed a proposal for umbrella funding to support organizations
that work to reduce food insecurity among HIV-affected families. This
strategy, developed by the health team, working together with FFP and
other offices within the mission, provides the possibility of a best
practice and will offer PVOs access to funds for livelihood activities
to support HIV-affected families.
Food Aid Quality Review
Over the last 15 years, USAID has conducted a number of reviews of
its processed and fortified foods, making some adjustments in the
formulations. Recently, USDA has also looked at the foods on the FFP
commodity list and is in the process of updating its specifications and
quality control for those foods.
Continuing emphasis in the Food for Peace Act on the importance of
micronutrients and FFP's experience with the use of foods in preventing
malnutrition in children under age 2 have encouraged a much deeper
review of the food aid basket.
FFP issued a Request for Proposals (RFP) in FY 2008 to review the
role of food aid commodities in meeting beneficiaries' nutritional
needs. In FY 2009, FFP awarded a contract to carry out this review,
which will examine the nutritional needs of FFP's current beneficiary
populations and the commodities currently available to meet those
needs. In addition, the contract will use a consultative process to
reach out to the many FFP grantees in order to arrive at a consensus on
needed reformulations and/or the development of new foods not currently
available. As part of this contract, any recommendations for
reformulation or new foods will be accompanied by the description of
the process necessary to test and evaluate the efficacy and
effectiveness of these foods.
II. U.S. International Food Assistance
Program Descriptions and Fiscal Year 2008 Accomplishments
A. Food for Peace Act
The primary mechanism of U.S. international food assistance is the
Agricultural Trade Development and Assistance Act of 1954 (P.L. 480,
renamed the Food for Peace Act in 2008).

1. Title I: Trade and Development Assistance

The Title I authority provides funding for both a concessional
sales program, supporting Trade and Development and for the Food for
Progress grant program, supporting agricultural development in emerging
democracies. In FY 2008, no new concessional sales agreements were
made.
The USDA-administered Food for Progress Program, authorized under
the Food for Progress Act of 1985, assists developing countries,
particularly emerging democracies ``that have made commitments to
introduce or expand free enterprise elements in their agricultural
economies through changes in commodity pricing, marketing, input
availability, distribution and private sector involvement.'' The
program authorizes the Commodity Credit Corporation (CCC) to carry out
the sale and exportation of U.S. agricultural commodities on credit
terms or on a grant basis, with the use of either CCC financing or Food
for Peace Title I funds. Grants under the Food for Progress program are
awarded to governments or PVOs, nonprofit agriculture organizations,
cooperatives, intergovernmental organizations or other private
entities.

a. Title I: Food for Progress Highlights

In FY 2008, Food for Progress Title I funding provided 10,900 MT in
assistance, with an estimated value of $13 million. The summaries below
provide examples of Title I-funded Food for Progress agreements signed
in FY 2008.

Tajikistan: USDA donated 6,570 MT of wheat flour and 300 MT
of vegetable oil to WFP for use in its Protracted Relief and
Recovery Operation. In Tajikistan, WFP works to prevent hunger
among chronically food-insecure households in marginalized
geographic areas during the lean period through vulnerable
group feeding and food for work activities; to promote
education through the provision of hot meals in primary schools
and take-home rations for girls in secondary schools; to
rehabilitate malnourished children and pregnant and lactating
women through the provision of supplementary food and to meet
the basic food needs of tuberculosis patients; and to support
government capacity building in managing national food
assistance programs.

East Timor: USDA donated approximately 1,600 MT of corn-soy
blend, 850 MT of kidney beans, 900 MT of rice and 260 MT of
vegetable oil to WFP for use in its Protracted Relief and
Recovery Operation. In East Timor, WFP is carrying out three
main activities: maternal and child health, school feeding and
emergency preparedness and response. These activities aim to
improve the nutritional status of the most vulnerable
population groups during critical times of their lives; the
potential for agricultural production; and the access to and
utilization of schools as a means for human capacity
development.

2. Title II: Emergency and Private Assistance Programs

In FY 2008, more than \3/4\ of U.S. international food aid was used
to respond to emergency situations and to implement development
projects under Title II, administered by the USAID Office of Food for
Peace in the Bureau for Democracy, Conflict, and Humanitarian
Assistance. In FY 2008, Title II programs (emergency and non-emergency)
and contributions from the Bill Emerson Humanitarian Trust provided
more than 2.6 million MT of commodities, with a program cost of more
than $2.6 billion, to assist approximately 56 million people in 49
countries worldwide.
The focus of Title II programs is to reduce food insecurity in
vulnerable populations. This focus on vulnerability to food insecurity
targets improving resiliency to shocks, an essential first step for
household self-sufficiency and economic independence. In support of
this strategy, the non-emergency development portfolio incorporates
some activities to strengthen local capacity to respond to natural
disasters.

a. Title II: Emergency Programs

Title II emergency programs aim to address two forms of
emergencies: natural disasters, such as floods or droughts, and complex
emergencies characterized by a combination of natural disaster,
conflict and insecurity. All of these elements pose substantial program
and operating challenges in responding effectively to the needs of
food-insecure populations.
In FY 2008, Title II emergency programs and contributions from the
Bill Emerson Humanitarian Trust provided more than 2.2 million MT of
emergency food aid, with a program cost of more than $2.2 billion, to
help alleviate malnutrition and hunger in 39 countries. In all, Title
II emergency programs reached approximately 43 million food-insecure
people in FY 2008.

Food for Peace Title II: Emergency Program Highlights

Horn of Africa

Approximately 19 million people in Ethiopia, Somalia, Kenya and
Djibouti needed emergency food assistance in FY 2008 because of a
regional drought, with several conflicts in the Horn of Africa. FFP
responded with more than 1 million MT of food aid, valued at nearly
$853 million, which helped to avert a humanitarian catastrophe.
This response included 735,140 MT of food aid for Ethiopia, valued
at $561.5 million; 211,320 MT for Somalia, valued at $197.4 million;
87,300 MT for Kenya, valued at $91.3 million; and 2,360 MT for
Djibouti, valued at $2.7 million.
In Somalia, despite sustained periods of drought and civil
conflict, the robust food aid response by FFP helped to stave off
significant mortality and mass migration.

------------------------------------------------------------------------

-------------------------------------------------------------------------
Emergencies in Urban Settings

While the majority of the world's food-insecure population resides
in rural areas, low-income urban populations are vulnerable to market-
induced food security shocks, as occurred in 2008 with the rise of food
prices worldwide. The urban poor are particularly vulnerable to price
increases because such a large portion of their income goes to
purchasing food.
In 2008, FFP published Emergencies in Urban Settings: A Technical
Review of Food-Based Program Options. This review, which emerged from a
workshop with private voluntary organizations and World Food Program
experts, is a programming manual that will improve targeting and
delivery of food aid to those most impacted by rising food prices. It
compares program options when food aid is determined to be an
appropriate response to an emergency--including targeted household food
distribution, food for work, food for training, ``wet'' feeding, and
community-based management of acute malnutrition programs.
------------------------------------------------------------------------

In Ethiopia, donors including USAID are working with the Government
of Ethiopia to mitigate the effects of recurrent cycles of drought and
food shortages through the innovative Productive Safety Net Program
(PSNP), which targets 7.2 million of the country's most food-insecure
people. These recipients receive cash and/or food transfers on a
predictable basis that allow them to withstand the worst periods of
food shortages without selling their assets. In return, they provide
labor for local public works projects during the 6 months of the year
between harvest and planting season. These projects have resulted in
the development and protection of thousands of water sources, such as
springs, hand-dug wells and water harvesting structures, making water
available for human and animal consumption as well as irrigation. They
have also provided 33,000 kilometers of rural access roads and the
construction of community facilities such as farmer training centers,
health posts and schools. PSNP participants withstood the effects of
the 2008 drought much better than non-beneficiaries who might have
received aid, but on a less predictable basis.
In Kenya, FFP provided nearly 55 percent of WFP emergency resources
that assisted up to one million Kenyan marginal farming and pastoralist
families affected by drought as well as approximately 300,000
internally displaced Kenyans during calendar year 2008. The United
States is the single largest donor to WFP for its emergency operation
in Kenya.

Sudan

USAID continues to be the world's leading donor of food assistance
to Sudan, having provided more than $1.5 billion in food assistance
since the Darfur crisis began in 2004. The United States contributed
approximately half of WFP's Sudan appeals for 2008 and 2009, by far the
largest contribution from any donor. Timely contributions from FFP
helped WFP ensure a continued flow of assistance during the critical
hunger period from June to September. Despite rampant insecurity, WFP
met, on average, more than 93 percent of its monthly target caseload in
Darfur throughout 2008.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Loading USAID food in Port Sudan for World Food Program
distribution in Sudan, May 2008. Photo by Tyler Beckelman,
USAID.

b. Title II: Private Assistance Programs (Non-Emergency)

The Food for Peace Title II development (non-emergency) food aid
program constitutes one of the largest sources of USAID funding in
promoting long-term food security in such areas as:

1. Agriculture and Natural Resource Management activities;

2. Health and household nutrition activities; and

3. Education, Humanitarian Assistance and Microenterprise.

In FY 2008, 20 grantees implemented 92 Title II non-emergency
activities in 28 countries. Approximately 341,280 MT of food
assistance, valued at more than $354 million, was used to support
programs that benefited more than 7.2 million people.

------------------------------------------------------------------------

-------------------------------------------------------------------------
Preventing Malnutrition in Children Under Two Approach (PM2A)

The USAID-funded Food and Nutrition Technical Assistance (FANTA)
grantee and its partners, the International Food Policy Research
Institute and Cornell University, together with FFP grantee World
Vision, recently completed the evaluation of a new approach to
supplementary feeding in Haiti.
Instead of providing food only as part of the recuperation of
malnourished children, the PM2A targets all children from 6 to 24
months with food supplementation and provides mothers with a supplement
as well from pregnancy until the baby is 6 months old. Receipt of the
food requires the mother's participation in improved health and
nutritional services, which include a Behavior Change Communications
program oriented toward improving family nutritional status and how the
infant and young child is cared for. A careful evaluation in Haiti
documented that the PM2A was both successful and cost effective in
reducing chronic malnutrition (stunting), wasting and underweight in
Haiti when compared with a similar maternal and child health and
nutrition program that used the traditional food aid approach of
providing supplementary feeding only to already malnourished children
as part of their recuperation.
As a result of this study, World Vision and the other two grantees
in Haiti are scaling up the use of the PM2A approach to the entire
population of Haiti benefiting from FFP non-emergency support. World
Vision has also incorporated the use of the PM2A approach into its new
multi-year program beginning in FY 2008 in Afghanistan.
See: Marie T. Ruel, et al. ``Age-based Preventive Targeting of Food
Assistance and Behavior Change and Communication for Reduction of
Childhood Malnutrition in Haiti: A Cluster Randomized Trial.'' The
Lancet 371 (Feb. 16, 2008): 588-595.
------------------------------------------------------------------------

Food for Peace Title II: Non-Emergency Program Highlights

The following examples illustrate the breadth of Title II non-
emergency food resources implemented by grantees as well as how these
activities have helped in allaying food insecurity and fostering self-
sufficiency.

Burkina Faso

Africare, a USAID grantee, was awarded the Government of Burkina
Faso's highest honor in 2008 for the achievements of its Zondoma Food
Security Initiative, which reached all 104 villages in the northern
province of Zondoma, a highly food-insecure region. Africare was the
only PVO to receive the award, Chevalier de l'Ordre National. Funded
through Title II of the Food for Peace Act, the initiative benefited
160,000 people by promoting diversified crop production and employment
opportunities, improving household nutrition, educating about HIV/AIDS
prevention and providing nutritional support to HIV/AIDS-affected
households. Food security in Zondoma province is threatened by factors
including low rainfall, high levels of infant morbidity and out-
migration of workers.

Bangladesh

USAID contributed 64,500 MT of commodities valued at $47.8 million
to non-emergency Title II programs in Bangladesh in FY 2008.
Save the Children Federation has been implementing a Title II
development program called Jibon-O-Jibika (Life and Livelihoods) in
three coastal districts of south-central Bangladesh since October 2004.
The program includes interventions to increase household food
availability and access, enhance maternal and child health and
nutrition and improve community disaster preparedness. The selected
costal areas are considered highly vulnerable due to high malnutrition
rates and their geographical location in the cyclone belt of
Bangladesh, which means they are constantly threatened by natural
disasters. An assessment of disaster preparedness and response
conducted in the Jibon-O-Jibika areas of operation in FY 2008 found
that cyclone warning awareness has increased substantially during the
course of the program's activities. Nearly 100 percent of inhabitants
in the areas had received cyclone warning messages prior to Cyclone
Sidr in November 2007, a significant improvement from 2005, when a
baseline assessment showed that warnings were reaching only 19 to 51
percent of households in the targeted communities. As a result of
improved cyclone warning, many households successfully evacuated before
Cyclone Sidr, and some were able to use cyclone shelters in their
communities.
A 5 year program implemented by CARE--Strengthening Household
Ability to Respond to Development Opportunities (SHOUHARDO)--is
reaching more than 407,000 vulnerable households in 2,205 villages and
137 urban slums with activities aimed at sustainably reducing chronic
and transitory food insecurity. One significant SHOUHARDO activity is a
flood early warning system called the Climate Forecast Application in
Bangladesh, which is being developed by a consortium including the
Georgia Institute of Technology, the National Center for Atmospheric
Research and the Asian Disaster Preparedness Center. The first tier of
this system, which provides a 10 day warning of impending floods, was
completed, tested and handed over to the Bangladesh Water Development
Board in FY 2008. Test results indicated a reliability level of more
than 90 percent.

Haiti

USAID contributed 44,400 MT of Title II non-emergency food aid
valued at $34.2 million to Haiti in FY 2008. USAID's grantees in Haiti
work with the poorest of the poor to increase food production, improve
health and nutrition, increase livelihoods and household incomes, and
provide a food safety net for the most vulnerable people in the
population. FFP's non-emergency programs were critical in a year when
Haiti was hit by dramatic food and fuel price increases and three
hurricanes in quick succession.
In addition to providing support for agricultural activities and
emergency food distribution following the hurricanes, ACDI/VOCA
developed an early warning system to monitor slow-onset disasters in 34
communities in southeastern Haiti, collecting rainfall and food price
data in order to mitigate the effects of drought and price shocks.
Catholic Relief Services trained 525 farmers in soil and water
conservation techniques and nursery management, and helped farmers
establish 36 demonstration plots in southwestern Haiti to evaluate
improved varieties of bean, corn and cassava.
Non-emergency programs in Haiti also included activities that
promoted maternal and child health. World Vision fully vaccinated
nearly 7,500 children under age 5, provided prenatal and postnatal
health services for more than 6,500 women, and provided an average of
nearly 22,000 monthly food rations to approximately 88,000 children,
pregnant and lactating women, and people living with AIDS.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Primary school students Jayrin Munoz Videa, left, and Carla
Antonieta Maradiaga, right, eating lunch provided by
International Food Relief Partnership grantee Fabretto
Children's Foundation at Mama Margarita School in Somoto,
Nicaragua. Photo: Rafael I. Merchan, Fabretto Children's
Foundation.

c. International Food Relief Partnership

In November 2000, the U.S. Congress passed the International Food
Relief Partnership (IFRP) Act. This law enables USAID to award grant
agreements to eligible U.S. nonprofit organizations to produce and
stockpile shelf-stable, pre-packaged commodities. Through the IFRP
program, commodities are made available to eligible nonprofit U.S.
organizations and international organizations for transportation,
delivery and distribution in emergency food aid relief programs.
In FY 2008, the Office of Food for Peace awarded approximately $8
million in Title II IFRP supplier and distribution grants. The
program's primary supplier, Breedlove Dehydrated Foods, produced a
micronutrient-fortified, dried vegetable soup mix which is used as a
meal supplement for humanitarian relief operations overseas. Over the
course of the year, 30 IFRP distribution grants were awarded to 27
nonprofit U.S.-based organizations, which distributed the commodity to
beneficiaries in 30 countries. A list of these countries is provided in
Appendix 2, List of Grantees.

3. Title III: Food for Development

The Food for Peace Title III program is a USAID-administered tool
for enhancing food security and supporting long-term economic
development in the least-developed countries. The U.S. Government
donates agricultural commodities to the recipient country and funds
their transportation to the point of entry in the recipient country.
These commodities are sold on the domestic market and the revenue
generated from their sale is used to support and implement economic
development and food-security programs. Funds were not appropriated for
Title III in FY 2008.

4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer
Program

The John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF) Program
provides voluntary technical assistance to farmers, farm groups and
agribusinesses in developing and transitional countries to promote
sustainable improvements in food processing, production and marketing.
The program relies on the expertise of volunteers from U.S. farms,
land-grant universities, cooperatives, private agribusinesses and
nonprofit farm organizations to respond to the local needs of host-
country farmers and organizations. Volunteers are recruited from all 50
states and the District of Columbia. In general, these volunteers are
not overseas development professionals, but rather individuals who have
domestic careers, farms and agribusinesses or are retired persons who
want to participate in development efforts. Typically volunteers spend
about 20 to 30 days in the host country.
The FTF Program was initially authorized by Congress in the Food
Security Act of 1985 and funded through Title V of the Agricultural
Trade Development and Assistance Act of 1954. The U.S. Congress
authorized the current FY 2009-2013 phase of the FTF Program in the
2008 Food for Peace Act, designating it the ``John Ogonowski and Doug
Bereuter Farmer-to-Farmer Program'' in honor of Ogonowski, one of the
pilots killed on September 11, 2001, and former Congressman Bereuter,
who initially sponsored the program.

Title V: FTF Highlights

Farmer-to-Farmer Volunteer Assignments: FY 2008
------------------------------------------------------------------------

------------------------------------------------------------------------
Angola 5
Ethiopia 22
Ghana 6
Guinea 7
Kenya 14
Malawi 11
Mali 5
Mozambique 6
Nigeria 1
South Africa 37
Uganda 22
Zambia 12
------------------------------
Subtotal Africa........................ 148
------------------------------
Bolivia 1
El Salvador 8
Guatemala 7
Guyana 17
Haiti 25
Honduras 13
Jamaica 32
Nicaragua 4
Peru 1
------------------------------
Subtotal Latin America--Caribbean...... 108
------------------------------
Armenia 18
Azerbaijan 16
Belarus 17
Georgia 8
Moldova 31
Russia 81
Ukraine 49
------------------------------
Subtotal Europe-Eurasia................ 220
------------------------------
Bangladesh 9
India 4
Indonesia 2
Nepal 5
Kazakhstan 20
Kyrgyzstan 33
Tajikistan 21
Turkmenistan 18
Vietnam 1
------------------------------
Subtotal Asia-Near East................ 113
==============================
Total................................ 589
------------------------------------------------------------------------

During FY 2008, USAID provided $9.8 for FTF programs of eight
implementing agencies. The FTF programs funded a total of 589 volunteer
assignments in 37 countries. Volunteers provided developing country
host organizations with technical assistance services with an estimated
value of more than $6.3 million. Volunteer efforts helped hosts
mobilize $11.3 million in grants and loans. In addition, volunteers
provided direct formal training to 22,822 beneficiaries (of which 45
percent were women). The following examples illustrate the types of
activities undertaken by the FTF program:

FTF volunteer Larry Swalheim helps strengthen the cooperative and
lifts members' spirits:

In April 2008, FTF volunteer Larry Swalheim visited the Farmer
Cooperative in Ukraine to work with its members on cooperative service
development. As the Chief Executive Officer of Landmark Cooperative in
Wisconsin, Mr. Swalheim is very familiar with a diverse set of products
and services, including animal feed production, petroleum marketing and
sales of fertilizer and seeds. During his work with the Farmer
Cooperative, Mr. Swalheim was able to draw on his extensive experience
to teach the cooperative's members methods of strengthening their
organization and improving services to farmer members. During his
assignment, Mr. Swalheim conducted seven seminars in six towns.

FTF Volunteer Strengthens Broiler Processing Value-chain in
Bangladesh:

Bangladesh Broiler Processing Center (BBPC), an agro-enterprise of
BRAC, the largest PVO in Bangladesh, was established as a semi-
automatic broiler processing facility in 2003 in Tongi/Gazipur, near
Dhaka. BBPC faced numerous challenges--lack of hygienic processing;
lack of adequate freezing, storage and transportation facilities; and
inefficient cooling and refrigeration systems.
In May 2005 and September 2006, the FTF Program fielded Dr. Omar
Oyarzabal, a highly experienced broiler processing specialist, to help
improve BBPC's processing facilities and upgrade staff technical and
management capabilities. Based on his recommendations, BBPC instituted
many important modifications to the plant's technical facilities to
bring about tangible improvements in the entire broiler processing
value chain. Notable among them were:

Installed a new blast freezing system to significantly
enhance carcass freezing efficiency;

Improved air-conditioning of the processing and grading
spaces to maintain room temperatures below 15 Celsius;

Upgraded freezer and chiller rooms to allow more space to
hold the processed products before refrigeration; and

Improved maintenance of chill tanks and made changes in the
practices of carcass storage.

In 2008, an analysis was conducted to determine the impact of the
FTF volunteer assistance. It was found out that as an outcome of these
important improvements, production of processed broiler meat has
increased by 63 percent (from 80 MT/month to 130 MT/month) as of August
2008; monthly gross value of sales has increased by 128 percent (from
$148,235 to $338,382); and monthly average net income has increased by
97 percent (from $16,471 to $32,500).
B. Section 416(b) of the Agriculture Act of 1949: Surplus Commodities
The Agricultural Act of 1949 authorizes the donation by USDA of
surplus food and feed grain owned by the CCC. Section 416(a) authorizes
surplus food assistance to be distributed domestically and surplus food
shipped to developing countries for assistance programs is covered
under Section 416(b). Surplus commodities acquired by the CCC as a
result of price-support operations may be made available under Section
416(b) if they cannot be sold or otherwise disposed of without
disrupting price-support programs or at competitive world prices. These
donations are prohibited from reducing the amounts of commodities
traditionally donated to domestic feeding programs or agencies, from
preventing the fulfillment of any agreement entered into under a
payment-in-kind program or from disrupting normal commercial sales.
In FY 2008, no commodities were made available by CCC, and
consequently, no donations were made under the program.
C. Food for Progress
The USDA-administered Food for Progress Program, authorized under
the Food for Progress Act of 1985, assists developing countries,
particularly emerging democracies ``that have made commitments to
introduce or expand free enterprise elements in their agricultural
economies through changes in commodity pricing, marketing, input
availability, distribution and private sector involvement.'' The
program authorizes the CCC to carry out the sale and exportation of
U.S. agricultural commodities on credit terms or on a grant basis, with
the use of either CCC financing or Food for Peace Title I funds.
Agreements for Food for Progress are awarded to governments or PVOs,
nonprofit agriculture organizations, cooperatives, intergovernmental
organizations or other private entities.
The 2008 Farm Bill extended the authority for the Food for Progress
Program to provide assistance in the administration and monitoring of
food assistance programs to strengthen private-sector agriculture in
recipient countries through FY 2012. The CCC is authorized to use $15
million for administrative costs under the grants and $40 million for
transportation expenses.

1. CCC-funded Food for Progress Highlights

In FY 2008, CCC funding financed the purchase and shipment of
199,600 MT of commodities to 15 countries, with an estimated value of
$162 million. The summaries below provide examples of CCC-funded Food
for Progress agreements signed in FY 2008.

Afghanistan: USDA donated 12,500 MT of wheat to Roots of
Peace (ROP), a PVO, for use in Afghanistan. ROP will use
proceeds from the sale of the wheat in Afghanistan to assist
approximately 14,400 farmers expand horticultural production in
Afghanistan. ROP aims to accomplish this by helping plant new
orchards and providing extension support for fruit and nut tree
farmers; expanding grape production by establishing grape vine
nurseries, upgrading vineyards through trellising and providing
extension support for grape farmers; providing post-harvest
training, services and facilities to farmers; providing
training to farmers in literacy, numeracy, business, marketing
and financial management; and establishing a line of credit
with a local financial institution to provide loans to eligible
farmers and merchants. Fruits and nuts are among the most
valuable agricultural exports of Afghanistan. The opportunity
to expand horticultural production by converting existing
irrigated grain fields into high market-value fruit and nut
production represents the most practical way of increasing farm
incomes and focusing production away from illicit crops.

Ethiopia: USDA donated 20,000 MT of wheat to ACDI/VOCA, a
PVO, for use in Ethiopia. Proceeds from the sale of the wheat
will be used to develop the animal feed industry, thereby
increasing profitability for smallholder livestock owners and
pastoralists. Activities include feed formulation and
manufacturing, feedlot management and forage production and
strengthening the feed distribution channel. The program will
benefit more than 72,000 livestock owners, including 53,300
cooperative member farmers and 19,300 pastoralists.
Approximately half of Ethiopia's population lives in poverty,
while another 15 percent is extremely susceptible to poverty as
a result of drought and other shocks. With an estimated 40.9
million cattle and 37 million sheep and goats, the livestock
sector is one of Ethiopia's key agricultural industries,
contributing 30 to 35 percent of agricultural gross domestic
product and 15 to 18 percent of total export earnings and
employs a third of Ethiopia's rural population.

The Gambia, Guinea-Bissau and Senegal: USDA donated 4,500 MT
of vegetable oil to International Relief and Development, Inc.
(IRD), a PVO, for use in The Gambia, Guinea-Bissau and Senegal.
Lying within the drought-prone Sahel region, these countries
have fragile ecosystems and unstable climates and the regional
effects of protracted civil conflict increases vulnerability to
food insecurity. IRD will sell the vegetable oil in The Gambia
and use the proceeds to assist cashew farmers in The Gambia,
southern Senegal and northern Guinea-Bissau. Activities include
capacity building of cashew farmer associations, increasing the
productivity and quality of cashews, adding value through
processing and increasing local consumption of cashews. IRD
seeks to increase yield by 60 percent and farmer income by 50
percent; 100,000 farmers will benefit from this program.

Honduras: USDA donated 8,800 MT of soybean meal to
TechnoServe, a PVO, for use in Honduras. TechnoServe will sell
the commodity in Honduras and use the proceeds to assist 750
smallholder farmers diversify production by integrating
jatropha with other high-value products like fine cocoa, roots
and tubers and dairy. The program will help agribusinesses
access export markets, raise incomes for smallholder farmers,
reforest degraded lands, rehabilitate soils and reduce erosion
and supply the demand for raw materials to produce
competitively priced biodiesel. Over 3 years, small producers
in the program will earn $3 million in incremental annual
sales, improving living standards for 4,000 rural poor. Despite
the fact that Honduras has made important gains in liberalizing
its economy (it is ranked as having one of the most open
economies in Central America and has favorable year-round
growing conditions) Honduran agricultural producers remain
mired in poverty, with nearly 70 percent of the rural
population engaged in subsistence farming. Per capita income is
$1,121 and 63 percent of the population lives in poverty.

Niger: USDA donated 2,410 MT of vegetable oil to Catholic
Relief Services (CRS), a PVO, for use in Niger. CRS will sell
the commodity and use the proceeds over 3 years to carry out a
program to increase production, processing and marketing of
sesame, okra, onion and other vegetables in approximately 60
villages, all in the western region of the country. The project
will enhance private sector development and give producers the
ability to support their financial needs through the sale of
locally grown agricultural commodities in national and
international markets. The project will assist 8,000 recipients
directly and benefit another 32,000 indirectly.
D. McGovern-Dole International Food for Education and Child Nutrition
Program
An estimated 120 million children around the world do not attend
school, due in part to hunger or malnourishment. The majority of them
are girls. Following the success of the Global Food for Education
Initiative, created in July 2000, the United States has demonstrated
its continued commitment to education and child nutrition with the 2008
Farm Bill's re-authorization of the McGovern-Dole International Food
for Education and Child Nutrition Program (FFE) through FY 2012.
Modeled on the U.S. Government's school meals program, the FFE
program is named in honor of former Senators George McGovern and Robert
Dole for their tireless efforts to promote education and school
feeding. The FFE program uses U.S. commodities and financial assistance
to provide incentives for children to attend and remain in school, as
well as to improve child development through nutritional programs for
women, infants and children under age 5. In FY 2008, the FFE program
provided more than 125,500 MT of commodities to support child nutrition
and school feeding programs in 17 countries, the total value of which
exceeded $99 million. The following are examples of new FFE programs
that were funded in FY 2008:

Bangladesh: Bangladesh has the third-highest number of
hungry poor in the world after India and China. The estimated
gross enrollment rate of pre-primary children (aged 4-5 years)
in Bangladesh is 23 percent for boys and 26 percent for girls,
which is low in comparison to other Asian countries in the
region. Additionally, economic hardship forces parents to keep
their children at home for domestic and paid work. To increase
relief in this region, USDA signed an FFE agreement with WFP to
donate 30,000 tons of wheat. WFP will directly distribute the
wheat in the form of fortified biscuits to 350,000 students. In
addition to direct feeding, this program will include
activities to enhance awareness of nutrition and education
issues among children, parents, teachers and School Management
Committees; de-worming; hygiene, sanitation and nutrition
counseling; and HIV/AIDS education.

Ethiopia: Food insecurity is very prevalent in Ethiopia and
is demonstrated by widespread chronic malnutrition resulting
from inadequate dietary intake, inadequate health
infrastructure and limited access to education. As a result,
Ethiopia has one of the most nutritionally deprived populations
in the world and the large number of children not in school is
linked to physical and psychological impairments resulting from
malnutrition in early childhood. Though improvement has been
observed in the past in regard to enrollment, the enrollment
rate in emerging pastoralist regions such as Somali and Afar is
still very low, with 30.3 percent and 21.9 percent
respectively, compared to the national average gross enrollment
rate of 85.8 percent. To help ease this situation, USDA donated
7,020 MT of corn-soy blend and 1,600 MT of vegetable oil to
WFP, which will use the food to feed 160,000 students in
pastoralist regions.

Guatemala: Guatemala is a post-conflict, poor, multi-ethnic
nation with a population of 12 million. According to UNICEF,
31.5 percent of the adult population is illiterate, rising to
73 percent in the rural Mayan highlands where Asociacion SHARE
deGuatemala (SHARE) will implement an FFE program. USDA donated
280 MT of vegetable oil, 560 MT of dark-red kidney beans, 560
MT of milled rice and 2,400 MT of soybean meal for use in
Guatemala. SHARE will sell the soybean meal locally and use the
remainder of commodities to provide daily meals for 72,300
teachers and children. Take-home rations will benefit another
18,000 students. In addition to food provisions, the program
will provide training for teachers, educational materials and
infrastructure improvements. SHARE will also support
approximately 300 schools with the supplies and training
necessary to implement school gardens. The harvest from these
gardens will provide additional complementary and nutritious
foods for the daily school snack and will teach students the
importance of caring for the environment and working as a team.

Laos: The United States is committed to helping Laos end the
threat posed by unexploded ordnance and improve education for
Laotian children in the districts of Mahaxy, Boualapha and
Ngommalat and in Khammouane Province. Since 2006, with the
assistance of the Humpty Dumpty Institute (HDI) and IRD, USDA
has provided 1.3 million nutritious mid-morning snacks of corn
soy blend and more than 45,000 take-home rations to the
children and teachers who maintain a monthly school attendance
rate of 80 percent. As a result of this school-feeding program,
school enrollment is up 21 percent for girls and 13 percent for
boys. Over 450 teachers have received training and 110 schools
have implemented vegetable gardens, rehabilitation projects,
health-education programs and school kits (pencils and
notebooks) distributions. In addition, the Mines Advisory Group
removed more than 2,220 items of unexploded ordnance and
cleared approximately 200,000 square meters of land and roads.
This land is now safe for agriculture and travel for school
children and the community.

Kyrgyzstan: With Kyrgyzstan's independence after the fall of
the Soviet Union in 1991 came the collapse of most social
services, including the education system. Nationwide, primary
school enrollment has dropped ten percent since 1991. Further,
many families cannot afford the unofficial costs of a primary
or preschool education, such as school meals and textbooks and
elect to send only their sons, not their daughters, to school.
As a result, school attendance for girls has dropped to nearly
ten percent lower than for boys. USDA and Mercy Corps
International (MCI) signed an FFE agreement for 200 MT of wheat
flour, 150 MT of rice and 150 MT of soybean oil to implement a
12 month school feeding program in all 40 rural regions of the
Kyrgyz Republic. The program's goal is to empower communities
and government toward sustained, improved educational
achievement in schools in the most underserved educational
institutions, through food distribution to 30,000 students.
Additionally, MCI will undertake school infrastructure projects
and provide educational grants to school children.

Mozambique: Mozambique has more than 1.5 million orphans,
close to 400,000 of whom are AIDS orphans. Many of these
children face grave difficulties in surviving, often making
school attendance impossible because they are needed for income
generation, food production or care for their siblings. USDA
signed an FFE agreement with Joint Aid Management (JAM), a PVO,
for the donation of 2,100 MT of corn-soy blend and 3,790 MT of
milled rice. JAM will use the commodities to provide a daily
nutritional meal to 113,000 students and take-home rations to
16,000 girls and 2,200 cooks. JAM's program also includes
training seminars and infrastructure development, as well as
the establishment of school gardens.

Rwanda: Chronic food insecurity, frequent drought and
structural poverty seriously reduce opportunities for children
in many parts of Rwanda to complete primary education. Lack of
food prevents many children from enrolling in school, forces
them to be frequently absent and reduces their learning ability
and academic performance. Although primary net enrollment has
increased from 73 percent in 2002 to 92 percent in 2005, pupil
to teacher ratios have increased and the availability of
teaching and learning materials and infrastructure has not kept
pace with enrollment. As a result, examination pass rates have
declined and the primary completion rate has stagnated. To
combat this, USDA signed an FFE agreement with WFP to donate
18,360 MT of cornmeal, 4,860 MT of beans and 1,620 MT of
vegetable oil. WFP will directly distribute these commodities
to 300,000 students in 12 food-insecure, drought-prone
districts in the eastern and southern provinces of Rwanda that
show low overall rates of primary enrollment and low attendance
of schoolchildren. WFP will also conduct school infrastructure
projects and supply kitchen equipment, health related equipment
and agricultural tools to schools.
E. Bill Emerson Humanitarian Trust
The Bill Emerson Humanitarian Trust (BEHT) is a food reserve
designed to hold up to 4 million MT of wheat, corn, sorghum and rice
administered under the authority of the Secretary of Agriculture. When
an unanticipated emergency arises that cannot be met with Food for
Peace Act resources, the Secretary of Agriculture may authorize the
release of commodities from the reserve in order to meet those
immediate needs. Each year, 500,000 MT may be released, plus up to
another 500,000 MT that was not released in prior years.
The reserve was originally authorized by the Agricultural Trade Act
of 1980 as the Food Security Wheat Reserve and was later broadened to
include a number of other commodities. In 1998, the reserve was renamed
the Bill Emerson Humanitarian Trust.
In FY 2008, USDA converted wheat in the trust into cash.
III. Appendices

Appendix 1: List of Abbreviations
------------------------------------------------------------------------

------------------------------------------------------------------------
BBPC Bangladesh Broiler Processing Center
BEHT Bill Emerson Humanitarian Trust
CCC Commodity Credit Corporation
CSB Corn Soy Blend
FEWS NET Famine Early Warning System Network
FFE McGovern-Dole International Food for Education
and Child Nutrition Program (formerly Global
Food for Education Initiative)
FFP Office of Food for Peace (USAID)
Food for Peace Act U.S. Food for Peace Act (formerly P.L. 480)
FTF Farmer-to-Farmer Program of Food for Peace
Act, Title V
FY Fiscal year
HIV Human Immunodeficiency Virus
IFRP International Food Relief Partnership
MT Metric ton
PEPFAR President's Emergency Plan for AIDS Relief
PM2A Preventing Malnutrition in Children Under Two
Approach
PSC Personnel Services Contract
PSNP Productive Safety Net Program (Ethiopia)
PVO Private voluntary organization
RFI Request for Information
RFP Request for Proposal
UNICEF United Nations Children's Fund
USAID U.S. Agency for International Development
USDA U.S. Department of Agriculture
WFP United Nations World Food Program
------------------------------------------------------------------------

Appendix 2: List of Grantees
------------------------------------------------------------------------

------------------------------------------------------------------------
The following grantees implemented U.S. Government food assistance
programs in Fiscal Year 2008:
------------------------------------------------------------------------
ACDI/VOCA Agriculture Cooperative Development
International/Volunteers in Overseas
Cooperative Assistance
ADRA Adventist Development and Relief Agency
International, Inc.
Africare Africare
CARE Cooperative for Assistance and Relief
Everywhere, Inc.
CNFA Citizens' Network for Foreign Affairs
CPI Counterpart International
CRS Catholic Relief Services
FFPI Food for the Poor, Inc.
FHI Food for the Hungry International
Florida A&M Florida A&M University
GoA Government of Afghanistan
GLIMGlobal Impact, Inc.
HDI The Humpty Dumpty Institute
IPHD International Partnership for Human
Development
IRD International Relief and Development, Inc.
LOLLand O'Lakes
LWMLegacy World Missions
MCI Mercy Corps International
NOAH NOAH Project
NPA Norwegian People's Aid
OICI Opportunities Industrialization Centers
International Partners of the Americas
PCI Project Concern International
PFD Partners for Development
REST Relief Society of Tigray
ROP Roots of Peace
SCF Save the Children Federation
SCF-UK Save the Children UK
SHARE SHARE Guatemala
TAMU Texas A&M University
TS TechnoServ
UMCOR United Methodist Committee on Relief
VSU Virginia State University
WFP United Nations World Food Program
Winrock Winrock International
WVUS World Vision US
------------------------------------------------------------------------
The following organizations served as grantees with the Title II-
Funded International Food Relief Partnership in Fiscal Year 2008:
------------------------------------------------------------------------
ACT ACTS International
AI Amigos Internacionales
BRA Batay Relief Alliance
BC Bless the Children
CRS Catholic Relief Services
CIH Center for International Health
CBU Church for Bible Understanding
Citihope Citihope International
CH Convoy of Hope
Coprodeli Coprodeli
CPI Counterpart International
EIM Evangelistic International Ministry
FCF Fabretto Children's Foundation
Feed the Children Feed the Children
Haiti Vision Haiti Vision
IRD International Relief and Development/Cambodia
IRT International Relief Teams
JAM Joint Aid Management
MM Medical Missionaries
Nascent Nascent Solutions
PA Planet Aid
PCI Project Concern International
PH Project Hope
Salvation Army Salvation Army World Service
SERV Serv Ministries
RPX The Resource and Policy Exchange
Uplift Uplift International
WH World Help
------------------------------------------------------------------------

Appendix 3: USDA Title I Program: Food for Progress Grants_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
Beneficiaries Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Tajikistan WFP Vegetable Oil, Wheat Flour 65 6,870 $7,998
East Timor WFP Vegetable Oil, Rice, Beans, 36.2 3,610 $4,987.3
Corn Soy Blend
----------------------------------------------
Sub-Total Asia/Near East 101.3 10,480 $12,985.3
==============================================
Worldwide Total 101.3 10,480 $12,985.3
----------------------------------------------------------------------------------------------------------------

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity and Tonnage_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
Recipients * Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso WFP Corn Soy Blend, Vegetable 1,337 2,160 $2,599.80
Oil
Burundi WFP Corn (bagged), Yellow Peas, 2.7 7,380 $8,241.20
Vegetable Oil
Central WFP Cornmeal, Corn Soy Blend, 597 7,490 $10,122.40
African Vegetable Oil, Yellow Split
Republic Peas
Cameroon WFP Cornmeal, Corn Soy Blend, 85 4,830 $5,136.70
Red Beans, Vegetable Oil
Chad WFP Cornmeal, Corn Soy Blend, 1,590.10 49,970.00 $60,925.90
Rice (bagged), Sorghum
(bulk), Vegetable Oil,
Yellow Split Peas
Democratic FHI -- -- -- ** $2,041.50
Republic of
the Congo
WFP Cornmeal, Corn Soy Blend, 13.4 42,940 $68,969.10
Green Peas, Green Split
Peas, Pinto Beans,
Vegetable Oil, Yellow Split
Peas
Djibouti WFP Corn Soy Blend, Lentils, 137.2 2,360 $2,735.00
Vegetable Oil, Wheat Flour
Ethiopia CARE Hard Red Winter Wheat, 904.8 36,620 $29,309.40
Lentils, Sorghum (bulk),
Vegetable Oil, Yellow Split
Peas
CRS Bulgur, Corn Soy Blend, Hard 615.9 116,570 $83,563
Red Winter Wheat, Rice
(bagged), Sorghum (bulk),
Vegetable Oil, Yellow Split
Peas
FHI Green Peas, Hard Red Winter 580.3 37,890 $28,482.30
Wheat, Sorghum (bulk),
Vegetable Oil, Yellow Split
Peas
REST Hard Red Winter Wheat, 1,767.40 100,270 $75,147.90
Sorghum (bulk), Vegetable
Oil, Yellow Peas, Yellow
Split Peas
SCF Green Split Peas, Hard Red 254.6 9,150 $8,056.50
Winter Wheat, Vegetable Oil
SCF-UK Hard Red Winter Wheat, 863.2 54,800 $42,364.20
Lentils, Sorghum (bulk),
Vegetable Oil, Yellow Split
Peas
WFP Corn Soy Blend, Green Peas, 350 266,960 $202,638.40
Hard Red Winter Wheat,
Lentils, Sorghum (bulk),
Vegetable Oil, Wheat Flour,
Yellow Peas, Yellow Split
Peas
WVUS Hard Red Winter Wheat, 200.9 10,660 $8,692.60
Vegetable Oil, Yellow Peas
The Gambia WFP Rice (bagged) 13.5 680 $577.00
Kenya WFP Bulgur, Cornmeal, Corn Soy 1,357.00 61,230.00 $64,633.30
Blend, Vegetable Oil, Wheat
Flour, Yellow Split Peas
Liberia WFP Bulgur, Vegetable Oil 767 1,460 $1,741.60
Mali WFP Corn Soy Blend 210 1,540 $1,647.40
Mauritania WFP Corn Soy Blend, Hard Red 678.8 11,620 $11,552.30
Winter Wheat, Soft Red
Winter Wheat, Vegetable Oil
Mozambique WFP Cornmeal 5.5 3,190 $2,793.40
Niger WFP Cornmeal, Corn Soy Blend, 5.8 11,080 $13,060.80
Rice (bagged), Vegetable
Oil
Rwanda WFP Cornmeal, Corn Soy Blend, 1,627.50 3,340 $3,830.40
Kidney Beans, Pinto Beans,
Vegetable Oil
Somalia CARE Corn Soy Blend, Lentils, 369.6 81,030 $70,606.00
Sorghum (bulk), Vegetable
Oil, Yellow Peas
WFP Corn Soy Blend, Green Peas, 17.8 130,290 $126,793.80
Green Split Peas, Lentils,
Sorghum (bulk), Vegetable
Oil, Yellow Peas, Yellow
Split Peas
Sudan ADRA Lentils, Sorghum (bagged), 44.1 730 $994.80
Vegetable Oil
CARE Lentils, Sorghum (bagged), 14 1,500 $1,466.90
Vegetable Oil
CRS Corn Soy Blend, Lentils, 146.3 3,950 $5,782.20
Sorghum (bagged), Vegetable
Oil
NPA Lentils, Sorghum (bulk), 208.2 7,140 $9,795.90
Vegetable Oil
WFP Lentils, Sorghum (bulk), 49.6 395,090 $494,876.80
Vegetable Oil, Yellow Split
Peas
Tanzania WFP Cornmeal, Corn Soy Blend, 733.8 16,900 $14,562.10
Green Peas, Sorghum
(bagged), Soy Fortified
Cornmeal, Yellow Peas
Uganda WFP Corn Soy Blend, Cornmeal, 10.9 47,850 $46,283.30
Pinto Beans, Sorghum
(bagged), Sorghum (bulk),
Vegetable Oil, Yellow Split
Peas
Zambia WFP Green Split Peas, Sorghum 91 3,090 $2,806.10
(bagged), Sorghum (bulk),
Yellow Split Peas
Zimbabwe WFP Bulgur, Green Peas, Pinto 2,234.50 47,900.00 $58,603.80
Beans, Sorghum (bulk),
Vegetable Oil, Yellow Peas
WVUS Bulgur, Cornmeal, Sorghum 10.1 42,010.00 $45,261.30
(bulk), Vegetable Oil,
Yellow Peasv
-------------------------------------------------------------------------------------------------
Sub-Total Africa 17,894.50 1,621,670 $1,616,695.10
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan WFP Green Split Peas, Hard Red 44.6 141,930.00 $144,843.20
Winter Wheat, Soft White
Wheat, Vegetable Oil, Wheat
Flour, Wheat Flour Bread,
Yellow Peas
Algeria WFP Corn Soy Blend, Yellow Split 125 5,940 $6,816.10
Peas, Vegetable Oil, Wheat
Flour Bread
Bangladesh CARE Hard Red Winter Wheat, 39 9,290 $5,967.10
Yellow Split Peas,
Vegetable Oil
SCF Hard Red Winter Wheat, 17.5 8,810 $7,948.90
Yellow Split Peas,
Vegetable Oil
WFP Soft Red Winter Wheat 38.9 22,350.00 $17,295.60
(bulk), Vegetable Oil, Rice
(bagged), Rice (bulk),
Yellow Split Peas
Burma WFP Corn Soy Blend, Garbanzo 1,749 23,640 $28,063.00
Beans, Rice (bagged),
Vegetable Oil
East Timor WFP Rice (bagged), Vegetable Oil 105 1,040 $1,150.00
Iraq WFP Navy Beans, Vegetable Oil, 1,500 17,500 $23,761.60
Wheat Flour
Nepal WFP Garbanzo Beans, Lentils, 328.4 15,830 $18,832.80
Rice (bagged), Vegetable
Oil, Yellow Split Peas
Pakistan WFP Soft Red Winter Wheat, 132 2,450 $2,551.20
Vegetable Oil
Sri Lanka WFP Hard Red Winter Wheat 5.7 31,360 $28,562.90
(bulk), Lentils, Soft White
Wheat (bulk), Vegetable Oil
Syria WFP Bulgur, Lentils, Navy Beans, 1,086 11,520 $14,031.60
Vegetable Oil
Yemen WFP Green Peas, Hard Red Winter 115.5 2,540.00 $2,201.30
Wheat, Kidney Beans, Rice
(bagged), Wheat Flour
-------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 5,286.60 294,200 $302,025.30
----------------------------------------------------------------------------------------------------------------
Central Asia
----------------------------------------------------------------------------------------------------------------
Tajikistan WFP Wheat Flour 590.8 180 $173.30
-------------------------------------------------------------------------------------------------
Sub-Total Central Asia 590.8 180 $173.30
----------------------------------------------------------------------------------------------------------------
Latin America
----------------------------------------------------------------------------------------------------------------
Colombia WFP Green Peas, Lentils, Pinto 2,315 7,680 $10,628.60
Beans, Vegetable Oil, Wheat
Flour
Ecuador WFP Hard Red Winter Wheat 11.7 1,020 $892.90
(bagged)
Haiti CRS Corn Soy Blend, Cornmeal, 765 7,880 $10,327.70
Lentils, Sorghum (bagged),
Soy Fortified Bulgur,
Vegetable Oil, Yellow Peas
WFP Corn Soy Blend, Pinto Beans, 1.4 20,060 $25,001.80
Rice (bagged), Vegetable
Oil, Yellow Peas
WVUS Cornmeal, Corn Soy Blend, 294 8,720 $10,002.20
Lentils, Soy Fortified
Bulgur, Vegetable Oil,
Yellow Peas
Nicaragua CRS Corn Soy Blend, Red Beans, 5 660 $1,699.40
Rice (bagged), Vegetable
Oil
WFP Corn Soy Blend, Rice 80 2,760 $3,294.50
(bagged)
-------------------------------------------------------------------------------------------------
Sub-Total Latin America 3,472.10 48,780 $61,847.10
------------------------------------------------
Funding Adjustments (IFRP, PSCs, Prepositioning and CSB -- -- $15,664.20
Mitigation)
================================================
Worldwide Total 27,244 1,964,830 $1,980,740.80
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report,
March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, February 16,
2009.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
totals.
** Some programs receive Section 202e and/or ITSH funds without receiving commodities in the same FY. Table does
not include IFRP activities. See page 18 for specific details.

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, Recipient and Tonnage
Tables_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
Recipients * Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso Africare Potatoes (flakes), Rice 0.8 2,850 $2,929.8
(bagged)
CRS Lentils, Rice (bagged), Soy 253.4 7,620 $7,094
Fortified Bulgur, Soy
Fortified Cornmeal,
Vegetable Oil
Burundi CRS Corn Soy Blend, Soy 58.4 5,510 $4,947.6
Fortified Bulgur, Soy
Fortified Cornmeal, Hard
Red Winter Wheat (bulk),
Vegetable Oil
Chad Africare Soy Fortified Bulgur, Wheat 20.5 3,410 $4,454.7
Flour Bread
Democratic ADRA Cornmeal, Hard Red Winter 14.4 4,910 $3,490
Republic of Wheat (bulk), Vegetable Oil
the Congo
FHI Cornmeal, Hard Red Winter 2.8 3,650 $3,108.3
Wheat (bulk), Vegetable Oil
MCI Cornmeal, Hard Red Winter 5 3,180 $3,192.1
Wheat, Vegetable Oil
Ethiopia CARE Hard Red Winter Wheat, 24.9 3,210 $3,627.1
Vegetable Oil, Yellow Split
Peas
CRS Bulgur, Corn Soy Blend, Hard 45 5,610 $6,314.4
Red Winter Wheat, Lentils,
Rice (bagged), Vegetable
Oil
FHI -- -- -- ** $500
REST -- -- -- ** $768
SCF Green Split Peas, Hard Red 76.3 3,650 $4,639.8
Winter Wheat, Vegetable Oil
SCF-UK Hard Red Winter Wheat, 53.7 6,370 $7,372.4
Vegetable Oil, Yellow Split
Peas
Ghana CRS Corn Soy Blend, Soy 223.5 5,650 $4,736.7
Fortified Bulgur, Soy
Fortified Sorghum Grits,
Vegetable Oil
OICI Soy Fortified Bulgur, Hard 2.5 2,840 $2,209.5
Red Winter Wheat (bulk)
Guinea OICI Cornmeal, Green Peas, 4.3 1,850 $2,992.8
Vegetable Oil
Kenya ADRA Corn Soy Blend, Dark 50.3 4,280 $3,571.9
Northern Spring Wheat
(bulk), Vegetable Oil
CARE Corn Soy Blend, Dark 5 3,590 $3,096.8
Northern Spring Wheat
(bulk)
FHI Corn Soy Blend, Dark 10.6 3,210 $2,753.4
Northern Spring Wheat
(bulk), Green Split Peas,
Soy Fortified Bulgur,
Vegetable Oil
Liberia CRS Bulgur, Lentils, Vegetable 36.5 2,730 $7,672.5
Oil
Madagascar ADRA Corn Soy Blend, Rice 9.9 1,540 $5,615.8
(bagged), Vegetable Oil
CARE Corn Soy Blend, Great 14 1,550 $5,766.5
Northern Beans, Rice
(bagged), Vegetable Oil
CRS -- -- -- ** $368.8
Malawi CRS Cornmeal, Corn Soy Blend, 8.3 17,120 $17,874.4
Hard Red Winter Wheat
(bulk), Pinto Beans,
Vegetable Oil
Mali Africare -- -- -- ** $990
CRS -- -- -- ** $989.7
Mauritania CPI Corn Soy Blend, Hard Red 32.3 7,610 $4,962.2
Winter Wheat (bulk),
Lentils, Vegetable Oil
Mozambique ADRA Hard Red Winter Wheat (bulk) -- 6,440 $4,039.5
FHI Hard Red Winter Wheat (bulk) -- 5,430 $3,359.4
SCF Hard Red Winter Wheat (bulk) -- 11,580 $7,502.4
WVUS Hard Red Winter Wheat (bulk) -- 7,490 $4,964.6
Niger Africare Corn Soy Blend 11.5 480 $3,024.5
CPI -- -- -- $2,534.0 **
CRS -- -- -- $7,262.1 **
Rwanda ACDI/VOCA Corn Soy Blend, Soy 2.6 1,930 $3,396.3
Fortified Bulgur, Vegetable
Oil
CRS Bulgur, Corn Soy Blend, 26 2,370 $3,143.3
Vegetable Oil
WVUS Corn Soy Blend, Soy 22.8 2,910 $4,810.5
Fortified Bulgur, Vegetable
Oil
Senegal CPI Corn Soy Blend, Lentils, 33.3 5,160 $4,070.2
Rice (bagged), Soy
Fortified Bulgur, Vegetable
Oil
Sierra Leone CARE Bulgur, Green Peas, 32.4 3,450 $6,948.5
Vegetable Oil
Uganda ACDI/VOCA Corn Soy Blend, Hard Red 42 23,350 $17,576.6
Winter Wheat, Vegetable Oil
CRS -- -- -- ** $350
MCI Cornmeal, Corn Soy Blend, 2.4 3,740 $3,498.2
Hard Red Winter Wheat,
Vegetable Oil
SCF Corn Soy Blend, Hard Red 4.5 3,980 $3,423.5
Winter Wheat, Lentils, Soy
Fortified Cornmeal,
Vegetable Oil
WVUS Hard Red Winter Wheat -- 2,100 $1,517.4
Zambia CRS Bulgur, Lentils, Sorghum 15 1,710 $5,431.5
(bulk)
LOL Hard Red Winter Wheat -- 3,760 $3,689.2
-------------------------------------------------------------------------------------------------
Sub-Total Africa 1,144.90 187,820 $206,580.9
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan WVUS Rice (bagged), Vegetable 11.5 6,820 $9,886.1
Oil, Wheat Flour
Bangladesh CARE Hard Red Winter Wheat, Hard 103.3 50,740 $36,857.9
Red Winter Wheat (bulk),
Soft White Wheat, Soft
White Wheat (bulk),
Vegetable Oil, Yellow Split
Peas
SCF Hard Red Winter Wheat, Hard 113 13,760 $10,961.5
Red Winter Wheat (bagged),
Soft White Wheat (bulk),
Vegetable Oil, Yellow Split
Peas
India CARE -- -- -- ** $6,872.8
CRS Bulgur, Vegetable Oil 555.1 6,730 $6,611.0
-------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 782.9 78,050 $71,189.3
----------------------------------------------------------------------------------------------------------------
Latin America
----------------------------------------------------------------------------------------------------------------
Bolivia ADRA -- -- -- ** $1,905.3
CARE -- -- -- ** $300.0
FHI Corn Soy Blend, Green Peas, 47.4 770 $3,215.4
Lentils, Soy Fortified
Bulgur
SCF Corn Soy Blend, Green Peas, 39.4 780 $3,564.7
Lentils
Guatemala CRS Corn Soy Blend, Pinto Beans, 66 3,470 $4,625.7
Rice (bagged), Vegetable
Oil
SCF Corn Soy Blend, Pinto Beans, 12.8 3,500 $4,628.3
Rice (bagged), Vegetable
Oil
SHARE Corn Soy Blend, Pinto Beans, 16.4 3,810 $4,627.3
Rice (bagged), Vegetable
Oil
Haiti ACDI/VOCA Corn Soy Blend, Hard Red 2 6,380 $5,050.5
Winter Wheat, Lentils, Soy
Fortified Bulgur, Vegetable
Oil
CRS Corn Soy Blend, Hard Red 35.2 16,175 $11,729.8
Winter Wheat (bulk),
Lentils, Soy Fortified
Bulgur, Vegetable Oil
WVUS Corn Soy Blend, Hard Red 202 21,845 $17,456.8
Winter Wheat (bulk),
Lentils, Soy Fortified
Bulgur, Vegetable Oil
Honduras ADRA Corn Soy Blend, Northern 45.1 3,770 $3,532.1
Spring Wheat (bulk), Red
Beans, Rice (bagged),
Vegetable Oil
SCF Corn Soy Blend, Northern 5 3,660 $3,265.2
Spring Wheat (bulk), Red
Beans, Rice (bagged),
Vegetable Oil
WVUS Corn Soy Blend, Red Beans, 8.7 2,250 $3,352.9
Rice (bagged), Vegetable
Oil
Nicaragua ADRA Corn Soy Blend, Lentils, 26.3 2,200 $2,268.2
Northern Spring Wheat
(bulk), Rice (bagged),
Vegetable Oil
CRS Corn Soy Blend, Lentils, 7.1 2,290 $2,385.3
Northern Spring Wheat
(bulk), Rice (bagged),
Vegetable Oil
PCI Corn Soy Blend, Lentils, 4 2,310 $2,363.0
Northern Spring Wheat
(bulk), Rice (bagged),
Vegetable Oil
SCF Corn Soy Blend, Northern 34 2,200 $2,247.6
Spring Wheat (bulk)
-------------------------------------------------------------------------------------------------
Sub-Total Latin America 551.4 75,410 $76,518.1
------------------------------------------------
Worldwide Total 2,479.20 341,280 $354,288.3
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report,
March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, February 16,
2009.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
totals.
** Some programs receive Section 202(e) and/or ITSH funds without receiving commodities in the same FY.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements. Some
programs received Section 202e and/or ITSH funds without receiving commodities.

Appendix 6: Bill Emerson Humanitarian Trust: Summary Budget, Commodity and Tonnage_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
Recipients * Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Ethiopia WFP Corn Soy Blend, Sorghum 3.8 83,380 59,982.1
(bulk), Vegetable Oil
Kenya WFP Cornmeal, Corn Soy Blend, 1.2 14,990 17,246.5
Vegetable Oil, Yellow Split
Peas
Zimbabwe WFP Green Peas, Pinto Beans, 2,232.2 12,510 18,155.8
Vegetable Oil
WVUS Bulgur, Cornmeal, Sorghum 4.1 49,080 54,275.9
(bulk), Vegetable Oil,
Yellow Peas
------------------------------------------------------------------------------------------------
Sub-Total Africa 2,241.3 159,960 149,660.3
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan WFP Hard Red Winter Wheat, 6.6 15,590 22,405.3
Vegetable Oil, Yellow Peas
North Korea MCI Corn (bulk), Corn Soy Blend, 941.2 38,000 23,583.6
Soy Beans (bulk), Vegetable
Oil
WFP Corn (bulk), Soft White Wheat 5.7 110,270 70,132.3
------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 953.5 163,860 116,121.2
==============================================
Worldwide Total 3,194.8 323,820 265,781.5
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report,
March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, March 20,
2009.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
totals.

Appendix 7: USDA-CCC Funded_Food for Progress Grants_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
Beneficiaries * Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Ethiopia ACDI/VOCA Wheat 72.6 20,000 $12,656.1
The Gambia IRD Vegetable Oil 800 4,500 $10,000
Regional
Malawi PA Wheat 252.2 10,000 $5,590
Mozambique PA Wheat, Textured Soy Protein 145.5 20,070 $9,161.1
TS Wheat 12 10,530 $3,832.9
LOL Wheat 787.2 15,600 $11,883.1
Liberia MC Soybean Oil 28.5 2,360 $5,321.8
Niger IRD Soy Fortified Bulgur 92.4 1,000 $6,841
Vegetable Oil 2,500
CRS Vegetable Oil 10.5 2,410 $5,836.2
Senegal CPI Vegetable Oil 194 4,260 $7,427.1
Tanzania PFD Wheat 36 15,750 $13,210.5
-------------------------------------------------------------------------------------------------
Sub-Total Africa 2,431 108,980 $91,759.9
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan ROP Wheat Flour 101.4 12,500 $10,233.8
GoA Soybean Oil -- 5,500 $10,312.5
Mongolia MCI Wheat 1,594.6 25,000 $13,750
-------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 1,696 43,000 $34,296.3
----------------------------------------------------------------------------------------------------------------
Europe
----------------------------------------------------------------------------------------------------------------
Armenia UMCOR Soybean Meal 126.5 6,000 $4,402.5
-------------------------------------------------------------------------------------------------
Sub-Total Europe 126.5 6,000 $4,402.5
----------------------------------------------------------------------------------------------------------------
Latin America
----------------------------------------------------------------------------------------------------------------
Bolivia PCI Lentils 50.8 500 $9,418.2
Peas 500
Wheat 15,370
Guatemala TAMU Soybean Meal 25.4 15,000 $9,975
Honduras TS Soybean Meal 4.1 8,800 $5,588
Nicaragua PCI Wheat 24.5 12,340 $6,771.4
-------------------------------------------------------------------------------------------------
Sub-Total Latin America 104.7 52,510 $31,752.6
================================================
Worldwide Total 4,358.2 210,490 $153,050.2
----------------------------------------------------------------------------------------------------------------
* Beneficiary figures are both direct and indirect.

Appendix 8: McGovern-Dole International Food for Education and Child Nutrition Program_Fiscal Year 2008
Donations by Country and Commodity
----------------------------------------------------------------------------------------------------------------
Beneficiaries Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Cameroon CPI Beans, Milled Rice, Vegetable 25 1,130 $3,900
Oil
Chad WFP Cornmeal, Vegetable Oil 194.2 4,290 $4,800
Democratic IPHD Rice, Pinto Beans, Soybean 70.2 3,970 $600
Republic of Oil
the Congo
Ethiopia WFP Corn Soy Blend, Vegetable Oil 160.4 3,910 $4,300
Kenya WFP Bulgur, Corn Soy Blend, Green 1,100 10,700 $9,900
Split Peas, Vegetable Oil
Malawi WFP Corn Soy Blend 437.2 6,280 $6,500
Mozambique JAM Milled Rice, Wheat Soy Blend 281 8,510 $6,800
Rwanda WFP Pinto Beans, Corn Meal, 300 8,280 $8,300
Vegetable Oil
Senegal CPI -- -- -- ** $100
Sierra Leone CRS Bulgur, Corn Soy Blend, 29.5 1,260 $2,900
Lentils, Vegetable Oil
------------------------------------------------------------------------------------------------
Sub-Total Africa 2,597.5 48,330 $54,400
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Bangladesh WFP Bulk Wheat 350 11,500 $7,800
Cambodia IRD Small Red Beans, Soybean Oil, 25.6 620 $1,300
Canned Salmon, Corn Soy
Blend
Laos HDI Black Turtle Beans, Canned 13.4 660 $3,700
Salmon, Corn Soy Blend,
Milled Rice, Vegetable Oil
WFP Canned Salmon, Corn Soy 50 2,240 $3,100
Blend, Rice, Vegetable Oil
Pakistan WFP Vegetable Oil 259.0 4,690 $9,900
------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 698.0 19,710 $25,800
----------------------------------------------------------------------------------------------------------------
Central Asia
----------------------------------------------------------------------------------------------------------------
Kyrgyzstan MCI Milled Rice, Soybean Oil, 30.0 500 $2,500
Wheat Flour
------------------------------------------------------------------------------------------------
Sub-Total Central Asia 30.0 500 $2,500
----------------------------------------------------------------------------------------------------------------
Latin America
----------------------------------------------------------------------------------------------------------------
Guatemala SHARE Corn Soy Blend, Dark Red 82.8 7,240 $7,600
Kidney Beans, Milled Rice,
Soybean Meal, Vegetable Oil
FFPI Rice, Light Red Kidney Beans, 210.0 10,200 $7,800
Textured Soy Protein,
Soybean Oil, Buckwheat
Groats, Yellow Corn, Nonfat
Dry Milk, Canned Salmon
Nicaragua GLIM Small Red Kidney Beans, Corn 13.0 880 $1,200
Meal, Milled Rice
------------------------------------------------------------------------------------------------
Sub-Total Latin America 305.8 18,320 $16,600
==============================================
Worldwide Total 3,631.3 86,860 99,300
----------------------------------------------------------------------------------------------------------------
** Senegal CPI--provision of cash in FY 2008 to support multi-year agreement. Commodities were supplied in
previous year.
Source: Commodities, Tonnage and Values derived from McGovern-Dole Food for Education signed agreements and
final budgets.
Note: Values include commodities plus freight. Beneficiaries listed as approved for direct distribution in
cooperative agreements.

Appendix 9: Food for Peace Title II Congressional Mandates_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
Bagged in United
Minimum Subminimum Monetization Value-added States
----------------------------------------------------------------------------------------------------------------
FY 2008 Target 2,500,000 1,875,000 15.0% 75.0% 50.0%
Status as of 2,695,133 379,029 66.3% 47.6% 27.2%
September 2008
----------------------------------------------------------------------------------------------------------------
Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report
against target.s0

Subminimum: Metric tons for approved non-emergency programs through PVOs and community development organizations
and WFP. Metric ton grain equivalent used to report against target.

Monetization: Percentage of approved Title II programs that are monetization programs.

Value-added: Percentage of approved non-emergency programs that are processed, fortified, or bagged.

Bagged in U.S.: Percentage of approved non-emergency bagged commodities that are whole grain to be bagged in the
United States.
----------------------------------------------------------------------------------------------------------------
Source: USAID Bureau for Democracy, Conflict and Humanitarian Assistance, Office of Food for Peace, FY 2008
Preliminary Budget Summary Overview, March 11, 2009.

Appendix 10: Countries with Approved U.S. Food Assistance
Programs_Fiscal Year 2008

------------------------------------------------------------------------
Title I (0 countries)
------------------------------------------------------------------------
Title I--Funded Food for Progress (2 countries)
------------------------------------------------------------------------
East Timor Tajikistan
------------------------------------------------------------------------
CCC-Funded Food for Progress (15 countries)
------------------------------------------------------------------------
Afghanistan Armenia Bolivia Ethiopia
The Gambia Guatemala Honduras Liberia
Malawi Mongolia Mozambique Nicaragua
Niger Senegal Tanzania
------------------------------------------------------------------------
Title II * (48 countries)
------------------------------------------------------------------------
Afghanistan Algeria Bangladesh Bolivia
Burkina Faso Burma Burundi Cameroon
Central African Chad Colombia Democratic
Republic Republic of the
Congo Djibouti East Timor Ecuador
Ethiopia The Gambia Ghana Guatemala
Guinea Haiti Honduras India
Iraq Kenya Liberia Madagascar
Malawi Mali Mauritania Mozambique
Nepal Nicaragua Niger Pakistan
Rwanda Senegal Sierra Leone Somalia
Sri Lanka Sudan Syria Tajikistan
Tanzania Uganda Yemen Zambia
Zimbabwe
------------------------------------------------------------------------
Title II-Funded International Food Relief Partnership (26 countries)
------------------------------------------------------------------------
Angola Bolivia Cambodia Cameroon
Democratic Congo * Dominican El Salvador
Republic of the Republic
Ethiopia * Georgia Guatemala Haiti
Honduras India Indonesia Kenya
Kyrgyzstan Malawi Nicaragua Peru
Philippines Senegal South Africa Tajikistan
Tanzania Uganda Zimbabwe
------------------------------------------------------------------------
Title III (0 countries)
------------------------------------------------------------------------
Title V--Farmer-to-Farmer (37 countries)
------------------------------------------------------------------------
Angola Armenia Azerbaijan Bangladesh
Belarus Bolivia El Salvador Ethiopia
Georgia Ghana Guatemala Guinea
Guyana Haiti Honduras India
Indonesia Jamaica Kazakhstan Kenya
Kyrgyzstan Malawi Mali Moldova
Mozambique Nepal Nicaragua Nigeria
Peru Russia South Africa Tajikistan
Turkmenistan Uganda Ukraine Vietnam
Zambia
------------------------------------------------------------------------
Bill Emerson Humanitarian Trust (5 countries)
------------------------------------------------------------------------
Afghanistan Ethiopia Kenya North Korea
Zimbabwe
------------------------------------------------------------------------
Food for Education (17 countries)
------------------------------------------------------------------------
Bangladesh Cambodia Cameroon Chad
Congo, Republic Ethiopia Guatemala Kenya
of the
Kyrgyzstan Laos Malawi Mozambique
Nicaragua Pakistan Rwanda Senegal
Sierra Leone
------------------------------------------------------------------------
Represents Title II programs with commodities approved in FY 2008, or
that remain active with resources allocated in the prior fiscal year.
* Represents IFRP programs with commodities approved in FY 2007, or that
remain active with resources allocated in the prior fiscal year.

U.S. International Food Assistance Report 2009

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Cover photo: USAID.
Transmittal to Congress
Under Food for Peace Act Section 407(f)(1)(A), ``Not later than
April 1 of each fiscal year, the Administrator [of USAID] and the
Secretary [of Agriculture] shall jointly prepare and submit to the
appropriate committees of Congress a report regarding each program and
activity carried out under this Act during the prior fiscal year.'' As
required, this report is hereby submitted to Congress.
April 2010

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A USAID-supported World Food Program initiative in eastern Sri
Lanka. USAID.

This report may be found online:

USAID Development Experience Clearinghouse
Telephone: (202) 712-0579
URL: http://www.dec.org/ and at http://www.usaid.gov
Table of Contents
Executive Summary
Introduction
I. U.S. International Food Assistance

A. Bellmon Estimation for Title II (BEST) Project
B. Title II Non-emergency Food Security Country Frameworks
C. USAID's Famine Early Warning Systems Network (FEWS NET)
D. Monitoring and Evaluation (M&E)
E. Food Aid Quality
F. Food and Nutrition Technical Assistance (FANTA) Project
G. Preventing Malnutrition in Children Under Two Approach (PM2A)

II. Program Descriptions and Fiscal Year 2009 Accomplishments

A. Food for Peace Act

1. Title I: Economic Assistance and Food Security
2. Title II: Emergency and Private Assistance Programs
3. Title III: Food for Development
4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF)
Program

III. Appendices

Appendix 1: List of Abbreviations
Appendix 2: List of Awardees
Appendix 3: USDA Title I Program: Food for Progress Grants--Fiscal
Year 2009
Appendix 4: USAID Title II Emergency Activities: Summary Budget,
Commodity, Recipient and Tonnage--Fiscal Year 2009
Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget,
Commodity, Recipient and Tonnage--Fiscal Year 2009
Appendix 6: USDA-CCC Funded--Food for Progress Grants--Fiscal Year
2009
Appendix 7: McGovern-Dole International Food for Education and Child
Nutrition Program--Fiscal Year 2009 Donations by Country and
Commodity
Appendix 8: Bill Emerson Humanitarian Trust: Summary Budget,
Commodity, Recipient and Tonnage--Fiscal Year 2009
Appendix 9: Local and Regional Procurement Pilot Program--Fiscal Year
2009
Appendix 10: Food for Peace Title II Congressional Mandates--Fiscal
Year 2009
Appendix 11: Countries with U.S. International Food Assistance
Programs under the FFP Act--Fiscal Year 2009
Executive Summary
The United States is committed to the promotion of global food
security through its international food assistance and other foreign
assistance programs. In Fiscal Year (FY) 2009, the United States
provided more than $2.9 billion of food assistance to developing
countries approximately 2.8 million metric tons, reaching over 70
million people worldwide. The following summary shows U.S. food
assistance, by legislative authority, for FY 2009.\1\
---------------------------------------------------------------------------
\1\ All costs represent commodities, freight, and distribution.
Beneficiary totals for USAID represent beneficiaries reached in FY
2009. Beneficiary totals for USDA represent planned beneficiary totals
associated with the FY 2009 award.

------------------------------------------------------------------------
Program Metric Tons Total Cost (000)
------------------------------------------------------------------------
Food for Progress Title I 14,300 $22,000.0
Food for Peace Title II 2,396,314 $2,552,061.6
Food for Development Title III -- --
Farmer-to-Farmer Program Title -- $12,500.0
IV
Section 416(b) -- --
Food for Progress CCC 274,230 $215,816.6
McGovern-Dole 126,523 $168,414.8
Procurement Pilot Project -- $4,750.0
Bill Emerson Humanitarian Trust 21,000 $5,638.4
---------------------------------------
Grand Total................... 2,832,367 $2,981,181.4
------------------------------------------------------------------------

More than one billion people--nearly \1/6\ of the world's
population--suffer from chronic hunger. It is a crisis with devastating
and far-reaching effects. Hunger weakens immune systems and stunts
child development. Half of all child deaths in the developing world are
related to undernutrition. Chronic hunger and undernutrition primarily
result from poverty--people who are poor often simply cannot afford to
buy food. Hungry families spend over half their income to buy the food
they need to survive. Food often cannot travel from surplus to deficit
regions within and across countries because of poor roads, barriers at
borders and checkpoints along the way. Without enough food, adults
struggle to work and children struggle to learn, making sustainable
economic development difficult to achieve.
Ensuring global food security will only become more challenging in
the future as demand for food is projected to increase by 50 percent
over the next 20 years. Increased demand will come primarily from
population growth in the developing world and income growth in middle-
income countries. Growth in agricultural productivity, which is already
lagging globally, also faces increasing threats from climate change,
scarce water supplies, and competition for energy resources from
industry and urbanization.
Addressing these issues will require a whole-of-government
approach, and the U.S. Agency for International Development (USAID) and
the U.S. Department of Agriculture (USDA) have been working closely
with the U.S. State Department and other U.S. Government agencies to
develop the Administration's new Global Hunger and Food Security
Initiative, ``Feed the Future.'' The focus and coordination promoted in
this initiative will strengthen all U.S. Government (USG) food security
programming, including USG food assistance. By targeting the poorest of
the poor and better integrating food aid programs into larger--often
multilateral--efforts, USAID and USDA food assistance programs are
aiming to improve the effectiveness of food aid and increase its
contribution to global targets for reducing hunger, malnutrition and
poverty.

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Children receiving USAID-supported food aid in Sudan. USAID.
Introduction
Since the passage of Public Law 480 or the Agricultural Trade
Development and Assistance Act of 1954, U.S. international food
assistance programs have evolved to address multiple objectives. The
most recent changes came with the Food for Peace Act of the Food,
Conservation, and Energy Act of 2008. Commonly known as the 2008 Farm
Bill, the Food, Conservation, and Energy Act of 2008 restated the
objectives that guide U.S. food assistance programs. These objectives
are to:

Combat world hunger and malnutrition and their causes;

Promote broad-based, equitable and sustainable development,
including agricultural development;

Expand international trade;

Foster and encourage the development of private enterprise
and democratic participation in developing countries; and

Prevent conflicts.
U.S. International Food Assistance.
The U.S. international food assistance program was established by
several legislative authorities and is implemented by two Federal
agencies. USAID administers Titles II, III and V of the Food for Peace
Act. USDA administers Section 416(b) of the Agricultural Act of 1949,
Title I of the Food for Peace Act, Food for Progress, the McGovern-Dole
International Food for Education and Child Nutrition Program, and the
Local and Regional Food Aid Procurement Pilot Project. The list below
provides a brief description of each activity.

1. Food for Peace Act.

Title I: Economic Assistance and Food Security--
concessional sales of U.S. agricultural commodities to
developing countries and private entities.

Title II: Emergency and Private Assistance Programs--
direct donation of U.S. agricultural commodities for
emergency relief and development.

Title III: Food for Development--government-to-government
grants of agricultural commodities tied to policy reform.

Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer
(FTF) Program--voluntary technical assistance to farmers,
farm groups and agribusinesses.

2. Section 416(b) of the Agricultural Act of 1949--overseas
donations of surplus food and feed grain owned by the USDA
Commodity Credit Corporation (CCC).

3. Food for Progress Act of 1985--commodity donations or
concessional financing available to emerging democracies and
developing countries committed to the introduction or expansion
of free enterprise in their agricultural economies.

6. Local and Regional Food Aid Procurement Pilot Project (PPP)--
local and regional purchase of commodities to help meet urgent
food needs due to food crises and disasters. This program was
authorized as a 5 year pilot program under the 2008 Farm Bill.

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Beneficiaries of a USAID-supported food aid activity in Malawi.
USAID.
I. U.S. International Food Assistance
U.S. international food assistance has long played a critical role
in responding to global food insecurity. This tradition continued in FY
2009, with the USG providing more than 2.8 million metric tons (MT) of
commodities to more than 70 million beneficiaries and 73 countries
worldwide.
In recent years, attention has focused on the continued challenges
that hamper efforts at reducing global food insecurity. The
Administration's new Global Hunger and Food Security Initiative, ``Feed
the Future,'' has been designed to begin to address these challenges,
including those faced in our food assistance programs. Starting in FY
2010, coordinated efforts promoted by the initiative will strengthen
all USG food security programming. USAID and USDA have already made
significant improvements to better target and monitor their food aid
programs through a series of new initiatives. USAID's Food for Peace
(FFP) office's recent 3 year pilot Bellmon Estimation for Title II
(BEST) Project collects and analyzes data and information from USAID,
USDA, and other sources to better inform the need, targeting, and
potential use of food aid commodities. FFP's recent adoption of the
Preventing Malnutrition in Children Under Two Approach (PM2A) builds on
research-based successes from targeting this beneficiary category, and
improves the cost effectiveness, design and content of such programs.
The recent hiring of additional FFP nonemergency (development) food aid
program field monitors, meanwhile, increases FFP's ability to analyze,
monitor and respond to food security and food aid concerns. FFP and
USDA are also funding efforts aimed at improving the nutritional
quality and content of food aid to better serve and respond to the
specific needs of food aid beneficiaries.
A. Bellmon Estimation for Title II (BEST) Project
The BEST Project conducts independent market analyses to ensure
that FFP complies with the Bellmon Amendment, which requires that
adequate storage facilities be available in a recipient country upon
arrival of a commodity to prevent spoilage or waste, and that
distribution of the commodity in the recipient country will not result
in substantial disincentive or interference with domestic production or
marketing in that country. The BEST Project is conducting independent
market analyses to ensure that these requirements are met. Using the
results of these analyses, FFP, USDA, and other food aid partners are
better able to target food aid most fully to those countries and
beneficiaries in need. A number of studies have already been completed
and can be found at http://www.usaid.gov/our_work/
humanitarian_assistance/ffp/bellmonana.html.
B. Title II Nonemergency Food Security Country Frameworks
In FY 2009, FFP continued to develop Food Security Programming
Frameworks (FSPF) that define objectives, approaches, geographic foci
and institutional partnerships for effective use of Title II
nonemergency resources to reduce food insecurity. The FSPFs provide
country-specific guidance to partners developing new Title II multi-
year nonemergency assistance proposals (MYAPs). During FY 2009, FFP and
respective Regional Bureaus and Missions developed FSPFs for
Bangladesh, Burkina Faso, Liberia and Sierra Leone. The FSPFs provide a
broad overview of contextual factors and cross-cutting issues that
promote or constrain food security programming in the country; identify
the determinants of food insecurity and the geographic distribution of
food insecurity and malnutrition, including areas of greatest food
insecurity, risks and vulnerabilities; describe existing policies,
strategies, initiatives, and programs related to reducing food
insecurity in the country; and identify priority objectives, program
areas, activities, partners, and geographic foci for Title II food
security programs. A number of FSPFs have already been completed and
can be found at http://www.usaid.gov/our_work/humanitarian_assistance/
ffp/countryspec.html.
C. USAID's Famine Early Warning Systems Network (FEWS NET)
USAID's Famine Early Warning Systems Network (FEWS NET) exemplifies
the U.S. commitment to anticipating and responding to humanitarian
vulnerabilities and crises. Using interagency agreements with the U.S.
Geological Survey, National Aeronautics and Space Administration,
National Oceanic and Atmospheric Administration and USDA, FEWS NET
continues to monitor, collect and disseminate critical data on
conditions of food availability and access. FEWS NET provides decision
makers in the USG, host country governments, and a variety of other
regional and international partners timely and analytical early warning
and vulnerability information. FEWS NET information products can be
found at www.fews.net.
In response to rising needs for more and better food security
monitoring information in additional countries where food security
could become a significant problem, in FY 2009 USAID, working with FEWS
NET, defined and tested a nonpresence-based monitoring strategy,
referred to as the ``remote monitoring'' initiative. This strategy
prioritizes the identification and early warning of significant changes
in food availability and food access that might potentially lead to a
food security crisis. Sectoral monitoring priorities for the remote
monitoring include weather and climate, crop condition and output, food
markets and trade, and a livelihood food security framework for each
country.
Using a minimal number of on-the-ground visits and focusing heavily
on FEWS NET's existing global monitoring resources and building and
sustaining collaborations and partnerships with organizations already
established in each country, FEWS NET developed methods, tools and
agreements that promote a continuous stream of monitoring data from
three remote monitoring pilot countries: Yemen, Tajikistan and Burundi.
D. Monitoring and Evaluation (M&E)
The renewed Monitoring and Evaluation (M&E) emphasis within FFP
ensures that Title II resources are being used effectively and
efficiently to achieve the best possible food security outcomes, and
that food aid program staff continually learn from past experiences to
improve program implementation.
In this regard, FFP continued its practice of delivering 4 to 5 day
M&E workshops to newly awarded Multi-Year Assistance Program (MYAP)
partners in order to improve the quality of Title II M&E data, as well
as USG staff charged with monitoring those programs. The workshops help
improve the design of program results frameworks, baselines, and M&E
plans, and ensure that required indicators from FFP and Missions are
included in partner M&E plans and that data are collected in a
consistent manner. The workshops also strengthen Mission and partner
knowledge of Title II programs and reinforce their understanding of M&E
procedures. Workshops have now been held in Mali and in Mozambique (for
16 newly awarded MYAPs), as well as in Ethiopia, Madagascar, and
Malawi. Additional workshops will be held as new MYAPs are awarded in
FY 2010, for Bangladesh, Burkina Faso, Liberia, Sierra Leone and South
Sudan.
FFP also released updated guidance that describes the key M&E
responsibilities of MYAP awardees and potential awardees, providing
additional detail to existing M&E policies. This guidance can be found
at http://www.usaid.gov/our_work/humanitarian_assistance/ffp/
ffpib.html. In addition, during FY 2009, FFP held a technical
assistance workshop on food aid commodity management for Title II
awardees. Held in the field, in Maputo, Mozambique, the workshop
provided a hands-on component that included observations of commodity
management activities at a seaport. Participants also learned the
general tenets of Title II commodity management from a field
perspective. The training strengthened the capacity of Title II
partners to properly manage commodities within their own programs, and
to improve commodity management practices among local sub-awardees.
USDA initiated efforts in FY 2009 to improve results-oriented
management for its food aid programs. USDA has worked with grantees and
results-oriented specialists to develop specific objectives and
measures for the programs. Grant agreements completed in FY 2009
included more specific measures to gauge the success of the programs.
USDA is continuing work in this area to define objectives and to
develop monitoring and evaluation procedures that will be used in
administering the programs. USDA plans to fully incorporate results-
oriented management in the programs by FY 2011.
E. Food Aid Quality
In FY 2009, FFP awarded Tufts University's School of Nutrition a
contract to examine the nutritional needs of food aid beneficiaries and
the commodities currently available to meet those needs in the context
of total available food resources. The beneficiaries studied include
orphans and vulnerable children, pregnant and lactating women, students
in grades K-8, food-insecure adolescents and adults, and people living
with HIV.

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A mother and child with their food aid ration in Ghana. USAID.

As part of their study, technical briefing papers will be produced
on the following topics:

Review of past recommendations and their implementation to
date;

Enrichment and fortification in USAID activities and in
Title II commodities;

Recommendations to improve Title II enrichment and
fortification formulations; and

Food aid and nutritional support for people living with HIV.

A final report will include an expanded executive summary of the
findings and recommendations of all four briefing papers, and
recommendations for next steps and implementation of these
recommendations. It will also include a description of a process for
periodic and ongoing review of the nutritional quality of Title II food
aid commodities.
Furthermore as part of this review, FFP and Tufts developed and
maintain a public, interactive website (www.foodaidquality.org) to
serve as a general space for information about the Food Aid Quality
Review project, including summaries of meetings and presentations, as
well as draft documents and preliminary recommendations for comment. On
the site, there is also a discussion forum on topics related to the
Food Aid Quality Review project, where those in the community are
invited to participate by commenting on or starting their own
discussion topic.
F. Food and Nutrition Technical Assistance (FANTA) Project
Under the USAID supported FANTA Project-2, FFP continued to publish
a number of Title II relevant publications, guides and tools to support
Title II partners and USAID and USDA staff in strengthening knowledge
in food security and nutrition activities. A list of the publications
can be found at www.fantaproject.org/focus/foodaid.shtml.
One of the persistent challenges to Title II nonemergency programs
is to assure that the impacts they achieve are sustained after the
program has ended. All Title II nonemergency programs are now required
to incorporate an ``exit strategy'' that aims at sustaining program
impact. However, little guidance exists on how to implement successful
exit strategies. To address this gap, FFP, with the help of Tufts
University through FANTA Project-2, is developing guidance on the
design of such strategies. For that purpose, a set of studies is being
conducted in several countries where Title II nonemergency programs are
ending.
Each country study protocol calls for a review of Title II
awardees' planned exit strategies and their implementation of that
strategy during the final MYAP year, followed by a qualitative review
one year after the MYAP has ended, as well as in-depth qualitative and
quantitative assessments 2 years after exit to assess the extent to
which the impacts of the MYAP were maintained or improved, and to
understand factors of success or failure in the specific exit
strategies that were used.
G. Preventing Malnutrition in Children Under Two Approach (PM2A)
The Preventing Malnutrition in Children Under Two Approach (PM2A)
is a food-assisted program aimed at reducing the prevalence of child
malnutrition by targeting a package of health and nutrition
interventions to all pregnant women, mothers of children 0-23 months
and children under 2 in food-insecure program areas, regardless of
nutritional status. Because they are the most nutritionally-vulnerable
members of the population, the program targets everyone in these groups
to protect children from malnutrition and its long-term consequences,
including diminished psychomotor skills, work capacity, intelligence
and income. PM2A integrates best practices in maternal and child health
and nutrition (MCHN) programming and combines them with food
assistance. USAID now strongly encourages Title II partners that submit
MYAP proposals to design their MCHN intervention on the basis of
preventive actions. In FY 2009, utilizing Title II resources, USAID
awarded PM2A MYAPs for Guatemala and Burundi.
II. Program Descriptions and Fiscal Year 2009 Accomplishments
A. Food for Peace Act

1. Title I: Economic Assistance and Food Security

The Title I authority of the Food for Peace Act provides funding
for both a concessional sales program, supporting trade and development
and for the Food for Progress grant program, supporting agricultural
development in emerging democracies. The primary objective of the
concessional sales component is to provide food assistance to targeted
developing countries in order to promote economic growth. By gradually
reducing the concessionality of support and eliminating ocean freight
financing, the program is intended to assist in the recipient country's
transition from aid to commercial trade. There were no Title I-funded
concessional sales programs active in FY 2009.
Title I resources were used to support the Food for Progress grant
program in FY 2009, providing 14,300 MT in assistance to two countries,
Burundi and the Central African Republic, with an estimated value of
$22 million. Additional information on Title I-funded activities is
included in the Food for Progress section of this report.

2. Title II: Emergency and Private Assistance Programs

More than \3/4\ of U.S. international food aid was used in FY 2009
to respond to emergency situations and to implement development
projects as part of the Title II program. Administered by the USAID
Office of Food for Peace in the Bureau for Democracy, Conflict, and
Humanitarian Assistance (DCHA), in FY 2009, Title II programs
(emergency and nonemergency) provided more than 2.3 million MT of
commodities, with a program cost of approximately $2.6 billion, to
assist approximately 61 million people in 61 countries.
The focus of Title II programs is to reduce food insecurity in
vulnerable populations, and improving resiliency to shocks is an
essential first step toward household self-sufficiency and economic
independence. In support of this strategy, the nonemergency development
portfolio incorporates many activities to strengthen local capacity to
respond to natural disasters.

a. Title II: Emergency Programs

Title II emergency programs aim to address two forms of
emergencies: natural disasters, such as floods or droughts, and complex
emergencies characterized by a combination of natural disaster,
conflict, and insecurity. All of these elements pose substantial
programmatic and operational challenges in responding effectively to
the needs of food-insecure populations.
In FY 2009, Title II emergency programs provided more than 1.9
million MT of emergency food aid, with a program cost of more than $2.1
billion, to help alleviate malnutrition and hunger in 38 countries. In
all, Title II emergency programs reached approximately 54 million food-
insecure people in FY 2009.

Food for Peace Title II: Emergency Program Highlights

Pakistan: With fighting between government forces and militants in
Pakistan's North-West Frontier Province on the rise, the number of
internally displaced persons (IDPs) increased exponentially in early
2009, with estimated figures growing from several hundreds of thousands
to over two million in mere months. As the number of IDPs grew--
reaching as many as 2.2 million by the end of May 2009--so did the
level of Title II assistance. In all, FFP provided 62,730 MT of food
aid to the World Food Program (WFP) in FY 2009, valued at $55 million,
to help meet the needs of Pakistan's IDP population. Importantly, FFP
was able to meet the demands of a rising IDP population by using
prepositioned commodities (see box on following page) and ship
diversions to expedite the transport, arrival, and distribution of U.S.
food aid. Moreover, as security conditions improved and IDPs began to
return to their places of origin, FFP continued to provide assistance
to IDPs and returnees, serving as an important safety net until their
livelihoods could be restored.

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U.S. food aid being prepared for distribution at an IDP camp in
Pakistan. USAID.

Ethiopia: In FY 2009, FFP continued to support the Government of
Ethiopia's Productive Safety Net Program (PSNP) by providing an
estimated $120 million of food assistance through its nongovernmental
organization (NGO) partners to chronically food insecure beneficiaries.
In exchange for food (or cash) transfers, beneficiaries of the PSNP
carry out public works projects such as soil and water conservation,
community road construction and rehabilitation, small-scale irrigation,
and school and health post renovation and construction, among others.
The food and cash transfers prevent the depletion of household assets
(such as the sale of livestock or the eating of the next season's
seeds), and the public works projects create community assets, such as
roads and health posts.

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Beehives being distributed to a youth group in Ethiopia as part
of an income generating activity. FHI.

In addition to support for the PSNP, Food for Peace provided over
$266 million of relief food assistance through WFP and Catholic Relief
Services (CRS) to drought-affected beneficiaries. These people can
normally meet their own food requirements. However, because of
successive seasons of insufficient rain and inadequate harvests, they
required emergency food assistance.

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Prepositioning Warehousing
USAID's warehouse program supports the strategic prepositioning of
Food for Peace commodities by increasing the number of warehouses from
two up to five in regions that show historic need or are situated along
trade routes. Under the new program, the Agency expects to store
packaged and bulk food commodities, as needed, in at least five
warehouses throughout Africa, in South Asia, and within the United
States.
Prepositioning warehouses are an integral part of USAID's food aid
program. They offer USAID the capability to significantly reduce
transit times of food commodities in the midst of a crisis.
USAID uses prepositioning sites to maintain a continuous flow of
vital food aid. The Agency stores commonly needed commodities in the
prepositioning warehouses and, as needs arise, ships the food directly
from the warehouse to the region in need.
Expansion of the USAID prepositioning program was made possible by
new authorities provided by Congress in the 2008 Farm Bill.
------------------------------------------------------------------------

b. Title II: Private Assistance Programs (Nonemergency)

The Food for Peace Title II development (nonemergency) food aid
program constitutes one of the largest sources of USAID funding in
promoting long-term food security in such areas as:

Agriculture and Natural Resource Management activities;

Health and household nutrition activities (e.g., MCHN
including PM2A); and

Education, Humanitarian Assistance, and Microenterprise.

In FY 2009, 19 awardees implemented 78 Title II nonemergency
programs in 31 countries. Approximately 474,350 MT of food assistance,
valued at more than $370 million, was used to support programs that
benefited more than seven million people.

Food for Peace Title II: Nonemergency Program Highlights

Guatemala: High levels of malnutrition are especially harmful for
children under the age of 2, who can experience life-long impairments
in their physical and cognitive development. In the northern department
of Alta Verapaz in Guatemala, more than 60 percent of children under 5
are chronically malnourished, while infant and maternal mortality rates
are among the worst in the country. To improve food security in Alta
Verapaz, FFP provided Mercy Corps International (MCI) 3,370 MT of food
aid in FY 2009, valued at $7.6 million, to implement a program using
the Preventing Malnutrition in Children Under Two Approach. Working in
tandem with government health counterparts and FANTA for operations
research support, MCI provided food assistance to 227,000 Guatemalan
children under 2 and malnourished children under 5, as well as nursing
and pregnant mothers in the Alta Verapaz, Peten and Quiche regions. In
addition, by the end of the PM2A program in Guatemala in FY 2013,
health providers will have increased their capacity to plan for
community health needs, and program beneficiaries are expected to have
improved their nutritional status and access to sustainable, quality
health care.
Liberia: While Liberia continues on its path to recovery and
development after decades of poor governance and civil war, high rates
of chronic malnutrition persist. As part of the U.S. President's Food
Security Response Initiative (PFSRI), FFP allocated 4,860 MT of food
aid commodities in FY 2009, valued at $6.3 million, for nonemergency
assistance in Liberia. Using these resources, CRS and over a dozen
international and domestic NGOs are working with 35,380 beneficiaries
in 24 districts to improve agricultural production, infrastructure and
emergency preparedness. The program also aims to improve the management
of childhood illnesses, rehabilitate malnourished children, and provide
life skills education for children and adolescents impacted by HIV.

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A father and son bringing home their USAID food aid ration in
Tajikistan. USAID.

Focusing on building the capacity of local NGOs to manage food
security activities and interventions, CRS's program made significant
achievements in FY 2009. One activity in the remote area of Nyor-
Diaply--rehabilitating community fish ponds left dormant due to the war
and providing associated training--led to the rehabilitation of 21 fish
ponds by seven community-based organizations. Eleven of the ponds
produced 1,084 kg of tilapia and catfish, from which community members
were able to feed themselves and sell the rest for a profit of USD
$650. The fish farming groups involved plans to save a portion of the
profits and expand their fish farming activities in the community.
Uganda: Following decades of civil insecurity and successive
seasons of poor rains and harvests, northern and northeastern Uganda
remain highly food insecure. As part of a Title II-funded MYAP, ACDI/
VOCA and its sub-grantees are implementing activities in 17 rural
districts in northern and eastern Uganda. Using 19,850 MT in food aid
in FY 2009, valued at $12.7 million, ACDI/VOCA provided over 116,000
beneficiaries with food assistance, agricultural training and support,
income generation services and grants, and activities in health,
nutrition, and hygiene. Using the support provided, the 1,955 farmer
savings groups formed under the program amassed a cumulative savings of
$162,668 in 2 years. In addition, the program focuses extensively on
People Living with HIV/AIDS (PLWHA). In addition to food aid provided,
in FY 2009, 96,970 PLWHAs, including their families, were provided with
income generating grants, agricultural support, and other support
services upon graduation from direct food distributions.

c. International Food Relief Partnership

In November 2000, the U.S. Congress passed the International Food
Relief Partnership (IFRP) Act. The law, which was renewed and extended
under the recent farm bill, enables USAID to award grant agreements to
eligible U.S. nonprofit organizations to produce and stockpile shelf-
stable, prepackaged commodities. Through the IFRP program, commodities
are made available to eligible nonprofit U.S. organizations and
international organizations for transportation, delivery and
distribution in emergency food aid relief programs.
In FY 2009, FFP awarded approximately $8.6 million in Title II IFRP
production and distribution grants. As part of the production grant,
Breedlove Dehydrated Foods produced a vitamin-fortified, dried
vegetable soup mix that is prepared and used as meals, predominantly in
institutional settings. Over the course of the FY, 30 IFRP distribution
grants were awarded to 23 nonprofit U.S.-based organizations. IFRP
awardees distributed the commodity to over 90,000 beneficiaries in 23
countries.
The organizations that received grants in FY 2009 to transport and
distribute the commodities were: ACTS International; Amigos
Internacionales; Batey Relief Alliance; Catholic Relief Services;
Center for International Health; Children's Hunger Fund; Church of
Bible Understanding; CitiHope; Convoy of Hope; Coprodeli USA;
Counterpart International; Cross International; Evangelistic
International Ministries; Fabretto Children's Foundation; Feed the
Children; Food for the Hungry; Haiti Vision; International Partnership
for Human Development; International Relief and Development;
International Relief Teams; Nascent Solutions; Project Concern
International; Resource and Policy Exchange; and World Help.

3. Title III: Food for Development

The Food for Peace Title III program is a USAID-administered tool
for enhancing food security and supporting long-term economic
development in the least-developed countries. The USG donates
agricultural commodities to the recipient country and funds their
transportation to the point of entry in the recipient country. These
commodities are sold on the domestic market and the revenue generated
from their sale is used to support and implement economic development
and food-security programs. Funds were neither requested nor
appropriated for Title III in FY 2009.

4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF)
Program

The John Ogonowski and Doug Bereuter FTF Program provides voluntary
technical assistance to farmers, farm groups, and agribusinesses in
developing and transitional countries to promote sustainable
improvements in food processing, production, and marketing. The program
relies on the expertise of volunteers from U.S. farms, land-grant
universities, cooperatives, private agribusinesses, and nonprofit farm
organizations to respond to the needs of host-country farmers and
organizations. Volunteers are recruited from all 50 states and the
District of Columbia. In general, these volunteers are not overseas
development professionals but rather individuals who have domestic
careers, farms, and agribusinesses or are retired persons who want to
participate in development efforts. Typically, volunteers spend about
20 to 30 days in the host country.
The FTF Program was initially authorized by Congress in the Food
Security Act of 1985 and funded through Title V of the Agricultural
Trade Development and Assistance Act of 1954. The U.S. Congress
authorized the current FY 2009-2013 phase of the FTF Program in the
2008 Food for Peace Act, designating it the ``John Ogonowski and Doug
Bereuter Farmer-to-Farmer Program'' in honor of Ogonowski, one of the
pilots killed on September 11, 2001, and former Congressman Bereuter,
who initially sponsored the program.
During FY 2009, USAID provided $12.5 million for FTF programs. Over
approximately 6 months of active implementation during the fiscal year,
218 volunteer assignments were completed in 23 countries, strengthening
163 host organizations--cooperatives, farmer associations,
agribusinesses, and NGOs--and directly assisting 10,533 persons,
including training 5,951 persons. Approximately 35 percent of FTF
beneficiaries were female. Importantly, new FTF programs were
implemented in 20 core countries, developing 5 year work plans for 41
country projects, focusing on agricultural productivity and value-chain
development for dairy, horticulture, staple food crops, aquaculture,
and other commodities. Four special projects were launched, involving
new implementing organizations and targeting special issues such as
avian influenza prevention, organic coffee production, and food
security.

Farmer-to-Farmer Volunteer Assignments: FY 2009
------------------------------------------------------------------------

------------------------------------------------------------------------
Africa
------------------------------------------------------------------------
Angola 4
Egypt 18
Ethiopia 1
Ghana 13
Kenya 16
Malawi 15
Mali 5
Mozambique 12
Nigeria 13
Tanzania 12
Uganda 10
---------------------
Sub-Total Africa................................ 119
------------------------------------------------------------------------
Latin America/Caribbean
------------------------------------------------------------------------
Bolivia 1
Dominican Republic 4
Guyana 5
Haiti 7
Jamaica 7
Nicaragua 12
Peru 2
---------------------
Sub-Total Latin America/Caribbean............... 38
------------------------------------------------------------------------
Europe/Eurasia
------------------------------------------------------------------------
Belarus 5
Georgia 23
Moldova 15
---------------------
Sub-Total Europe/Eurasia........................ 43
------------------------------------------------------------------------
Asia/Near East
------------------------------------------------------------------------
Lebanon 16
Tajikistan 2
---------------------
Sub-Total Asia/Near East........................ 18
=====================
Worldwide Total............................... 218
------------------------------------------------------------------------

Title V: FTF Program Highlights

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FTF-supported green pepper producer women's group in El
Salvador. USAID.

Egypt: The Four Thousand Tons per Day Program, a USAID Global
Development Alliance (GDA) activity in Egypt, targets over 8,000
smallholder farmers to help them to become reliable and profitable
suppliers for both local processors and export markets. FTF volunteers
provide invaluable technical and training assistance through the
program. For example, in FY 2009, volunteers provided technical
assistance to farmer groups in the Nubariya region, and introduced new
technologies for managing soil fertility, irrigation water use, and
seedling production. One of the beneficiaries, a smallholder tomato
producer in the region, almost doubled his yield from the previous year
as well as his net income, in part from savings incurred from lower
production costs. Using some of the proceeds generated, his household
plans to purchase small livestock and rent additional land to increase
the area under cultivation next season.
B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities
The Agricultural Act of 1949 authorizes the donation by USDA of
surplus food and feed grain owned by the CCC. Section 416(a) authorizes
surplus food assistance to be distributed domestically, and surplus
food donated to developing countries for assistance programs is covered
under Section 416(b). Surplus commodities acquired by the CCC as a
result of price-support operations may be made available under Section
416(b) if they cannot be sold or otherwise disposed of without
disrupting price-support programs at competitive world prices. In FY
2009, no commodities were made available by CCC for use in the 416(b)
program and, consequently, no donations were made under the program.
C. Food for Progress
The USDA-administered Food for Progress Program, authorized under
the Food for Progress Act of 1985, assists developing countries,
particularly emerging democracies ``that have made commitments to
introduce or expand free enterprise elements in their agricultural
economies through changes in commodity pricing, marketing, input
availability, distribution and private sector involvement.'' The
program authorizes the CCC to carry out the sale and exportation of
U.S. agricultural commodities on credit terms or on a grant basis, with
the use of either CCC financing or Title I funds. Agreements under the
Food for Progress Program are awarded to governments or private
voluntary organizations (PVOs), nonprofit agricultural organizations,
cooperatives, intergovernmental organizations or other private
entities.
The 2008 Farm Bill extended the authority for the Food for Progress
Program to provide assistance in the administration and monitoring of
food assistance programs to strengthen private-sector agriculture in
recipient countries through FY 2012. The CCC is authorized to use $15
million for administrative costs under the grants, and $40 million for
transportation expenses.
In FY 2009, CCC funding financed the purchase and shipment of
274,230 MT of commodities to 14 countries, with an estimated value of
$216 million. In total, the Food for Progress Program--through CCC and
Title I funding--provided over $238 million in food assistance in FY
2009, which supported the purchase and shipment of 288,530 MT of
commodities.

Food for Progress Program Highlights

Afghanistan: As part of the USG's long-term commitment to help
Afghanistan rebuild after years of war, USDA provided 25,000 MT of
monetized wheat--valued at $12.1 million--to Shelter for Life
International (SFL) to implement programs that combat food insecurity.
SFL is rehabilitating irrigation systems, building storage facilities,
facilitating information sharing, and extending credit to local
farmers. Through training and the technical support provided, increases
are expected in agricultural productivity, local markets will be made
more accessible, and grain mills will be improved.
Bangladesh: Although having made great strides in meeting the food
needs of its growing population, Bangladesh remains among the poorest
and most densely populated countries in the world. Approximately 50
percent of the total population live in poverty, 34 percent live on
less than $1 per day, and over 52 percent of children under 5 years of
age face severe malnutrition. To combat these problems, Cornell
University is using the proceeds from 4,850 MT of monetized crude
degummed soybean oil--valued at $10.5 million--to implement programs
that fight poverty in the region. Specifically, Cornell is providing
training and micro-loans to small farmers to enhance agricultural
production technology in liming, bedding, and arsenic management. It is
also improving the capacity of national agricultural institutions,
NGOs, and input suppliers to provide technical support and
infrastructure development to farmers. The goals of the program are to
increase crop productivity of the farms assisted by Cornell's program
by 40 percent and expand incomes of local farmers by 25 percent.
Burundi: Burundi has a high population density and very limited
natural resources, with 90 percent of Burundians dependent on
subsistence farming. Despite recent improvements in the political and
security landscapes, food insecurity persists after more than a decade
of civil war. High food prices are also impacting vulnerable people in
both rural and urban areas. To mitigate food security challenges, Food
for Progress funding was provided to WFP to support the recovery
process in six provinces characterized by high levels of food
insecurity. Using 3,500 MT of corn, 2,250 MT of yellow split peas, and
1,500 MT of vegetable oil, WFP provided general food distribution and
support for vulnerable groups, carried out school feeding, and
implemented activities aimed at asset creation, skills training, and
improved nutrition. These activities reached approximately 65,000
beneficiaries in 2009.
Dominican Republic: Food insecurity and malnutrition are most
widely seen in the underserved sugar cane farming communities (bateyes)
in the Dominican Republic where access to farming and agricultural
production is limited. The Batey Relief Alliance (BRA) is implementing
programs designed specifically to address the pressing needs of
millions in the Dominican Republic, especially in the bateyes. BRA is
monetizing 1,250 MT of crude degummed soybean oil and is using the
proceeds to implement program activities that address some of the
country's food needs. Using $2 million in Food for Progress resources
over the life of the program, BRA is improving the region's
agricultural productivity by establishing new agricultural cooperatives
where BRA will provide credit and train local farmers in agricultural
management. Through a Food for Work program, farmers and farm families
will assist in the construction of storage facilities and irrigation
systems for improved crop management, help repair roads for improved
market access, and assist with repairs to latrines, schools, and homes
for improved sanitary and health conditions among agricultural
populations. The objectives of the program are to increase agricultural
production by 20 percent and decrease crop losses by 20 to 25 percent.
Income and food sales are planned to increase by 20 percent, and
beneficiary access to markets is expected to increase by 35 percent.
Finally, the program may provide 1,400 people with access to potable
and clean water.
Ethiopia: Ethiopia is among the most underdeveloped countries in
the world, ranking 171 of 177 countries in the 2009 United Nations
Human Development Index. Malnutrition is rampant, affecting an
estimated 50 percent of the population. The World Council of Credit
Unions (WOCCU) is using proceeds from 23,000 MT of monetized hard red
winter wheat provided through the Food for Progress program to
implement activities that address food insecurity in the areas of
Tigray, Amhara, and Oromia. The program, valued at $13.8 million, is
developing a supportive commercial environment for agriculture by
providing technical assistance on productivity, post-harvest handling,
and marketing strategies to farmer members of existing rural credit
unions. Infrastructure such as storage facilities, irrigation systems,
access roads, bridges, basic sanitation facilities, and other support
projects will improve through the support of community self-help
activities. Finally, WOCCU is strengthening community-based
agricultural credit unions in order to expand credit and micro-loans to
local farmers. These activities are hoped to increase output, yields,
and income for local farmers by 30 percent by the end of the 4 year
program.
Malawi: Over \1/2\ of Malawi's 13.6 million inhabitants live in
poverty, with 30 to 50 percent of the population at risk of food
insecurity. To support sustainable economic and agricultural
development, USDA provided the Foundation for International Community
Assistance International (FINCA) 10,000 MT of hard red spring wheat to
implement programs aimed at reducing food insecurity. The total value
of FINCA's grant for FY 2009 equaled $8.5 million. Using the proceeds
from the monetization of the wheat, FINCA is expanding microfinance
services to agribusiness entrepreneurs in rural areas as well as
conducting social and economic assessments to determine the influence
of loans on household welfare and agriculture-related businesses.
Moreover, training and support is provided to local farmers to promote
long-term sustainable agricultural growth. These activities will
contribute toward the following objectives: increase individual
business sales and income for loan recipients by ten percent annually
and increase access to tools, equipment, inputs, marketing
opportunities, and financial services for rural clients by 15 percent.
Philippines: While experiencing a period of economic growth and
decreasing poverty rates nationwide, poor agricultural practices,
natural disasters, and conflict have prevented sustainable development
in the Mindanao provinces of the Philippines. In response, USDA
provided a Food for Progress grant valued at $5.7 million to CRS in FY
2009. CRS is monetizing 9,000 MT of soybean meal provided through the
program and will use the proceeds to implement activities aimed at
increasing food production and reducing poverty in selected Mindanao
provinces. The program will focus on: enhancing technical support to
farmers; increasing post-harvest capacity; improving post-harvest
practices; increasing crop diversification for cash crops; and linking
farmers to financial institutions and markets. This agreement will
build upon the successes of CRS/Philippines' ongoing USDA-assisted
Small Farms and Marketing Program, which has been implemented in five
pilot sites throughout Mindanao. CRS's objectives are to increase farm
incomes of resource-poor farmers by an average of 50 percent, provide
agricultural extension and marketing services for 10,000 farmers, and
increase rice, cacao, and coffee production.
Senegal: To combat high rates of poverty and malnutrition in
Senegal, USDA provided a Food for Progress grant in FY 2009 to the
National Cooperative Business Association (NCBA) totaling $8.3 million.
NCBA is using proceeds from 4,200 MT of monetized crude degummed
soybean oil to implement programs aimed at strengthening producer
organizations, enhancing millet production, improving market linkages,
and increasing access to financial services. Training programs include
financial management, efficient production and processing methods,
marketing strategies, and business development. NCBA is also
distributing improved seeds locally, promoting conservation farming,
establishing information systems for farmers, and providing a range of
financial services and financial training opportunities for producer
groups and processors. Over 9,000 people are benefiting from this
assistance.
D. McGovern-Dole International Food for Education and Child Nutrition
Program
An estimated 120 million children around the world do not attend
school, due in part to hunger or malnourishment. The majority of them
are girls. Following the success of the Global Food for Education
Initiative, created in July 2000, the USG has demonstrated its
continued commitment to education and child nutrition with the 2008
Farm Bill's reauthorization of the McGovern-Dole International Food for
Education and Child Nutrition Program (McGovern-Dole Program) through
FY 2012.
Modeled after the USG's school meals program, the McGovern-Dole
Program is named in honor of former Senators George McGovern and Robert
Dole for their tireless efforts to promote education and school
feeding. The McGovern-Dole Program uses U.S. commodities and financial
assistance to provide incentives for children to attend and remain in
school, as well as to improve child development through nutritional
programs for women, infants, and children under age 5. In FY 2009, the
McGovern-Dole Program provided more than 126,523 MT of commodities to
support child nutrition and school feeding programs in 18 countries,
the total value of which exceeded $168 million.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Schoolgirls taking part in a McGovern-Dole-supported WFP
program in Bangladesh. USDA.

McGovern-Dole Program Highlights

Cambodia: Decades of war and internal strife continue to impede
Cambodia's economic growth. Low per capita Gross Domestic Product (GDP)
in combination with high inflation in recent years has had major
implications for the country's largest economic sector--agriculture--
where poor farming practices, inadequate irrigation systems, and
unfavorable market conditions already hamper development, with negative
impacts on food security and nutrition. In response, International
Relief and Development (IRD) is using 1,930 MT of USDA-donated
commodities to meet the following goals: increase school enrollment by
29 percent, expand attendance by 20 percent, and raise the continuation
rate to 86 percent in 51 schools in Kampong Chhanang Province over the
3 years of the program. IRD will provide nutritious on-site meals and
take-home rations to girls, to students who complete the sixth grade,
and to high performing teachers. Program activities will reach 31,100
students, 200 teachers, and 1,300 families. In addition to meals
provided, each targeted school will have active health and nutrition
education programs to combat the province's high malnutrition rates
more effectively.
Guatemala: While the country suffers from high rates of
malnutrition nationwide, high rates are especially pronounced in rural
areas. In areas such as the central and northwestern highlands, they
run as high as 80 percent. With the goal of increasing the nutritional
and educational status of children in targeted areas of the rural Mayan
highlands, the McGovern-Dole Program donated 13,780 MT of commodities
to Asociacion SHARE de Guatemala (SHARE) in FY 2009. Targeting
approximately 385 schools in these areas, SHARE's program includes
direct feeding, the provision of take-home rations, establishing and
training members of Parent Teacher Associations (PTAs), developing
school infrastructure, promoting capacity building of indigenous
organizations, and establishing school gardens for educational and
nutritional purposes. Through this program, SHARE will directly reach
over 70,000 students and 2,300 teachers each year. The program's
targets are to increase enrollment by 17 percent and attendance by 19
percent. In addition, the promotion rate is expected to rise to 79.5
percent.
Liberia: With a fractured economy and few services available
following years of civil war and poor governance, Liberia remains one
of the poorest countries in the world. Upwards of 40 percent of
children under 5 years old suffer from malnutrition and more than \1/3\
of the population lives on less than $1 per day. Life expectancy is a
mere 45 years, and the adult literacy rate is 52 percent. With the
Government of Liberia's renewed focus on economic development and food
security, IRD is implementing a 3 year McGovern-Dole Program-funded
program in five counties in Liberia: Montserrado, Grand Bassa,
Maryland, Grand Kru, and River Gee. Each year, program activities will
directly benefit 30,000 students and 600 teachers, and indirectly reach
25,000 families through a combination of direct feeding, health/
nutrition activities, HIV/AIDS education, school resource and
infrastructure improvements, and the building of sustainability through
PTAs, school farms, and youth clubs. The program also provides school
supplies and printed materials that support literacy and numeracy to
targeted schools. The program is focused on increasing total enrollment
by 30 percent and attendance by 44 percent.
Pakistan: Nutrition and education remain priorities in Pakistan,
where malnutrition rates average 37 percent for children under 5 and
the national literacy rate is 55 percent. The McGovern-Dole Program has
been providing assistance to WFP since 2005, offering female
beneficiaries in targeted food-insecure districts access to development
opportunities through three primary activities. The first focuses on
improving enrollment, attendance, and retention rates among girls at
targeted primary schools. The second focuses on pregnant mothers, who
are provided with quality health services during pre- and post-natal
periods. Lastly, WFP supports asset creation and livelihood improvement
activities to improve the socioeconomic condition of rural women and
their families. WFP has reached over 6.4 million Pakistanis since 2005
and received $7 million in McGovern-Dole Program support in FY 2009.
During that year, WFP continued to build upon program successes that
included an increase in the completion rate of 22 percent for females
in targeted schools and an increase in enrollment of over 450 percent
for females in targeted schools between 2005 and 2008. In that same
time period, deliveries by trained birth attendants increased from 51
percent to 93 percent and in 2008, 234,066 women received routine
health services. Furthermore, the number of families with access to
clean drinking water increased by ten percent in 2008.
Uganda: The Karamoja region of Uganda is one of the country's most
vulnerable areas, where malnutrition and lack of education remain
pressing issues. Only 18 percent of men and six percent of women are
literate and only an estimated 33 percent of children are enrolled in
school, based on 2007 statistics. In FY 2009, the McGovern-Dole Program
granted WFP 5,680 MT of commodities, a donation valued at $19 million,
for 3 years of support to assist the government in improving the
cognitive performance of primary school children in the region. WFP
provided school meals to students in both day and boarding schools and
allocated take-home rations to girls achieving 80 percent attendance
per term. The objectives of the program are to increase total
enrollment by 30 percent and attendance for girls and boys by 23
percent and 11 percent, respectively, above 2008 levels. Importantly,
the Government of Uganda plans to gradually integrate itself into
program administration and activities to ensure program sustainability.
E. Bill Emerson Humanitarian Trust (BEHT)
The Bill Emerson Humanitarian Trust (BEHT) is a reserve of
commodities and cash that is used to meet unanticipated food aid needs.
The BEHT can hold wheat, rice, corn, and sorghum in any combination,
but the only commodity ever held has been wheat. USDA has recently sold
the remaining wheat in the trust (about 915,000 MT) so that currently
the BEHT holds only cash--$315 million. The cash would be used by USDA
to purchase U.S. food products when USAID determines it is needed for
emergency food aid.
The 2008 Farm Bill reauthorizes the BEHT through FY 2012 and allows
the Secretary of Agriculture to invest the funds from the trust in low-
risk, short-term securities or instruments so as to maximize its value.
FFP used $5.6 million of BEHT resources in FY 2009, which was
converted into 21,000 MT of food aid commodities, to respond to
declining food security conditions in North Korea.
F. Local and Regional Food Aid Procurement Pilot Project (PPP)
The USDA Local and Regional Food Aid Procurement Pilot Project
(PPP) was authorized as a pilot program under the 2008 Farm Bill. The
primary objective of the project is to use local and regional purchase
to help meet urgent food needs due to food crises and disasters
quickly. The goal is to protect against a decline in food consumption,
save lives, and reduce suffering. In FY 2009, $4.75 million was
allocated for programming in three countries, of which $2.73 million
was used for local and regional procurement of commodities and $2.02
million for associated costs including inland transportation and
storage and handling. All three pilot programs in FY 2009 in Malawi,
Mali, and Tanzania were implemented by WFP.

PPP Program Highlights:

Malawi: Ranking 160 of 177 countries in the United Nations 2009
Human Development Index, with half of its 12 million citizens living
below the poverty line and 20 percent of the population extremely poor,
Malawi proved an ideal candidate for PPP assistance in FY 2009. USDA
provided WFP with funding support from the PPP to address the food
needs of households that are at risk of hunger and poverty. In addition
to providing food to vulnerable groups, WFP specifically focuses on
procuring food including cereals, pulses, and corn-soy blend, from
smallholder farmer groups through pro-smallholder tendering practices.
Through this process, WFP hopes to strengthen the engagement of
smallholders and small/medium-scale traders in the markets, stimulate
agricultural production and cohesion within smallholder farmer
organizations, and raise smallholder/trader income levels. Support
provided through the PPP in Malawi will provide food to 24,999
households, or an estimated 124,995 beneficiaries, for approximately 3
months.
Mali: A landlocked Sahelian country with a poverty rate of over
59.3 percent, Mali suffers from high levels of food and nutritional
insecurity that is most pronounced in rural areas. As part of PPP, USDA
provided almost $1.1 million to WFP to assist with their Country
Program and Protracted Relief and Recovery Operation (PRRO). Under
these programs, WFP provides support for basic education, rural
development, and food security. Specifically, the programs include
nutrition interventions among children aged 6 to 59 months, food
assistance for vulnerable groups, and communication activities on
nutritional information. Support provided through the PPP in Mali will
provide food to 28,000 pregnant and lactating women for 6 months and to
15,000 people through food for work/food for training activities for 3
months.
Tanzania: While Tanzania is one of Africa's more politically stable
countries, the country is categorized as a low-income and food-deficit
country, with almost 80 percent of its total population dependent on
subsistence agriculture for their livelihood. In FY 2009, USDA provided
WFP $2 million in PPP resources to assist with their Country Program
and PRRO in Tanzania. Under the Country Program, WFP provides support
to HIV/AIDS-affected households, implements food for asset creation
activities, and provides supplementary feeding to vulnerable children
and lactating and pregnant women. The PRRO, meanwhile, provides basic
food needs to refugees and the most vulnerable Tanzanians living in
northwestern Tanzania. Activities under this program enable poor
communities to acquire livelihood skills to build resilience to future
shocks and support education, health care, and agricultural services.
Support provided through the PPP in Tanzania will provide food to over
125,000 beneficiaries, including refugees, for one to 5 months.
III. Appendices

Appendix 1: List of Abbreviations
------------------------------------------------------------------------

------------------------------------------------------------------------
BCC Behavior Change Communication
BEHT Bill Emerson Humanitarian Trust
CCC Commodity Credit Corporation
CSB Corn Soy Blend
FANTA Food and Nutrition Technical Assistance
FEWS NET Famine Early Warning System Network
FFP Office of Food for Peace (USAID)
FSPF Food Security Programming Framework
FTF Farmer-to-Farmer Program of Food for Peace
Act, Title V
FY Fiscal year
GDA Global Development Alliance (USAID)
GDP Gross Domestic Product
GHFSI Global Hunger and Food Security Initiative
GOE Government of Ethiopia
HIV Human Immunodeficiency Virus
HPSC Health Practices, Strong Communities
IDP Internally Displaced Person
IFRP International Food Relief Partnership
ITSH Internal Transportation, Storage and Handling
M&E Monitoring and Evaluation
MCHN Maternal and Child Health and Nutrition
MDG Millennium Development Goal
MT Metric ton
MYAP Multi-Year Assistance Program
NGO Nongovernmental Organization
PEPFAR President's Emergency Plan for AIDS Relief
PFSRI President's Food Security Response Initiative
PLWHPeople Living with HIV/AIDS
PM2A Preventing Malnutrition in Children Under Two
Approach
PPP Procurement Pilot Project
PRRO Protracted Relief and Recovery Operation
PSNP Productive Safety Net Program
PTA Parent Teacher Association
RFI Request for Information
RFP Request for Proposal
UNICEF United Nations Children's Fund
USAID U.S. Agency for International Development
USDA U.S. Department of Agriculture
USG U.S. Government
WFP World Food Program
------------------------------------------------------------------------

Appendix 2: List of Awardees
------------------------------------------------------------------------

------------------------------------------------------------------------
The following awardees implemented U.S. Government food assistance
programs in Fiscal Year 2009:
------------------------------------------------------------------------
ACDI/VOCA Agriculture Cooperative Development
International/Volunteers in Overseas
Cooperative Assistance
ACTS ACTS International
ADRA Adventist Development and Relief Agency
International, Inc.
Africare Africare
AI Amigos Internacionales
BRA Batey Relief Alliance
CARE Cooperative for Assistance and Relief
Everywhere, Inc.
Caritas Caritas
CBU Church of Bible Understanding
CH Convoy of Hope
CHF Children's Hunger Fund
CHOUF Cooperative Housing Foundation
CIH Center for International Health
Citihope Citihope International
Coprodeli Coprodeli USA
CPI Counterpart International
Cross Cross International
CRS Catholic Relief Services
CU Cornell University
EIM Evangelistic International Ministries
FCF Fabretto Children's Foundation
Feed the Children Feed the Children
FFTP Food for the Poor
FHI Food for the Hungry International
FINCA Foundation for International Community
Assistance International
GDR Government of the Dominican Republic
GIROA Government of the Islamic Republic of
Afghanistan
GoPK Government of Pakistan
HV Haiti Vision
IPHD International Partnership for Human
Development
IRD International Relief and Development
JAM Joint Aid Management
LOLLand O'Lakes
MCI Mercy Corps International
Nascent Nascent Solutions
NCBA National Cooperative Business Association
NPA Norwegian People's Aid
OICI Opportunities Industrialization Centers
International
PAI Planet Aid International
PCI Project Concern International
PRISMA Asociacion Benefica Prisma
REST Relief Society of Tigray
RI Relief International
ROP Roots of Peace
RPX Resource and Policy Exchange
SCF Save the Children Federation
SCF-UK Save the Children UK
SFL Shelter for Life International
SHARE Asociacion SHARE de Guatemala
TNS TechnoServ
UMCOR United Methodist Committee on Relief
WH World Help
WFP World Food Program (United Nations)
WOCCU World Council of Credit Unions
WVUS World Vision US
------------------------------------------------------------------------

Appendix 3: USDA Title I Program: Food for Progress Grants_Fiscal Year 2009
----------------------------------------------------------------------------------------------------------------
Beneficiaries Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burundi WFP Corn, Vegetable Oil, Yellow 65 7,250 $10,000.0
Split Peas
Central African WFP Cornmeal, Corn Soy Blend, 65 7,050 $12,000.0
Republic Vegetable Oil, Yellow Split
Peas
------------------------------------------------------------------------------------------------
Sub-Total Africa 130 14,300 $22,000.0
==============================================
Worldwide Total 130 14,300 $22,000.0
----------------------------------------------------------------------------------------------------------------

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, Recipient and Tonnage_Fiscal Year
2009
----------------------------------------------------------------------------------------------------------------
Recipients * Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burundi WFP Cornmeal, Corn Soy Blend, 2 3,720 $4,101.7
Vegetable Oil, Yellow Peas
Cameroon WFP Cornmeal, Vegetable Oil, 170 4,690 $4,868.5
Yellow Peas
Central WFP Cornmeal, Corn Soy Blend, 367 3,430 $5,431.4
African Kidney Beans, Rice,
Republic Vegetable Oil
Chad WFP Cornmeal, Corn Soy Blend, 1,746 100,950 $138,482.2
Sorghum, Vegetable Oil,
Yellow Peas, Yellow Split
Peas
Cote d'Ivoire WFP Cornmeal, Corn Soy Blend, 2 4,980 $6,608.1
Pinto Beans, Vegetable Oil
Democratic WFP Cornmeal, Corn Soy Blend, 328 72,080 $111,654.1
Republic of Pinto Beans, Vegetable Oil,
the Congo Yellow Split Peas
Ethiopia CARE Vegetable Oil, Wheat, Yellow 202 19,180 $13,188.5
Split Peas, Lentils
CRS Corn Soy Blend, Peas, 26 168,790 $92,987.3
Sorghum, Vegetable Oil,
Wheat
SCF Vegetable Oil, Wheat, Yellow 161 21,230 $17,887.6
Split Peas
SCF-UK Lentils, Vegetable Oil, 628 46,170 $30,230.8
Wheat, Yellow Split Peas
WFP Corn Soy Blend, Pinto Beans, 587 249,410 $173,740.5
Sorghum, Vegetable Oil,
Wheat, Yellow Split Peas
Kenya WFP Cornmeal, Corn Soy Blend, 3,910 125,610 $133,722.8
Green Split Peas, Vegetable
Oil, Wheat Flour, Yellow
Split Peas
Rwanda WFP Cornmeal, Pinto Beans, 705 2,430 $2,932.9
Vegetable Oil, Corn Soy
Blend
Somalia CARE Corn Soy Blend, Vegetable 123 14,200 $11,195.5
Oil, Sorghum
WFP Corn Soy Blend, Lentils, 17 142,440 $112,242.0
Sorghum, Vegetable Oil,
Yellow Peas, Yellow Split
Peas
Sudan ADRA * -- -- -- $332.7
CRS Corn Soy Blend, Lentils, 243 5,130 $8,678.4
Sorghum, Vegetable Oil
NPA Lentils, Sorghum, Vegetable 197 2,860 $6,234.0
Oil
WFP Lentils, Sorghum, Vegetable 47 476,360 $532,202.5
Oil, Yellow Split Peas
Tanzania WFP Cornmeal, Corn Soy Blend, 512 9,480 $9,718.7
Pinto Beans, Vegetable Oil
Uganda WFP Corn Soy Blend, Cornmeal, 1,943 19,520 $18,546.1
Pinto Beans, Sorghum,
Vegetable Oil, Yellow Peas,
Yellow Split Peas
Zimbabwe WFP Bulgur, Pinto Beans, 9 96,340 $92,487.3
Sorghum, Vegetable Oil,
Yellow Peas
WVUS Bulgur, Cornmeal, Sorghum, 4 92,370 $73,397.0
Vegetable Oil, Yellow Peas
-------------------------------------------------------------------------------------------------
Sub-Total Africa 11,928 1,681,370 $1,600,870.6
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan WFP Corn Soy Blend, Green Peas, 16 62,190 $59,509.7
Wheat, Vegetable Oil
Algeria WFP Beans, Corn Soy Blend, Rice, 125 6,470 $6,880.3
Vegetable Oil, Wheat Flour
Georgia WFP Kidney Beans, Vegetable Oil, 100 1,550 $1,840.9
Wheat Flour Bread
Nepal WFP Lentils, Rice, Vegetable 550 7,450 $8,793.0
Oil, Yellow Split Peas
Pakistan WFP Vegetable Oil, Wheat Flour, 1,207 62,730 $55,386.7
Yellow Split Peas
Philippines WFP Rice 2 1,480 $1,855.0
Sri Lanka WFP Lentils, Vegetable Oil, 2,352 38,550 $28,727.8
Wheat
West Bank/Gaza WFP Garbanzo Beans, Vegetable 1,030 21,430 $20,715.4
Oil, Wheat Flour
Yemen WFP Beans, Wheat 72 3,900 $2,432.0
-------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 5,454 205,750 $186,140.8
----------------------------------------------------------------------------------------------------------------
Central Asia
----------------------------------------------------------------------------------------------------------------
Tajikistan SCF Vegetable Oil, Wheat Flour, 70 4,090 $6,091.1
Yellow Peas
-------------------------------------------------------------------------------------------------
Sub-Total Central Asia 70 4,090 $6,091.1
----------------------------------------------------------------------------------------------------------------
Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Colombia WFP Green Peas, Lentils, Pinto 1,590 8,660 $11,046.4
Beans, Vegetable Oil, Wheat
Flour
Haiti CARE Lentils, Bulgur, Vegetable 49 870 $1,495.5
Oil
CRS Bulgur, Vegetable Oil, 14 910 $2,478.0
Yellow Peas
WFP Corn Soy Blend, Pinto Beans, 1,603 16,110 $21,253.4
Rice, Vegetable Oil, Yellow
Peas
WVUS Bulgur, Corn Soy Blend, 52 2,000 $3,040.0
Lentils, Vegetable Oil,
Yellow Peas
-------------------------------------------------------------------------------------------------
Sub-Total Latin America/Caribbean 3,309 28,550 $39,313.3
------------------------------------------------
Funding Adjustments (Program Support Costs, Prepositioning, -- -- $333,553.4
and Unallocated Resources)
================================================
Worldwide Total 20,760 1,919,760 $2,165,969.2
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November
24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from
Food for Peace Information System reports, December 4, 2009 and November 13, 2009, respectively. Recipient
values are reflective of commodity rations and are derived separately from program beneficiary totals.
* Some programs receive Section 202(e) and/or ITSH funds without receiving commodities in the same FY.
Table does not include IFRP awardees. See page 14 for a list of awardees and page 38 for the country list.

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, Recipient and Tonnage
Tables_Fiscal Year 2009
----------------------------------------------------------------------------------------------------------------
Total Cost
Country Grantee Commodity Recipients (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso Africare Bulgur, Pinto Beans, Rice, 21 2,390 $3,498.1
Soy Flour, Vegetable Oil
CRS Bulgur, Cornmeal, Lentils, 214 8,460 $9,807.8
Rice, Vegetable Oil
Burundi CRS Bulgur, Corn Soy Blend, 59 20,900 $16,013.8
Vegetable Oil, Wheat,Yellow
Peas
Chad Africare Bulgur, Wheat Flour Bread 99 5,680 $8,110.5
Democratic ADRA Cornmeal, Green Peas, 21 5,410 $4,654.5
Republic of Vegetable Oil, Wheat
the Congo
FHI Cornmeal, Vegetable Oil, 3 5,100 $4,465.7
Wheat
MCI Cornmeal, Vegetable Oil, 3 6,020 $5,223.1
Wheat, Yellow Split Peas
Ethiopia CRS Bulgur, Corn Soy Blend, 192 25,080 $17,066.5
Rice, Vegetable Oil, Wheat,
Yellow Split Peas
FHI Green Peas, Wheat 195 19,690 $12,368.4
REST Vegetable Oil, Wheat, Yellow 755 46,070 $25,485.7
Peas
SCF-UK * -- -- -- $3,526.8
Ghana OICI Bulgur, Vegetable Oil, Wheat 7 4,990 $4,500.0
Guinea OICI Cornmeal, Green Peas, 14 1,400 $2,500.9
Vegetable Oil
Liberia CRS Rice -- 4,860 $6,300.9
Madagascar ADRA -- -- -- $71.2
CRS Corn Soy Blend, Rice, 135 3,640 $16,186.1
Sorghum, Vegetable Oil
Malawi CRS Corn Soy Blend, Pinto Beans, 34 25,230 $18,963.0
Wheat, Vegetable Oil
Mali Africare Bulgur, Vegetable Oil 37 1,600 $2,821.2
CRS Bulgur, Corn Soy Blend, 63 5,120 $8,755.2
Green Split Peas, Vegetable
Oil
Mauritania CPI Bulgur, Corn Soy Blend, 99 7,140 $5,000.1
Lentils, Vegetable Oil,
Wheat
Mozambique ADRA Wheat -- 8,830 $3,974.9
FHI Wheat -- 8,640 $3,654.2
SCF Wheat -- 16,550 $7,454.8
WVUS Wheat -- 11,540 $4,968.0
Niger Africare Red Beans, Rice 14 3,400 $4,486.7
Counterpart Corn Soy Blend, Rice, 12 3,400 $3,038.5
Vegetable Oil
CRS Bulgur, Rice 23 6,340 $6,568.7
Rwanda ACDI/VOCA Bulgur, Corn Soy Blend, 3 1,010 $1,415.8
Vegetable Oil
CRS Bulgur, Corn Soy Blend, 26 1,810 $2,130.3
Vegetable Oil
WVUS Bulgur, Corn Soy Blend, 49 2,570 $3,815.5
Vegetable Oil
Senegal CPI Bulgur, Corn Soy Blend, 43 3,600 $3,355.1
Lentils, Potato (flakes),
Rice, Vegetable Oil
Sierra Leone CARE Bulgur, Vegetable Oil, 27 9,460 $7,850.5
Wheat, Yellow Split Peas
Uganda ACDI/VOCA Corn Soy Blend, Wheat, 42 19,850 $12,748.6
Vegetable Oil
MCI Corn Soy Blend, Cornmeal, 8 10,170 $8,446.1
Green Split Peas, Wheat,
Vegetable Oil
Zambia CRS Bulgur, Lentils 15 1,710 $8,002.2
-------------------------------------------------------------------------------------------------
Sub-Total Africa 2,212 307,660 $257,229.4
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan WVUS Rice, Vegetable Oil, Wheat 138 8,190 $13,500.0
Flour, Yellow Peas
Bangladesh CARE Vegetable Oil, Wheat, Yellow 228 50,100 $21,582.9
Split Peas
SCF Vegetable Oil, Wheat, Yellow 180 18,320 $8,445.4
Split Peas
India CARE * -- -- -- $6,000.0
CRS Bulgur, Vegetable Oil 422 8,200 $7,465.5
-------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 968 84,810 $56,993.8
----------------------------------------------------------------------------------------------------------------
Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Guatemala CRS Corn Soy Blend, Pinto Beans, 85 4,310 $4,556.2
Rice, Vegetable Oil
MCI Corn Soy Blend, Pinto Beans, 16 3,370 $7,614.7
Rice, Vegetable Oil
SCF Corn Soy Blend, Pinto Beans, 12 5,540 $5,534.7
Rice, Vegetable Oil
SHARE Corn Soy Blend, Pinto Beans, 17 4,110 $4,337.6
Rice, Vegetable Oil
Haiti ACDI/VOCA Bulgur, Corn Soy Blend, 44 17,710 $8,679.6
Wheat, Vegetable Oil,
Yellow Peas
CRS Bulgur, Corn Soy Blend, 91 13,930 $10,297.9
Green Peas, Vegetable Oil,
Wheat
WVUS Bulgur, Corn Soy Blend, 107 31,490 $16,522.5
Lentils, Vegetable Oil,
Wheat,
Honduras ADRA Corn Soy Blend, Red Beans, 36 330 $1,310.1
Rice, Vegetable Oil
SCF Corn Soy Blend, Red Beans, 5 650 $2,451.9
Rice, Vegetable Oil
WVUS Corn Soy Blend, Rice, 4 440 $2,008.8
Vegetable Oil
-------------------------------------------------------------------------------------------------
Sub-Total Latin America 418 81,880 $63,314.0
================================================
Worldwide Total 3,597 474,350 $377,537.2
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November
24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from
Food for Peace Information System report, December 4, 2009. Recipient values are reflective of commodity
rations and are derived separately from program beneficiary totals.
* Some programs receive Section 202e and/or ITSH funds without receiving commodities in the same FY.

Appendix 6: USDA-CCC Funded_Food for Progress Grants_Fiscal Year 2009
----------------------------------------------------------------------------------------------------------------
Beneficiaries * Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Ethiopia WOCCU Wheat 37 23,000 $13,750.0
Malawi FINCA Wheat 21 10,000 $8,520.0
PAI Wheat 325 30,000 $26,620.0
Mozambique PAI Wheat 145 20,000 $8,746.0
Niger IRD * -- -- -- $416.7
CRS * -- -- -- $255.7
Senegal NCBA Soybean Oil 9 4,200 $8,330.0
Africare Soybean Meal 15 16,500 $9,830.0
Uganda FINCA Wheat 25 15,000 $9,200.0
------------------------------------------------------------------------------------------------
Sub-Total Africa 577 118,700 $85,668.4
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan GIROA * -- -- -- $73.7
SFL Wheat 30 25,000 $12,100.0
ROP ** Wheat Flour 14 -- $4,472.8
GIROA Soybean Oil 70 10,600 $17,500.0
Bangladesh CU Soybean Oil 829 4,850 $10,490.0
Mongolia MCI/CHOUF * -- -- -- $1,703.5
Pakistan WFP *** -- -- --$13,283.0
GoPk Wheat 2,700 50,000 $30,800.0
Soybean Oil -- 6,800 --
Philippines CRS Soybean Meal 10 9,000 $5,660.0
ACDI/VOCA Soybean Meal 23 13,200 $10,500.0
LOL Soybean Meal 22 9,730 $8,699.9
------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 3,698 129,180 $115,283.0
----------------------------------------------------------------------------------------------------------------
Europe
----------------------------------------------------------------------------------------------------------------
Armenia WFP * -- -- -- $15.6
UMCOR * -- -- -- $143.2
------------------------------------------------------------------------------------------------
Sub-Total Europe _ _ $158.8
----------------------------------------------------------------------------------------------------------------
Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Bolivia PCI * -- -- -- $1,216.5
Dominican BRA Crude Vegetable Oil, 8 1,350 $1,990.0
Republic Vegetable Oil
GDR Wheat -- 25,000 $11,500.0
------------------------------------------------------------------------------------------------
Sub-Total Latin America/Caribbean 8 26,350 $14,706.5
----------------------------------------------
Worldwide Total 4,283 274,230 $215,816.6
----------------------------------------------------------------------------------------------------------------
* Represents prior year agreements with costs incurred in FY 2009.
** Represents part of an FY 2008 award billed in FY 2009.
*** Represents internal distribution costs only, no commodity costs.

Appendix 7: McGovern-Dole International Food for Education and Child Nutrition Program_Fiscal Year 2009
Donations by Country and Commodity
----------------------------------------------------------------------------------------------------------------
Beneficiaries Total Cost
Country Grantee Commodity (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Africa
----------------------------------------------------------------------------------------------------------------
Angola JAM Corn Soy Blend 200 14,400 $29,500.0
Cameroon CPI Beans, Rice, Vegetable Oil 28 1,130 $2,850.0
Chad WFP Cornmeal, Vegetable Oil 104 4,440 $5,504.1
Ethiopia WFP Corn Soy Blend, Vegetable 160 3,910 $5,343.2
Oil
Guinea-Bissau IPHD Beans, Dehydrated Potatoes, 105 9,020 $18,300.0
Rice, Vegetable Oil
Kenya WFP Bulgur, Rice, Vegetable Oil, 1,100 11,900 $9,488.7
Yellow Split Peas
Liberia IRD Soy Flour, Soy Protein 135 7,260 $8,800.0
Isolate, Wheat
WFP Beans, Rice, Vegetable Oil 3 243 $170.4
Malawi WFP Corn Soy Blend 400 5,520 $6,084.8
Mozambique JAM Rice, Wheat Soy Blend 271 9,270 $7,800.0
Niger RI Corn Soy Blend, Rice, 25 9,600 $13,200.0
Vegetable Oil
Rwanda WFP Beans, Cornmeal, Vegetable 300 8,020 $8,832.3
Oil
Sierra Leone CRS Bulgur, Corn Soy Blend, 55 1,330 $2,850.0
Lentils, Vegetable Oil
Uganda WFP Corn Soy Blend, Cornmeal, 245 5,680 $19,000.0
Vegetable Oil
-------------------------------------------------------------------------------------------------
Sub-Total Africa 3,131 91,723 $137,723.5
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
Bangladesh WFP Wheat 350 14,490 $5,315.5
Cambodia IRD Beans, Canned Salmon, Corn 25 1,260 $1,230.0
Soy Blend, Soybean Oil
Laos WFP Canned Salmon, Corn Soy 100 2,010 $2,886.6
Blend, Rice, Vegetable Oil
Pakistan WFP Vegetable Oil 300 5,410 $7,000.0
-------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 775 23,170 $16,432.1
----------------------------------------------------------------------------------------------------------------
Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Guatemala FFTP Beans, Corn, Rice, Salmon, 260 3,660 $6,000.0
Soybean Oil
SHARE Beans, Corn Soy Blend, Rice, 72 7,970 $8,259.2
Soybean Meal, Vegetable Oil
-------------------------------------------------------------------------------------------------
Sub-Total Latin America/Caribbean 332 11,630 $14,259.2
================================================
Worldwide Total 4,238 126,523 $168,414.8
----------------------------------------------------------------------------------------------------------------

Appendix 8: Bill Emerson Humanitarian Trust: Summary Budget, Commodity, Recipient and Tonnage_Fiscal Year 2009
----------------------------------------------------------------------------------------------------------------
Total Cost
Country Grantee Commodity Recipients (000s) Metric Tons (000s)
----------------------------------------------------------------------------------------------------------------
Asia/Near East
----------------------------------------------------------------------------------------------------------------
North Korea MCI Corn 941.2 21,000 $5,638.40
------------------------------------------------------------------------------------------------
Sub-Total Asia/Near East 941.2 21,000 $5,638.40
==============================================
Worldwide Total 941 21,000 $5,638.4
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November
24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from
Food for Peace Information System report, December 4, 2009. Recipient values are reflective of commodity
rations and are derived separately from program beneficiary totals.

Appendix 9: Local and Regional Procurement Pilot Program_Fiscal Year
2009
------------------------------------------------------------------------
Country Awardee Total Cost (000s)
------------------------------------------------------------------------
Malawi WFP $1,700
Mali WFP $1,050
Tanzania WFP $2,000
-------------------------------------
Sub-Total Africa $4,750
==================
Worldwide Total $4,750
------------------------------------------------------------------------

Appendix 10: Food for Peace Title II Congressional Mandates_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
Bagged in United
Minimum Subminimum Monetization Value-added States
----------------------------------------------------------------------------------------------------------------
FY 2009 Target 2,500,000 1,875,000 15.0% 75.0% 50.0%
Status as of 2,824,033 535,195 58.1% 53.9% 25.9%
November 2009
----------------------------------------------------------------------------------------------------------------
Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report
against target.

Subminimum: Metric tons for approved nonemergency programs through PVOs and community development organizations
and WFP. Metric ton grain equivalent used to report against target.

Monetization: Percentage of approved Title II programs that are monetization programs.

Value-added: Percentage of approved nonemergency programs that are processed, fortified, or bagged.

Bagged in U.S.: Percentage of approved nonemergency bagged commodities that are whole grain to be bagged in the
United States.
----------------------------------------------------------------------------------------------------------------
Source: FFP Preliminary Final Budget Summary Report, November 24, 2009.

Appendix 11: Countries with U.S. International Food Assistance Programs
under the FFP Act_Fiscal Year 2009

------------------------------------------------------------------------
Title I (0 countries)
------------------------------------------------------------------------
Title I-Funded Food for Progress (2 countries)
------------------------------------------------------------------------
Burundi Central African
Republic
------------------------------------------------------------------------
Title II (54 countries)
------------------------------------------------------------------------
Afghanistan Algeria Bangladesh Bolivia *
Burkina Faso Burma * Burundi Cameroon
Central African Chad Colombia Cote d'Ivoire
Republic
Democratic Djibouti Ecuador * Ethiopia
Republic of the
Congo
Gambia * Georgia Ghana Guatemala
Guinea Haiti Honduras India
Indonesia * Iraq * Kenya Lesotho *
Liberia Madagascar Malawi Mali
Mauritania Mozambique Nepal Nicaragua *
Niger Pakistan Peru * Philippines
Rwanda Senegal Sierra Leone Somalia
Sri Lanka Sudan Syria * Tajikistan
Tanzania Uganda West Bank/Gaza Yemen
Zambia Zimbabwe
------------------------------------------------------------------------
Title II-Funded International Food Relief Partnership (23 countries)
------------------------------------------------------------------------
Bolivia * Cambodia Cameroon Central African
Rep.
Dominican El Salvador Ethiopia Georgia
Republic
Guatemala Haiti Honduras Kenya
Kyrgyzstan Laos Lesotho Malawi
Namibia Nicaragua Peru Senegal
Tajikistan Uganda Uzbekistan
------------------------------------------------------------------------
Title III (0 countries)
------------------------------------------------------------------------
Title V--Farmer-to-Farmer (23 countries)
------------------------------------------------------------------------
Angola Belarus Bolivia Dominican
Republic
Egypt Ethiopia Georgia Ghana
Guyana Haiti Jamaica Kenya
Lebanon Malawi Mali Moldova
Mozambique Nicaragua Nigeria Peru
Tajikistan Tanzania Uganda
------------------------------------------------------------------------
CCC-Funded Food for Progress (14 countries)
------------------------------------------------------------------------
Afghanistan Armenia Bangladesh Bolivia
Dominican Ethiopia Malawi Mongolia
Republic
Mozambique Niger Pakistan Philippines
Senegal Uganda
------------------------------------------------------------------------
Food for Education (18 countries)
------------------------------------------------------------------------
Angola Bangladesh Cambodia Cameroon
Chad Ethiopia Guatemala Guinea-Bissau
Kenya Laos Liberia Malawi
Mozambique Niger Pakistan Rwanda
Sierra Leone Uganda
------------------------------------------------------------------------
Bill Emerson Humanitarian Trust (1 country)
------------------------------------------------------------------------
North Korea
------------------------------------------------------------------------
Procurement Pilot Project (3 countries)
------------------------------------------------------------------------
Malawi Mali Tanzania
------------------------------------------------------------------------
* Active program(s) funded in previous fiscal year(s).

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF USDA FARM LOAN PROGRAMS)

----------

THURSDAY, JULY 14, 2011

Subcommittee on Department Operations,
Oversight, and Credit,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:00 p.m., in
Room 1300, Longworth House Office Building, Hon. Jeff
Fortenberry [Chairman of the Subcommittee] presiding.
Members present: Representatives Fortenberry, Crawford,
Fudge, McGovern, Baca, and Owens.
Staff present: Tamara Hinton, Brandon Lipps, Josh Maxwell,
John Porter, Debbie Smith, Pelham Straughn, Heather Vaughan,
Liz Friedlander, Anne Simmons, Suzanne Watson, John Konya, and
Jamie Mitchell.

OPENING STATEMENT OF HON. JEFF FORTENBERRY, A REPRESENTATIVE IN
CONGRESS FROM NEBRASKA

The Chairman. The Subcommittee on Department Operations,
Oversight, and Credit hearing entitled, Agricultural Program
Audit: Examination of USDA Farm Loan Programs, will come to
order.
I would like to welcome our guests. Good afternoon. Thank
you for joining us here at the fifth farm bill audit hearing.
These audits help Members of the Agriculture Committee gather
data on farm programs so that we can evaluate each of them for
effectiveness and efficiency. Having accurate and comprehensive
information on current farm policy will help us develop the
next farm bill in an integrated fashion so we can best serve
America's farmers and ranchers.
We are joined today by Bruce Nelson. Mr. Nelson is the
Administrator of the Farm Service Agency. The Farm Service
Agency administers several loan programs that ensure that
farmers, ranchers and rural businesses have access to the
credit they need to purchase and maintain their operations.
It is difficult to imagine an industry that is more reliant
on credit and access to capital than farming and ranching. Farm
equipment can run upwards of $\1/2\ million. Combines cost more
than most homes, especially here on Capitol Hill. And the cost
of land can be prohibitive in and of itself. For beginning
farmers with no credit history, obtaining a loan can be
impossible.
My district is home to a growing community of farmers who
raise food specifically for local farmers markets and other
emerging food retailers. With little historical data on farmers
producing for new markets, commercial credit institutions are
sometimes reluctant to offer them credit. Farm Service Agency
loan programs ensure that new farmers have access to the credit
they need to get started.
It isn't only the new farmers that need access, however.
All farmers operate in a risky environment subject to volatile
swings in both weather patterns as well as commodity prices.
The swings and the effect on farm income can cause commercial
credit markets to tighten. The Farm Service Agency loans ensure
that farmers don't lose access to credit during such difficult
times.
Today we will hear how the Farm Service Agency administers
its loan programs and how these programs are received in the
countryside.
I don't think I need to remind anyone here that we are
operating in a challenging fiscal environment. Today's audit
will help us prioritize the programs that are most valuable to
America's farmers and ranchers while making the most efficient
use of the taxpayer dollar.
Mr. Nelson, thank you for joining us today, and I look
forward to hearing your testimony and learning how we may
actually improve our loan programs.
[The prepared statement of Mr. Fortenberry follows:]

Prepared Statement of Hon. Jeff Fortenberry, a Representative in
Congress from Nebraska
Good afternoon. Thank you all for joining us here today at the
fifth farm bill audit hearing.
These audits help Members of the Agriculture Committee gather data
on current farm programs so that we can evaluate each of them for
effectiveness and efficiency. Having accurate and comprehensive
information on current farm policy will help us develop the next farm
bill in an integrated fashion, so that we can better serve America's
farmers and ranchers.
We are joined today by Bruce Nelson, the Administrator of the Farm
Service Agency.
The Farm Service Agency administers several loan programs that
ensure farmers, ranchers and rural businesses have access to the credit
they need to purchase and maintain their operations.
It's difficult to imagine an industry more reliant on credit and
access to capital than farming and ranching. Farm equipment can run
upwards of $\1/2\ million. Combines cost more than most homes. It's
cheaper to buy a house on Capitol Hill than it is to buy certain cotton
pickers. And the cost of land can be prohibitive in and of itself.
For beginning farmers with no credit history, obtaining a loan can
be impossible. My district is home to a growing community of farmers
who raise food specifically for local farmers' markets and other
emerging food retailers. With little historical data on farmers
producing for new markets, commercial credit institutions are sometimes
reluctant to offer them credit. Farm Service Agency loan programs
ensure that new farmers have access to the credit they need to start
farming.
It isn't only new farmers that need access to credit; however. All
farmers operate in a risky environment, subject to volatile swings in
both weather patterns and commodity prices. These volatile swings and
the effect on farm income can cause commercial credit markets to
tighten. The Farm Service Agency loans ensure that farmers don't lose
access to credit during difficult times.
Today we will hear how the Farm Service Agency administers its loan
programs and how these loans are received in the countryside.
I don't think I need to remind anyone here that we are operating in
a challenging fiscal environment. Today's audit will help us prioritize
the programs that are most valuable to America's farmers and ranchers,
while making the most efficient use of taxpayer dollars.
Mr. Nelson, thank you for joining us today. I look forward to
hearing your testimony and learning how we might improve our loan
programs.

The Chairman. With that, I would also like to recognize our
Ranking Member, Ms. Fudge, from Ohio, for any opening
commentary she might have.

OPENING STATEMENT OF HON. MARCIA L. FUDGE, A REPRESENTATIVE IN
CONGRESS FROM OHIO

Ms. Fudge. Thank you very much, Mr. Chairman, and thank you
for holding this hearing to review the Farm Service Agency
credit programs. This hearing is a good complement to the
information we gathered during the April hearing on national
credit conditions. The testimony offered and questions asked
today will help move us a step closer to understanding and
addressing credit concerns for producers in the next farm bill.
So I am pleased to have the opportunity to both listen to
and ask questions of Mr. Nelson again. Thank you, sir.
As I mentioned in April, I represent Cleveland and many of
its eastern suburbs. So there are not a lot of farms in my
district. However, the farmers who grow food close to my
district are very important to me. Like many urban communities,
Cleveland is one of the largest food deserts in the nation.
Fresh fruits and vegetables are not plentiful or affordable in
my district. Many of my constituents depend on food banks, and
my food banks depend on locally grown produce.
Thankfully, farmers markets and urban gardening are
becoming more prevalent. Many people are struggling to make
ends meet during these hard economic times, so these outlets
are vital considering the high cost of fruits and vegetables.
With that said, I am concerned about the soundness and
adequacy of the credit extended to farmers by the FSA and how
that affects the affordability and availability of food in
urban areas like Cleveland.
Additionally, I look forward to learning how agricultural
lenders are responding to some of the developments I see in our
cities and suburban areas like the increased interest in
locally produced foods and the real problem of food deserts. I
want to ensure that FSA is meeting the needs of young and
innovative producers who can fill these gaps.
Finally, I want to make sure that FSA is reaching out to
minority farmers with adequate and equal credit. This has been
a difficult and ongoing problem at USDA, and although progress
appears to have been made, it is our responsibility to ensure
that both the structure and the implementation of FSA programs
is fair. Sufficient and unbiased access to credit is critical
for successful farming and ranching operations of all sizes in
all states and locales.
So again, welcome to our witness. I look forward to hearing
your testimony.
Thank you very much, Mr. Chairman. I yield back.
The Chairman. We are also joined today by the gentleman
from New York, Mr. Owens, who is not a Member of this
Committee, but who in consultation with the Ranking Member, we
are happy to have on the panel for questions later.
Mr. Owens. Thank you very much. I appreciate it, Mr.
Chairman.
The Chairman. We move now to our witness. Mr. Bruce Nelson
is the Administrator of the Farm Service Agency, and he is
accompanied by Mr. Jim Radintz, the Assistant Deputy
Administrator of the Farm Service Agency.
Mr. Nelson, please begin.

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY,
U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED
BY JIM RADINTZ,
ASSISTANT DEPUTY ADMINISTRATOR, FSA, USDA

Mr. Nelson. Mr. Chairman and Members of the Committee,
thank you for the opportunity to discuss credit conditions in
rural America. I am Bruce Nelson, Administrator of the Farm
Service Agency, and today I look forward to giving you an
overview and an update of FSA's farm loan programs.
Farmers and ranchers who are unable to obtain commercial
credit can turn to FSA's Farm Loan Program. While we have been
known as the lender of last resort by some, we have really
become the lender of first opportunity to many in rural
America. FSA assists farmers through both direct and guaranteed
loan programs. Direct loans are made and serviced by FSA
employees, and direct loans are not intended to be a permanent
source of credit; rather, they are intended to help borrowers
transition to commercial credit. Guaranteed loans are made and
funded by a commercial lender. FSA guarantees up to 95 percent
of the loan principal and interest, and guaranteed lenders are
then accountable for loan servicing under this guarantee.
FSA farm loan programs are discretionary programs funded
through annual appropriations, and because the vast majority of
these loans are repaid, FSA loans carry a low cost for the
taxpayer. Last year, for example, $155 million in
appropriations supported over $5.2 billion in loans, and as of
June 30 of this year, $124.8 million in Fiscal Year 2011
appropriations have supported more than $3.9 billion in
lending.
As in recent years, demand for loans has remained quite
high. While higher commodity prices have benefited some
producers, rising input costs such as feed, fuel, and
fertilizer have remained high. In addition, as land prices
continue to rise, commercial lenders in many regions are
maintaining tight credit standards in general. All of these
factors contribute to continuing demand for FSA loans.
Term limits on FSA loans have also affected credit
availability. Federal statute presently limits borrowers with
guaranteed operating loans to 15 years of eligibility. This has
been suspended in the past, but the latest suspension expired
on December 31 of last year, making about 4,500 guaranteed loan
borrowers ineligible for further guaranteed loans as a result.
We at FSA are always working to improve the way we
administer and service loans. In Fiscal Year 2010, I am proud
to report that the loss rate in the Direct Loan Program fell to
1.2 percent, its second lowest level since 1986. The direct
loan delinquency rate stood at 5.6 percent in Fiscal Year 2010,
its lowest point in 2 decades. And the direct loan foreclosure
rate stood at just \1/10\ of 1 percent last year.
While working to keep trouble loan numbers low, we are also
able to graduate more than 2,000 direct loan borrowers to a
guaranteed loan last year. This is a very important progress
because helping farmers build relationships with their
community lenders is a key step in establishing their future
success in agriculture.
We are also processing loans more quickly than ever before.
This improvement is largely due to modernized IT systems which
help our field office staff to deliver our programs more
efficiently. Support in Congress for these critical
infrastructure improvements has made these great strides and
service possible, and I am grateful for that support.
Finally, I would like to speak on the issue of equal access
to our loans.
Secretary Vilsack has been extremely clear that improper
treatment of those that USDA and FSA serve will not be
tolerated. Under this Secretary's leadership, FSA has improved
processing of civil rights complaints, and we have requested an
external analysis of our field office program delivery. Our
team here in Washington and across the country shares my
commitment and Secretary Vilsack's commitment to equal access
and opportunity for all those customers that FSA serves.
Mr. Chairman and Members of the Subcommittee, again thank
you for allowing me to share this snapshot of FSA loan
activities with you, and I am available to answer your
questions now or at anytime in the future.
Thank you very much.
[The prepared statement of Mr. Nelson follows:]

Prepared Statement of Bruce Nelson, Administrator, Farm Service Agency,
U.S. Department of Agriculture, Washington, D.C.
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to appear before you to provide an update on the credit
conditions rural America now faces and the current status and
operations of the farm loan programs at the Farm Service Agency (FSA).
Credit Conditions
The farm economy strengthened in 2010. However, farm income,
especially net farm income, is very unevenly distributed. Much of the
improvement in farm economic conditions is driven by higher commodity
prices. While higher prices have been beneficial for some crop
producers, they have also resulted in higher feed costs which are
squeezing profits among livestock and dairy producers.
A combination of higher commodity and energy prices is
significantly increasing the amount of capital required to finance
agricultural production. Crop-related expenses grew 77 percent between
2002 and 2008, and are expected to rise by 9.5 percent in 2011.
Livestock expenses increased by 64.4 percent between 2002 and 2008, and
are forecast to increase by 6.8 percent in 2011. These higher
production costs increase the demand for operating credit, increase
financial leverage, and strain liquidity.
Recent Federal Reserve Surveys indicate commercial lenders in most
regions are continuing to maintain stringent credit standards.
Concerned that a combination of factors may be pushing farmland values
quite high, the Federal Deposit Insurance Corporation has issued
guidance to its examiners to scrutinize farm loans more rigorously,
particularly in financial institutions with a concentration of farm
lending. The combination of high feed and other input costs, increased
operating capital needs, and a continued high level of loan scrutiny by
lenders means some farmers are still being denied commercial credit.
FSA Farm Loan Programs. Family farmers who are denied commercial
credit due to lender standards, but are otherwise creditworthy, can
turn to the farm loan programs administered by FSA. The Agency assists
farmers through direct and guaranteed farm loans. Direct loans are made
and serviced by FSA; agency employees provide supervision and technical
assistance to direct loan borrowers. Direct loans are not intended to
be a permanent source of credit and borrowers agree to obtain
commercial credit and refinance their FSA debts when they are able to
do so.
Guaranteed loans are made, funded and serviced by a commercial
lender. FSA typically guarantees up to 90 percent of the loan principal
and interest. FSA employees must evaluate and make a credit decision on
all guaranteed loans. Guaranteed lenders must retain at least the non-
guaranteed portion of the loan in their portfolio and are accountable
for loan servicing under the FSA guarantee.
Funding. FSA farm loan programs are discretionary programs funded
through annual appropriations. In accordance with the Federal Credit
Reform Act of 1990 (as amended), appropriations for FSA farm loans are
based on the projected total cost of loans when they are made. Federal
budget resources are able to be significantly leveraged through the
loan programs. In Fiscal Year (FY) 2010, for example, $155.3 million in
appropriations supported $5.29 billion in direct and guaranteed FSA
loans.
Loan Demand. Activity in FSA's farm loan programs indicates that a
significant number of farmers continue to be unable to obtain
commercial credit under current conditions. Farm loan program demand is
usually a reflection of financial conditions in the farm economy: when
the over-all farm economy is strong, farm loan activity declines;
during times of financial stress in the farm economy, demand for FSA's
loans rises. This makes sense, since a basic requirement to qualify for
the loan programs is to be unable to meet the criteria for commercial
credit.
In early FY 2009, loan demand surged to levels that had not been
seen since the early 1980s. Demand for farm loan program assistance in
FY 2009 and FY 2010 reached its highest levels since FY 1985. Demand
has continued at, and in some programs increased above, those near-
record FY 2009 levels (Chart 1). Use of the guaranteed farm ownership
program in FY 2010 reached an all-time high. FY 2010 direct operating
and farm ownership obligations nearly doubled compared to FY 2008
levels. Application activity in FY 2011 reflects demand levels similar
to the higher levels of FY 2009 and FY 2010. The demand for new loans
in FY 2011 is in addition to the credit provided through the $7.97
billion in direct loans and $10.35 billion in guaranteed loans
outstanding in the FSA portfolio at the beginning of the fiscal year To
manage the increase demand, FSA has proposed shifting budget authority
from the guaranteed operating loan interest assistance program, where
demand is down, to the direct operating loan program and the guaranteed
farm ownership loan program, where a shortfall is expected. On June 27,
2011 Secretary Vilsack signed letters to the Chairmen and Ranking
Members of the appropriate Appropriations Subcommittees of the House
and Senate, advising them of the proposed transfer. The planned
transfer will fund the approved and pending applications for direct
operating loans and provide adequate guaranteed ownership funding for
the remainder of FY 2011. Some, but not all of the unfunded direct
ownership loans will be funded from other transfers that are required
by law in August and September.
Over the past 2 years, an unusually high number of direct operating
loan applications have been received from new customers. Normally,
about 20 percent of direct operating loan applications in any given
year are from farmers who do not have FSA loans. Since 2009, over 40
percent of direct operating loan applications have been from farmers
who are not FSA borrowers. As of July 7, 2011, 44 percent of the direct
operating loans made in FY 2011 were to customers who did not have
existing FSA operating loans.
Performance and Portfolio Conditions
Farm loan programs continue to emphasize the importance of
processing applications in a timely manner. Between FY 2001 and FY
2011, farm loan programs reduced its direct loan application processing
timeframes by 11.5 days (31 percent), and reduced guaranteed loan
processing timeframes by 2 days (ten percent). As of March 30, 2011,
the average time from application receipt to final decision for direct
loans was 27.8 days, and for guaranteed loans, 9.4 days. It is
remarkable that even though loan demand has surged, there has not been
a noticeable deterioration in application processing time. This is a
testament to the dedication of FSA field staff and the effectiveness of
the Information Technology (IT) solutions farm loan programs has
deployed.
As of June 30, 2011, the FSA direct loan portfolio consisted of
$8.14 billion owed by 70, 937 borrowers, while the guaranteed portfolio
consisted of $10.86 billion owed by 34,832 borrowers. The quality of
our portfolio has continued to improve, with foreclosure and loss rates
falling while borrower ``graduation'' to commercial loans has
increased.
Loss Rates. In FY 2010, losses in the direct loan program fell to
their second lowest level since 1986--just 1.2 percent (Chart 2).
Losses for FY 20l0 in the guaranteed loan program were 0.6 percent,
(Chart 2).
Delinquency Rates. As with losses, the direct loan delinquency
rates have been at historic lows for the past 2 decades at 5.9 percent
for FY 2010 (Chart 3). This is the result of steady and dramatic
decreases, from a 23.8 percent delinquency rate in FY 1995. The
decrease was facilitated by expanded authority, since 1996, to offset
delinquent borrowers' loan obligations with their Federal payments,
salaries and income tax refunds. In the guaranteed program, the FY 2010
delinquency rate was 1.69 percent, the second lowest since 1995 (Chart
3).
Foreclosures. Foreclosure rates continue to be very low in the
direct loan program. In 2010, FSA completed 64 foreclosures. This
represents less than \1/10\ of 1 percent of the agency's direct loan
caseload of 70,905 (as of September 30, 2010). The extremely low
foreclosure rate is the result of the use of all available servicing
tools and a structured review process to ensure that all options to
assist the borrower have been exhausted before a foreclosure action is
started.
Inventory Properties. Inventory farm properties those that have
come into government ownership through voluntary conveyance or
foreclosure are also at historic lows, with just 86 farms totaling
10,900 acres in FY 2010 (Chart 4). In 1995, FSA held nearly 1,800 farms
totaling 598,000 acres. Many of those inventory properties were sold to
established and beginning farmers, providing those individuals with
prime opportunities to expand or create new operations.
Graduation Rates. Federal law requires FSA to ``graduate'' its
borrowers to commercial credit when they have made sufficient progress
to be able to qualify for loans from other lenders. They are assisted
by the agency in refinancing their direct loans with FSA guaranteed
loans from commercial lenders. Some 2,221 direct loan borrowers were
able to graduate in FY 2010.
Equitable Treatment and Participation
Secretary Vilsack has been extremely clear that improper and
inequitable treatment of individuals the United States Department of
Agriculture (USDA) and FSA serve will not be tolerated. On April 21,
2009, the Secretary announced several actions in a comprehensive
approach to ensure fair and equitable treatment of USDA employees and
constituents. These actions included an initiation of several
improvements in processing civil rights complaints, requesting an
external analysis of program delivery by USDA service center agencies,
and 90 day suspension of FSA farm foreclosures, which has provided us
time to ensure that all producers have received their statutory
protections. In FY 2010, while FSA received more than 48,000 loan
applications, more than 4,000 loan servicing requests, and tens of
thousands of applications for various farm commodity, support, and
disaster programs, the Assistant Secretary for Civil Rights received
only 37 civil rights complaints related to FSA programs. While this is
the lowest number of FSA civil rights complaints received since records
have been kept, it is our goal to further reduce this number.
I, along with all members of the FSA management team, remain fully
committed to providing to equal access and opportunity for all those
FSA serves. I will closely monitor the operations of farm loan programs
and all other FSA programs to assure that our producers, program
applicants, and employees receive fair and equitable treatment. I want
to update you on a few key activities dealing with these important
issues.
Program participation. An examination of the composition of FSA's
loan portfolio indicates that FSA finances socially disadvantaged
farmers at a much higher rate than that groups' proportion of the farm
population (Chart 5). FSA has significantly increased the amount of
loan funds provided to socially disadvantaged applicants. Between 1995
and 2010, the FSA direct loan caseload for socially disadvantaged
borrowers increased from 3,260 to 14,840. Between 1997 and 2010, the
FSA guaranteed loan caseload for socially disadvantaged borrowers
increased from 1,730 to 2,998.
In the 2008 Farm Bill, Congress re-affirmed the focus for FSA
programs on beginning farmers and ranchers. FSA continues to strive to
reach more beginning farmers and ranchers and has increased the amount
of loan funds provided to beginning farmers and ranchers. The FSA
direct loan caseload for beginning farmers increased from 3,474 in 1995
to 27,111 borrowers in 2010. Guaranteed caseloads for beginning farmers
and ranchers were first reported in 1997. The FSA guaranteed loan
caseload for beginning farmers increased from 3,617 in 1997 to 9,477
borrowers in 2010.
IT Modernization. Farm loan programs has also implemented modern,
Web-based systems to manage the loan application, approval and funding
process. This system provides real-time management data on application
activity and allows the Agency to better cope with funding problems and
act quickly when necessary. For example, when the Agency received
supplemental funding in the American Revitalization and Recovery Act,
over 2,000 farmers were waiting for desperately needed direct operating
loans to pay 2009 planting and other farming expenses. When funds were
made available to FSA, the Agency was able to process obligations
overnight, and funds began flowing into farmers' bank accounts only 3
days later. I am proud to say that FSA was one of the first agencies in
the government to get recovery dollars flowing to those who desperately
needed it. The modern, web-based IT systems in place for farm loan
programs, such as the Direct Loan System (DLS) and the Program Funds
Control System (PFCS), were a key factor in our ability to provide such
timely service.
This past year we have completed the final phase of moving all
automated farm loan systems to the Web. With the completion of this
project, duplicate data collection is eliminated and farm loan services
are being delivered even more efficiently This project allows our
employees to conduct USDA business from any location where there is
broadband, WiFi or dial-up Internet access. This allows us to conduct
business with producers at locations and times convenient to them.
Additionally, this information is stored on a centralized server
allowing employees to quickly access portfolio information and provide
real time management reports. FLP staff no longer relies on antiquated
operating environments for program delivery.
In addition to the business plan and loan accounting systems, other
IT systems have been developed and implemented which also enhance the
efficiency of FSA employees. Agency appraisers have recently been
provided state of the art agricultural software that allows collateral
valuations to be done more expeditiously, which facilitates faster
access to capital for loan applicants. Automated Web-based systems have
been developed for program oversight, including Farm Loan Programs Risk
Assessment (FLPRA) and the District Director Oversight System (DDORS),
which help to ensure the integrity of FSA's farm loan programs.
Conclusion
Through modernization efforts, maintaining focus on program
objectives, and the hard work and dedication of FSA employees, FSA farm
loan program staff has made great strides in improving program
performance. Loan failures and losses have declined which is a strong
indication that the program mission of helping farmers become
successful is being accomplished. At the same time, increased
assistance to small, beginning, and socially disadvantaged farmers,
reflects remarkable success as well.
However, we continue to face challenges. Government resources are
increasingly limited and the agriculture production landscape is
changing. It will require every bit of innovation, management
expertise, and determination that we can muster to maintain the
efficiency and efficacy of farm loan programs over the next several
years.
We are experiencing a unique set of conditions in the credit and
banking sectors, and to a large extent, in agriculture. These changes
pose significant barriers and challenges to the groups that FSA farm
loan programs are intended to assist. These issues create major
challenges for the agency as well, since the success of the program
depends on those whom the programs are intended to serve. To keep pace
with these changes, we look forward to working with you to continue
efforts to modernize our delivery systems, and to refine and adjust
program requirements and operations to maximize the opportunities for
our nation's small, beginning, and socially disadvantaged farmers and
ranchers.
Because of our rural delivery system and experienced loan officers,
FSA's farm loan programs staff is well positioned to continue providing
high quality delivery of existing programs and new initiatives to
assist small, beginning, and socially disadvantaged family farmers. We
look forward to working with this Subcommittee to address the
challenges we face in accomplishing this worthwhile mission to
strengthen family farmers and rural America.
Thank you for allowing me to share our Department of Agriculture
perspective as you seek to address this important issue. I am available
to answer your questions now or at any time in the future.
Charts
Chart 1
Total All Loans
Comparison of Obligations
(in Billion Dollars)

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Chart 2
Farm Loan Programs Loss Rates
10 Year Trend

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Chart 3
Farm Loan Programs Dollar Delinquency Rate
10 Year Trend

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Chart 4
Farm Loan Programs Inventory Property

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Chart 5
FY 2010 Borrower Case Load by Race
(As Compared to 2007 Ag Census Data)
----------------------------------------------------------------------------------------------------------------
Percent of Percent of
Percent of 2007 Percentage of FY Population being Percentage of FY Population being
Ag Census 2010 Direct served by FSA 2010 Guaranteed served by FSA
Population Caseload Direct Farm Caseload Guaranteed Farm
Loans Loans
----------------------------------------------------------------------------------------------------------------
White 96.45 89.15 2.99 95.53 1.56
Black 1.40 3.10 7.18 0.53 0.60
Asian/Hawaiin 0.57 0.89 5.00 2.21 6.05
Amer Ind./AI Nat. 1.58 3.46 7.07 1.58 1.57
Hispanic * N/A 3.31 N/A 0.11 N/A
Other N/A 0.10 N/A 0.04 N/A
----------------------------------------------------------------------------------------------------------------
Hispanic Americans are not a separate category within the 2007 Census of Agriculture; therefore, no reliable
comparison can be established.

The Chairman. Thank you, Mr. Nelson.
Let me begin with the questions, then I will turn to our
Ranking Member.
Let's talk about this issue of the term of the guaranteed
loan. There seems to be--let's just unpack that further as to
the policies that led to the 15 year term, and suspension of
the term so that it could be extended into much longer periods
of time. Yet that has to be held in comparison with wanting
people to move actually away from this type of product, this
type of guarantee, particularly if they are in a successful
situation.
So what do you anticipate emerging in this regard?
Mr. Nelson. Mr. Chairman, I really appreciate your question
because it gives an opportunity not only to talk about the
issue of possibly extending the term limits, but it gives me an
opportunity to emphasize that the vast majority of FSA
borrowers do stay within the term limits.
For example, for our operating loans, the average time of
participation of our borrowers is between 5\1/2\ and 6 years.
And for the farm ownership loans, it is about 12 years. So
again, I think it is important to have on the record the fact
that, again, the vast majority of the borrowers stay within the
term limits.
But I am a farmer from out in Montana. My family has been
there for about 100 years on the place that my grandparents
homesteaded. And like a lot of families, most of the farmers
and ranchers around the country are in business for 40 or 50
years, and it is likely that in that 40 to 50 year period that
you are going to have 10 or 15 or 20 bad years because of, for
example, low commodity prices or disaster situations that are
beyond the control of the individual producer.
Now, we have recognized, as you mentioned in your opening
statement, that there are inherent risks in agriculture that
are beyond the control of individual producers, and it is why
the ag safety net was created in the first place. And we have
also realized that if you have enough hard years that affect
enough producers, you can actually affect the food security of
the nation.
So what I would ask you to consider on term limits is some
flexibility so that we at FSA can look at the individual
borrower on a case-by-case basis and determine whether or not
the fact that that producer may need to have a term extension
is because of factors beyond their control, again because of
low commodity prices or disaster situations, or whether it was
something that was within the producer's control. And in the
case where it was something that happened to them because of
situations beyond their control or factors beyond their
control, we ought to have the flexibility to look at extending
the term, but where it was something that was clearly within
the producer's control, then we probably shouldn't.
The Chairman. How is this balanced with the dual
responsibility the agency has to graduate farmers to the
commercial loan market?
Mr. Nelson. Well, I believe that always ought to be our
objective and, as I mentioned in my statement, we were proud to
graduate over 2,000 borrowers last year, and that needs to
become the intention and continue to be the intention.
The Chairman. What percent is that of the overall program?
Mr. Nelson. We have about 70,000, I believe, borrowers in
the Direct Loan Program. So that was 2,000 of 70,000, and we
will make sure that we clarify those numbers if I don't have it
right, Mr. Chairman.
The Chairman. Okay. With that, I will turn to our Ranking
Member for any questions she may have.
Ms. Fudge. Thank you very much, Mr. Chairman. I have just a
few quick questions.
Mr. Nelson, in the district I represent, instead of having
the traditional farmers obviously, we have young innovators and
creative entrepreneurs who are growing gardens on rooftops or
on abandoned lots and turning them into thriving farms. And
there are many who garden indoors because we have very harsh
winters in Ohio, which I am sure you know. And we encourage
this kind of gardening.
So while they aren't your garden variety farmers, they do
consider themselves farmers and do need financial assistance.
Under your rules, are these producers qualified for FSA loans?
Mr. Nelson. That is another good question because again,
there is an impression out there that because our loan program
is agricultural in nature that that means it is strictly rural
in nature. That is not the case because our agricultural loans
are available for producers whether they are in the middle of a
city, or in the suburbs, or out in the rural countryside.
And so this is a good opportunity to help get the word out
about that because we do have examples in the Farm Service
Agency of having made loans around the country for just the
type of roof-type gardens that you are talking about, for small
apiaries that are in or near cities, and also for community-
sponsored agriculture, CSA, so that we can help local producers
create the food networks to supply food to food deserts like
your hometown of Cleveland.
Now, the Department of Agriculture has started on a ``Know
Your Farmer--Know Your Food'' Program and I like that, as a
dryland wheat farmer from Montana, because that helps get the
word out to the American people about the importance of
agriculture. It is a program designed to make them understand
and appreciate farmers and ranchers. But also in the situation
you are talking about, it is a program designed to help link up
those local producers with local markets.
Now, one thing I will say, though, is we are pretty new to
urban areas, and so we could certainly use some help from you
folks in terms of how better to serve the agricultural
producers in our cities.
Ms. Fudge. And I appreciate that because you are saying to
me that you are trying to find ways to work with the very
people that we are talking about. And I would like to at some
point talk to you further about that because I think it is very
important. And I am glad to see that you are taking the
initiative to find ways to work with that particular population
of farmers. So I thank you.
My last question is can you give us just a brief update on
how the reduced funding in the Continuing Resolution will
affect credit programs. And specifically, how has FSA been able
to weather the cuts to the Agriculture Credit Insurance Fund of
some $430 some odd million and to the Farm Assistance Fund of
another $44 million.
Mr. Nelson. Under the 2011 Appropriations Act, and I am
going to turn this over to Jim in a minute, we were given the
authority to transfer funds. And so pursuant to that authority,
back on June 27 Secretary Vilsack did notify the appropriators
of our intention to transfer funds from the Guaranteed Interest
Assist Program, where there wasn't as much demand, into the
Direct Operating Loan Program. And we anticipate that if that
transfer goes through, which we haven't heard any issues that
the appropriators have had with it, that we will be able to
cover our direct operating loan demand.
We also do have a backlog on the farm ownership side, and
there are target designations that will come off some of our
loans in August and September that will free up those funds to
hopefully cover our farm ownership approved loans out there.
Jim, do you have anything to add to that.
Mr. Radintz. I just would clarify that while we will be
able to use some of those transfers late in the year to address
some of the backlog, there will be some folks with approved
direct ownership loans that won't be funded until fiscal 2012
because even with the transfers we just have more demand than
we will be able to have funding for.
Ms. Fudge. Thank you so much. Mr. Chairman, I yield back.
The Chairman. I thank the Ranking Member. I should inform
the Members of the Committee that votes have been called. I
think if we can all aggressively manage time we might be able
to get through, each Member will have a question if it is kept
at about 2 minutes. So with that I will turn to Mr. Crawford.
Mr. Crawford. Okay. Real quick. Mr. Nelson, I understand
that by law emergency loans offered by the SBA are not
available to farmers although they once were back in the 1980s
and that change was made in 1986 because some viewed that as a
degree of overlap. At this time, the loan structure of SBA
loans is actually a lot more favorable than FSA, giving SBA
borrowers lower interest rates, longer periods of maturity and
higher loan amounts. I am wondering if there is any way we can
model the FSA emergency loans after the SBA loans to get those
more favorable rates and terms.
Mr. Nelson. Congressman Crawford, I am going to turn that
over to Mr. Radintz because my experience in history with Farm
Service Agency lending program is that we work together with
the Small Business Administration. And so in emergency
situations, if there is a Secretarial designation, FSA
emergency loans are triggered for farmers and ranchers along
with SBA assistance to the Main Street businesses that are also
adversely affected by the natural disaster.
If you are suggesting modeling the Farm Service Agency Loan
Program more after SBA, we would be happy to look at that and
advise you, our technical experts, within FSA during your
consideration of the farm bill debate and see where we may be
able to improve things.
By the way, Congressman, I did appreciate the opportunity
to come up and visit with you about the Farm Storage Facility
Loan Program that day. Thank you again for the invitation.
Mr. Crawford. You bet.
Mr. Radintz. Regarding the Emergency Loan Program and
comparing it with Small Business Administration disaster
recovery loans, there are a couple of factors. We could lower
the interest rates. That is a decision that the Secretary would
need to make. But of course any change in the interest rates of
the loan programs would have some budgetary impact for us.
The other conditions, rates and terms and so forth, would
require some statutory modification, and that is something that
we could certainly work with the Committee on.
Mr. Crawford. Gentlemen, thank you. I yield back.
The Chairman. Thank you.
Mr. McGovern is recognized.
Mr. McGovern. Thank you, and I will be brief.
I am new to the Agriculture Committee, but I have a
district similar to Ms. Fudge. I represent a primarily urban-
suburban district. And I am particularly interested in, as I
mentioned to your predecessor, who was here not too long ago,
that I am particularly interested in reaching out to smaller
and medium-sized farms and smaller producers as well as
speciality crop producers.
And I assume that you think that in most regions of the
country there continues to be a need for the FSA to provide
credit.
And then my second question is how does participation in
your programs vary across types of producers as well as in
various areas of the country? Are there certain parts of the
country where FSA plays a bigger role than commercial credit?
Where I am from, what I hear constantly from these farmers,
who I didn't know existed until I got on the Agriculture
Committee, is that it is a challenge for them to access credit
because of their proximity to an urban area.
And I would just appreciate your comments on those.
Mr. Nelson. Well, Congressman, I appreciate that, again in
response to Congressman Fudge's question earlier, we are
challenged in the Farm Service Agency with going beyond our
traditional customers out there. And we look forward to working
with you to better reach folks in urban areas and around urban
areas because, again, this is an agricultural program. It is
not a rural program. It is supposed to serve agricultural
producers everywhere in the country. And with respect to
smaller producers, in fact most of our borrowers are on the
small end of the spectrum. If you look at the gross sales and
the equity positions and the net income positions of our
borrowers, we loan primarily to folks on the small end of the
producer spectrum. And that makes sense because those are with
the emphasis on beginning farmers, for example, most people
aren't going to start out big.
And so again we would look forward to working with you to
try to develop ways to reach folks out there. And I look
forward to those conversations and, during your consideration
of the farm bill, what we can do in that to help.
Mr. McGovern. I appreciate it. Just my final point, are
there certain parts of the country where FSA plays a bigger
role than commercial credit?
Mr. Nelson. If your question is do we play a bigger role
than commercial credit, I will have to get back to you on that.
I can answer the question about where we historically have our
most loans, and that is we have our most loans in the most
intensely agricultural parts of the country, which is the
Midwest primarily over to the Missouri River. And again, our
challenge is to reach out beyond those traditional
constituencies.
So I would turn it over to Mr. Radinitz to see if he has
anything to add. And we would look forward to providing you
with more detailed information.
[The information referred to is located on p. 459.]
Mr. McGovern. I appreciate your offer to work with us and I
look forward to working with you. It sounds like the issue is
that we just need to get to know each other better rather than
there is any kind of barrier from getting help.
Mr. Nelson. No barriers. Looking forward to it.
Mr. McGovern. Thank you.
The Chairman. Mr. Owens, you are recognized.
Mr. Owens. Mr. Nelson, first I want to thank you obviously
for being here today, but you also were a great deal of help to
me in a conversation we had about 2 weeks ago regarding the
potential for SBA loans for people in my district affected by
dramatic flooding.
I want to ask, in your testimony there was appended several
graphs and one is entitled, Farm Loan Programs Loss Rates 10
Year Trend. Very interesting to me because we are looking at
direct loan loss rates and guaranteed loan loss rates. When
they blend together they are about .9 percent.
Would it be fair to say that you compare quite favorably
with commercial bank loan loss rates?
Mr. Nelson. I am going to have to defer that question to
Mr. Radintz because I don't know of the commercial loss rates,
Congressman.
Mr. Owens. Thank you.
Mr. Radintz. In our Guaranteed Loan Program, the loss rates
are somewhat marginally higher than commercial rates but again
these are loans made by commercial lenders with an FSA
guarantee, so the rates are somewhat close. The loss rates in
the Direct Loan Program are somewhat higher. I would say
probably maybe double. But again we are talking about the
difference between maybe \3/4\ of a percent for commercial
lender versus 1\1/2\ to 2 for a direct loan, and remember these
are borrowers that direct lenders won't even take the risk. So
they are very high-risk borrowers, and we are still able to
keep our loss rates fairly comparable, at least tracking with
commercial lenders.
Mr. Owens. Thank you very much. I yield back.
The Chairman. Mr. Baca of California.
Mr. Baca. Thank you very much, Mr. Chairman.
Let me ask this question. I am pleased that Secretary
Vilsack and President Obama are committed to turning the page
when it comes to civil rights at USDA. Unfortunately, the loan
discriminations of the past are still often associated with
USDA today. Can you please speak to the Subcommittee a little
bit more regarding the Farm Service Agency's effort to
eliminate discrimination once and for all in all U.S. loan
programs?
And I am going to ask a second question. Given the
discrimination suits of various groups such as the African
Americans, Latinos, Native Americans, and female farmers, is
there more that Congress can do when we look at the next farm
bill to ensure equitable access to credit for everyone in rural
America?
Mr. Nelson. Well, I appreciate that comment and question,
Congressman, because it gives me the opportunity to reemphasize
not only----
The Chairman. Mr. Nelson, if you could suspend for one
moment. There are 2 minutes left in the vote, just to inform
you all. I will continue the hearing for another moment or two,
and then we may proceed afterward but if you need to leave it
is okay.
Mr. Nelson.--to the President and Secretary's commitment to
making sure that we are serving everyone, and I believe that
the Farm Loan Program numbers of Farm Service Agency since 1995
to 2010 bear out with, for example, we are--in the Direct Loan
Program since 1995, we have increased the number of direct loan
SDA borrowers from 3,260 to almost 15,000. That is a 4\1/2\-
fold increase. In the Guaranteed Program, we have more than
doubled them.
And I want to emphasize that overall those are good loans
because those folks are keeping up their end of the bargain and
in that period of time----
Mr. Baca. I don't think I am questioning the good loans. I
just wanted to make sure there is no discrimination, that there
is an equitable distribution.
Mr. Nelson. I appreciate that, Congressman. And that is
absolutely what we are committed to. Absolutely.
Mr. Baca. Thank you.
The Chairman. Mr. Baca, do you think you need to proceed
with further questioning after the vote?
Mr. Baca. No, Mr. Chairman. Thank you.
The Chairman. Well, gentlemen, you have come at an awkward
time, but it is always awkward up here. I apologize.
Under the rules of the Committee the record of today's
hearing will remain open for 10 calendar days to receive any
additional supplementary material and written responses from
you from any questions posed by the Members.
The hearing of the Subcommittee on Department Operations,
Oversight, and Credit is adjourned.
[Whereupon, at 2:35 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Supplementary Material Submitted by Bruce Nelson, Administrator, Farm
Service Agency, U.S. Department of Agriculture
During the July 14, 2011 hearing entitled, Agricultural Program
Audit: Examination of USDA Farm Loan Programs, a request for
information was made to Bruce Nelson. The following is the information
submission for the record.
Insert
Mr. McGovern. . . . Just my final point, are there certain
parts of the country where FSA plays a bigger role than
commercial credit?
Mr. Nelson. If your question is do we play a bigger role than
commercial credit, I will have to get back to you on that. I
can answer the question about where we historically have our
most loans, and that is we have our most loans in the most
intensely agricultural parts of the country, which is the
Midwest primarily over to the Missouri River. And again, our
challenge is to reach out beyond those traditional
constituencies.
So I would turn it over to Mr. Radinitz to see if he has
anything to add. And we would look forward to providing you
with more detailed information.

While overall the total share of debt provided through direct and
guaranteed programs is less than 10%, there are localized regions where
farmers are more dependent on FSA loan programs.
Specifically, regions where FSA loan programs are more important
include the Mississippi Delta, Southeastern Coastal Plains, New
England, Southern & Northern High Plains, and the Inter-mountain west
(see Attachment 1).
In many of the counties within these regions, FSA appears to serve
over half of the indebted farmers through either the direct or
guaranteed credit programs.
Since FSA tends not to be the primary credit source in most
situations (i.e., Provides <50% of an individual farmer's credit), the
share of farmers served provides a better picture of FSA's market
presence than the market share of total debt.
The share of farmers served can be examined by comparing the number
of FSA borrowers with the number of indebted farmers. The Census of
Agriculture provides data on the number of farmers with interest
expense by county. In developing this measure, farmers with less than
$500 of interest expense per year were excluded, as it was judged that
these observations likely represented interest expense on accounts
payable and not loans. The number of FSA borrowers was determined based
on year-end 2010 to reflect the most recent data.
Thus, market penetration by county was estimated as:

No. of farmers with either a direct or Guaranteed FSA loan in 2010
----------------------------------------------------------------------------------------------------------------
No. of farmers with over $500 of interest expense in 2007 (Census of Ag)

Since the numerator and denominator represent two different time
periods, this is a proxy rather than a measure for market penetration.
The Census of Agriculture is collected only once every 5 years and is
the only county-level data available on farm indebtedness. Still, debt
levels do not change dramatically from year-to-year, and counties with
high numbers of indebted farmers in 2007 are likely to have high
numbers of indebted farmers in 2010. Note that if a farmer held both a
direct and guaranteed loan, they were counted only once.
There were 222 counties with over 100 borrowers through either the
direct or guaranteed loan programs. Most were in Wisconsin (19),
Oklahoma (18), Minnesota (17), Louisiana (15), Nebraska (14), Iowa
(13), Texas (12), and North Dakota (12) (see Attachment 2).
There were 147 counties where the number of Farm Loan Program (FLP)
borrowers in 2010 was over half the number of indebted farmers in 2007.
Many of the borrowers were either in Texas or the Mississippi Delta,
with Louisiana holding the highest (21) number of borrowers, followed
by Arkansas (14), Texas (14) and Tennessee (5) (see Attachment 3).
There are also areas with few farmers, but FSA tends to be a
relatively important source of credit. This includes West Virginia,
northern Michigan, northern Wisconsin, Long Island, and areas of New
England.
attachments
Attachment 1
Total FSA Loan Program Borrowers (2010)/Total No. of Farms With >$500
of Int. Exp (2007)

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Attachment 2

Counties With 100 or More FSA Farm Loan Borrowers
------------------------------------------------------------------------
FSA
County, State FSA Financed County, State Financed
Farmers * Farmers *
------------------------------------------------------------------------
Lafayette, Wisconsin 504 Merced, California 126
Grant, Wisconsin 406 Morehouse, Louisiana 126
LeFlore, Oklahoma 316 Washita, Oklahoma 126
Yakima, Washington 285 Tripp, South Dakota 126
Seneca, Ohio 276 Dodge, Wisconsin 126
Marshall, Minnesota 263 Nemaha, Kansas 125
Green, Wisconsin 261 Avoyelles, Louisiana 125
Hale, Texas 260 Pointe Coupee, 125
Louisiana
Polk, Minnesota 252 Cedar, Nebraska 125
Franklin, Louisiana 250 Cuming, Nebraska 125
Conway, Arkansas 247 Ward, North Dakota 125
Washington, Arkansas 234 Jackson, Oklahoma 125
Wood, Ohio 234 Dunklin, Missouri 124
Delaware, Iowa 229 Bottineau, North 124
Dakota
Hancock, Ohio 224 Crawford, Ohio 124
Richland, Louisiana 221 Haywood, Tennessee 124
West Carroll, 219 Shawano, Wisconsin 124
Louisiana
Otter Tail, Minnesota 217 Clay, Minnesota 123
Vernon, Wisconsin 217 Brookings, South 123
Dakota
Sanilac, Michigan 214 Vermilion, Illinois 122
Clinton, Iowa 212 Renville, Minnesota 122
Vermilion, Louisiana 212 Custer, Oklahoma 122
McCurtain, Oklahoma 212 Day, South Dakota 121
Dubuque, Iowa 209 Desha, Arkansas 120
Manitowoc, Wisconsin 209 Pondera, Montana 120
Lancaster, 208 Crockett, Tennessee 120
Pennsylvania
La Salle, Illinois 203 Wharton, Texas 120
Clark, Wisconsin 202 Graves, Kentucky 119
Lincoln, Nebraska 201 Sibley, Minnesota 119
Clayton, Iowa 195 Holt, Nebraska 119
Buchanan, Iowa 195 Chautauqua, New York 119
Huron, Michigan 193 Okanogan, Washington 119
Malheur, Oregon 189 Faribault, Minnesota 117
Aroostook, Maine 183 Beadle, South Dakota 117
Gage, Nebraska 182 Swisher, Texas 117
Putnam, Ohio 179 Emery, Utah 117
Caddo, Oklahoma 178 Colusa, California 116
Monroe, Wisconsin 177 Morrow, Ohio 116
Sutter, California 175 Cross, Arkansas 115
St. Landry, Louisiana 175 Labette, Kansas 115
Walsh, North Dakota 174 Duplin, North 115
Carolina
Lonoke, Arkansas 173 Craig, Oklahoma 115
Tuscola, Michigan 173 Hockley, Texas 115
Stearns, Minnesota 171 Terry, Texas 115
Addison, Vermont 168 Acadia, Louisiana 114
Kittson, Minnesota 165 Shiawassee, Michigan 114
Traill, North Dakota 163 Thayer, Nebraska 114
Jackson, Iowa 162 Washington, New York 114
Phillips, Arkansas 161 Sanpete, Utah 114
Pembina, North Dakota 161 Grady, Oklahoma 113
Grant, North Dakota 159 Rockingham, Virginia 113
Carroll, Iowa 158 Marion, Oregon 112
Charles Mix, South 158 Matagorda, Texas 112
Dakota
Sandusky, Ohio 157 Weld, Colorado 111
Marathon, Wisconsin 155 Warren, Illinois 111
Fond Du Lac, Wisconsin 154 Fayette, Iowa 111
Hancock, Illinois 153 Catahoula, Louisiana 111
Hillsdale, Michigan 151 Sheridan, Nebraska 111
Grant, Washington 151 Shelby, Illinois 110
Bingham, Idaho 150 Pulaski, Kentucky 110
Murray, Minnesota 150 Richland, Illinois 109
Cavalier, North Dakota 150 Stephenson, Illinois 109
Parmer, Texas 150 Kiowa, Oklahoma 109
Lubbock, Texas 150 Meade, South Dakota 109
Jefferson Davis, 149 Polk, Wisconsin 109
Louisiana
Roseau, Minnesota 149 Sumner, Kansas 108
Lyon, Iowa 148 Nowata, Oklahoma 108
Hopkins, Texas 148 Lamb, Texas 108
Franklin, Vermont 148 Mississippi, Arkansas 107
Knox, Nebraska 147 Grant, Indiana 107
Dodge, Nebraska 147 Richland, Montana 107
Minidoka, Idaho 146 Cass, North Dakota 107
Harmon, Oklahoma 146 Umatilla, Oregon 107
Iowa, Wisconsin 146 Union, South Dakota 107
Hutchinson, South 145 Orleans, Vermont 107
Dakota
Sauk, Wisconsin 145 Trempealeau, 107
Wisconsin
Sioux, Iowa 144 Lee, Arkansas 106
Garfield, Oklahoma 143 Meeker, Minnesota 106
Dawson, Nebraska 142 Stoddard, Missouri 106
Oconto, Wisconsin 142 Kay, Oklahoma 106
Buena Vista, Iowa 141 Dane, Wisconsin 106
Reno, Kansas 139 Colquitt, Georgia 105
Haskell, Oklahoma 139 Carroll, Arkansas 104
East Carroll, 138 Poinsett, Arkansas 104
Louisiana
Madison, Louisiana 138 Knox, Illinois 103
Chicot, Arkansas 137 Adams, Illinois 103
Stanislaus, California 137 Harrison, Kentucky 103
Okmulgee, Oklahoma 136 Barry, Missouri 103
Saluda, South Carolina 136 Otoe, Nebraska 103
Mitchell, Georgia 134 Stutsman, North 103
Dakota
Greene, Illinois 134 Hawaii, Hawaii 102
Concordia, Louisiana 134 Winneshiek, Iowa 102
Spink, South Dakota 134 Ottawa, Ohio 102
Washington, Kansas 133 Beckham, Oklahoma 102
Grand Forks, North 133 Bryan, Oklahoma 102
Dakota
Douglas, South Dakota 133 Nacogdoches, Texas 102
Franklin, Washington 132 Falls, Texas 102
Tensas, Louisiana 131 Twin Falls, Idaho 101
Gratiot, Michigan 131 Lyon, Minnesota 101
San Joaquin, 130 Nobles, Minnesota 101
California
Hardin, Ohio 130 Scotts Bluff, 101
Nebraska
Barron, Wisconsin 130 Butler, Nebraska 101
Iowa, Iowa 129 Herkimer, New York 101
Lenawee, Michigan 129 Emmons, North Dakota 101
Lac Qui Parle, 129 Fulton, Illinois 100
Minnesota
St. Lawrence, New York 129 Christian, Kentucky 100
Cassia, Idaho 128 Plymouth, 100
Massachusetts
Breckinridge, Kentucky 128 Norman, Minnesota 100
Redwood, Minnesota 128 Custer, Nebraska 100
Fresno, California 127 Choctaw, Oklahoma 100
Morton, North Dakota 127 Outagamie, Wisconsin 100
------------------------------------------------------------------------
* Total Number of Farmers With Either a Direct or Guaranteed FSA Loan in
FY 2010.

Attachment 3

Counties Highly Dependent on FSA Lending
(50%+ of all farmers using FSA financing)
------------------------------------------------------------------------
Percent of
FSA Percent of FSA all
County, Financed all Farmers County, Financed Farmers
State Farmers * Financed by State Farmers * Financed by
FSA ** FSA **
------------------------------------------------------------------------
Graham, 29 54.72% Daniels, 76 50.00%
Arizona Montana
Phillips, 161 100.00% Nance, 90 53.89%
Arkansas Nebrask
a
Chicot, 137 100.00% Dawes, 97 53.01%
Arkansas Nebrask
a
Lee, 106 100.00% Frontier 76 51.70%
Arkansas ,
Nebrask
a
Desha, 120 94.49% Hayes, 63 51.22%
Arkansas Nebrask
a
Conway, 247 88.21% Hidalgo, 32 50.00%
Arkansas New
Mexico
St. 83 72.81% Martin, 71 78.02%
Francis, North
Arkansas Carolin
a
Lonoke, 173 72.69% Bertie, 66 67.35%
Arkansas North
Carolin
a
Cross, 115 72.33% Tyrrell, 17 65.38%
Arkansas North
Carolin
a
Monroe, 64 70.33% Northamp 74 60.66%
Arkansas ton,
North
Carolin
a
Prairie, 99 69.72% Sioux, 80 78.43%
Arkansas North
Dakota
Ashley, 77 62.60% Traill, 163 66.80%
Arkansas North
Dakota
Woodruff, 63 58.88% Pembina, 161 64.14%
Arkansas North
Dakota
Mississip 107 54.87% Grant, 159 63.60%
pi, North
Arkansas Dakota
Poinsett, 104 54.45% Steele, 86 56.95%
Arkansas North
Dakota
Martin, 84 88.42% Seneca, 276 62.73%
Florida Ohio
Baker, 54 96.43% Hancock, 224 59.89%
Georgia Ohio
Mitchell, 134 79.76% Wood, 234 57.07%
Georgia Ohio
Pulaski, 33 70.21% Sandusky 157 55.67%
Georgia , Ohio
Terrell, 44 65.67% Ottawa, 102 54.55%
Georgia Ohio
Lee, 42 63.64% Harmon, 146 100.00%
Georgia Oklahom
a
Calhoun, 36 54.55% Greer, 87 50.58%
Georgia Oklahom
a
Colquitt, 105 53.57% Haskell, 139 50.18%
Georgia Oklahom
a
Marion, 25 52.08% Saluda, 136 100.00%
Georgia South
Carolin
a
Miller, 48 50.00% Barnwell 67 94.37%
Georgia , South
Carolin
a
Butte, 64 68.09% Marlboro 59 92.19%
Idaho , South
Carolin
a
Minidoka, 146 59.35% Dillon, 59 88.06%
Idaho South
Carolin
a
Cassia, 128 51.00% Clarendo 93 75.00%
Idaho n,
South
Carolin
a
Greene, 134 63.21% Williams 82 72.57%
Illinois burg,
South
Carolin
a
Saline, 59 51.75% Lee, 58 63.74%
Illinois South
Carolin
a
Grant, 107 53.77% Darlingt 58 50.43%
Indiana on,
South
Carolin
a
Logan, 60 54.55% Douglas, 133 70.00%
Kansas South
Dakota
Pratt, 86 51.19% Bennett, 83 60.14%
Kansas South
Dakota
Fulton, 41 65.08% Jackson, 86 59.31%
Kentucky South
Dakota
Hickman, 65 56.52% Shannon, 53 58.89%
Kentucky South
Dakota
Richland, 221 100.00% Custer, 53 56.99%
Louisian South
a Dakota
Vermilion 212 100.00% Potter, 57 55.34%
, South
Louisian Dakota
a
West 219 100.00% Jones, 39 54.17%
Carroll, South
Louisian Dakota
a
Concordia 134 100.00% Haakon, 76 51.35%
, South
Louisian Dakota
a
Madison, 138 100.00% Crockett 120 100.00%
Louisian ,
a Tenness
ee
Pointe 125 100.00% Haywood, 124 90.51%
Coupee, Tenness
Louisian ee
a
East 138 100.00% Tipton, 97 70.80%
Carroll, Tenness
Louisian ee
a
Tensas, 131 100.00% Dyer, 80 50.63%
Louisian Tenness
a ee
St. 47 95.92% Lake, 13 50.00%
Martin, Tenness
Louisian ee
a
St. 175 88.83% Hale, 260 95.94%
Landry, Texas
Louisian
a
Morehouse 126 88.73% Baylor, 58 75.32%
, Texas
Louisian
a
Acadia, 114 86.36% Parmer, 150 73.17%
Louisian Texas
a
Jefferson 149 86.13% Swisher, 117 73.13%
Davis, Texas
Louisian
a
Iberia, 55 82.09% Wilbarge 95 67.38%
Louisian r,
a Texas
Franklin, 250 78.86% Terry, 115 64.25%
Louisian Texas
a
Caldwell, 44 74.58% Reeves, 29 61.70%
Louisian Texas
a
Catahoula 111 70.25% Refugio, 29 61.70%
, Texas
Louisian
a
Avoyelles 125 63.78% Briscoe, 46 54.12%
, Texas
Louisian
a
Evangelin 70 61.95% Hockley, 115 53.49%
e, Texas
Louisian
a
lberville 26 57.78% Crosby, 68 51.91%
, Texas
Louisian
a
St. Mary, 18 56.25% Matagord 112 50.91%
Louisian a,
a Texas
Aroostook 183 72.33% Dawson, 86 50.00%
, Maine Texas
Hancock, 18 64.29% Cottle, 36 50.00%
Maine Texas
Presque 33 52.38% Garfield 37 94.87%
Isle, , Utah
Michigan
Kittson, 165 70.51% Piute, 52 83.87%
Minnesot Utah
a
Mahnomen, 76 57.14% Emery, 117 82.39%
Minnesot Utah
a
Humphreys 77 90.59% San 53 79.10%
, Juan,
Mississi Utah
ppi
Jasper, 95 84.07% Wayne, 46 64.79%
Mississi Utah
ppi
Calhoun, 90 66.67% Beaver, 50 59.52%
Mississi Utah
ppi
Sunflower 86 61.43% Carbon, 27 50.94%
, Utah
Mississi
ppi
Quitman, 49 59.76% Addison, 168 63.88%
Mississi Vermont
ppi
Tallahatc 76 58.02% Franklin 148 58.73%
hie, ,
Mississi Vermont
ppi
Webster, 30 56.60% Nicholas 29 63.04%
Mississi , West
ppi Virgini
a
Washingto 76 56.30% Monroe, 94 57.67%
n, West
Mississi Virgini
ppi a
Newton, 76 51.01% Roane, 64 50.79%
Mississi West
ppi Virgini
a
Dunklin, 124 59.05% Lafayett 504 77.90%
Missouri e,
Wiscons
in
Pemiscot, 67 53.17% Ashland, 35 66.04%
Missouri Wiscons
in
Richland, 107 54.04% Bayfield 60 57.69%
Montana ,
Wiscons
in
Pondera, 120 51.50%
Montana
------------------------------------------------------------------------
* Total Number of Farmers Indebted for Either a Direct or Guaranteed FSA
Loan in 2010.
** As share of farmers in the county with >$500 int. in 2007 Census.

States with FSA Dependent Counties
------------------------------------------------------------------------
State Counties
------------------------------------------------------------------------
Louisiana 21
Texas 14
Arkansas 14
Mississippi 9
Georgia 9
South Dakota 8
South Carolina 8
Utah 7
Tennessee 5
Ohio 5
North Dakota 5
North Carolina 4
Nebraska 4
Wisconsin 3
West Virginia 3
Oklahoma 3
Montana 3
Idaho 3
Vermont 2
Missouri 2
Minnesota 2
Maine 2
Kentucky 2
Kansas 2
Illinois 2
New Mexico 1
Michigan 1
Indiana 1
Florida 1
------------------------------------------------------------------------

For additional explanation of rationale behind development of these
tables, please refer to document fsaconcentration.docx.
______

Submitted Questions
Response from Bruce Nelson, Administrator, Farm Service Agency, U.S.
Department of Agriculture
Questions Submitted By Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. On the term limits for guaranteed borrowers issue, can
you provide us a breakdown of how many producers have been using the
program for more than 15 years and how many borrowers for each year
beyond the 15th?
Answer. FSA currently has 4,558 borrowers who have received loans
through the guaranteed operating loan program or a combination of the
direct and guaranteed operating loan programs for more than 15 years.
An additional 1,503 borrowers will only be able to utilize the program
for one more year and another 2,189 borrowers will only be able to
utilize the program for two more years.

Question 2. The 2008 Farm Bill reestablished a separate
conservation loan program at FSA. Can you tell us how much interest
there was in the program before the funding for FY11 got cut in the
continuing resolutions? Did you get any money out the door?
Answer. Since the implementation of the Conservation Loan program
in August 2010, FSA has approved and funded 231 direct conservation
loans totaling $16,351,101 and three guaranteed loan requests totaling
$703,500.
Question Submitted By Hon. William L. Owens, a Representative in
Congress from New York
Question. As you may know, two types of business structures that
are increasingly common among family farms do not qualify for loans
through FSA. Today many family farms have both a farm ownership LLC and
farm operating LLC to facilitate ownership of multiple family members.
This may be done for liability protection and to facilitate the
transfer of a farm business between generations. However, because the
operator of the farm does not own the farm, the farm is not eligible
for a loan. Farms operating with an embedded entity structure to
facilitate estate planning are also currently ineligible for an FSA
guarantee. In your view, is access to credit through FSA for family
farms with these business structures an issue that needs to be
addressed?
Answer. Current statute prevents operators with multiple or
embedded entities from receiving a loan guarantee through FSA. Removing
this statutory restriction would allow FSA to assist family farms using
more complex organizational structures, such as multiple or embedded
entities. USDA is available to provide technical assistance to Members
on this or any other statutory matter.
______

House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
Farm Ownership Loan (FO).
Prepared by the U.S. Department of Agriculture's (USDA) Farm
Service Agency (FSA).
2. Subprograms/Department Initiatives
Through its nationwide network of service centers, often in
geographically isolated areas with few private or commercial lenders,
FSA provides agricultural financing to small and family size farmers
and ranchers for farm ownership purposes, including costs associated
with acquiring or enlarging a farm or ranch or to make a down payment
of a farm or ranch; make capital improvements to a farm owned by the
applicant, for construction, purchase or improvement of farm dwellings,
service buildings or other facilities and improvements essential to the
farming operation; promote soil and water conservation and protection;
pay loan closing costs; and to refinance a bridge loan under specific
and limited conditions.
FO loans are sub-categorized by targeted funding type, i.e.,
regular interest rate eligible; limited resource rate; Socially
Disadvantaged Applicant; and Beginning Farmer and/or Beginning Farmer
Socially Disadvantaged Applicant. There is no limited resource
Guaranteed FO loan.
In addition to the aforementioned FO loan types, FSA offers two
other subprograms under the main FO umbrella: Participation FO and
Beginning Farmer Down Payment loans. Each of these sub-categories are
further identified by targeting Socially Disadvantaged FO loan
applicants by ethnicity and gender to broaden and ensure availability
of limited appropriations for all members of the agricultural
community. For example, an FO loan application can be funded as
``Direct FO--Beginning Farmer Down Payment--Socially Disadvantaged--
Gender.''

Direct FO--Participation

A Direct FO Participation loan is made as part of a joint financing
arrangement and the amount of FSA's loan does not exceed 50 percent of
the total amount financed. In such arrangements, an applicant may
obtain financing from a commercial lender, a state program, or the
seller of a farm. The other lender's portion of the loan may be
guaranteed by FSA. Utilization of this program allows FSA to extend
credit to more farmers than the Agency would be able to finance if the
farmer relied solely on FSA Direct or Guaranteed loan funding.

Direct FO--Beginning Farmer Down Payment

Down Payment FO loans are used to partially finance the purchase of
a family farm by an eligible Beginning Farmer or Socially Disadvantaged
Applicant. This is the only FSA loan program that requires the loan
applicant to provide a minimum downpayment of five percent of the
purchase price of the farm. Additional limitations specific to the
Beginning Farmer Down Payment FO loan is that the maximum FSA loan
amount is not tied to the statutory limitations. Rather, Down Payment
loans may not exceed 45 percent of the lessor of: (1) the purchase
price; (2) the appraised value of the farm to be acquired; or (3)
$500,000. Financing provided by FSA and all other creditors must not
exceed 95 percent of the purchase price. Any financing provided by
eligible lenders may be guaranteed by FSA.

Direct FO--Socially Disadvantaged Applicant (SDA)

Guaranteed FO

An FSA Guaranteed FO loan is a contract between the loan applicant
and commercial lender that allows for the extension of financial credit
for a period not to exceed 40 years. FSA guarantees the loan against
possible loss up to 95 percent principal and interest.

Guaranteed--Beginning Farmer/Rancher

Guaranteed--Socially Disadvantaged Applicant

A Socially Disadvantaged loan applicant is not a program type;
rather it distinguishes a specific funding source. To be eligible for
SDA loan consideration, the applicant must belong to a socially
disadvantaged group whose members have been subject to racial, ethnic
or gender prejudice, which includes American Indians or Alaskan
Natives, Asians, Blacks or African Americans, Native Hawaiians or other
Pacific Islanders, Hispanics, and women. FSA issues a guarantee that
protects the lender against possible loss up to 95 percent of principal
and interest.

3. Brief History

The Farm and Rural Development Act, as amended, Subtitle B,
Sections 311-317, Public Law 92-419, 7 U.S.C. 1942 enabled operators of
not larger than family farms, through the extension of credit and
supervisory assistance, to make efficient use of their land, labor, and
other resources, and to establish and maintain financially viable
farming and ranching operations.
Title III of the Agricultural Act of 1961, The Consolidated Farm
and Rural Development Act (CONACT), as amended, through Public Law 109-
171, Feb. 8, 2006, provided a major overhaul and expansion of farm
lending authorities.
The 1978 Agriculture Credit Act changed existing programs by
authorizing farm loans to family corporations, cooperatives, and
partnerships as well as to individuals; changed the interest rate for
farm ownership loans so that the rate is now based on the cost of
borrowing to the government; and limited resource farmers and limited
resource rates were identified and established.
The Food Security Act of 1985 (December 23, 1985) made major
changes in farm loan eligibility and provided protections for borrowers
undergoing serious financial difficulty. Loan eligibility was expanded
to include ``joint operators'' and persons related by blood or
marriage.
Targeted participation rates for Direct and Guaranteed FO loans are
found in the Agricultural Credit Act of 1987 (January 6, 1988), Section
355 of the CONACT.
FO Down Payment loans were authorized through the Agricultural
Credit Improvement Act of 1992 (October 29, 1992), Section 310E of the
CONACT. Section 246(b)(2) of this same Act contains the authorities for
targeted funds to beginning farmers. This Act also provided for the
inclusion of women in the definition of Socially Disadvantaged
Applicants.
Through the Federal Agriculture Improvement and Reform (FAIR) Act
of 1995 (April 4, 1996), Public Law 104-127, farm lending programs were
reauthorized, placing new restrictions on loan purposes and the length
of time borrowers are eligible for new credit assistance. This law also
established the targeted funding for beginning farmers.
In Fiscal Year 1988, FSA was given authority to offer FO-SDA loans.
4. Purpose/Goals
The basic objective of the FO loan program is to provide credit and
management assistance to eligible farmers and ranchers to become owner-
operators of family-sized farms or to continue such operations when
credit is not available elsewhere. FSA's farm ownership loan assistance
enables family-farm operators to procure land and to improve their
living and financial conditions so that they can graduate fully to
commercial credit.
FSA direct loans facilitate the provision of credit, which can help
support low farm family incomes, assist minority and beginning farmers,
or help farmers adopt new technology that will make their farming
operations more economical. FSA has the responsibility of providing
credit counseling and supervision to its direct borrowers by making a
thorough assessment of the farming operation. The Agency helps
applicants evaluate the adequacy of the real estate and facilities,
machinery and equipment, financial and production management, and the
farmer's goals. FSA assists the applicant in identifying and
prioritizing areas needing improvement in all phases of the operation.
An FSA official then works one-on-one with the farmer to develop and to
help strengthen the identified areas that ultimately result in the
farmer's graduation to commercial credit.
Because special skills may be needed to evaluate farm loans, and
because much farm production occurs in geographically isolated areas
that have few lenders, some farmers may face less competitive markets
for their loans that can result in higher rates, less favorable terms,
and/or no access to loan funds. Farmers may have trouble demonstrating
their credit worthiness to lenders because of the economic
uncertainties of production agriculture as well. This can be
particularly true for beginning farmers, women, and minorities, as they
typically operate smaller farms, have less equity, or lack a sufficient
credit or production histories. To address these issues, each year FSA
allocates a share of loan funding for use by beginning farmers and
socially disadvantaged, including racial, ethnic minorities, and women
farmers, who by statute are deemed more likely to have problems
accessing needed credit than other high-risk family-sized farm
borrowers.
The Guaranteed Loan Program plays an important role in facilitating
the extension of credit to farmers, not only through collaboration with
partner lenders but also with FSA's Direct Loan Program. Often times a
borrower's credit needs are met through a combination of a Guaranteed
loan and an FSA direct loan. For example, a Farm Ownership loan will be
made by a commercial lender with an FSA guarantee to purchase farmland
and the borrower will also obtain a direct operating loan from FSA to
cover annual operating expenses.
The ``credit gaps'' which farm loan guarantees are designed to fill
are associated with farm businesses that usually have debt burdens and/
or repayment capacities that do not meet private sector lending
standards. These high-risk farms might fail to meet industry standards
due to a lack of production or credit history, limited equity, being a
start-up business, defined as 10 or less years of farming experience,
or by being able to offer only single purpose collateral. Another
factor limiting access to capital is that some farm production occurs
in geographically isolated areas that tend to have fewer lenders
specializing in agricultural lending. As a result, farmers may face
limited competition loans in these areas, which can result in higher
interest rates, unfavorable loan terms, and/or a shortage of loan
funds. By reducing the lenders' exposure to risk, the 90 to 95 percent
guarantee provided lenders on eligible farm loans allows farmers to
obtain loans to finance annual operating expenses, equipment,
livestock, and farmland purchases and improvements.
5. Success in Meeting Programmatic Purpose/Goals
FSA has been very successful in accomplishing its long-term
performance goals for the Farm Ownership Loan Program. Loss rates,
delinquency rates, and lending to beginning farmers, minorities, and
women have all shown significant long-term progress.
Reduce First Year Delinquency Rates on New Loans: The 1st year
delinquency rate is calculated based on the number of new loans issued
in the previous calendar year and is primarily and indicator of credit
quality. The formula is the total number of delinquent first year loans
plus any first year loans restructured divided by the total number of
loans issued in the previous calendar year. Note: Data reported is for
all Direct FO and Operating Loans (OL) loans, Guaranteed loans are not
included.

------------------------------------------------------------------------
Fiscal Year Actual Performance
------------------------------------------------------------------------
2007 7.4%
2008 6.2%
2009 10.5%
2010 9.2%
2011
------------------------------------------------------------------------

Increase Lending to Minorities, Woman, and Beginning Farmers and
Ranchers: FSA establishes annual performance goals to increase its
lending to beginning and socially disadvantaged farmers. Performance is
measured by calculating the percentage of total loan obligations in a
given fiscal year that are issued to farmers in the targeted groups.
Note: Data reported is for all Direct and Guaranteed FO and OLs.

------------------------------------------------------------------------
Fiscal Year Actual Performance
------------------------------------------------------------------------
2007 40.7%
2008 43.2%
2009 41.0%
2010 37.7%
2011
------------------------------------------------------------------------

Reduce the Average Processing Time for Direct and Guaranteed Loan
Applications: A core component of FSA's mission is to provide an
economic safety net for America's farmers and ranchers. Therefore, it
is important that financial assistance is provided timely when the need
arises. The average processing time is calculated from the date of
application receipt until the date a loan decision is made. Note: Data
reported includes the average processing time for FO and OL loans.

------------------------------------------------------------------------
Program Category Fiscal Year Actual Performance
------------------------------------------------------------------------
Direct FO 2007 27.0 days
2008 27.8 days
2009 29.9 days
2010 30.8 days
2011
------------------------------------------------------------------------
Guaranteed FO 2007 12.6 days
2008 8.6 days
2009 8.75 days
2010 10.24 days
2011
------------------------------------------------------------------------

Decrease Delinquency Rates for Direct and Guaranteed Loans: A low
delinquency rate indicates that borrowers are experiencing greater
success in meeting their financial obligations, which is an indicator
of greater financial strength and viability. The Direct Delinquency
rate is calculated by dividing the amount delinquent by the unpaid
principal plus unpaid interest held by all Direct loan borrowers. The
loan delinquency rate performance measure for FSA Guaranteed loans is
calculated by taking the total amount past due, as reported by lenders
nationwide on form FSA-2248, ``Guaranteed Farm Loan Default Status
Report'', divided by the total amount outstanding on all guaranteed
loans nationwide.

------------------------------------------------------------------------
Program Category Fiscal Year Actual Performance
------------------------------------------------------------------------
Direct FO 2007 7.1%
2008 6.5%
2009 6.3%
2010 5.9%
2011
------------------------------------------------------------------------
Guaranteed FO 2007 1.32%
2008 1.18%
2009 1.69%
2010 1.69%
2011
------------------------------------------------------------------------

Decrease the Loss Rate for Direct and Guaranteed Loans: Low loss
rates indicate that borrowers are experiencing greater success in
meeting their financial obligations, which is an indicator of financial
strength and economic viability. The Direct Loss rate is calculated by
dividing the amount of losses processed during the fiscal year by the
amount of unpaid principal at the beginning of the fiscal year. The
Guaranteed Loss rate is calculated by dividing the amount of losses
processed during the fiscal year by the amount unpaid principal at the
beginning of the fiscal year.

------------------------------------------------------------------------
Program Category Fiscal Year Actual Performance
------------------------------------------------------------------------
Direct FO 2007 2.3%
2008 1.6%
2009 0.8%
2010 1.1%
2011
------------------------------------------------------------------------
Guaranteed FO 2007 0.30%
2008 0.33%
2009 0.39%
2010 0.58%
2011
------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)
See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
See Attachment 3.
9. Eligibility Criteria
The eligibility criteria for all FO loan applicants include the
following:

Have no disqualifying convictions for controlled substances,
including drug trafficking and possession;

Possess the legal capacity to incur the obligation of the
loan

Be a citizen of the United States, a United States non-
citizen national, or a qualified alien under applicable Federal
immigration laws;

Have an acceptable credit history demonstrated by debt
repayment;

Have not caused the Agency a loss by receiving debt
forgiveness;

Have not received debt forgiveness or incurred a loss to the
government relating to a guaranteed loan loss;

Have the inability to obtain credit elsewhere, with or
without an FSA guarantee;

Not be in delinquent status on any Federal debt, excluding
debt under the Internal Revenue Code of 1986 at the time of
loan closing;

Have no outstanding unpaid judgments obtained by the United
States in any court, excluding those filed as a result of
action in the United States Tax Courts;

May not be ineligible due to disqualification resulting from
Federal Crop Insurance violation(s) according to 7 CFR 718;

Have sufficient farm managerial ability as demonstrated by a
combination of education, on-the-job training, and farming
experience;

Must agree to meet borrower training requirements, if FSA
determines the training to be necessary for success; and

Be the owner-operator or tenant-operator of a family farm or
ranch.

The loan eligibility criterion for an FO loan to a Socially
Disadvantaged Applicant, including women, includes all general
eligibility requirements outlined above. As stated previously, a
Socially Disadvantaged loan only specifies a funding source. Therefore,
the loan process and all loan requirements are identical for SDA
applicants to those for non-SDA applicants. Loan applicants must
voluntarily provide his or her ethnicity, race, and gender on the loan
application to qualify for the targeted funding.
Specific to the Direct FO loan program is the requirement that the
applicant, or one or more members constituting a majority interest of
an entity applicant, must have participated in the business operations
of a farm or ranch for at least 3 years out of the 10 years prior to
the date the application is submitted. The factors to determine
participation in the business operations of a farm are similar to those
for determining adequate farming experience necessary to ensure a
reasonable prospect of success.
The Direct FO program also has term limits attached to it. To meet
the program-specific eligibility requirement, the loan applicant must:
(1) meet the definition of a beginning farmer; (2) have not had a
Direct FO loan outstanding for more than a total of 10 years prior to
the date the new FO loan is closed; or (3) have never received a Direct
FO loan.
10. Utilization (Participation) Data

Program Loan Funds Use (dollars in millions)
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 *
----------------------------------------------------------------------------------------------------------------
Direct FO 303 382 560 702 425
Guaranteed FO 949 1,170 1,272 1,605 1,456
----------------------------------------------------------------------------------------------------------------
* As of June 30, 2011.

11. Duplication or Overlap with Other Programs
FSA Guaranteed Farm Loan Program serve separate purposes and are
generally not duplicative with other Federal and state credit programs.
While other Federal or state credit programs are available to family
farm businesses, these programs lack national scope, are focused on
narrow market segments, and are not specifically designed to serve
high-risk farm businesses. FSA's Direct Farm Loan Program serves high-
risk farmers with similar purposes, but this program is designed to
assist even less creditworthy borrowers; those unable to obtain credit,
even with a Federal loan guarantee. Studies of the economic profiles of
both Direct and Guaranteed program participants indicate the two
delivery systems serve different high-risk borrower segments. In
addition, the FSA Direct Loan Program is narrower in scope because of
the more limited funding and is more highly targeted to underserved
market segments of beginning start-up farm operations and socially
disadvantaged borrowers.
Across other Federal agencies, the Small Business Administration
(SBA), and USDA's Rural Business Service (RBS) provide loan guarantee
programs that may serve agriculture. The RBS loan guarantee programs do
not duplicate those of FSA because they serve agribusiness and value-
added farm enterprises. The SBA programs are not designed to meet
specialized agricultural needs and participating SBA lenders' program
delivery is geographically limited. In FY 2007, SBA accounted for only
3.5 percent of all federally guaranteed loans made to farmers, with FSA
accounting for the remainder. Many SBA agricultural loan guarantees are
made to farms that would not meet FSA eligibility requirements. Overlap
between FSA and SBA was mostly limited to poultry and nursery farms.
Some state governments also provide farm loan guarantees, but
funding and geographic coverage for such programs is limited. The
National Council of State Agricultural Finance Programs indicates that
only 18 states have an established loan guarantee program. However,
only four states have programs that are actively providing loan
guarantees to farmers. State programs typically target specific
purposes, such as value-added or single-purpose livestock facilities,
have limited or sporadic funding, or limited geographical availability,
hence seldom duplicating FSA loan objectives. Again, eligibility
criteria and intended purposes differ significantly from FSA Direct and
Guaranteed Loan Programs, and funding can be sporadic. A more common
type of state financing assistance is provided through ``Aggie Bonds,''
which are tax exempt bonds, issued by states under specific eligibility
requirements.
12. Waste, Fraud and Abuse
FSA has a robust internal controls program for its farm loan
programs, which consists of OMB Circular A-123 reviews, Farm Loan
Program Risk Assessments, the County Operations Review program, Lender
Reviews, and National Office Loan Origination File Reviews.
Additionally, farm loan programs are subject to periodic audit and
review by the Office of Inspector General and the Government
Accountability Office. No material weaknesses related to fraud, waste,
and abuse have been identified through these processes for many years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Emergency Loan (EM).
Prepared by the U.S. Department of Agriculture's (USDA) Farm
Service Agency (FSA).
2. Subprograms/Department Initiatives
Emergency loans may be categorized as being a: (1) real estate
physical loss; (2) chattel physical loss; or (3) a production loss.

Real Estate Physical Loss

EM loan funds for real estate physical losses may only be used to
repair or replace essential property damaged or destroyed as a result
of a disaster for purchasing real estate, if authorized; establishing a
new site for a farm dwelling and service buildings outside of a flood
or mudslide area; soil and water conservation, land and water resource
placement and land and water development when existing structures are
damaged or destroyed during the disaster.

Chattel Physical Loss

EM loan funds may be used for chattel physical losses only to
repair or replace essential property damaged or destroyed as a result
of a disaster to purchase livestock or farm equipment; repair or
replace household contents damaged by the disaster; pay the costs to
restore perennials which produce an agricultural commodity; pay family
living expenses and farm operating expenses for farmers and ranchers
suffering from livestock losses or losses to stored crops held for
sale; or for refinancing farm-related debts caused by the designated or
declared disaster.

Production Loss

Production losses to agricultural commodities are eligible for FSA
EM loan assistance to pay costs associated with reorganizing the farm
or ranch; to pay annual operating expenses; pay costs associated with
Federal or state-approved standards under the Occupational Safety and
Health Act of 1970 (19 U.S.C. 655 and 667); pay essential family living
expenses; or refinance farm debt which resulted from the designated or
declared disaster.
3. Brief History
Federal Farm Loan Act of 1916--Emergency crop and seed loans.
Disaster Loan Act of 1949--Emergency farm loans.
Rural Development Act of 1972, Section 321 of the CONACT--Emergency
Loan Program.
Title III of the Agricultural Act of 1961, The Consolidated Farm
and Rural Development Act (CONACT), as amended, through Public Law 109-
171, Feb. 8, 2006.
4. Purpose/Goals
EM loans are made to eligible loan applicants who have incurred
substantial financial losses from a natural disaster or quarantine.
These disasters may be either Presidential declarations or declared by
the Secretary of Agriculture.
5. Success in Meeting Programmatic Purpose/Goals
Performance in the EM program is consistent with other farm loan
programs in terms of loan processing timeliness, delinquency rates, and
losses. These results are especially noteworthy considering the very
high risk nature of these loans, as they are issued to borrowers who
have suffered financial losses resulting from natural disaster.
6. Annual Budget Authority (FY 2002-FY 2011)
See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
See Attachment 3.
9. Eligibility Criteria
Emergency loans may be made to farmers and ranchers who:

Own or operate land located in a county declared by the
President or designated by the Secretary of Agriculture as a
primary disaster area or quarantine area. All counties
contiguous to the declared, designated, or quarantined primary
counties also are eligible for emergency loans. A disaster
designation by the FSA administrator authorizes emergency loan
assistance for physical losses only in the designated and
contiguous counties;

Are established family farm operators and have sufficient
farming or ranching experience;

Are citizens or permanent residents of the United States;

Have suffered at least a 30 percent loss in crop production
or a physical loss to livestock, livestock products, real
estate or chattel property;

Have an acceptable credit history;

Are unable to receive credit from commercial sources;

Can provide collateral to secure the loan;

Have repayment ability; and

Submit applications within 8 months of the county's disaster
or quarantine designation date.

In addition to eligibility criteria, FSA loan requirements are
different from those of other lenders. Some of the more significant
differences are borrowers must keep acceptable farm records, must
operate in accordance with a farm plan developed with the local FSA
staff, may be required to participate in a financial management
training program, and may be required to obtain crop insurance.
All emergency loans must be fully collateralized. The specific type
of collateral may vary depending on the loan purpose, repayment ability
and the individual circumstances of the applicant. If applicants cannot
provide adequate collateral, their repayment ability may be considered
as collateral to secure the loan. A first lien is required on property
or products acquired, produced or refinanced with loan funds.
Loans for crop, livestock, and non-real estate losses are normally
repaid within one to 7 years, depending on the loan purpose, repayment
ability and collateral available as loan security. In special
circumstances, terms of up to 20 years may be authorized. Loans for
physical losses to real estate are normally repaid within 30 years but,
in certain circumstances, may be extended up to a maximum of 40 years.
10. Utilization (Participation) Data

Program Loan Funds Use (dollars in millions)
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 *
----------------------------------------------------------------------------------------------------------------
Emergency 75 44.9 30.4 35.5 29
----------------------------------------------------------------------------------------------------------------
* As of June 30, 2011.

11. Duplication or Overlap with Other Programs
The FSA Farm Loan Programs serves separate purposes and is
generally not duplicative with other Federal and state credit programs.
While other Federal or state credit programs are available to family
farm businesses, these programs lack national scope, are focused on
narrow market segments, and are not specifically designed to serve
high-risk farm businesses. FSA's EM program serves an even higher-risk
farmer who have suffered financial setback resulting from natural
disasters.
Some state governments also provide farm loan assistance but
funding and geographic coverage is limited. Emergency assistance, if
available, would be only available on an ad hoc basis.
12. Waste, Fraud and Abuse
FSA has a robust internal controls program for its farm loan
programs, which consists of OMB Circular A-123 reviews, Farm Loan
Program Risk Assessments, the County Operations Review program, Lender
Reviews, and National Office Loan Origination File Reviews.
Additionally, farm loan programs are subject to periodic audit and
review by the Office of Inspector General and the Government
Accountability Office. No material weaknesses related to fraud, waste,
and abuse have been identified through these processes for many years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Operating Loan (OL).
Prepared by the U.S. Department of Agriculture's (USDA) Farm
Service Agency (FSA).
2. Subprograms/Department Initiatives
Through its nationwide network of service centers, often in
geographically isolated areas with few private or commercial lenders,
FSA provides agricultural financing to small and family size farmers
and ranchers for farm operating costs, including costs associated with
reorganizing a farm to improve its profitability; farm equipment and
other chattel purchases; family and annual farm operating expenses;
refinancing farm related debts; land and water development, and other
farm needs. Federally regulated lenders with experience in agricultural
lending are eligible to participate in the FSA Guaranteed Farm Loan
Program as Standard, Certified, or Preferred Lenders, depending upon
their experience and level of participation.

Direct OL

An annual OL is designed to finance farm operating expenses, family
living expenses, or small purchase costs that are repayable within one
year or a maximum of 18 months. The maximum number of years a farmer
may receive annual direct OL assistance is 7 years, which may be
consecutive or non-consecutive. There is no limit on the number of
loans closed in a single year. On a case-by-case basis, it is possible
for farmers and ranchers to be granted a one-time waiver for an
additional 2 years of direct loan assistance. This limitation is not
applicable if the farm or ranch is subject to the jurisdiction of an
Indian tribe.
A term OL is designed to finance costs associated with reorganizing
a farm, such as changing enterprises, production practices, marketing
methods or purchasing shares in value-added processing and marketing
cooperatives; land and water development; and other similarly related
farm expenses. Term Operating loans allow for an extended repayment
period not to exceed 7 years. The maximum number of years a farmer may
receive term direct OL assistance is 7 years, which may be consecutive
or non-consecutive. There is no limit on the number of loans closed in
a single year. On a case-by-case basis, it is possible for farmers and
ranchers to be granted a one-time waiver for an additional 2 years of
direct loan assistance. This limitation is not applicable if the farm
or ranch is subject to the jurisdiction of an Indian tribe.

Direct OL--Limited Resource

A limited resource Direct OL is designed to assist family farmers
and ranchers unable to develop a farm business plan with a positive
cash flow and reasonable prospects for loan repayment using FSA's
regular interest rates. A limited resource interest rate is intended to
reflect an interest rate below FSA's regular interest rate during
periods of otherwise high interest rates. Limited resource loans are
available for all OL loan purposes and authorities with repayment
periods from one to 7 years depending upon the loan purpose, type of
security and repayment ability. Limited resource farmers and ranchers
are expected to graduate to FSA's regular rates and terms upon
achieving stronger financial solvency. The maximum number of years a
farmer may receive term Direct OL limited resource assistance is 7
years, which may be consecutive or non-consecutive. There is no limit
on the number of loans closed in a single year. On a case-by-case
basis, it is possible for farmers and ranchers to be granted a one-time
waiver for an additional 2 years of direct loan assistance. This
limitation is not applicable if the farm or ranch is subject to the
jurisdiction of an Indian tribe.

Direct OL--Rural Youth

Rural Youth loans are utilized to finance modest, income-
generating, agriculture-related educational projects while
participating in 4-H Clubs, Future Farmers of America, or similar
organizations. Applicants must be between the ages of 10 to 20 years.
Youth loan funds may be used only to pay the expenses associated with
the approved project. A 4-H club advisor, vocational teacher, county
extension agent or other organizational sponsor is required for
supervision and technical assistance, and parental consent must be
obtained.

Direct OL--Beginning Farmer/Rancher

Beginning farmer loans are targeted to loan applicants who have not
operated a farm or ranch for more than 10 years and do not own real
farm property, directly or indirectly, which does not exceed 30 percent
of the median acreage of the farms in the county where the property is
located. Beginning farmer loan recipients are often required to
participate in production and financial management training in an
effort to ensure success of the operation by providing the guidance and
technical support necessary. Beginning farmer loans are available for
all OL purposes and authorities with repayment periods from one to 7
years depending upon the loan purpose, type of security and repayment
ability. The maximum number of years a beginning farmer may receive
Direct OL assistance is 10 years. This limitation is not applicable if
the farm or ranch is subject to the jurisdiction of an Indian tribe.

Direct OL--Socially Disadvantaged Applicant (SDA)

A Socially Disadvantaged loan applicant is not a program type;
rather it distinguishes a specific funding source. Therefore, the loan
process and all loan requirements are identical for SDA applicants to
those for non-SDA applicants. To be eligible for SDA loan
consideration, the applicant must belong to a socially disadvantaged
group whose members have been subject to racial, ethnic or gender
prejudice, which includes American Indians or Alaskan Natives, Asians,
Blacks or African Americans, Native Hawaiians or other Pacific
Islanders, Hispanics, and women. Loan applicants must voluntarily
provide his or her ethnicity, race and gender on the loan application.
If an applicant does not voluntarily provide this information, targeted
funding will not be available. Direct OL assistance for SDA applicants
is available for all OL purposes and authorities with repayment periods
from one to 7 years depending upon the loan purpose, type of security
and repayment ability. The maximum number of years a farmer may receive
term Direct OL limited resource assistance is 7 years, which may be
consecutive or non-consecutive. There is no limit on the number of
loans closed in a single year. On a case-by-case basis, it is possible
for farmers and ranchers to be granted a one-time waiver for an
additional 2 years of Direct loan assistance. This limitation is not
applicable if the farm or ranch is subject to the jurisdiction of an
Indian tribe.

Guaranteed OL

An FSA Guaranteed Line of Credit is a contract between the loan
applicant and commercial lender that allows for the extension of
financial credit where the loan principal may fluctuate throughout the
term of the contract. The term of the contract may not extend beyond 5
years. FSA issues a guarantee that protects the lender against possible
loss up to 95 percent principal and interest.
An FSA Guaranteed Operating term loan is a contract between the
loan applicant and commercial lender that allows for the extension of
financial credit for a period not to exceed 7 years. FSA guarantees the
loan against possible loss up to 95 percent principal and interest.

Guaranteed OL--Beginning Farmer/Rancher

Guaranteed OL--Socially Disadvantaged Applicant

Guaranteed OL--Interest Assistance

FSA's Interest Assistance program is intended to assist family
farmers and ranchers who have low production or who are suffering the
effects of a natural disaster or adverse economic conditions. This is
helpful to beginning farmers who traditionally face difficulties in
obtaining access to private credit programs. In exchange for
reimbursing a commercial lender four percentage points on the
Guaranteed OL, the commercial lender reduces the interest rate charged
to the farmer by that amount, thus allowing the farmer a greater
opportunity to accrue farm assets and become financially viable. FSA
also issues a guarantee that protects the lender against possible loss
up to 95 percent of principal and interest.
3. Brief History
The Farm and Rural Development Act, as amended, Subtitle B,
Sections 311-317, Public Law 92-419, 7 U.S.C. 1942 enabled operators of
not larger than family farms through the extension of credit and
supervisory assistance, to make efficient use of their land, labor, and
other resources, and to establish and maintain financially viable
farming and ranching operations.
Title III of the Agricultural Act of 1961, The Consolidated Farm
and Rural Development Act (CONACT), as amended, through Public Law 109-
171, Feb. 8, 2006, provided a major overhaul and expansion of farm
lending authorities.
Congressional appropriations are the sole source of funding for
FSA's Direct loan program. Funding for this program was initially
authorized through Title III of the Consolidated Farm and Rural
Development Act of 1961 (CONACT), as amended, and amended by every
subsequent farm bill.
The Rural Development Act of 1972 (August 20, 1972), Section
311(b)(1) of the CONACT, established the use of the guarantee
provisions for commercial lenders and authorized the Rural Youth loan
program, and has been amended in every subsequent farm bill. Loan
authorities provided within this Act initially authorized FSA's
Guaranteed loan program, which also has been amended by each subsequent
farm bill.
The 1978 Agriculture Credit Act changed existing programs by
authorizing farm loans to family corporations, cooperatives, and
partnerships as well as to individuals; changed the interest rate for
farm ownership loans so that the rate is now based on the cost of
borrowing to the government; and limited resource farmers and limited
resource rates were identified and established.
The Emergency Agricultural Credit Act of 1984 (April 10, 1984)
increased the maximum repayment period for rescheduled or consolidated
loans and allowed for borrowers to have their loan changed to a limited
resource loan, if qualified. This Act also permitted interest rates on
operating loans that are deferred, consolidated, rescheduled or re-
amortized to be set at the original rate or current rate, whichever is
lower and required a target of 20 percent of operating funds to be
targeted to limited resource borrowers.
The Food Security Act of 1985 (December 23, 1985) made major
changes in farm loan eligibility and provided protections for borrowers
undergoing serious financial difficulty. Loan eligibility was expanded
to include ``joint operators'' and persons related by blood or
marriage.
The targeting of direct and guaranteed Operating Loan funds to
Socially Disadvantaged Applicants was initially authorized in the Food,
Agriculture, Conservation and Trade Act of 1990 (November 28, 1990),
Section 355 of the CONACT. The inclusion of women as Socially
Disadvantaged farmers occurred in the Agricultural Act of 1992, Section
355 of the CONACT.
Targeted direct and guaranteed Operating Loan funds to Beginning
Farmers and Ranchers were authorized through the Agricultural Credit
Improvement Act of 1992, Section 346(b)(2) of the CONACT, and as
amended in every subsequent farm bill.
Through the Federal Agriculture Improvement and Reform (FAIR) Act
of 1995 (April 4, 1996), Public Law 104-127, farm lending programs were
reauthorized, placing new restrictions on the purposes for which loans
can be used and the length of time borrowers are eligible for new
credit assistance. This law also established the targeted funding for
beginning farmers.
Section 806 of the Omnibus Consolidated and Emergency Supplemental
Appropriations Act, 1999 (Public Law 106-277), amended the maximum
Guaranteed loan limits for farm operating loans in Section 305 and 313
of the CONACT. Beginning in Fiscal Year 2000, this cap is adjusted
annually if the ``Prices Paid by Farmers Index'', as compiled by the
National Agricultural Statistics Service for the 12 month period ending
in August of year exceeds the value for the 12 month period ending
August 31, 1996.
4. Purpose/Goals
FSA direct loans facilitate the provision of credit, which can help
support low farm family incomes, assist minority and beginning farmers,
or help farmers adopt new technology that will make their farming
operations more economical. FSA has the responsibility of providing
credit counseling and supervision to its direct borrowers by making a
thorough assessment of the farming operation. The Agency helps
applicants evaluate the adequacy of the real estate and facilities,
machinery and equipment, financial and production management, and the
farmer's goals. FSA assists the applicant in identifying and
prioritizing areas needing improvement in all phases of the operation.
An FSA official then works one-on-one with the farmer to develop and to
help strengthen the identified areas that ultimately result in the
farmer's graduation to commercial credit.
Because special skills may be needed to evaluate farm loans, and
because much farm production occurs in geographically isolated areas
that have few lenders, some farmers may face less competitive markets
for their loans that can result in higher rates, less favorable terms,
and/or no access to loan funds. Consequently, farmers may face a
competitively limited market for their loans that can result in higher
rates, unfavorable terms, and a shortage of loan funds. Farmers may
have trouble demonstrating their credit worthiness to lenders because
of the economic uncertainties of production agriculture as well. This
can be particularly true for beginning farmers, women, and minorities,
as they typically operate smaller farms, have less equity, or lack a
sufficient credit or production histories. To address these issues,
each year FSA allocates a share of loan funding for use by beginning
farmers and socially disadvantaged, including racial, ethnic
minorities, and women farmers, who by statute are deemed more likely to
have problems accessing needed credit than other high-risk family-sized
farm borrowers.
The Guaranteed Loan Program plays an important role in facilitating
the extension of credit to farmers, not only through collaboration with
partner lenders but also with FSA's Direct Loan Program. Often times a
borrower's credit needs are met through a combination of a Guaranteed
loan and an FSA direct loan. For example, a Farm Ownership loan will be
made by a commercial lender with an FSA guarantee to purchase farmland
and the borrower will also obtain a direct operating loan from FSA to
cover annual operating expenses.
The ``credit gaps'' which farm loan guarantees are designed to fill
are associated with farm businesses that usually have debt burdens and/
or repayment capacities that do not meet private sector lending
standards. These high-risk farms might fail to meet industry standards
due to a lack of production or credit history, limited equity, being a
start-up business, defined as 10 or less years of farming experience,
or by being able to offer only single purpose collateral. Another
factor limiting access to capital is that some farm production occurs
in geographically isolated areas that tend to have fewer lenders
specializing in agricultural lending. As a result, farmers may face
limited competition loans in these areas, which can result in higher
interest rates, unfavorable loan terms, and/or a shortage of loan
funds. By reducing the lenders' exposure to risk, the 90 to 95 percent
guarantee provided lenders on eligible farm loans allows farmers to
obtain loans to finance annual operating expenses, equipment,
livestock, and farmland purchases and improvements.
Current program measures and targets, which cover FY 2007-2011,
were established in FY 2006 by the Farm Loan Programs Goal Working
Group. The group, which was comprised of FSA senior managers and
stakeholders, considered numerous factors when developing the
performance targets, including past program performance and economic
forecast for the agricultural sector. Out-year targets for the loss and
delinquency goals may not seem overly ambitious, on the surface, given
the current performance levels. However, it is important to note that
both losses and delinquencies are at historically low levels. The
historical loss rate covers a long-term period and reflects the high-
risk nature of agricultural operations, where success often depends
upon circumstances beyond the control of lenders and borrowers. The
historic loss rate is a more accurate gauge of the cyclical nature of
agriculture and is a more relevant comparison than measuring against
the extremely low losses attained in recent years.
It must be understood that FSA's loan program was designed to
provide access to capital for those farmers who cannot obtain credit
with or without a guarantee, equating to an extremely high probability
of loss. The long-term measures focus on an outcome of keeping losses
and delinquency low but not so low as to no longer meaningfully reflect
the purpose of the program. FSA's goals for Fiscal Years 2007 through
2011 are as follow:
Loan Making: (1) reduce first year delinquency rates on new loans;
(2) increase lending to minorities, women and beginning farmers and
ranchers; (3) reduce the average processing time for direct loans; and
(4) reduce the average processing time for Guaranteed loans.
Loan Servicing: (1) decrease the delinquency rate on direct loans;
(2) decrease the loss rate for direct loans; (3) decrease the loss rate
on guaranteed loans and (4) decrease the delinquency rate of Guaranteed
loans.
Measures for loss and delinquency rates are valuable in two
respects. First, they are indicators of the financial well being of
borrowers. Second, they are indicators of the overall quality of the
FSA underwriting standards and loan servicing.
Regarding the measure to ``increase the percentage of beginning
farmers, minorities, and women financed by FSA,'' FSA continues to
provide increased levels of assistance to these targeted groups.
Measurement of this goal was revised in 2002 to be a more outcome-
oriented indicator of FSA success in providing credit assistance to
these historically underserved groups. This performance is noteworthy,
given the relatively low numbers of farmers in the targeted groups in
the U.S. farm sector.
An external factor that could impact progress and accomplishment of
these measures includes widespread or prolonged natural disasters that
can significantly reduce farm production and, therefore, reduce net
income. Also, substantial inflation in farm expenses or depressed
commodity prices could have a similar effect. If economic conditions
deteriorate in the agricultural sector, rural lending institutions
contract their delivery of capital, which increases demand for FSA Farm
Loan Programs. Such conditions reduce borrower repayment ability,
increase delinquencies and losses, and reduce the ability of direct
borrowers to obtain guaranteed credit. Such an event would also
dramatically increase workload of Service Center employees, hindering
the ability to provide needed assistance to producers in a timely
manner. To mitigate these factors, FSA encourages farmers to use
various risk management practices such as crop insurance, and marketing
tools, such as forward contracting.
5. Success in Meeting Programmatic Purpose/Goals
FSA has been very successful in accomplishing its long-term
performance goals for the Operating Loan Program. Loss rates,
delinquency rates, and lending to beginning farmers, minorities, and
women have all shown significant long-term progress. (See
specifications on page 467.)
6. Annual Budget Authority (FY 2002-FY 2011)
See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
See Attachment 3.
9. Eligibility Criteria
The eligibility criteria for the Operating Loan--Annual, Operating
Loan--Term, Operating Loan--Limited Resource applicants and Beginning
Farmers is as follows:

Have no disqualifying convictions for controlled substances,
including drug trafficking and possession;

Possess the legal capacity to incur the obligation of the
loan;

Be a citizen of the United States, a United States non-
citizen national, or a qualified alien under applicable Federal
immigration laws;

Have an acceptable credit history demonstrated by debt
repayment;

Have not caused the Agency a loss by receiving debt
forgiveness;

Have not received debt forgiveness or incurred a loss to the
government relating to a guaranteed loan loss; and

Have the inability to obtain credit elsewhere, with or
without an FSA guarantee;

Not be in delinquent status on any Federal debt, excluding
debt under the Internal Revenue code of 1986 at the time of
loan closing;

Have no outstanding unpaid judgments obtained by the United
States in any court, excluding those filed as a result of
action in the United States Tax Courts;

May not be ineligible due to disqualification resulting from
Federal Crop Insurance violation(s) according to 7 CFR 718;

Have sufficient farm managerial ability as demonstrated by a
combination of education, on-the-job training and farming
experience;

Must agree to meet borrower training requirements, if FSA
determines the training to be necessary for success; and

Be the owner-operator or tenant-operator of a family farm or
ranch.

The loan eligibility criterion for an Operating Loan to a Socially
Disadvantaged Applicant, including women, includes all general
eligibility requirements outlined above. As stated previously, a
Socially Disadvantaged loan only specifies a funding source. Therefore,
the loan process and all loan requirements are identical for SDA
applicants to those for non-SDA applicants. Loan applicants must
voluntarily provide his or her ethnicity, race and gender on the loan
application to qualify for the targeted funding.
Rural Youth loan eligibility criteria include all general
eligibility requirements except a youth loan applicant does not need to
demonstrate managerial ability, is not subject to borrower training
requirements, does not need to operate a farm, and is not subject to OL
term limits for loan assistance.
10. Utilization (Participation) Data

Program Loan Funds Use (dollars in millions)
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 *
----------------------------------------------------------------------------------------------------------------
Direct OL 600 629.1 1,226.4 1,242.3 917
Guaranteed OL 917 1,032 1,235 1,510.1 1,015.2
(unsubsidized)
Guaranteed OL 271 175 149.7 181.5 52.1
(interest as-
sistance)
----------------------------------------------------------------------------------------------------------------
* As of June 30, 2011.

11. Duplication or Overlap with Other Programs
The FSA Guaranteed Farm Loan Program serves separate purposes and
is generally not duplicative with other Federal and state credit
programs. While other Federal or state credit programs are available to
family farm businesses, these programs lack national scope, are focused
on narrow market segments, and are not specifically designed to serve
high-risk farm businesses. FSA's Direct Farm Loan Program serves high-
risk farmers with similar purposes, but this program is designed to
assist even less creditworthy borrowers; those unable to obtain credit,
even with a Federal loan guarantee. Studies of the economic profiles of
both Direct and Guaranteed program participants indicate the two
delivery systems serve different high-risk borrower segments. In
addition, the FSA Direct Loan Program is narrower in scope because of
the more limited funding and is more highly targeted to underserved
market segments of beginning start-up farm operations and socially
disadvantaged borrowers.
Across other Federal agencies, the Small Business Administration
(SBA), and USDA's Rural Business Service (RBS) provide loan guarantee
programs that may serve agriculture. The RBS loan guarantee programs do
not duplicate those of FSA because they serve agribusiness and value-
added farm enterprises. The SBA programs are not designed to meet
specialized agricultural needs and delivery by participating SBA
lenders' program delivery is geographically limited. In FY 2007, SBA
accounted for only 3.5 percent of all federally guaranteed loans made
to farmers, with FSA accounting for the remainder. Many of SBA
agricultural loan guarantees are made to farms that would not meet FSA
eligibility requirements. Overlap between FSA and SBA was mostly
limited to poultry and nursery farms.
Some state governments also provide farm loan guarantees, but
funding and geographic coverage for such programs is limited. The
National Council of State Agricultural Finance Programs indicates that
only 18 states have an established loan guarantee program. However,
only four states have programs that are actively providing loan
guarantees to farmers. State programs typically target specific
purposes, such as value-added or single-purpose livestock facilities,
have limited or sporadic funding, or limited geographical availability,
hence seldom duplicating FSA loan objectives. Again, eligibility
criteria and intended purposes differ significantly from FSA Direct and
Guaranteed Loan Programs, and funding can be sporadic. A more common
type of state financing assistance is provided through ``Aggie Bonds,''
which are tax exempt bonds, issued by states under specific eligibility
requirements.
12. Waste, Fraud and Abuse
FSA has a robust internal controls program for its farm loan
programs, which consists of OMB Circular A-123 reviews, Farm Loan
Program Risk Assessments, the County Operations Review program, Lender
Reviews, and National Office Loan Origination File Reviews.
Additionally, farm loan programs are subject to periodic audit and
review by the Office of Inspector General and the Government
Accountability Office. No material weaknesses related to fraud, waste,
and abuse have been identified through these processes for many years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Indian Tribal Land Acquisition Program (ITLAP).
Prepared by the U.S. Department of Agriculture's (USDA) Farm
Service Agency (FSA).
2. Subprograms/Department Initiatives
None.
3. Brief History
ITLAP was authorized by 5 U.S.C. 301 and 25 U.S.C.
4. Purpose/Goals
Some Indian reservation allotments are co-owned by hundreds of
people. This is because with the passing of each generation, there are
an increasing number of heirs who have inherited undivided interests in
the same allotments. This increase in co-ownership, or fractionation,
often renders the consolidation of title into one owner nearly
impossible. There are limited sources of funding to consolidate
fractionated interest. FSA's ITLAP extends credit to Indian Tribes or
Tribal corporations which do not qualify for standard commercial loans
to purchase land within their own reservation or Alaskan community.
5. Success in Meeting Programmatic Purpose/Goals
The ITLAP program has been successful in meeting the programmatic
purpose. The amount appropriated each year limits the program benefits
because the funding available is insufficient to meet the needs of the
Tribes interested in participating in the program.
6. Annual Budget Authority (FY 2002-FY 2011)
See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
See Attachment 3.
9. Eligibility Criteria
Native American Tribes must meet the following eligibility
requirements to be eligible for an ITLAP loan:

The Tribe must show credit from other sources is not
available to purchase the real estate.

The land must be located within the Tribe's reservation for
use by the members of the Native American tribe or Tribal
Corporation.

A feasibility plan for the use of lands and a method of
repayment of the loan funds must be provided.

The Tribe must be in good standing with all Federal Agencies
and not subject to a judgment lien against the Tribe's property
due to a debt to the United States.

The Tribe must not have received a write-down on any other
loans within the past 5 years.

The amount of the loan funds must not exceed the market
value of the land determined by the current appraisal.
10. Utilization (Participation) Data
Since 2000, seven loans valued at a total of $2.88 million have
been made through ITLAP.
11. Duplication or Overlap with Other Programs
The Bureau of Indian Affairs' Indian Land Consolidation Pilot
Program, which began in 1999, is a result of Congressional Acts and
Supreme Court decisions that sought to remedy problems associated with
fractional land.
12. Waste, Fraud and Abuse
There has been no known instance of waste, fraud or abuse.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Boll Weevil Eradication Loan Program.
Prepared by the U.S. Department of Agriculture's (USDA) Farm
Service Agency (FSA).
2. Subprograms/Department Initiatives
There are no subprograms or department initiatives for the Boll
Weevil Eradication Loan program.
3. Brief History
USDA has been involved with Boll Weevil Eradication since the
1970's through the USDA Animal and Plant Health Inspection Service
(APHIS), the Agency that initially funded the program along with the
member states. The Boll Weevil Eradication Loan Program was authorized
by 5 U.S.C. 301; 7 U.S.C. 1989 and Public Law 104-180, 110 Stat. 1569,
to essentially provide the full funding needed to complete the
eradication of the boll weevil. The first Boll Weevil Eradication Loan
was made by FSA in 1997, and since that time the boll weevil has been
successfully eradicated from most states.
4. Purpose/Goals
Through the use of FSA's loan authorities, this loan program serves
two primary objectives: reducing pesticide requirements of cotton
producers and increasing overall cotton production in the United
States. The FSA Boll Weevil Eradication Loan program is a supplemental
program to the USDA/APHIS Boll Weevil Eradication program and differs
only in that FSA administers a Boll Weevil Eradication Loan program and
APHIS offers Federal grants as well as provides technical assistance
and program oversight.
The goal of the Boll Weevil Eradication Loan Program is to support
APHIS and farmer eradication efforts at minimal cost.
5. Success in Meeting Programmatic Purpose/Goals
The Boll Weevil Eradication Loan program has been very successful
in meeting its programmatic purpose. The reduction in the number of
boll weevils has greatly reduced the amount of pesticides used by
cotton producers. At one time, cotton growers applied more than 41
percent of all insecticides in agricultural use, regularly spraying
their cotton as many as 15 times a season. In contrast, since the
establishment of the Boll Weevil Eradication Loan Program, annual
pesticide applications have been reduced to nearly zero. The program
has no delinquent accounts and no losses with minimal administrative
program cost.
6. Annual Budget Authority (FY 2002-FY 2011)
See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
See Attachment 3.
9. Eligibility Criteria
An eligible applicant must:

Meet all requirements prescribed by APHIS to qualify for
cost-share grants;

Have the appropriate charter and legal authority as a
nonprofit corporation or state organization specifically
organized to operate the boll weevil eradication program in any
state or region (Individual producers are not eligible for
loans);

Possess the legal authority to enter into contracts,
including debt instruments;

Operate in an area in which producers have approved a
referendum authorizing producer assessments and in which an
active eradication or post-eradication program is underway or
scheduled to begin; and

Have the legal authority to pledge producer assessments as
security for loans from FSA.
10. Utilization (Participation) Data
Ten states have benefited from the Boll Weevil Eradication Loan
program; obtaining a total of 49 loans for a total of $992,412,496. At
present, only two states remain active in this program with a total
outstanding debt of slightly more than $61,000,000.
11. Duplication or Overlap with Other Programs
There is no known duplication with other programs beyond the APHIS
grant program for Boll Weevil Eradication. As stated earlier the APHIS
program was supplemented by the FSA loan program in order to provide
full funding to the eradication initiative.
12. Waste, Fraud and Abuse
FSA has a robust internal controls program for its farm loan
programs, which consists of OMB Circular A-123 reviews, Farm Loan
Program Risk Assessments, the County Operations Review program, Lender
Reviews, and National Office Loan Origination File Reviews.
Additionally, farm loan programs are subject to periodic audit and
review by the Office of Inspector General and the Government
Accountability Office. No material weakness related to fraud, waste,
and abuse have been identified through these processes for many years.
13. Effect of Administrative PAYGO
None.

Attachment 1
Appendix I: ACIF Historical Program Subsidy Budget Authority and Loan Levels
($ in Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
ACIF
Annual Subsidy Budget Authority 190 248 198 144 151 148 153 241 156 155
Direct Loan Level
Farm ownership 147 169 142 272 275 303 382 560 702 474
Farm operating 611 690 610 556 641 600 629 1,056 1,220 1,049
Emergency disaster 25 96 30 24 51 75 46 30 36 66
Indian tribe land acquisition 2 0 2 0 0 0 0 0 0 4
Boll weevil eradication 100 99 98 83 22 6 100 100 0 100
Indian Highly Fractionated Land N/A N/A N/A N/A N/A N/A 0 0 0 0
Conservation N/A N/A N/A N/A N/A N/A 0 0 5 11
Farm Operating ARRA N/A N/A N/A N/A N/A N/A 0 170 22 0
---------------------------------------------------------------------------------------------------
Total Direct Loan Levels 885 1,054 882 935 989 984 1,157 1,916 1,985 1,704
---------------------------------------------------------------------------------------------------
Direct Loan Appropriated Subsidy
Farm ownership 4 20 31 15 14 13 17 36 29 33
Farm operating 55 119 88 56 64 70 80 125 58 64
Emergency disaster 3 19 4 3 6 9 5 4 1 7
Indian tribe land acquisition 0 0 0 0 0 0 0 0 0 0
Boll weevil eradication 0 0 0 0 0 0 0 0 0 0
Seed cotton 0 0 N/A N/A N/A N/A N/A N/A N/A N/A
Indian Highly Fractionated Land N/A N/A N/A N/A N/A N/A 0 0 0 0
Conservation N/A N/A N/A N/A N/A N/A 0 0 0 0
Farm Operating ARRA N/A N/A N/A N/A N/A N/A 0 20 1 0
---------------------------------------------------------------------------------------------------
Total Direct Loan Subsidy 62 158 123 74 84 92 102 185 89 104
---------------------------------------------------------------------------------------------------
Guaranteed Loan Level
Farm ownership 1,161 1,231 1,103 1,027 949 965 1,171 1,273 1,606 1,906
Farm operating, unsubsidized 1,548 1,013 951 885 937 918 946 1,235 1,510 1,498
Farm operating, subsidized 511 418 278 283 272 272 135 150 182 65
Conservation N/A N/A N/A N/A N/A N/A 0 0 0 1
---------------------------------------------------------------------------------------------------
3,220 2,662 2,332 2,195 2,158 2,155 2,252 2,658 3,298 3,470
---------------------------------------------------------------------------------------------------
Guaranteed Loan Appropriated Subsidy
Farm ownership 5 9 6 5 5 6 5 4 6 7
Farm operating, unsubsidized 54 32 34 27 28 23 23 31 35 35
Farm operating, subsidized 69 49 35 38 34 27 23 21 26 9
Conservation N/A N/A N/A N/A N/A N/A 0 0 0 0
---------------------------------------------------------------------------------------------------
128 90 75 70 67 56 51 56 67 51
--------------------------------------------------------------------------------------------------------------------------------------------------------

Attachment 2
ACIF Historical Program Outlays
($Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
ACIF
Direct Loan Subsidy Outlays
Farm ownership 5 17 30 15 13 9 19 30 28 33
Farm operating 56 109 87 56 61 70 77 107 67 64
Emergency disaster 28 18 4 3 5 7 5 4 1 7
Indian tribe land acquisition 0 0 0 0 0 1 0 0 0 0
Boll weevil eradication 0 0 0 0 0 0 0 0 0 0
Indian Highly Fractionated Land N/A N/A N/A N/A N/A N/A 0 0 0 0
Conservation N/A N/A N/A N/A N/A N/A 0 0 0 0
Farm Operating ARRA N/A N/A N/A N/A N/A N/A 0 18 2 0
---------------------------------------------------------------------------------------------------
Total Direct 89 144 121 74 79 87 101 159 98 104
---------------------------------------------------------------------------------------------------
Guaranteed Loan Subsidy Outlays
Farm ownership 5 9 6 5 4 5 4 4 5 7
Farm operating, unsubsidized 48 32 33 28 28 35 23 30 35 9
Farm operating, subsidized 63 49 31 37 34 15 18 21 25 35
Conservation N/A N/A N/A N/A N/A N/A 0 0 0 0
---------------------------------------------------------------------------------------------------
Total Guaranteed 116 90 70 70 66 55 45 55 65 51
--------------------------------------------------------------------------------------------------------------------------------------------------------

Attachment 3

Department Strategic Goal: Assist rural communities to create prosperityso they are self-sustaining, repopulating, and economically thriving.

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

Farm Loans

Direct Farm Ownership 12,712 16,990 35,560 28,675 26,520
Loans
Direct Farm Operating 70,147 79,959 124,545 58,889 47,500
Loans
Guaranteed Farm Ownership 5,599 4,955 4,200 5,942 5,559
Loans
Guaranteed Farm Operating 27,379 23,341 20,645 25,529 23,902
Loans
Guaranteed Farm Operating 22,666 22,908 30,754 35,338 35,126
Loans, unsub.
Emergency Disaster Loans 8,891 5,135 4,323 1,314 6,000
Indian Tribe Land 0 0 0 0 0
Acquisition Loans
Boll Weevil Eradication 114 0 0 0 0
Loans
Indian Fractionated Land 0 0 0 0 793
Loans
Direct Conservation Loans 0 0 0 0 0
Guaranteed Conservation 0 0 0 0 0
Loans
Program Loan Cost Expenses 7,920 7,920 7,920 7,920 7,920
Individual Development 0 0 0 0 0
Account Grants
Administrative costs 243,993 277,206 305,903 309,848 304,655
(direct)
Indirect costs 2 146,791 23,979 4,214 4,273 8,518
-------------------------------------------------------------------------------
Total Costs 1 546,212 462,393 538,064 477,728 466,493
FTEs 2,809 2,752 2,923 2,804 2,804

Performance Measure: Maintain or reduce avg processing time for direct and guaranteed loans.

Direct Loans (# of 27.00 27.80 33.50 30.80 32.50
days):
Guaranteed Loans (# of 12.60 8.50 13.50 13.25 13.00
days):
Performance Measure: Increase % of beginning farmers, racial and ethnic minority farmers, and women
farmers financed by FSA.

Percent: 15.90% 16.22% 17.40% 19.90% 18.00%

1 For loan programs reflects subsidy budget authority to support loan levels.
2 Indirect costs include a small amount related to State Mediation Grants.

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF USDA ENERGY AND FORESTRY PROGRAMS)

----------

WEDNESDAY, JULY 20, 2011

Subcommittee on Conservation, Energy, and
Forestry,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300, Longworth House Office Building, Hon. Glenn Thompson
[Chairman of the Subcommittee] presiding.
Members present: Representatives Thompson, Goodlatte,
Gibbs, Southerland, Roby, Huelskamp, Hultgren, Ribble, Holden,
Schrader, Owens, McIntyre, Costa, Walz, Pingree, and Sablan.
Staff present: Patricia Barr, Brent Blevins, Tamara Hinton,
Josh Maxwell, Mary Nowak, Debbie Smith, Lauren Sturgeon,
Heather Vaughan, John Konya, Nona Darrell, Liz Friedlander,
Anne Simmons, and Jamie Mitchell.

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

The Chairman. Good morning, everyone, this hearing of the
Subcommittee on Conservation, Energy, and Forestry, entitled,
Agricultural Program Audit: Examination of USDA Energy and
Forestry Programs, will come to order.
We will start with opening statements. I want to welcome
everyone to today's hearing to audit the USDA energy and
forestry programs.
Today we will hear from USDA about the farm bill programs
administered under the energy and forestry titles. As with each
farm audit we are holding, we will learn basic information
about programs as well as whether any programs are duplicative.
The first energy title was created in the 2002 Farm Bill, and
it was designed to help develop feedstock for renewables fuels
and to assist farmers and ranchers with energy efficiency.
The 2008 Farm Bill expanded the energy title and committed
more than a billion dollars in mandatory funding to help foster
the development of advanced biofuels.
Many of these programs, such as the Biomass Crop Assistance
Program, were created with the purpose of fostering the
creation of the next generation of advanced biofuels by
developing dedicated energy crops. Other programs, like the
Rural Energy for America Program, were expanded to better
assist rural America's producers and small businesses to
implement energy efficiency measures and renewable energy
systems.
As we consider these programs and to what extent they have
fulfilled their purpose, we must be aware that we face a
significant challenge in the next farm bill. Thirty-seven
programs in the farm bill do not have a budget baseline beyond
the expiration of the current farm bill, including every
program in the energy title.
For those of you who are not familiar with the
Congressional budgeting process, this means that none of the
energy title programs have mandatory funding beyond the
expiration of the 2012 Farm Bill. Therefore, if we wish to see
any of these programs continue into the future in their current
form, we will be faced with the challenge of finding funding
elsewhere.
Now that will be challenging in these fiscal times as we
are looking for ways to cut spending and make government more
efficient. It is not as simple as reallocating funds from one
title to another when the 37 programs I mentioned previously
are spread through 12 titles of the farm bill.
In addition to energy, we will also examine USDA forestry
programs today. The Committee shares jurisdiction of forestry
matters with the Natural Resources Committee.
Our Committee's jurisdictions over forestry is focused on
state and private forestry and landowner assistance programs,
forestry research as well as oversight of the Forest Service.
The forestry title is one of the smaller titles of the farm
bill but no less important.
Several Members of the Subcommittee, including me, have
forestlands in their districts and appreciate the important
relationship the Forest Service maintains with rural America.
Though most of the forestry programs have a permanent
authorization, it is important for us to review these programs
to ensure that they are being carried out in a manner
consistent with their purpose.
I want to welcome our panel of witnesses from USDA. The
Subcommittee looks forward to hearing your testimony and your
thoughts on the programs we are examining today, and I look
forward to working with you all in the future as we craft the
next farm bill.
[The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good morning. I want to welcome everyone to today's hearing to
audit USDA energy and forestry programs.
Today, we will hear from USDA about the farm bill programs they
administer under the energy and forestry titles.
As with each farm audit we are holding, we will learn basic
information about the programs, as well as whether any programs are
duplicative.
The first energy title was created in the 2002 Farm Bill. It was
designed to help develop feedstocks for renewable fuels and to assist
farmers and ranchers with energy efficiency.
The 2008 Farm Bill expanded the energy title and committed more
than $1 billion in mandatory funding to help foster the development of
advanced biofuels.
Many of these programs, such as the Biomass Crop Assistance
Program, were created with the purpose of fostering the creation of the
next generation advanced biofuels by developing dedicated energy crops.
Other programs, like the Rural Energy for America Program, were
expanded to better assist rural America's producers and small
businesses to implement energy efficiency measures and renewable energy
systems.
As we consider these programs, and to what extent they have
fulfilled their purpose, we must be aware that we face a significant
challenge in the next farm bill.
Thirty seven programs in the farm bill do not have a budget
baseline beyond the expiration of the current farm bill, including
every program in the energy title.
For those of you who are not familiar with the Congressional
budgeting process, this means that none of the energy title programs
have mandatory funding beyond the expiration of the 2012 Farm Bill.
Therefore, if we wish to see any of these programs continue into
the future in their current form, we will be faced with the challenge
of finding funding elsewhere.
That will be challenging in these fiscal times, as we are looking
for ways to cut spending and make government more efficient.
It is not as simple as reallocating funding from one title to
another when the 37 programs I mentioned previously are spread through
12 titles of the farm bill.
In addition to energy, we will also examine USDA forestry programs
today.
The Committee shares jurisdiction of forestry matters with the
Natural Resources Committee.
Our Committee's jurisdiction over forestry is focused on state and
private forestry and landowner assistance programs, forestry research,
as well as oversight of the Forest Service.
The forestry title is one of the smaller titles of the farm bill,
but no less important.
Several Members of this Subcommittee, including me, have
forestlands in their district, and appreciate the important
relationship the Forest Service maintains with rural America.
Though most of the forestry programs have a permanent
authorization, it is important for us to review these programs to
ensure that they are being carried out in a manner consistent with
their purpose.
I want to welcome our panel of witnesses from USDA. The
Subcommittee looks forward to hearing your testimony and your thoughts
on the programs we are examining today.
I look forward to working with you all in the future as we craft
the next farm bill.
I now yield to the gentleman from Pennsylvania, Mr. Holden, for his
opening statement.

The Chairman. I now yield to the gentleman from
Pennsylvania, Mr. Holden, for his opening statement.

OPENING STATEMENT OF HON. TIM HOLDEN, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA

Mr. Holden. Thank you, Mr. Chairman.
I would like to thank our witnesses and guests for being
here this morning. This hearing presents an important
opportunity for Members of the Subcommittee to review the state
of USDA energy and forestry programs. The Farm Service Agency,
Rural Development and U.S. Forest Service, through the
authority of this Committee, currently administer the energy
and forestry titles and programs contained in the 2008 Farm
Bill.
This bill expanded many of the renewable energy programs
originally authorized in the 2002 bill and introduced many new
provisions intended to ensure that agriculture played an
important role in moving this country towards energy
independence.
This Committee crafted a bill to encourage a move toward
advanced biofuels by promoting research, development and
demonstration of biomass-based renewable energy and by
providing over $1 billion in investments needed to show a
promising but fragile industry that we are committed to
renewable energy production.
Implementation of many of these energy title programs,
however, has been slow, leading to uncertainty in an industry
we intended to strengthen and support. In addition, the energy
title does not have mandatory money for these programs after
the 2008 Farm Bill expires. This leaves this Committee and the
agencies before us today in a difficult situation during a
difficult fiscal environment.
Similarly the forestry title, which impacts forestland
management in the 155 National Forests and 20 grasslands in the
National Forest System does not have any mandatory funding. To
ensure the Forest Service continues to meet the needs of
present and future generations, we must ensure that forestry
title policies are efficient and accessible.
It is important for us to find out today which programs
have been implemented and are accomplishing our goal of a well-
managed agency dedicated to forest stewardship. We must all
work together to make certain taxpayer dollars are being spent
wisely and as intended if we are to sustain healthy, diverse
and productive forests and expand domestic production of
renewable energy to decrease our dependence on foreign oil.
I look forward to hearing from our witnesses today and
yield back my time, Mr. Chairman.
The Chairman. I thank the gentleman.
The chair would request that other Members submit their
opening statements for the record so that the witnesses may
begin their testimony and to ensure there is ample time for
questions.
[The prepared statement of Ms. Fudge follows:]

Prepared Statement of Hon. Marcia L. Fudge, a Representative in
Congress from Ohio
Thank you Chairman Thompson and Ranking Member Holden, for
convening today's hearing and thank you Mr. Tidwell, Ms. Canales, and
Mr. Garcia for educating us on energy and forestry provisions of the
farm bill. As a new Member of this Committee, I appreciate these
opportunities to learn some substance about the issues that will be
relevant for the next iteration of the farm bill.
I am particularly interested in the USDA's renewable energy
research programs, and specifically, the Biodiesel Fuel Education
Program. On one hand, the price of commodities like petroleum and oil
have shot up over the past decade, so it is important for the U.S. as a
nation to explore cheaper, cleaner, renewable fuel sources. There are
institutions and organizations in my district that are blazing the path
for new energy technology and this program represents a great funding
opportunity for them and similar institutions across the country.
Moreover, being able to use biomass to produce cleaner, renewable fuel
will have a positive effect on the economy and make it less expensive
for food producers to provide the fresh and nutritious foods that
people depend on both here and abroad.
I am also interested in the Urban and Community Forestry Program as
I represent an urban district. Scientific evidence of green spaces has
been mounting for some time now. For example, One tree can remove 26
pounds of carbon dioxide from the atmosphere annually, equaling 11,000
miles of car emissions. Plants have been shown to reduce the urban heat
island effect, i.e., where buildings, asphalt, and concrete absorb
solar radiation and then reemit it as heat, causing the air temperature
of the city to rise, directly by shading heat absorbing surfaces, and
indirectly through evaporative cooling. Green spaces can also reduce
noise pollution, by dense screens of trees and shrubs, and can even
cleanse partially-treated wastewater. I have worked on awareness around
childhood obesity and youth fitness, so programs that make the outdoors
safer and more inviting are certainly of interest to me.
Again, I thank the Chairman for holding today's hearing and I look
forward to hearing from our witness.

The Chairman. I am pleased to welcome our panel of
witnesses to the table today. First, we have Mr. Tom Tidwell,
Chief of the U.S. Forest Service, U.S. Department of
Agriculture; Ms. Judy Canales, Administrator of the Rural
Business Cooperative Service, USDA; and Mr. Juan Garcia, Deputy
Administrator of the Farm Service Agency.
Chief Tidwell, begin when you are ready.

STATEMENT OF THOMAS TIDWELL, CHIEF, U.S. FOREST
SERVICE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.

Mr. Tidwell. Thank you.
Mr. Chairman, Members of the Subcommittee, I want to thank
you for the opportunity to be here in front of you today to
discuss the forestry title of the farm bill.
The Forest Service not only manages 193 million acres of
National Forest, but we also work with our partners across the
country to help manage over 750 million acres of our nation's
forests. Two-thirds of our nation's forests, over 500 million
acres, are in non-Federal ownership. Over ten million families
own forests.
Our nation's forests are a primary source of clean water,
clean air, wildlife habitat and recreational settings. They are
also the key component of America's rural landscape, supporting
our healthy rural communities and economies and supporting
well-paying jobs.
Forests are a key part of our rural economies. In fact,
roughly 75 million acres of forests belong to working farms
with over 900,000 jobs nationwide that rely on our private
forests. The programs we will talk about today help keep
America's forests working, keeps them productive, rather than
having our forests go to some other use, like some form of
development.
The Forest Service, primarily through our state and private
forestry programs, we provide technical assistance and cost-
share financial assistance to landowners to help conserve and
enhance the benefits from our nation's forests.
These programs are delivered by our expanding network of
partners centered around the state forestry agencies. These
efforts are a key part of Secretary Vilsack's ``All Lands''
vision for the nation's forests.
This Federal investment, it leverages the capacity of our
state foresters and their partners to manage the state and
private lands to continue to produce the ecological, social and
economic benefits that the American people rely on.
In the 2008 Farm Bill, it placed an increased emphasis on
forestry and forest landowners. For the first time, the farm
bill set priorities for private forest conservation to conserve
and manage our working forest landscapes for multiple values
and uses, to protect forests from threats and to enhance the
public benefits from our private forests.
Furthermore, the 2008 Farm Bill requires each state and
territory to develop an assessment of the forest resource
conditions and develop a long-term forest research strategy to
address the threats and identify the resources that are needed.
The resulting forest action plans, really a nationwide
strategy, are a long-term plan for how we should prioritize our
limited resources to achieve our national conservation goals.
These action plans address the primary threats facing the
nation's forests, including changing ownership of private
forestlands, forest fragmentation, water quality and quantity
issues, increasing urbanization and increasing amounts of the
wildland/urban interface that we have to deal with during fire
seasons, and also addresses the effects from the changing
climate, wildfire, and invasive species.
I don't have to have point out what we have been seeing in
this country this year, as far as the devastating natural
disasters that have been occurring with the floods, the
tornadoes and the wildfires and in the drought that this
country has been experiencing across the entire southern tier
of this country.
There are about 325 million acres of private forests that
are currently at risk from a catastrophic wildfire; 58 million
acres are at risk of being overtaken by insect and disease and
invasive species; and urban development could swallow another
57 million acres of forests by 2030.
It is essential that we work together, the various
agencies, our state partners, so that we can help to address
these issues across not only the public lands but also our
private forested lands, so that we can ensure that the
generations to come will have the same benefits that we have
enjoyed from our nation's forests.
The Forest Service, we administer a number of programs that
are authorized by the farm bill. These programs are not
mandated funding programs, but they do receive discretionary
appropriations each year. The first is our Forest Health
Management Program. This is a program that helps to identify
and project where we are going to see the next insect, disease
and invasive outbreaks that are going to occur.
It provides the information that not only we rely on the
public lands, but also our private landowners rely on this
information so that they know where we need to be moving
forward to be able to address the next threat.
Some of the invasives that we are dealing with are the
emerald ash borer, the Asian longhorn beetle, dealing with
sudden oak death and hemlock wooly adelgid.
Our next program is our Cooperative Fire Assistance, and
there are two parts of this. The State Fire Assistance, this
program provides matching Federal assistance for our fire
management activities with our states, including to help make
sure that the states are prepared; they have their plans in
place; they are able to provide the training, not only to their
personnel but also to our rural volunteer fire departments; and
then also it provides funding for hazardous fuel treatments.
The second part is with our Volunteer Fire Assistance
Program, which is focused on our volunteer fire departments
across this country, to be able to make sure they have the
technology and equipment that they need to be able to respond.
Volunteer rural fire departments, they represent really the
first line in dealing with wildland fire. They provide nearly
80 percent of initial attack on wildland fires in the United
States since almost \2/3\ of all wildland fires in this country
are on non-Federal lands.
Our next program is the Forest Stewardship Program. This
program delivers forestry technical assistance to individual
forest landowners to help them to be able to develop a
management plan for their lands. This is focused on the
individual landowners that not always will have the access to
the technology, the access to the expertise, to really
understand what they should be doing, what they need to be
doing on their lands to make sure that we can sustain the
forests that are on their lands.
Since the authorization of this in 1990, the Forest
Stewardship Program has provided funding for more than 330,000
forest management plans, covering 38 million acres nationwide
and has reached more than five million private forest
landowners.
Our next program is the Urban and Community Forestry
Program. With 80 percent of Americans now living in our cities
and our towns, this program has really made a difference to
help the communities understand the benefits of having tree
cover in our urban settings. Some of the things that we are
doing is with our i-Tree program, which is a Web-based program
that allows not only cities and communities but also
individuals to be able to use that program to actually see
where planting trees on their property, where to place trees on
their property, will significantly reduce the amount of energy
that they are using. And also with our communities, we have had
some great success with the cities using this program to
actually be able to reduce the costs of having to deal with
storm water runoff because of an increase in their forest cover
within their cities.
Our next program is the Forest Legacy Program. This is a
program that helps us to protect environmentally important
private forest areas that are threatened by conversion to non-
forest or to development. We work with willing landowners to
provide a conservation easement to ensure that that private
landowner can stay on their land and that we can continue to
have productive working forestlands.
In addition to these programs, the 2008 Farm Bill
authorized four new programs that are administered by the
Forest Service. The first is the Community Forest and Open
Space Conservation Program that allows us to work with our
tribal governments, local governments and qualified nonprofit
entities so that they can acquire private forestland that is
threatened by conversion and non-forest uses and establish
community forests that provide access and community benefits.
The next is the Pest and Disease Revolving Loan Fund that
provides loans to local government to finance the purchase of
equipment that is needed for management to address disease or
pest-infested trees.
Our Community Wood Energy Program provides the states and
local governments with grants to develop community wood energy
plans to either acquire or to upgrade community wood energy
systems. But this is primarily focused on universities, medical
service areas, that we are trying to encourage expansion of
biomass plants that deal with much larger areas instead of just
individual offices or individual schools.
And then the last is our Forest Biomass for Energy Program
that directs the Forest Service to conduct a competitive
research and development program to encourage the use of forest
biomass for energy.
In conclusion, sound management of our nation's forestlands
is important to all Americans. Once again, there are over 500
million acres of non-Federal forestland in the United States.
Our recent research has shown that every year, large areas are
lost to development sprawl. The majority of the acres at risk,
more than 430 million acres, are owned by individual families.
And some of these private forest owners, they just lack the
financial and technical resources to be able to hold on to
their lands and manage their forests effectively. The farm bill
programs offer the opportunity for those folks to be able to
stay on their land, to be able to continue to have productive,
working forested farms and ranches.
I want to thank you for the opportunity to be here to
discuss the Forest Service's farm bill programs, and I am happy
to answer any questions that you may have today.
[The prepared statement of Mr. Tidwell follows:]

Prepared Statement of Thomas Tidwell, Chief, U.S. Forest Service, U.S.
Department of Agriculture, Washington, D.C.
Mr. Chairman and Members of the Committee, thank you for the
opportunity to appear before you today to discuss the Forestry Title of
the farm bill.
The Forest Service not only manages the 193 million acres of
National Forests, but also works with partners across the country to
help manage all 750 million acres of our nation's forests. Two thirds
of our nation's forests, over 500 million acres, are in non-Federal
ownership. These state, private and tribal forests comprise about 20
percent of our nation's land base. Management practices on these lands
impact everyone, both socially and economically, as well as affecting
the natural environment. The nation's private forests are a key
component of America's rural landscapes, stimulating healthy rural
communities and economies, and supporting well-paying jobs.
The Forest Service, primarily through its State and Private
Forestry Programs, provides both technical assistance and cost-share
financial assistance to landowners and resource managers to help
conserve and enhance the benefits from our nation's forests and protect
them from harm. These State and Private Forestry Programs are delivered
by an ever expanding network of partners centered around the State
Forestry agencies. As a result, we work where Federal, state, and local
interests intersect. We also work closely with a variety of Federal
agencies helping them deliver their programs to benefit America's
forests and the American people. These efforts are a key part of
Secretary Vilsack's ``All Lands'' vision for our nation's forests. This
Federal investment leverages the capacity of State Foresters and their
partners to manage state and private lands and produce ecological,
social and economic benefits for the American people.
2008 Farm Bill: State-Wide Assessments and Strategies for Forest
Resources
The 2008 Farm Bill contained an increased focus on forestry and
forest landowners. For the first time, the farm bill set priorities for
private forest conservation: (1) conserving and managing working forest
landscapes for multiple values and uses; (2) protecting forests from
threats; and (3) enhancing public benefits from private forests
(section 8001). To help ensure success in focusing on these priorities,
section 8002 of the 2008 Farm Bill required each state and territory,
by June 2010, to develop an assessment of the forest resource
conditions within its boundaries and develop a long-term forest
resource strategy to address threats and describe necessary resources.
All states and territories submitted these Assessments to the Forest
Service by the deadline and they now represent the first-ever
``strategic plan'' for the nation's forests. The resulting Statewide
Assessments and Strategies, or Forest Action Plans, provide an analysis
of forest conditions and trends and delineate priority landscape areas
in each state and territory. They offer practical, long-term plans for
focusing state, Federal and other resources on priorities that will be
most effective in achieving national conservation goals.
The approach for developing these plans varied widely among states
and territories, reflecting differences in the way that national,
state, and local priorities came together, the differing challenges
each faced, and the resources available to tackle those challenges.
Many states engaged in wide-ranging stakeholder involvement processes
and involved a variety of partners in establishing their priorities.
They used an ``All Lands'' approach that considered all forestland
within their boundaries, regardless of ownership. The primary trends
and threats facing the nation's forests, as revealed in the Forest
Action Plans, include changing ownerships of private forestlands,
forest fragmentation, water quality and quantity issues, increasing
urbanization, increasing amounts of Wildland Urban Interface areas, and
the effects of climate change, wildfire, and invasive species. Each of
these issues intertwines with the others. Cooperation and coordination
across jurisdictional boundaries are clearly needed to address these
issues, most of which can only be addressed meaningfully at a landscape
level. By focusing on priority outcomes that address landscape-scale
issues, the Forest Action Plans provide a tool to guide investments
that will conserve, protect, and enhance our forests.
2008 Farm Bill: Forestry Programs
To achieve the priorities of conserving, protecting and enhancing
the nation's forests, the Forest Service administers a number of
programs through its State and Private Forestry Deputy Area that are
authorized by the farm bill. Many of these programs stem from older
laws, like the 1911 Weeks Act, the 1924 Clarke-McNary Act, and the
Cooperative Forestry Assistance Act of 1978. However, in recent years,
these laws have most often been amended in the farm bill and new
private forestland programs administered by the Forest Service have
been authorized. Also, Forest Service programs authorized by the farm
bill are funded through discretionary appropriations each year.
This testimony provides an overview and status for six of the
Forest Service programs, as well as the forestry programs housed in the
Natural Resources Conservation Service and Farm Service Agency.
Forest Health Management--Federal and Cooperative Lands: The Forest
Health Management (FHM) program is truly all-lands. It is made up of
two components: Forest Health Protection on Federal lands and Forest
Health Protection on Non-Federal lands. Funding for these components
come in both the State and Private and Wildland Fire Management
appropriations. The FHM program provides insect, disease, and invasive
plant survey and monitoring information and technical and financial
assistance to prevent, suppress, and control outbreaks threatening
forest resources. FHM utilizes science, active land management, and
technology transfer expertise to restore and sustain forest
landscapes--across urban, private, state, Tribal, and Federal forests.
Recently completed Forest Action Plans have, in many cases, identified
forest health as a key state priority. These Plans are being used to
help guide priorities at the national and regional levels. The
technical and financial assistance that FHM provides help to ensure
that forests remain healthy and resilient by minimizing impacts of
native and invasive insects and diseases, and invasive plants.
The FHM program works collaboratively with other agencies,
especially the Animal and Plant Health Inspection Service (APHIS), to
combat several damaging invasive pests, such as emerald ash borer,
Asian long horned beetle, sudden oak death, and hemlock woolly adelgid.
FHM also plays an active role in international activities. Many of the
current forest health issues regarding invasive and exotic insects and
diseases are directly related to the international arena. During Fiscal
Year (FY) 2010, FHM specialists were involved in approximately 50
international-related activities in 17 countries, including biological
control of invasive insects, providing training in bark beetle
management and identification, and technology transfer for aerial
survey detection.
In FY 2010, FHM received $78 million in funding for this work on
Federal lands and $60 million in funding for this work on non-Federal
lands. Over the last 3 years, FHM has protected almost 4 million acres
of Federal and non-Federal lands from invasive and native pests.
The President's FY 2012 Budget proposes $118.9 million for Forest
Health Management.
Cooperative Fire Assistance--State Fire Assistance: The State Fire
Assistance (SFA) program provides matching financial assistance through
partnership agreements to State Foresters for all fire management
activities including preparedness activities, planning, training,
hazardous fuel treatments, and the purchase and maintenance of
equipment. Funds provide financial assistance, technical training, and
equipment to ensure that Federal, state, and local fire agencies can
deliver a coordinated response to wildfire. The emphasis is on
improving fire planning, initial attack capabilities, and use of the
Incident Command System and wildland fire techniques training for local
fire agencies. This program also supports programs such as the Smokey
Bear fire prevention campaign, Firewise, and Ready, Set, Go! Funds are
provided in both the State and Private and Wildland Fire Management
appropriations. We emphasize funding in areas that have developed or
are developing Community Wildfire Protection Plans (CWPPs), FEMA hazard
mitigation plans, or other collaboratively developed hazard mitigation
plans. Recipients of SFA funds are required to provide a 50 percent
cost-share match, which leverages the amount of work that is completed
with SFA funds.
In FY 2010, the agency received $110 million in SFA funds for this
work, which were used, in part, to train almost 15,000 firefighters
across the county and conduct over 19,000 prevention and education
programs. In the past 3 years, this program has assisted over 13,000
communities at risk from wildland fire in developing management plans
and provided funding for over 660,000 acres of hazardous fuels
treatments near communities.
The President's FY 2012 Budget proposes $78.8 million for State
Fire Assistance.
Cooperative Fire Assistance--Volunteer Fire Assistance: Originally
authorized in Title IV of Public Law 921-419, ``The Rural Development
Act of 1972,'' the Volunteer Fire Assistance (VFA) program provides
Federal financial, technical, and other assistance to State Foresters
and other appropriate officials to organize, train and equip fire
departments in rural communities (population of 10,000 or less) to
suppress fires. A department may buy fire equipment, pay for training
or training materials, or cover the cost of department incorporation,
as long as the funds are matched. Volunteer fire departments receiving
VFA funds are required to provide a 50 percent cost-share match. Funds
are provided in both the State and Private and Wildland Fire Management
appropriations.
Volunteer fire departments play a major role in suppressing
wildfires on Federal lands. Rural Fire Departments represent the first
line of defense in coping with fires and other emergencies in rural
areas and rural communities. They provide nearly 80% of initial attack
on wildland fires in the United States. These departments are charged
with the protection of lives, homes and business investments in rural
America. Their presence enhances rural development opportunities and
economic vitality, thereby improving standards of living in rural
areas.
The Forest Service and the Department of the Interior land
management agencies have entered into cooperative agreements with many
rural volunteer fire departments for the purpose of protection of both
communities and natural resources. A level of fire protection is
attained that would be impossible without such cooperation. Interagency
agreements provide a cost-effective means of enhancing fire protection.
In FY 2010, the agency received $15.7 million in VFA funds. These
funds were used to train over 9,000 firefighters in rural areas and
helped to expand or create 18 fire departments in rural communities. In
the past 3 years, the program has assisted almost 38,000 volunteer fire
departments.
The President's FY 2012 Budget proposes $13.4 million for Volunteer
Fire Assistance.
Forest Stewardship Program: The Forest Stewardship Program is the
only Forest Service program focused on private forestland management.
The program delivers assistance by leveraging a national network of
forestry technical assistance providers and programs. Because of this
unique role--and since most of America's forests are privately owned--
the Forest Stewardship Program is central to addressing forest resource
management issues. Individual forest landowners are assisted within the
context of forest resource management issues that cross boundaries and
encompass multiple ownerships and jurisdictions. The Forest Stewardship
Program plays a fundamental role in keeping forests as forests,
preparing forest landowners for forest products and ecosystem services
markets, qualifying them for incentive programs, and maintaining jobs
and diverse forest products markets in rural communities. Since its
authorization in 1990, the Forest Stewardship Program has provided
funding for more than 330,000 comprehensive forest management plans
covering 38 million acres nationwide and has reached more than five
million private forest landowners through a variety of technical and
educational assistance programs.
In FY 2010, the agency received $29.4 million in Forest Stewardship
funds. These funds were used to conduct landowner education programs
for almost 230,000 landowners and fund almost 15,000 new or revised
Forest Stewardship Plans. In FY 2010, over 1.8 million acres of
nonindustrial private forestland was being managed sustainably under
Forest Stewardship Management Plans.
The President's FY 2012 Budget proposes $29.4 million for the
Forest Stewardship program.
Urban and Community Forestry Program: The Urban and Community
Forestry Program (U&CF) fosters the creation of healthier, more livable
urban environments across the nation by promoting benefits of tree
cover in urban areas and communities, encouraging maintenance of trees
and community forests, and expanding research and education efforts
intended to improve the understanding of trees' economic,
environmental, social and psychological, and energy conservation
benefits. With 80% of Americans living in cities, suburbs and towns,
there are strong environmental, social, and economic cases to be made
for the conservation of green spaces to guide growth and revitalize
city centers and older suburbs. The Urban and Community Forestry
Program is helping to improve the condition and extent of the 100
million acres of community trees and forests in cities, suburbs, and
towns where people live, work and play.
All Americans benefit from the multitude of services that the urban
tree canopy provides, including improved human health and wellbeing,
green jobs, energy conservation, improved air and water quality, carbon
sequestration, recreation, and wildlife habitat. Urban and Community
Forestry also provides support and funding for cutting-edge
technologies and information, such as the ``i-Tree'' suite of local
decision support tools that include urban forest benefits assessment,
pest detection and storm response protocols.
In FY 2010, the Forest Service received $30.4 million in Urban and
Community Forestry funds. These funds were used to assist over 7,000
communities reaching a total of 177 million people. In the past 3
years, the program has helped over 21,000 communities.
In FY 2012 the President's Budget includes $32.4 million for the
Urban and Community Forestry program.
Forest Legacy Program: The Forest Legacy Program (FLP) protects
environmentally important private forest areas that are threatened by
conversion to non-forest uses. In partnership with participating
states, private landowners, and other conservation partners the FLP
works to identify important forestlands and protect them for future
generations. The FLP provides the opportunity for the continuation of
traditional forest uses, including forest management activities and
outdoor recreation. Using conservation easements and fee-simple
purchases, FLP gives priority to lands that have important scenic or
recreational values, riparian areas, fish and wildlife values, and
other ecological values. Family forest owners and timber companies
currently face increasing pressure to sell, subdivide, and develop
their land. This program provides financial incentives to help private
landowners stay on their land to conserve their forests, thereby
protecting outdoor recreation opportunities, fish and wildlife habitat,
water quality and resource-based economies. The program operates on a
``willing buyer-willing seller'' basis and is a non-regulatory,
incentive-based land conservation program.
Funds for the FLP program are provided through the Land and Water
Conservation Fund. In FY 2010, the agency received $78.96 million in
FLP funding. Since its inception, the program has protected over 2
million acres of important forest from conversion.
In FY 2012, the President's Budget includes $135 million for the
Forest Legacy program.
In addition to these programs, the 2008 Farm Bill authorized four
new programs administered by the Forest Service, which are in various
stages of implementation.

1. Community Forest and Open Space Conservation Program: This
program, authorized under Section 8003 of the 2008 Farm Bill,
directs the Forest Service to provide grants to Tribal
governments, local governments, and qualified nonprofit
entities to acquire private forestland that is threatened by
conversion to non-forest uses, and establish community forests
that provide accessible community benefits. The benefits
include public recreation, improvement of environmental health,
economic activity, and forest-based educational programs. This
program received $500,000 in funding in FY 2010 and $1 million
in FY 2011. The Forest Service is still in the process of
finalizing the regulations for this program. The agency engaged
in government-to-government consultation with tribes during a
145 day period, and conducted a 60 day public comment period,
which ended on March 7, 2011. The Forest Service analyzed
comments received during both processes and prepared final
regulations for the program. The final regulation is planned
for publication in the Federal Register later this year.

2. Pest and Disease Revolving Loan Fund: The Pest and Disease
Revolving Loan program was authorized in section 10205 of the
2008 Farm Bill. The program is authorized to provide loans to
local governments to finance the purchase of equipment needed
for the management of diseased or pest-infested trees. The
agency has implemented an interim procedure to help address
pest and disease issues, using its existing grant authorities
to make grants to the states, which in turn, make grants
available to local governments.

3. Community Wood Energy Program: Section 9013 of the 2008 Farm
Bill directs the Forest Service to establish the Community Wood
Energy Program. This program authorizes appropriations of $5
million per year for fiscal years from 2009 through 2012 for a
grant program to provide state and local governments up to
$50,000 to develop community wood energy plans. Competitive
grants could also be available to acquire or upgrade community
wood energy systems that primarily service public facilities
owned or operated by the governmental entity and that use woody
biomass as the primary fuel. To date, this program has not been
funded.

4. Forest Biomass for Energy Program: Section 9012 of the 1008 Farm
Bill directs the Forest Service to conduct a competitive
research and development program to encourage use of forest
biomass for energy. The agency's Research and Development
Deputy Area would administer this program. To date, this
program has not been funded.

Biomass Commercial Utilization Grant Program: The agency also
implements a program, the Biomass Commercial Utilization Grant Program,
that authorizes grants to an owner or operator of a facility that uses
biomass for wood-based products or other commercial purposes, to offset
the costs incurred to purchase biomass. Section 203 of the Health
Forests Restoration Act provided an authorization of appropriations for
this program through Fiscal Year 2008. Through appropriations acts, the
agency has provided $5 million of hazardous fuels funds for the biomass
utilization grants each year since 2005. From 2005 to 2010, the grants
have focused on assisting businesses and communities with the
production, delivery, and utilization of wood residues. The Forest
Service has provided grants for equipment such as grinders, harvesters,
new trucking methods, energy production facilities, roundwood
manufacturing, and production of wood shavings for animal bedding
markets. In FY 2010, 13 biomass grant awards were made to small
businesses and community groups in six states. In 2011, the emphasis
was changed to focus on engineering design, permitting, and other
preconstruction work for wood energy facilities. Grants for biomass
utilization have totaled over $30 million to 123 grant recipients in 21
states since 2005.
2008 Farm Bill: Cultural and Heritage Cooperation
Subtitle B, Cultural and Heritage Cooperation Authority applies
specifically to the Forest Service's interactions and capacity for
cooperation with federally recognized Indian tribes. Section 8106,
``Prohibition on Disclosure,'' exempts certain information received by
the agency from the Tribes from disclosure under the Freedom of
Information Act. Other provisions in Subtitle B relate to reburial of
human remains and cultural items, temporary closures for traditional
and cultural purposes, and gathering of forest products by Tribes.
In addition to the Forest Service, USDA's Natural Resource
Conservation Service (NRCS) and Farm Service Agency (FSA) also have
forestry programs authorized in the 2008 Farm Bill.
Natural Resources Conservation Service--Forestry Activities
USDA's NRCS assists private forest owners in managing the nation's
nonindustrial private forests through technical and financial
assistance. NRCS has a long-term combined objective for forestland with
an expected outcome of healthy forestlands that are productive,
diverse, resilient, and provide a wide range of ecosystem services.
During the past 3 years, about 4.7 million acres of private forestland
have received conservation treatment through NRCS assistance.
In 2010, the Environmental Quality Incentives Program (EQIP)
authorized under the Conservation Title of the farm bill, provided
about $51 million (about six percent of total EQIP funding) to private
forest owners to improve forest health. This level of assistance has
steadily increased since enactment of the 2008 Farm Bill. Conservation
practices funded by EQIP include forest health treatments, tree
planting and reforestation activities, and plan development to help
guide the stewardship of forestlands into the future. So far in FY
2011, EQIP has funded 1,443 new forest management plans. Additionally,
over 20 percent of the FY 2010 funds under the Wildlife Habitat
Incentive Program (WHIP) have supported wildlife habitat improvement on
private forestlands with special emphasis in the Longleaf Pine
Ecosystem Restoration Initiative in the southeast and the New England/
New York Forestry Initiative.
The Conservation Stewardship Program (CSP) takes a different
approach than other programs by encouraging existing good stewards to
continue and expand their forest management. In the past 2 years, about
2.1 million acres of nonindustrial private forestland were enrolled in
CSP. The most popular CSP forest practices include prescribed burning,
forest stand improvement, and building shelters and structures for
wildlife. Additionally the Cooperative Conservation Partnership
Initiative (CCPI) component of EQIP, WHIP, and CSP program funds were
leveraged with resources from state and local governments and
conservation organizations in seven focused forested landscapes with
projects ranging from restoring salmon spawning grounds to reducing
sediment loss from timber harvesting operations.
Through the Healthy Forests Reserve Program (HFRP), NRCS assists
landowners in restoring, enhancing, and protecting forest ecosystems
to: (1) promote the recovery of threatened and endangered species; (2)
improve biodiversity; and (3) enhance carbon sequestration.
Participants may enroll in HFRP through restoration agreements,
contracts, and easements depending on their objectives. An FY 2010 HFRP
project in Oregon is working to increase Northern Spotted Owl habitat
while maintaining a working forest. The effort is a partnership between
NRCS, the U.S. Fish and Wildlife Service, the Oregon Department of
Forestry and 11 private landowners. The project includes long-term
plans for stand management and provides the landowners with assurances
that if they manage their property in accordance with the plan, they
will avoid future regulatory restrictions on the use of that land under
the Endangered Species Act. In FY 2010, over 5,600 acres were enrolled
in 13 states for about $6.5 million in financial assistance.
Farm Service Agency--Forestry Activities
USDA's Farm Service Agency (FSA) implements the Emergency Forest
Restoration Program (EFRP), a program that provides payments for
nonindustrial private forestland to carry out emergency measures to
restore land damaged by a natural disaster. Funding for EFRP is by
appropriations. For FY 2010, $18 million was made available by
supplemental appropriations.
To be eligible for EFRP, nonindustrial private forestland must have
existing tree cover (or had tree cover immediately before the natural
disaster occurred and is suitable for growing trees). EFRP program
participants may receive financial assistance of up to 75 percent of
the cost to implement approved emergency forest restoration practices.
A payment limitation of $500,000 per person or legal entity applies per
disaster.
EFRP program participants may implement emergency forest
restoration practices including emergency measures necessary to repair
damage caused by a natural disaster to natural resources on
nonindustrial private forestland and to restore forest health and
forest related resources on the land.
Conclusion
In conclusion, sound management of our nation's forestlands is
important to all Americans. There are over 500 million acres of non-
Federal forestland in the United States and recent research has shown
that every year, large areas are lost to development and sprawl. The
majority of the acres at risk, more than 430 million acres, are owned
by families and individuals. Some of these private forest owners lack
the financial and technical resources to hold on to and manage their
forests effectively. Farm bill programs offer protection for forests
and support for these working landscapes by directing technical support
and resources to these forest landowners--helping to keep working
forests intact, providing quality jobs in rural America, and keeping
privately-owned forestlands together for future generations.
The Forest Service's State and Private Forestry Deputy Area
administers these programs through robust partnerships with states,
private landowners, and other partners. These programs and partnerships
help private landowners and rural communities care for their forests,
strengthen local economies, and maintain a high quality of life.
Thank you for the opportunity to be here today to discuss the
Forest Service's farm bill programs. I am happy to answer any questions
from the Subcommittee Members.

The Chairman. Thank you, Chief.
Administrator Canales, go ahead and proceed whenever you
are ready. Thank you.

STATEMENT OF JUDY CANALES, ADMINISTRATOR, RURAL BUSINESS
COOPERATIVE SERVICE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.

Ms. Canales. Chairman Thompson, Ranking Member Holden, and
Members of the Subcommittee, thank you for the opportunity to
review Rural Development's energy programs, accomplishments in
creating jobs and building a cleaner, more secure, more
sustainable and domestically produced energy sector for future
generations.
The mission of Rural Development's Rural Business Service
programs is to enhance the quality of life for rural Americans
by providing leadership in building competitive businesses. We
provide funding opportunities for the development and
commercialization of renewable energy sources to change the way
people power their homes, businesses and industries.
We meet these goals by providing financial and technical
assistance to businesses and cooperatives located in rural
communities and establishing strategic alliances and
partnerships that leverage public, private and cooperative
resources to create jobs and stimulate rural economies.
Through USDA's Rural Business Service, four title IX
programs are implemented to assist the agriculture sector in
finding energy solutions and helping rural residents and
communities access renewable energy systems and to use energy
more efficiently. These four programs are section 9003, the
Biorefinery Assistance Program; section 9004, the Repowering
Assistance Program; section 9005, the Advanced Biofuel Payment
Program; and section 9007, the Rural Energy for America
Program, REAP.
The section 9003 Biorefinery Assistance Program provides
much-needed assistance in the development of new and emerging
technologies to develop advanced biofuels.
My agency, Rural Business Service, is currently reviewing
ten applications totaling over $1 billion in funding requests.
Through the section 9004 Repowering Assistance Program, we will
provide payments to biorefineries who switch from using fossil
fuels to using renewable biomass to produce heat or power for
their facilities. We are currently reviewing applications at
this moment.
The section 9005 Advanced Biofuels Payment Program provides
payments to eligible producers to support and expand the
production of advanced biofuels. To date, almost $30 million in
assistance payments have been provided to 141 advanced biofuel
producers. The section 9007 Rural Energy for America Program,
REAP, is the longest running renewable energy program that
Rural Business operates. In Fiscal Year 2010, we provided 2,400
grants and loan guarantees, totaling $159 million in support of
energy audits and energy efficiency and renewable energy
projects, including projects, such as windmills, methane
digesters and geothermal systems.
REAP provides an immediate impact and engages all types of
communities.
For example, the Menard family, a farming couple located in
New York, received a $31,000 grant for a solar electric
generating system. The system has already saved this farm and
this family over $11,000 in electric costs.
Since the signing of the 2008 Farm Bill, our renewable
energy programs have invested over $460 million in
biorefineries and renewable energy and energy efficiency
systems.
Through Fiscal Year 2010, over 6,100 awards were made,
saving or generating enough energy to support 2.3 million
households for a year. These programs are distinct and unique
in the Federal Government. There are no other programs that
solely support cellulosic and advanced biofuel production or
the conversion of biorefinery power systems to renewable
energy.
REAP is also unique, creating a multitude of methods to
support the energy sector.
The USDA Rural Business Service, my agency, is the only
Federal agency that is focused and dedicated to promoting rural
communities and businesses in rural communities. Our field
office structure reaches out to the poorest, most rural
counties in America, providing Federal support to businesses
who will not receive financial aid from any other source.
We are the leader in promoting the creation and expansion
of renewable energy in rural areas.
Advancing biomass and biofuel production, which has the
potential to create jobs, is one of the many ways we are
looking to rebuild and revitalize rural America. By producing
renewable energy, especially biofuels, America's farmers,
ranchers and rural communities have the ability to be help
ensure our nation's energy security, environmental security and
economic security.
In conclusion, thank you for your time, Mr. Chairman, and
Members of the Subcommittee. We at the USDA Rural Business
Service are committed to promoting renewable energy in rural
communities through our grants, our loan guarantees and payment
programs.
I will be happy to respond to questions from the Committee.
Thank you.
The Chairman. Thank you, Administrator.
Deputy Administrator Garcia, go ahead and proceed whenever
you are ready.

STATEMENT OF JUAN GARCIA, DEPUTY ADMINISTRATOR, FARM SERVICE
AGENCY, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, D.C.

Mr. Garcia. Chairman Thompson, Ranking Member Holden,
Members of the Subcommittee, thank you for the opportunity to
appear before you today. My name is Juan Garcia, Acting Deputy
Administrator for Farm Programs at the Farm Service Agency. My
remarks will focus on FSA's energy programs.
As part of the Energy Policy Act of 2005, Congress created
the first renewable fuel standard calling for 7.5 billion
gallons of corn starch ethanol in our national fuel supply by
2012. When Congress modified the renewable fuel standard in
2007, it increased the biofuel targets to 36 billion gallons by
2022.
It has taken more than 20 years to introduce just over 10
billion gallons of biofuels, but now the nation must achieve 20
billion gallons more biofuels in half the time.
Meeting this goal means growing new crops in greater
quantities. Some of these crops will take several years from
establishment to maturity before they can be harvested and will
be used in facilities that may not yet be completed.
Producers growing these new crops are subject to greater
risks in the establishment, production and marketing of the
biomass crops, as compared to the production of conventional
crops.
The 2008 Farm Bill created a program designed to jump start
the establishment of bioenergy crops and reduce the risk to
producers. This is a Biomass Crop Assistance Program, BCAP,
which offers incentives to farmers, ranchers and forest
landowners to establish, maintain and harvest a dedicated
energy crop for heat, power, biobased products and fuels.
Two types of assistance are available under BCAP. First,
establishment costs and annual payments may be available to
producers who enter into contracts with FSA to produce eligible
crops within approved project areas. Participants may receive
up to 75 percent of the establishment costs for perennial crops
and annual payments for up to 5 years for non-woody crops or up
to 15 years for woody crops.
Second, matching payments may be available to producers for
the collection, harvest, storage and transport of eligible
biomass to qualified facilities that produce heat, power,
biobased products or advanced biofuels from that biomass.
In July 2009, FSA issued a notice of funds availability for
the matching payments portion of the BCAP program, issuing the
first payment in August of 2009. FSA published a proposed rule
in February of 2010 to implement the full program. After review
of over 24,000 comments, the final rule for BCAP was published
on October 27, 2010, and FSA began accepting applications for
BCAP project areas.
Earlier this year, FSA began the sign up for Iowa farmers
seeking matching payments for the delivery of crop residues to
a qualified biomass conversion facility located in South
Dakota. FSA also announced the first BCAP project area,
comprising of 39 contiguous counties in Missouri and Kansas
that proposed the enrollment of up to 50,000 acres of native
grasses, including switchgrass from manufacturing into pellet
fuels. And, last month, FSA announced four more BCAP project
areas, in Arkansas, Missouri, Ohio and Pennsylvania, designated
to grow giant Miscanthus, a sterile hybrid warm-season grass
intended for bioenergy conversion.
On April 14 of this year, funding for BCAP was
legislatively reduced from $432 million to $112 million that
must be obligated by the end of this fiscal year. In order to
meet this timeframe, FSA announced that BCAP project area
proposals must be submitted no later than May 27 of this year.
Interest in BCAP has been significant. FSA received 41
project proposals from 21 states where project area sponsors
requested an estimated $1 billion to enroll more than 1.5
million acres in dedicated energy crops over 5 to 15 years. FSA
soon will announce a final project area selection for Fiscal
Year 2011.
In addition to BCAP, the 2008 Farm Bill also authorizes the
establishment of the Feedstock Flexibility Program. This
program was authorized to prevent the accumulation of
government-held sugar stocks that otherwise can impede price
recovery, by allowing USDA to sell the surplus sugar to
bioenergy producers as a fuel feedstock.
Domestic sugar demand has increased significantly and is
expected to remain strong relative to supplies in Fiscal Years
2011 and 2012. USDA does not anticipate an immediate need for
the Feedstock Flexibility Program.
Mr. Chairman and Members of the Subcommittee, this
concludes my remarks. I will be prepared to answer any
questions that you may have. Thank you.
[The joint prepared statement of Ms. Canales and Mr. Garcia
follows:]

Joint Prepared Statement of Judy Canales, Administrator, Rural Business
Cooperative Service; Juan Garcia, Deputy Administrator, Farm Service
Agency, U.S. Department of Agriculture, Washington, D.C.
Chairman Thompson, Ranking Member Holden, and Members of the
Subcommittee, our nation today faces pressing challenges to increase
our energy security, decrease our dependence on imported oil, protect
and improve our environment, and create new jobs and new opportunities
that will strengthen our economy. In the face of these challenges,
renewable energy offers an enormous opportunity for all Americans but
especially for agriculture and rural America to help build a cleaner,
more secure, more sustainable, and domestically-produced energy sector
for future generations. Advancing the development and deployment of
renewable energy is a high priority for the Obama Administration, as it
has been for bipartisan champions in Congress for many years. USDA has
been and remains a proud partner in these efforts. We appreciate the
opportunity to appear before you today to discuss USDA's energy
programs which contribute to an energy policy that reduces our
dependence on imported oil, protects our environment, and promotes jobs
and economic growth in the United States.
This testimony will review the Title IX (Energy Title) programs
from the 2008 Farm Bill and will also provide additional information on
some of the ways in which other agencies and programs contribute to the
overall USDA energy portfolio.
Renewable Energy at USDA
USDA has a longstanding commitment to supporting the research and
development and commercialization of renewable energy resources. While
there are urban and suburban sources of renewable energy, renewable
energy is largely rural energy--produced in rural areas and moved to
more urban areas where the majority of the energy users live.
USDA support for biofuels and bioenergy is an important part of a
much broader commitment to a cleaner and greener future which has
included investment in biofuels, biomass to energy, wind, solar,
geothermal, hydroelectric power and energy efficiency, as well as basic
scientific research into second and third generation biofuels and
biomass to power. USDA recognizes that environmentally responsible
renewable energy and energy conservation provide opportunities for
economic growth and prosperity across rural America and the nation as a
whole. We are working to ensure that our programs meet and exceed the
challenge of promoting sustainable economic growth and prosperity.
USDA programs support the entire supply chain of renewable energy
production, from feedstock research and development through to the
consumer, drawing on the established expertise, funding, and staff from
a dozen USDA agencies and offices as follows:

Rural Development Office of the Chief
Economist
Farm Service Agency Departmental Management
National Institute of Natural Resources
Food and Agri- Conservation
culture Service
Agricultural Research Forest Service
Service
National Agricultural Foreign Agricultural
Statistics Service
Service Agricultural Marketing
Service
Economic Research
Service

USDA is working within the Department and with other Federal
departments and organizations on furthering renewable energy and energy
efficiency; efforts include but are not limited to, the following
intra/intergovernmental agreements, councils, working groups, and
boards. USDA organizes all energy-related efforts internally through
the USDA Energy Council to lead the Department in policy development,
and the USDA Energy Council Coordinating Committee to coordinate
activities and perform duties assigned by the Secretary and the Energy
Council. USDA along with the Department of Energy (DOE) co-chairs the
Biomass Research and Development Board (BR&D Board) which coordinates
the government-wide research initiative and activities for the purpose
of promoting the use of biobased products, power and biofuels. Members
of the board also include the National Science Foundation,
Environmental Protection Agency (EPA), Department of the Interior,
Department of Defense, Department of Transportation and the Office of
Science and Technology Policy. The BR&D Technical Advisory Committee is
a group of approximately 30 individuals from industry, academia, and
state government, and is responsible for providing guidance to the BR&D
Board on the technical focus of the Biomass Research and Development
Imitative. Additionally, President Obama established the Biofuels
Interagency Working Group (BIWG) co-chaired by the Secretaries of
Agriculture and Energy, and the Administrator of the EPA, which works
closely with the BR&D Board in undertaking its work. The BIWG will
develop the nation's first comprehensive biofuel market development
program.
Farm Bill Energy Programs
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
provided over $1 billion of mandatory funding during a 5 year period to
support a comprehensive approach to energy efficiency and renewable
energy development in rural America. The 2008 Farm Bill reauthorized,
expanded, and/or modified existing programs, and created new programs
and initiatives to promote advanced biofuels production. The bill
supports farm, small rural business, and community renewable energy
systems; promotes production, marketing, and processing of biofuel
feedstocks other than those using corn starch; and expands research,
education, and demonstration programs for advanced biofuels. It also
expanded programs for Federal procurement of biofuels and bio-refinery
repowering projects and established USDA as the lead agency for
coordination of Federal biobased energy efforts. The Title IX (Energy
Title) programs were designed to increase America's energy security,
improve the environment, and strengthen rural economies through
development and production of renewable energy and the creation of
sustainable green jobs. The Obama Administration and USDA are committed
to these objectives.
Additional USDA Energy Programs and Efforts
Outside of the Energy Title programs, USDA has made significant
progress in assisting farmers, forest landowners, rural businesses and
communities, rural residents, agricultural producers and the nation
responding to energy related issues and opportunities. These range from
fundamental scientific research to the development and
commercialization of new technologies. They include outreach and
education, technical assistance programs, financial support for
infrastructure, and the adoption of biobased and energy-saving products
and volunteer biobased product labeling by USDA itself. We support more
energy efficient farming and sustainable feedstock production and
management techniques; geothermal facilities; solar and wind farms;
current and advanced bioenergy production supply chains; and
biochemical and genomics research crucial to furthering the advancement
of these technologies in the future. USDA also supports modernization
of the rural electric grid through smart grid technologies, renewable
energy development, as well as renewable energy transmission to move
renewable electricity to markets.
Rural Development
Rural Development consists of three agencies, the Rural Business
Service (RBS), the Rural Utility Service (RUS), and the Rural Housing
Service, with RBS and the RUS managing renewable energy programs.
Within Rural Development, only RBS operates programs created under the
Energy Title of the farm bill.
The mission of Rural Development's Rural Business Service (RBS)
programs is to enhance the quality of life for rural Americans by
providing leadership in building competitive businesses including
sustainable cooperatives that can prosper in the global marketplace. We
meet these goals by investing financial resources and providing
technical assistance to businesses and cooperatives located in rural
communities and establishing strategic alliances and partnerships that
leverage public, private, and cooperative resources to create jobs and
stimulate rural economic activity.
The RBS mission is unique in the Federal Government. There is no
other Federal agency that focuses only on promoting rural communities
and businesses. Our field offices reach out to the poorest, most rural
counties in America, providing Federal support to businesses who might
otherwise not receive financial aid from any other source.
Energy Programs
RBS implements four Energy Title programs to assist the agriculture
and energy sectors in finding energy solutions and helping rural
residents, rural small businesses, and communities to access renewable
energy systems and to use energy more efficiently. We provide funding
opportunities in the form of payments, grants, and loan guarantees for
the development and commercialization of renewable energy sources
including wind, solar, geothermal, hydrogen, ocean waves,
hydroelectric, biomass, and advanced biofuel (ethanol, biodiesel,
methane gas, etc.) to change the way people power their homes,
businesses, and industries. By making renewable energy sources
commercially viable, we are also helping to create sustainable
opportunities for wealth, new jobs, and increased economic activity in
rural America.
RBS has been a leader in promoting the creation and expansion of
renewable energy in rural areas. Since the enactment of the 2008 Farm
Bill, the renewable energy programs authorized under the Energy Title
have invested over $460 million in biorefineries and renewable energy
and energy efficiency systems through mandatory funding for grants,
loan guarantees, and assistance payments. Through 2010, over 6,100
awards were made, saving/generating close to 28 billion kWh of energy
or supporting approximately 2.3 million households for a year. These
programs provide an immediate impact and affect all walks of life. Take
for example, Gary and Connie Menard, a dairy farming couple in Mooers,
New York. They received a $31,162 grant from USDA which covered 25
percent of the cost of a 12.6 kilowatt solar electric generating system
that featured a system to track the sun for maximum output. The system
has generated over 85,000 kilowatt-hours of electricity to date and has
already saved the farm over $11,000 in electric costs.
The three Energy Title programs that RBS administers for the sole
purpose of promoting biofuels are distinct and unique in the Federal
Government. There are no other programs that's sole purpose is to
support the processing of advanced biofuel production, as is the case
for the Biorefinery Assistance program and the Advanced Biofuel Payment
Program respectively. The Repowering Assistance Program is the only
program of its kind, providing support to biorefineries to convert
their power systems to renewable energy.
Rural Energy for America Program (REAP)
REAP is the longest running renewable energy program that RBS
operates. Initially authorized under the 2002 Farm Bill, the program
was reauthorized and expanded in the 2008 Farm Bill. REAP provides
grants and loan guarantees for renewable energy and energy efficiency
to support a multitude of methods to support the energy sector in rural
America. The President's Budget for Fiscal Year (FY) 2012 requested $37
million to support a program level of $45 million in 2012 in addition
to the $165 million in mandatory program level funding to support $210
million in program activity. In FY 2011 RBS has $75 million in
mandatory and discretionary funding to support a program level of $113
million in funds which will be awarded to many of the over 3,000
applications that were received. In FY 2010, the program provided 2,400
grants and loan guarantees totaling $159 million in support for energy
audit projects, and energy efficiency and renewable energy projects
that ranged from biofuels to wind, solar, geothermal, anaerobic
digesters, hydroelectric, and biomass projects.
Four categories of program assistance are available through the
REAP:

(1) The REAP Renewable Energy Systems/Energy Efficiency Improvement
Grants Program is designed to assist farmers, ranchers and
rural small businesses that are able to demonstrate financial
need. All agricultural producers, including farmers and
ranchers, who gain 50 percent or more of their gross income
from the agricultural operations are eligible. Small businesses
that are located in a rural area can also apply. Rural electric
cooperatives may also be eligible to apply.

(2) The REAP Energy Audit and Renewable Energy Development Assist
Grants Program is available to eligible entities which include
a unit of state, tribal, or local government; institutions of
higher education; rural electric cooperatives; or a public
power entity. The program is designed to assist farmers,
ranchers, and rural small businesses.

(3) The REAP Feasibility Study Grants Program is designed to assist
agriculture producers (including farmers and ranchers) and
rural small businesses. All agricultural producers who gain 50
percent or more of their gross income from the agricultural
operations are eligible. Small businesses that are located in a
rural area can also apply. Rural electric cooperatives may also
be eligible to apply.

(4) The REAP Guaranteed Loan Program has recently established a new
definition for eligible applicants. All agricultural producers
or rural small businesses are eligible to apply. Agricultural
producers must gain 50 percent or more of their gross income
from their agricultural operations. An entity is considered a
small business in accordance with the Small Business
Administration (SBA) small business size standards NAICS code.
Most lenders are eligible, including national and state-
chartered banks, Farm Credit System banks and savings and loan
associations. Other lenders may be eligible if approved by
USDA.

This program supports a wide range of small businesses, and
technologies can range from wind turbines, to methane digesters, to
geothermal systems. For example, in Altura Minnesota, Pork and Plants
of Altura was awarded a $16,250 grant to build a renewable energy
system. The grant provided sufficient incentive to motivate Pork and
Plants to utilize corn and pellets to provide the heat needed for their
greenhouses eliminating the need for approximately 40,000 gallons of
liquid propane gas per year.
Biorefinery Assistance Program
The Biorefinery Assistance Program (Section 9003) provides loan
guarantees to assist in the development of new and emerging
technologies to develop advanced biofuels. An Interim Rule was
published on February 14, 2011, the Notice of Funds Available (NOFA)
was published March 11, 2011, and the application window closed July 6,
2011. RBS received thirteen applications, requesting over $1.3 billion
in requested funding. We are currently reviewing the applications and
identifying loans that may range up to $250 million.
The Biorefinery Assistance program is the only Federal program that
provides support exclusively to advanced biofuel biorefineries.
Eligible applicants include individuals, entities, Indian tribes, units
of state or local government, farm cooperatives, farmer coop
organizations, associations of agricultural producers, National Labs,
Institutions of higher education, rural electric cooperatives, public
power entities, or various consortia of any of those entities.
Repowering Assistance Program
The Repowering Assistance Program (Section 9004) provides payments
to biorefineries who switch from using fossil fuels to produce heat or
power from renewable biomass. These biorefineries must have been in
existence at the time the 2008 Farm Bill was passed. An Interim Rule
was published on February 11, 2011 and a NOFA was published on March
11, 2011, and the application window closed on June 9, 2011.
This program can provide payments to a biorefinery existing before
June 2008 based on the quantity of fossil fuel the biorefinery is
replacing, the percentage reduction in fossil fuel used by the
biorefinery, and the cost effectiveness of the renewable biomass
system, economic benefit to the community, and the potential to improve
the quality of life in rural America.
Bioenergy Program for Advanced Biofuels
The Advanced Biofuel Payment Program, formerly the Bioenergy
Program for Advanced Biofuels (Section 9005) provides payments to
eligible producers to support and expand the production of advanced
biofuels. Only one producer per refinery is eligible to apply. To date,
almost $30 million in assistance payments have been provided to 141
advanced biofuel producers. On February 11, 2011, an Interim Rule was
published and incorporated a notice of contract proposals (NOCP) for
the 2010 funding in the amount of $80 million. A second NOCP for $85
million was published on March 11, 2011 for the FY 2011 funding;
applications for funding were required to be submitted to RBS by May
10, 2011. This program is vital in supporting existing biofuel
infrastructure and a crucial support to help us meet the mandated
Renewable Fuel Standard (RFS2) which calls for 22 billion gallons of
advanced biofuels by 2022.
An example is Indiana Flex Fuels which received $3,600 in FY 2010.
Though relatively small in capacity--a 5 million gallon a year plant--
the FY 2010 payment and future payments in FY2011 will provide a
financial incentive to biorefineries such as this, which will provide
them with a necessary step towards meeting the nation's renewable
energy needs.
Performance
In 2009 and 2010, USDA assisted nearly 4,000 rural small
businesses, farmers, and ranchers save energy and improve their bottom
line by installing renewable energy systems and energy efficiency
solutions that have the potential of producing or saving a projected
4.67 billion in kilowatt hours--enough energy to power 390,000 American
homes for a year. USDA is the among the largest supporters of biofuels
in the nation and our programs are essential in ensuring a stable
market structure that creates jobs and meets our nation's energy needs
and goals.
Farm Service Agency
Biomass Crop Assistance Program (BCAP)
The Energy Title of the 2008 Farm Bill also authorized BCAP which
is implemented by the Farm Service Agency (FSA). BCAP provides
financial assistance to owners and operators of agricultural and
nonindustrial private forestland who volunteer to establish, produce
and deliver eligible crops for conversion to bioenergy or bio-based
products. Such Commodity Credit Corporation (CCC) funds as necessary
were authorized for BCAP. However, subsequent appropriations bills have
limited the availability of funding.
There are two types of assistance available under BCAP. First,
establishment and annual payments may be available to producers who
enter into contracts to produce eligible crops on lands within approved
BCAP project areas. Generally, crops that receive payment under the
Commodity Title (e.g., corn, wheat, rice, soybeans) and noxious weeds
or invasive species are not eligible for payments. Producers may
receive up to 75 percent of the establishment costs of a perennial crop
and annual payments for up to 5 years for non-woody crops or up to 15
years for woody crops.
Second, matching payments may be available to producers for the
collection, harvest, storage and transport of eligible biomass to
qualified facilities that produce heat, power, bio-based products, or
advanced biofuels from that biomass. To qualify for payment, the
biomass must be an eligible material that also is collected or
harvested directly from the land before transport to the facility, in
accordance with an approved conservation or forest stewardship plan.
Woody biomass must not have a previously existing market and must also
be removed to reduce forest fire threats, disease or insect
infestation, or to restore ecosystem health.
In July 2009, FSA issued a NOFA for the matching payments portion
of the BCAP program and issued the first payment in August 2009. In
February 2010, the authority for payments under the NOFA ended and FSA
published a proposed rule to implement the full BCAP program. The final
rule for BCAP was published in October 2010 and FSA began accepting
applications for BCAP Project Areas.
Early this year, FSA began the sign-up period for farmers seeking
matching payments for the delivery of crop residues to qualified
biomass conversion facilities located in Iowa and South Dakota. Also
this spring, FSA announced the first BCAP Project Area comprised of 39
contiguous counties in Missouri and Kansas for the enrollment of up to
50,000 acres of native grasses, including switchgrass, for
manufacturing into pellet fuels. Just last month, FSA announced four
more BCAP project areas in Arkansas, Missouri, Ohio, and Pennsylvania
to grow giant Miscanthus which is a sterile hybrid warm-season grass to
be converted into bioenergy. Any project area, as part of the project
proposal package, must be compliant with the National Environmental
Policy Act (NEPA), compliance includes environmental screening,
reviews, and may include an environmental assessment or impact
statement at cost to the project sponsor(s).
The 2011 Full Year Continuing Resolution limited funding for BCAP
to $112 million. On April 20, 2011, FSA announced that BCAP Project
Area proposals must be submitted no later than May 27, 2011, to be
considered for FY 2011 funding. Demand for BCAP funding is significant:
FSA received 41 project area proposals from 21 states requesting an
estimated $1 billion to enroll more than 1.5 million acres in dedicated
energy crops. FSA soon will announce the final project area selection
for FY 2011.
Feedstock Flexibility Program (FFP)
The 2008 Farm Bill also established the FFP. Typically, the CCC
nonrecourse loan program offers sugarcane and sugar beet growers the
opportunity to forfeit their sugar loan collateral to CCC as full
satisfaction of the loan with growers keeping the loan proceeds. CCC
later dispenses the forfeited sugar into the marketplace by sale or
donation. FFP was authorized to prevent the accumulation of government-
held sugar stocks that otherwise can impede price recovery by instead
allowing CCC to sell the surplus sugar to bioenergy producers as a fuel
feedstock. Compared to expectations during the 2008 Farm Bill, however,
domestic sugar demand has increased significantly and is expected to
remain strong relative to supplies in FY 2011 and FY 2012. While FSA
does not anticipate an immediate need for FFP during this period, the
proposed rule to implement this program has been drafted and will be
published soon.
National Institute of Food and Agriculture (NIFA)
As the USDA's extramural research and education arm, NIFA has a
number of programs that support fundamental and applied research into
renewable energy and contribute to the USDA role in pursuing our
nation's energy security.
Biomass Research and Development Initiative (BRDI)
The Energy Title of the 2008 Farm Bill reauthorized the BRDI
competitive grants program which is a joint effort between USDA and the
Department of Energy (DOE) to support the development of a biomass-
based industry in the United States. The objectives of the program are
to promote the development of: (a) technologies and processes necessary
for abundant commercial production of biofuels at prices competitive
with fossil fuels; (b) high-value bio-based products to enhance the
economic viability of biofuels and biopower, to serve as substitutes
for petroleum-based feedstocks and products, and to enhance the value
of coproducts produced using the technologies and processes; (c) a
diversity of economically sustainable domestic sources of renewable
biomass for conversion to biofuels, bioenergy, and bio-based products.
Projects supported through this program must take into account a life
cycle perspective that takes into account the environmental, economic
and social implications of the proposed technologies. The program has
been effective in developing multi-institutional and multi-disciplinary
consortia to increase technology transfer and commercialization.
Biodiesel Fuel Education Program
The Biodiesel Education program (Section 9006) was created to help
the biodiesel industry grow by providing technical information about
this new fuel to a broad spectrum of U.S. consumers and producers. This
program is operated through cooperation between the Office of the Chief
Economist (OCE) and NIFA. Education materials and outreach activities
deliver information on the environmental benefits of biodiesel, and
expert guidance is provided on producing biodiesel, maintaining fuel
quality, and insuring fuel safety. Since the Program began in 2003, the
U.S. biodiesel industry has grown from just a few firms to over 150
firms today. Awareness of biodiesel among Americans has increased
markedly over the past 10 years--consumer awareness of biodiesel has
grown from 27 percent in 2003 to 86 percent today. At the onset of the
Program, many engine manufacturers were apprehensive about using
biodiesel, but now nearly 60% of U.S. manufacturers support the use of
biodiesel blends in at least some of their equipment. While the Program
has been a major success, education is needed more than ever, with the
biodiesel industry ramping-up to meet record production levels, set by
the RFS2 mandates.
Agriculture and Food Research Initiative (AFRI)
AFRI is NIFA's flagship extramural competitive grants program and
has a Sustainable Bioenergy Challenge Area which seeks to facilitate
the establishment of regional systems for the sustainable production of
bioenergy and biobased products. This challenge area funds projects
that contribute significantly to reducing the national dependence on
foreign oil; have net positive social, environmental, and rural
economic impacts; and are integrated with existing agricultural
systems. The development of regional bioenergy systems will result in
viable commercial options that can be rapidly deployed to produce
advanced biofuels as well as value-added co-products to diversify
product options, reduce risks, and bridge to full scale advanced
biofuel production. A priority of this challenge area is to foster
coordinated plans for developing regional systems for the sustainable
production and distribution of bioenergy and biobased products with net
positive social, environmental, and economic effects. It is expected
that the Regional Bioenergy Coordinated Agricultural Projects (CAPS)
will network with and leverage existing efforts within USDA, university
research, education, and extension, other Federal agencies, and the
private sector, and take multidisciplinary and transdisciplinary
approaches.
Another priority in the Sustainable Bioenergy Challenge Area is to
develop the bioenergy workforce. The field of bioenergy and biobased
products holds potential for new technologies and entrepreneurial
opportunities that may substantially change regional rural economies.
This emerging bio economy will demand a new workforce and will
challenge institutions to produce graduates who have the
multidisciplinary and problem solving framework to meet this demand.
This new economy will require a trained and competent skill set that
meets workforce needs all along the bio-energy value chain encompassing
a wide range of technical, educational, socioeconomic, and scientific
competencies. Projects supported through this program are stimulating
the K-12 and baccalaureate and master's level education system to
produce students who are science and math based independent thinkers
and investigators, steeped in interdisciplinary coursework who can
identify solutions to problems and opportunities, work creatively in
teams and present solutions in a clear and concise manner, and who have
an interest in America's bio-energy and bio-based products future.
Sun Grant Initiative Program (SGI)
Authorized under the Research Title of the farm bill, SGI began 10
years ago with support from USDA to harness the capacities of the land-
grant universities to develop bioenergy and biobased products through
regional collaboration, coordinated through five regional Sun Grant
Centers. With support from USDA/NIFA, DOE and the Department of
Transportation (DOT) the SGI has over 130 field studies on biomass
feedstocks currently underway with locations in more than 75 percent of
the states in the nation. SGI research has been a catalyst for
attracting industry investments that have resulted in formation of new
businesses and creation of new jobs in the bioenergy sector. For
example, in the South East SGI Region, SGI supported projects that led
to the DuPont-Danisco joint venture partnership with the University of
Tennessee and Genera Energy to open a demonstration scale facility
producing lignocellulosic ethanol. Over 7,000 acres of switchgrass are
in production and under contract to support this demonstration
conversion facility, which is being utilized to develop a commercial
scale facility by 2013 that has a production capacity of 25-50 million
gallons of ethanol. In the North Central Region, Sun Grant-supported
research led to DuPont-Danisco deciding to locate a cellulosic ethanol
production facility in Iowa. Similar collaborations are underway in
each SGI Region with Sun Grant-supported research leading to
commercialization of new feedstock varieties for production of advanced
biofuels.
Plant Feedstock Genomics Program
DOE's Office of Biological and Environmental Research has teamed up
with NIFA's Agriculture and Food Research Initiative to fund projects
that accelerate plant breeding programs and improve biomass feedstocks
by characterizing the genes, proteins, and molecular interactions that
influence biomass production. DOE and USDA initiated this competitive
grant program in 2006 to support fundamental research in biomass
genomics. Ultimately, the research seeks to develop and demonstrate
environmentally acceptable crops and cropping systems for producing
large quantities of low-cost, high-quality biomass feedstocks. Specific
focus areas include: elucidating the regulation of genes, proteins, and
metabolites to for improved productivity, processing, or growth
characteristics in marginal environmental conditions, such as drought
or salt tolerance; developing novel technologies to facilitate the
analysis and manipulation of cell wall structure and composition for
both breeding and basic research; using genomic approaches that lead to
the identification of genetic markers enabling more efficient plant
breeding or manipulation; and enhancing fundamental knowledge of the
structure, function, and organization of plant genomes leading to
improved biomass characterization.
Agricultural Research Service (ARS)
ARS is USDA's principal intramural research arm and conducts basic
research to support the commercial production of dedicated feedstocks
for the making of advanced biofuels and bioenergy. The research is
focused on four primary objectives: increase biomass production
efficiency to improve grower profits and reduce biorefinery transaction
costs; optimally incorporate biomass and other dedicated feedstocks
into existing agriculture-based systems; address the uncertainties of
expanded feedstock production up-front to avoid negative impacts on
existing markets and ecosystem services; and develop and find new ways
to utilize value-added coproducts to economically enable commercially
preferred biorefining technologies. Region-based production systems are
being developed for dedicated energy crops including perennial grasses,
oil crops, energy cane, and biomass sorghum.
ARS bioenergy research is conducted through the regional USDA
Biomass Research Centers, which include the Forest Service, and is
coordinated with NIFA's AFRI Sustainable Bioenergy Coordinated
Agricultural Projects (CAP) grant program, and the USDA-DOE jointly-
funded BRDI grants. ARS also partners with the DOE Plant Feedstock
Genomics for Bioenergy competitive grant programs. These combined
efforts are done in partnerships with universities, other Federal
agencies, states, and private companies and are designed to help
accelerate the commercial development of biofuels, biopower, and other
bio-based products from dedicated feedstocks produced on our nation's
farms.
Economic Research Service
The Economic Research Service (ERS) conducts rigorous and objective
research on the economic and environmental implications of agriculture-
based bioenergy production. ERS research on bioenergy focuses on how
policy and market developments affect commodity markets, land use, the
environment, rural development, and consumers. Core objectives include:
examining the relationships between bioenergy production and farm and
retail food prices; developing long-term projections of domestic and
international agricultural markets, taking account of changing
policies, and macroeconomic events that affect markets for biofuels;
examining the effect of biofuel production on rural employment and
wealth creation; and analyzing the effect of increased biofuel
production on environmental quality and use of scarce natural
resources.
ERS research on bioenergy is being enhanced by expanding the
capabilities of in-house economic models, geo-spatial analysis tools,
budget generators for dedicated energy crops, and by establishing
partnerships with universities and other Federal agencies. ERS works in
conjunction with the National Agricultural Statistics Service (NASS) to
collect and analyze unique data on farm characteristics and production
practices from the Agricultural Resource Management Survey. NASS data
on agriculture is essential at every stage of infrastructure
development, from the initial policies that drive basic research, to
the establishment of markets and feedstock production needed to sustain
this new industry.
Departmental Management
Biobased Markets Program
The Energy Title of the 2008 Farm Bill established the Biobased
Markets Program, known as the BioPreferred' Program, and
USDA is the lead agency responsible for its implementation. This
biobased products program helps to create green jobs in rural
communities, adds value to agricultural commodities, decreases
environmental impacts, and reduces our dependence on imported oil.
USDA's goal is to increase Federal procurement of biobased products
government-wide and develop government and public markets through a
voluntary labeling program.
USDA has promulgated BioPreferred' program guidelines
and six rounds of regulations designating categories of biobased
products for preferred Federal procurement. As a result, there are now
50 designated product categories. A seventh designation rule with 14
product categories should be promulgated later this month. When Round
seven is published, 64 categories and almost 9,000 products will be
approved for preferred Federal procurement. USDA initiated a voluntary
labeling program earlier this year; over 430 products from 150
companies have been certified to carry the USDA Certified Biobased
label to date. In FY 2010, 88 percent of all applicable USDA contracts
included biobased clauses or purchases, up from 80 percent in FY 2008
and 84 percent in FY 2009. In addition, there are over 20,000 biobased
products and the number and types of products continue to grow.
Natural Resources Conservation Service (NRCS)
NRCS formally identified energy as a resource concern in 2010 and
substantial efforts are being made to enhance the Agency's capacity to
work with producers in conserving energy. All of the Agency's
conservation practice standards were evaluated for their potential
contribution to address energy resource concerns and many were revised
to incorporate energy as a purpose for performing the conservation
practice. Training efforts are underway to ensure that agency employees
are prepared to assist customers with energy conservation efforts. A
series of agriculture-focused energy fact sheets have been issued and
more are under development. In addition, the suite of producer-focused
web-based Energy Estimators for animal housing, irrigation, nitrogen,
and tillage are being updated to reflect recent information and
technologies. These tools provide a simple way for producers to
evaluate potential savings from implementing energy conservation
practices.
Environmental Quality Incentives Program (EQIP)
The Environmental Quality Incentives Program (EQIP), administered
by NRCS, has been helping producers in addressing natural resource
concerns since 1996. Conservation practices and systems implemented
under EQIP have helped producers to achieve environmental objectives,
and in some cases to have a beneficial effect on energy resources. For
example, producers have reduced energy use through conservation
tillage, which requires fewer passes over a field; irrigation water
management that conserves water and saves energy; and improved nutrient
management, which can include adoption of anaerobic digesters. Manure
from the anaerobic digesters provides a reliable level of nitrogen
fertilization and can be used to replace commercial fertilizer. When
stored and handled properly, animal manure loses less nitrogen and can
be applied with confidence. NRCS can provide information and
considerations for designing and constructing appropriate manure
handling facilities. Methane produced by the manure can allow biogas
generators to produce electricity and heat that producers can use
onsite. Also, the potential exists to sell the excess electricity to a
local electric grid.
The Conservation Title of the 2008 Farm Bill added energy
conservation as a purpose of EQIP and authorized the NRCS administered
program to be used for conservation plans that further energy
conservation and other purposes of the program. The conservation
practice associated with plan development under this authority is known
as a ``conservation activity plan'' (CAP). Two Agricultural Energy
Management Plan (AgEMP) CAPs have been developed for energy
conservation, one focusing on operation headquarters and one focusing
on farm landscape energy conservation.
These AgEMPs for the farm headquarters and farm landscape contain
the on-farm energy audit that establishes a baseline of total energy
consumption of the farm or ranch operation and also provides
recommendations of energy conservation and efficiency measures that the
producer can prioritize and implement on their agricultural working
lands. For FY 2011 and as of June 15, 2011, NRCS has planned 364 AgEMPs
for headquarters and landscape energy audits, obligating $715,761 in
financial assistance funds. Another 133 AgEMP headquarters audits have
been completed, with producers receiving $237,489 in financial
assistance payments.
The actual benefits from an on-farm energy audit (AgEMP) to the
producer and the environment are achieved fully when the on-farm energy
audit recommended measures are implemented. Four states are already
using conservation practice standard 374 for On-Farm Equipment
Efficiency Improvements to accelerate implementation. As of June 3,
2011 there were 20 planned and four completed contracts that included
this conservation practice standard, totaling nearly $580,000.
Conservation Stewardship Program (CSP)
NRCS offers financial assistance to producers to enhance their
conservation activities, through the CSP including energy conservation.
In FY 2011, there are seven CSP enhancements for energy, ranging from
fuel use reduction and renewable energy use to on-farm landscape energy
audits and variable frequency drive motors. In FY 2010, program
participants applied fuel use reduction on over 206,000 acres and added
more than 6,500 systems or units using renewable energy, such as solar
powered electric fence charging systems and renewable energy powered
pumping plants.
Conservation Innovation Grants (CIG)
NRCS also encourages energy technology innovation and conservation
through Conservation Innovation Grants (CIG). Through this competitive
process, NRCS awards grants to demonstrate innovative technologies for
more effectively managing natural resources while leveraging Federal
resources. CIG enables NRCS to work with other public and private
entities to accelerate technology transfer and adoption of promising
technologies and approaches to address some of the nation's most
pressing natural resource concerns.
In FY 2010, over $5.5 million was awarded for 12 projects working
in 29 states to demonstrate innovative energy technologies or programs
that range from on-farm energy audits to anaerobic digester
technologies and sustainable biomass production. Of this, nearly $\1/2\
million was awarded in two grants for innovative energy conservation
projects. By comparison, between FY 2004 and FY 2009, there were four
national CIG grants for innovative energy conservation projects
totaling $1,361,109.
Conclusion
As these USDA programs and efforts show, in addition to its
environmental, energy security, and national security implications,
renewable energy is an important source of jobs, economic growth, and
tax revenue in rural communities across the country. USDA recognizes
that environmentally responsible renewable energy and energy
conservation provide opportunities for economic growth and prosperity
across rural America and the nation as a whole. We are working to
ensure that our programs meet and exceed the challenge of promoting
economic growth and prosperity.
Thank you, again Mr. Chairman and Members of the Subcommittee. With
your help, we look forward to continuing to create jobs and build a
cleaner, more secure, more sustainable, and domestically-produced
energy sector.

The Chairman. Thank you, Mr. Garcia.
The chair would like to remind Members that they will be
recognized for questioning in the order of seniority of Members
who were here at the start of the hearing, and after that,
Members will be recognized in order of arrival. I appreciate
the Members' understanding.
I am going to proceed with my 5 minutes of questions.
Now, my first question is directed to Chief Tidwell.
Chief, the 2008 Farm Bill required each state to conduct a
state-wide assessment of forest resource conditions, threats,
trends, priorities to receive Federal forestry assistance
funds. What is the status of this assessment?
Mr. Tidwell. Thank you. All of the states and the
territories have completed their assessments and developed
their forest action plans.
The Chairman. And the Forest Service, where are you in
terms of analysis of that?
Mr. Tidwell. Well, we are looking at that for a couple of
opportunities to help establish the priorities about where is
the best place in this country to be using the funds. And it
really helps the states that they can identify their priorities
and where is the best place for us to use our limited funds.
We are also seeing that we have--we are seeing states
starting to work together with their neighboring states to be
able to put together their proposals as to their requests for
funding.
The other key part of this, too, is it is going to be, it
is going to be very beneficial, as we move forward with doing
the forest planning on our National Forests and grasslands,
these assessments, these action plans, are going to be a key
part of the information that we are going to use as we move
forward with revising our forest plans.
The Chairman. All right. In your testimony, you have
identified, obviously, a very important issue, invasive
species. And one much your predecessors, Chief Bosworth, once
suggested that invasive species are one of the main threats to
healthy forests.
What are your suggestions on altering the structure and
financing programs related to invasive species in our
forestlands?
Mr. Tidwell. Well, with our Forest Health Program, I
believe it is essential for us to be able to deal with the
invasives that we have currently and the invasives that are
going to be coming into this country.
That program provides the ability for our states to be able
to conduct the surveys, be able to monitor the infestations so
we can do the best job that we can to either stop, eradicate
these infestations or at least be able to deal with them.
Without this program, I think it would be very difficult for us
to be able to track and monitor this, especially on a national
scale. This program allows us to be able to look beyond the
borders, beyond the private land borders, beyond state borders,
and I believe provides an efficiency that could not be
duplicated if, say, each state was having to do this on their
own.
The Chairman. I appreciate that.
Administrator Canales, thanks for your overview on the
energy titles--and the energy title. Specifically I want to
look at Section 9003, the Biorefinery Assistance Program. How
many awards have been made through the Biorefinery Assistance
Program for the construction of new biofuel facilities and how
many of these were for commercial cellulosic facilities?
Ms. Canales. Thank you, Mr. Chairman.
Our first award was made in 2010, and that project is in
Georgia. Our second award was made for three separate projects
during this fiscal year, in January of this year. Those were
all conditional commitments, and those are involving projects
to occur in Florida, Mississippi and Alabama. So, those
projects are not under way at this point in time.
The Chairman. Just for clarification, because I think that
is helpful for all of us here as we prepare to look at this
title within the next farm bill, how does the Biorefinery
Assistance Program differ from the programs administered by the
Department of Energy that fund the construction of renewable
fuel facilities?
Ms. Canales. They defer--or they differentiate because
these technologies are all first of a kind. They are not off-
the-shelf technologies and, most importantly, in regard to
USDA, there is some element usually of a relationship to
agriculture. What we are trying to drive at is gaining the
opportunity to get this loan guarantee to try and drive
private-sector dollars into the rural communities
predominantly.
Each one of those projects all have some sort of feedstock
that has some agriculture tie, and also, frankly, our
experience has been in operating a loan guarantee program that
is different from Department of Energy.
The Chairman. Okay. Thank you.
Now I recognize Mr. Holden for 5 minutes.
Mr. Holden. Thank you, Mr. Chairman.
Mr. Garcia, as you know, there has been a lot of and
anxiety regarding the implementation of this BCAP program. Can
you tell me now that it has been implemented what the process
was like, how did you approve projects and did you work with
other agencies during that process?
Mr. Garcia. Thank you, Mr. Holden.
I would start off by saying that the BCAP program has been
a challenge to administer. It is a very new program. It is a
pioneering program that FSA is charting new territory that we
had never explored before. FSA historically has been working
with the conventional crop production, and this new energy
program we were just not very familiar with. So we did take the
time to consult with other agencies.
Mr. Holden. What agencies did you consult with?
Mr. Garcia. With other USDA agencies, such as Agricultural
Research Service, Animal and Plant Health Inspection Service,
that were involved already with some research on these energy
crops. And, therefore, we started establishing the program
provisions for this program.
We have set a structure here a few months ago since we were
approved for the $112 million that I mentioned earlier. We have
set a structure, and we have involved expertise from other USDA
agencies in order to come up with a process to review the
project proposals at hand. We received over 40 proposals, and
we expect to make a decision on those proposals within the
month.
Mr. Holden. And you have mentioned four projects that have
recently been approved, and you mentioned one in Pennsylvania.
What crop is that plant using, and where in Pennsylvania?
Mr. Garcia. That particular project involves Miscanthus,
which is a new energy crop. It is planted through rhizomes, and
it involves over 250,000 acres of establishment in
Pennsylvania, Ohio, Arkansas and Missouri.
Mr. Holden. So it is in western Pennsylvania.
Mr. Garcia. I am sorry?
Mr. Holden. The location.
Mr. Garcia. Excuse me, may I confer?
Mr. Holden. Just curious. That is okay.
Mr. Garcia. It is in western Pennsylvania.
Mr. Holden. Thank you.
Ms. Canales, the Georgia facility, that is operational now;
correct?
Ms. Canales. It has been, sir.
Mr. Holden. And how long was it in operation?
Ms. Canales. About 3 months.
Mr. Holden. And what is its feedstock?
Ms. Canales. Biomass, woody biomass.
Mr. Holden. And the other projects, I think you said,
Florida, Mississippi and Alabama, is that correct?
Ms. Canales. Yes, sir.
Mr. Holden. You said that was conditional, conditional on
financing.
Ms. Canales. Well, conditional commitment is a part of our
due diligence process and that is the review. And so the part
about finance is to ensure that their bank, because the
applicant is actually the bank. The applicant is the bank for
the loan guarantee, and so, yes, it is the formalization of
financing.
Mr. Holden. And what was the exposure on the Georgia
project for the loan guarantee?
Ms. Canales. I apologize, I am sorry?
Mr. Holden. The Georgia project, how much was that project?
Ms. Canales. Well, $80 million was going to be total, but
we sent $50 million. It was two phases, $50 million and then
$30 million would have been the second phase.
Mr. Holden. Okay.
Mr. Tidwell, you know from the Energy Independence and
Security Act, this Committee is very concerned about the
definition of biomass.
What types of challenges are you facing on forestlands with
that definition and several other definitions that are not
consistent in trying to manage the forestlands?
Mr. Tidwell. The challenge that we are having in America
now is to be able to get the restoration work done on our
National Forests, which includes the removal of not only saw
logs but also the removal of a lot of smaller diameter material
to reduce the biomass.
We need to look for every opportunity we have to be able to
encourage the use of that material for beneficial use, whether
it is any type of biomass utilization or for wood energy.
So, as far as we think about definitions, we want to make
sure that they are flexible and that they will encourage the
restoration work that needs to be done on these lands. And so
that is the thing that we are interested in. It is just having
a flexibility in there so that this small-diameter material
that doesn't really have any use, that we can be able to find
ways to encourage that to be used for beneficial use instead of
having to pay someone to just pile it up in the woods and then
burn it and put smoke in the air.
Mr. Holden. My time has expired, Mr. Chairman.
The Chairman. I thank the gentleman.
I now recognize the gentleman from Wisconsin, Mr. Ribble,
for 5 minutes.
Mr. Ribble. Thank you, Mr. Chairman.
And thank you to the panel for spending some time with us
this morning.
Chief Tidwell, I am from Wisconsin, and the Chequamegon
Nicolet National Forest is in my district. But the forest plan
is not being fully implemented, and it is hurting our local
communities, particularly small rural communities, particularly
in northeast Wisconsin, and, quite frankly, our state as a
whole.
I am also concerned very much about how it is affecting
what once was a very vibrant timber industry in Wisconsin.
What are the barriers to fully implementing your plan?
Mr. Tidwell. A forest plan lays out the desired conditions
and lays out the expectation of what can be produced off these
lands.
A forest plan itself doesn't establish any targets along
those lines, so it more is a document that allows. There is no
question that we need to do more work, not only in your state
but across the country, to be able to do more restoration work.
The things that we are focused on to be able to build some
efficiencies is to be able to look at much larger landscapes.
We used to look at projects that were sometimes 500 acres,
maybe 1,000 acre projects. What we are now doing is moving
forward to be able to look at much larger landscapes, things
like 50,000 acres, 100,000 acres at a time. Do the analysis on
that so that we can move forward with the restoration work.
The other key component of this is to be able to have a
long-term contract in place so that purchaser knows that not
only do they have work this year but they are going to have
work next year and the year after, and that is through our
Stewardship Contracting Program that I am hopeful we will be
able to continue to be able to have that program.
That is going to be a key element, to be able to encourage
folks to make additional investments and for us to be able to
actually increase the amount of work that we need to do in our
forests.
Mr. Ribble. Okay, thank you. I would encourage you to move
with as much haste as you possibly can. I mean, it is a
constant problem for us, and the problem has lasted a long
time. And at some point, we have to stop saying we are working
it, we are studying it, we are analyzing it and finally get
something moving. There is just a lot of frustration back home.
Along a similar line and staying with our forests here,
recently the Ninth Circuit Court overturned an EPA regulation
and ruled for the first time that forest roads are point
sources and that using them for timber harvesting requires
Federal permitting.
Earlier this year, I joined many of my colleagues,
including my friend, Mr. Schrader, in sending a letter to the
EPA raising some concerns in response to this decision. Given
your experience, can you tell us whether or not best management
practices work or whether or not they are affecting--or whether
or not they are effective at maintaining water quality?
Mr. Tidwell. Well, I am definitely aware of the court
decision that you are referring to.
You know, our experience with our best management practice
is that when we followed those, that they do provide the right
restrictions in place to ensure clean water. There is no
question that--in fact, I have never met anyone that wasn't
supportive of providing clean water.
So I think it is--that is very important.
You know, the best management practices that we use on our
National Forest System lands along, with the environmental
assessments that have to be completed before we do any of our
work, I do believe that we are doing a good job to be able to
minimize any impact to clean water.
It is essential that, as we move forward, that we be able
to find a way to, of course, provide for clean water, and best
management practices has been one tool that we have been using
in the past. It is also my experience that at least every state
that I have worked in does also have best management practices.
There is a difference between the states, but it has been a
very good approach in the past.
Mr. Ribble. But what is the permitting requirement--what
type of impact is it going to have on the Department's ability
to conduct restoration work?
Mr. Tidwell. Well, we would have to see what process was
put into place.
You could design a permitting process that would not
necessarily have any impact, it would be another step. Until
that decision is made and we actually see what process would be
put into place, I probably can't answer that. But I tell you I
am confident that the work that we are currently doing,
following the best management practices, will provide for clean
water.
And so if there is a permit process in place that we will
be able to meet that requirement.
Mr. Ribble. Okay. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman.
The chair now recognizes the gentleman from Minnesota, Mr.
Walz, for 5 minutes.
Mr. Walz. Thank you, Mr. Chairman, and the Ranking Member
for holding this audit and this hearing, and thank you all for
being here with us.
I would like to talk just a little bit, Ms. Canales, on the
REAP program, it is obviously very important in Minnesota. I am
deeply concerned with the zeroing out of this program at a time
when America's security is dependent on us becoming energy
independent. I have seen what that program does in Minnesota,
creating literally thousands of jobs, dozens of large and
smaller projects, creating energy independence at home.
And it strikes me that we are caught in a false dichotomy
here that we are going to figure out how to grow our economy
either by cuts or by spending increases. And I think the
problem is we continue to try and divide up that pie as we are
missing the most obvious answer here is grow the pie. And
growing the pie on energy is what is happening in southern
Minnesota.
So I wanted to ask you just a couple of questions about
this.
The critics of REAP claim--and as it was zeroed out--I
wanted to thank my colleague from Nebraska, Mr. Fortenberry,
who is also on this Committee, for getting a little bit of
money back in this program--that it is duplicative, that it,
once again, we are trying to squeeze efficiencies, which all of
us agree on.
Can you explain the unique nature of the REAP program and
why, at least my constituents, I would argue, consider it to be
highly effective and a great return on our dollar? If you could
help me understand that a little bit.
Ms. Canales. Thank you, sir, and, yes, there has been a
considerable amount of activity in your State of Minnesota and
the Rural Energy for America Program, REAP, is a program that I
believe is the closest to the consumer, that is something that
I have always put forward because of the fact the that it goes
back to the fundamentals.
For us, it is businesses in rural America, and it is also
producers. They are business owners, farmers are business
owners. Therefore, it is an opportunity for them to become
energy efficient. It is an opportunity for them to also
generate fuel energy. I have seen it myself, a methane
digester, where a group of dairy farmer operations can come
together--you have that on the East Coast; you have that
certainly in your area in middle America, and you have it in
the West Coast--in which the livestock produces waste, and that
waste can go towards energy production.
So this program has also been a growing program because it
is a business opportunity, and we do not finance the entire
project. There is a contribution; this is all leveraging.
So it is a Federal incentive for that private business
owner to determine whether this makes good business sense for
me. It has just become something that has gained a lot of
attraction that has people trying to reduce their energy costs
for their business purposes.
Mr. Walz. Well, I would mention that, too. I know that
looking at the statistics here with Minnesota, trailing only
Iowa in this, that it is about $5.8 million in grant amounts,
but that the amount we leverage is over $16 million,
contributing to $24 million in growth, job creation and all of
that.
My question is, if we are trying to go save money in the
budget, is defunding REAP in your opinion the best way to try
to figure out how to save money?
Ms. Canales. Sir, what we have found is that this is a
program that brings in, draws in, additional funding. So with
that Federal seed dollar, be it a grant dollar or, also a loan
guarantee, what we do is try and engage more banks to do
lending in rural America. So that becomes a very important
product for that bank.
Farm Credit Administration and numerous banks throughout
the United States are seeing that this loan guarantee is an
attractive product for them. Then they can take on that
particular loan so that brings in its private financing
mechanism using that government incentive.
Mr. Walz. Well, I appreciate that. As my time is winding
down, I would just, on BCAP and things, as we move to the next
generation, I am a strong supporter that we are getting there.
I have a small company called Easy Energy Systems in our
district that is working on what I think is the future on
biofuels, not the large 100 million gallon static plants, but a
mobile 1 million gallon plant that has already been sold to
India, that we are able to plop down and fuel small villages on
tapioca remains or whatever the product might be as the
biomass. And I am just fearful now we are on the cusp of that,
that this absolute zeroing out and decimating energy, energy
products, is going to end those types of things.
Mr. Garcia, I will wait till my time comes back around to
hear a little on BCAP, so thank you.
The Chairman. I thank the gentleman. I recognize the
gentleman from Florida, Mr. Southerland, for 5 minutes.
Mr. Southerland. Thank you, Mr. Chairman.
Mr. Tidwell--well, first of all, thank you to all of you
for appearing before us today.
My question is regarding, I would like to ask you, Mr.
Tidwell, tell me, I think I heard just a few moments ago you
make the statement that a forest plan doesn't establish harvest
targets; is that correct?
Mr. Tidwell. That is correct.
Mr. Southerland. So and I think in your written testimony,
the Forest Service manages 190 million acres of National
Forest; is that correct?
Mr. Tidwell. That is correct.
Mr. Southerland. And you have no established targets
established for the National Forest?
Mr. Tidwell. We have targets every year based on the budget
that we receive, and that produces--and then we are--we do have
a target every year.
Mr. Southerland. Okay. Well, in one particular National
Forest in my district, we have a six percent mortality rate and
a 3.5 percent harvest rate. Is that acceptable?
Mr. Tidwell. No, I believe we need to be doing more work on
that forest and almost every forest in this country.
Mr. Southerland. And what kind of work?
Mr. Tidwell. We need to be able to get in there and do work
to restore the health of these forests.
Mr. Southerland. No, wait a second. Restoration, okay if
you have a mortality rate of six percent and you have wood that
is rotting----
Mr. Tidwell. Right.
Mr. Southerland. Do you need to study that a little more?
Mr. Tidwell. No, no. We need to do--when I talk about
restoration, it is actually to go out there and remove the
biomass from the landscape, whether it is the disease, infected
trees, to thin out the stands so that they are more resilient
to be able to deal with the stresses, whether it is insect and
disease, whether it is an invasive, whether it is fire. Those
are the things, why we need to be able to do more work on the
landscape to make sure these forests--we maintain the forest
health, that these forests are resilient to the stressors that
we are dealing with today.
Mr. Southerland. But, sir, what you are telling me is not,
in reality, happening.
What you are saying that you need to do, you have forests--
I mean, you have companies that are dying on a vine that want
to get in these National Forests that the Services have
basically turned into national parks now. This Administration
speaks a lot about helping rural communities. Well, the rural
communities in my district, they just want to work. They want
to work.
And so I hear a lot about restoration. I hear a lot about
studies. I hear a lot about planning. Just let the people go in
and do what you just said, under testimony, needs to happen.
Why is that not happening?
Mr. Tidwell. Well, actually, over the last year, we treated
over 3 million acres.
Mr. Southerland. Three million of 193 million acres that
you, really, that is like throwing an ice cube at the sun.
Mr. Tidwell. Well, it is the most that we have treated in
many years.
Mr. Southerland. The most, so we have been incompetent for
many, many, many years.
Mr. Tidwell. No, I disagree. I respectfully disagree with
that. I do acknowledge that we need to be doing more work on
the landscape. We need to be able to find ways so that that we
can do larger projects, that we can have more long-term
contracts in place that encourage the infrastructure, to be
able to do this work.
So I agree with you we need to be doing more work. That is
one of the things that we are looking for.
Mr. Southerland. And that is all the American people, Mr.
Tidwell, are wanting to do, more work. But I think, and I
respectfully disagree with you, because I know people that are
losing everything they have, everything, sir, everything, and
they don't want to hear about the studying, the analysis, the
restoration plans; they want to restore.
Because I also know that if you want to restore a healthy
forest, you have to go in and you have to thin it. And down in
the South, we invented controlled burning. We understand fire.
You talk about burn it and just put smoke in the air; that has
a good purpose for a healthy forest. And it just bothers me
that there is stonewalling, I believe, because if you have 193
million acres and you do not have a harvest plan and a harvest
target, that tells me that you are not, you are not managing
properly.
And the statistics, the data, the raw data supports what I
just stated.
Mr. Tidwell. I agree with you we need to be doing more
work. Every National Forest has a, basically, we do set a cap
of what is sustainable, about how much biomass can be removed
off of that National Forest over a 10 year period, that is kind
of the cap based on the planning. The amount of work----
Mr. Southerland. For the American people, when you say
biomass, just for the American people, are you talking about
wood?
Mr. Tidwell. Yes.
Mr. Southerland. Okay, let's just say wood, timber. Okay.
You don't have to make it go into biomass?
Mr. Tidwell. No, when I am talking about biomass, it
includes the saw logs, the material that is used for pulp and
paper. It is also the smaller residual material that also needs
to be removed.
In addition to the prescribed burning that we have to do,
especially in our southern forests, where we actually do more
burning there than any parts of the country.
Mr. Southerland. Well, you can tell I am passionate about
this, okay, because there is a sense of urgency. Because when I
go home, okay, and people are losing their jobs and they are
losing everything they own, I don't see that when I come to
Washington, D.C., and I represent them, sir. And I just think
we should be doing better. We do agree on that.
Mr. Tidwell. I do agree with you.
Mr. Southerland. I yield back.
The Chairman. I thank the gentleman.
I now recognize the gentlelady from Maine, Ms. Pingree, for
5 minutes.
Ms. Pingree. Thank you, Mr. Chairman.
Thank you for your testimony this morning. It has been very
interesting, and I appreciate the work that you have been doing
for us and briefing us on all of this.
Ms. Pingree. Ms. Canales, thank you for your background and
interesting information.
I just have a couple of questions from my own district in
Maine. One is, there seems to be considerable opportunity to
support development of small-scale, cellulosic-based biofuel
systems. Such systems could take advantage of waste biomass at
smaller scales, avoiding the economic dilemma posed by hauling
low-grade materials long distances and providing a mechanism to
address local energy needs. The idea is it is just more
efficient and it could solve some of the problems of areas. How
might the existing USDA programs be tailored to pursue this
opportunity?
Ms. Canales. Thank you, and I have visited your state as
well, Representative. And indeed between the beauty, you have
the natural resources that could be utilized for some of these
programs.
Of course, your office works very closely with our state
office and State Director Virginia Manuel, who is there in
Maine--what I would advise is that for prospective businesses
who want to engage in these programs is to work very closely
with our state offices. That is part of our delivery system.
In regards to what you are describing, you do not have to
be a large-scale business. In fact, predominantly and certainly
regarding the Rural Energy for America Program, it is small
business ownership. And those projects can be $100,000,
$500,000, a million dollars, just depending on what the needs
are for that particular business. So I would just offer to you
that that is part of how we would proceed with what you just
described.
The other part to it is that I would advise strongly in
working with local leadership, we can work with them to do an
energy assessment. People need to know what do we have
available? Every community has potential feedstock. That is how
we also pursue this.
We have an energy coordinator that is designated in every
state for rural development; and that energy coordinator is
also dedicated to working specifically on these programs. The
next step would be working with you to provide information to
these business owners to see what best suits their needs.
Ms. Pingree. Great. Thank you.
We do enjoy working with Virginia Manuel, and she does a
great job for our state. And I do think she is very open to
thinking of ways to help some of our small producers and do
things that allow people to use the Program in ways that allow
for less transportation and a variety of things. So I would be
happy to work with you more on that.
Mr. Garcia, I just want to talk briefly about the pellet
industry, which is something that is of interest in our state.
We have the most oil dependent state in the nation and a lot of
seniors and a lot of people in rural areas who are very
interested in renewable energy and who deal every year with our
cold temperatures and expensive fuel costs, and so we are
always looking for ways to do more with that. And I have a
question around that.
Given that our pellet industry plays a major role in
reducing heating oil consumption, is the production of wood
pellets from the removal of excess low-value woody biomass
being provided adequate support under programs like BCAP for
the purposes of incentivizing these types of best forest
management purposes?
Mr. Garcia. Thank you for your question.
I may have to get back to you with that to the
Subcommittee. That will probably take some research on our
part, but we will be more than happy to provide you with that
information. I apologize for not having that information
readily available to answer your question.
But as far as the Farm Service Agency, we are working
closely--under the BCAP Program through matching payments--
through the matching payment portion of the BCAP Program and
also looking at the particular project proposals that could
result in the development of fuel pellets to help our energy
situation out there.
Ms. Pingree. Great, and I am happy to get together with you
on that. It is a growing industry in our state; and, obviously,
wood and wood products and the management of our forests is a
big issue for us. But this is also a growing fuel product, and
we want to do everything we can to help our industry and also
help our residents afford the cost of fuel.
Thank you for your work.
I yield back.
The Chairman. Thank you.
I recognize the gentlelady from Alabama, Mrs. Roby, for 5
minutes.
Mrs. Roby. Thank you, Mr. Chairman, and I apologize for
jumping up and down.
Mr. Tidwell, for just a minute, your testimony highlights a
number of programs that are important to private forest owners,
like the almost 400,000 family forest owners in my home State
of Alabama. And while I understand the value of these programs,
another key program that is incredibly important for both the
conservation and forest products industry in Alabama is the
Forest Inventory and Analysis Program; and it helps us
understand the conditions and the trends in our forests, where
we have insect and disease threats, how much fiber we have in
our forest products. Are you making progress with FIA? Have you
fully implemented this program as directed by the previous farm
bill?
Mr. Tidwell. We are making progress. And our FIA Program is
just essential, especially to the private landowners, to be
able to understand what is occurring not only on their land but
throughout their state. It helps industry to be able to make
decisions about where to make investments. It is really
essential for us as we, when folks are asking us about is this
a place for maybe an opportunity for a pellet facility, we have
that data. We can actually show how much material that needs to
be removed off of both the private land and also our public
land. So we are making progress.
A few years ago, we expanded the frequency--increased the
frequency of reading the plots here in the eastern part of the
state because of the level of change that we are seeing. So we
have made some shifts in the program, and we are close to
having it fully implemented.
I expect in the future, though, that there will be more and
more of a request for us to increase the frequency of reading
our plots across the entire United States. So that is one of
the things we are looking at, is how to build more efficiencies
into this program with an anticipation that is going to be
probably a need for more current data than we currently
provide.
Mrs. Roby. Thank you so much.
Mr. Chairman, I yield back.
The Chairman. I thank the gentlelady.
Now I recognize the gentleman from Oregon, Mr. Schrader,
for 5 minutes.
Mr. Schrader. Thank you, Mr. Chairman.
Mr. Tidwell, how is the Forest Service responding to some
of the attacks from EPA on the use of woody biomass, the boiler
MACT fiasco that went down and this Ninth Circuit Court
decision that Congressman Ribble referred to? How are we
responding to talk about the good things biomass should and
could be doing for a healthy forest?
Mr. Tidwell. We are working with the EPA and all the
Federal agencies to make sure that everyone understands the
importance of being able to restore these forests and whether
it is the saw log material or the small diameter, the residual
material that needs to be removed. And we want to make sure
that if there are any procedures or policies that are put into
place that they actually encourage and allow for that
restoration work. So whether it is with air quality----
Mr. Schrader. But EPA is going the opposite way, obviously.
How aggressive are you in talking to Ms. Jackson and company
over there?
Mr. Tidwell. Well, we meet with that staff on a variety of
issues and--whether it is air quality or clean water concerns--
to be able to offer options about how we can move forward to
ensure that--of course, we want clean air and clean water but
to be able to do it in a way that we can do the restoration
work that needs to occur to prevent some of the long-term
impacts to either clean air or clean water.
For instance, the amount of emissions that occur off of
these large wildfires. We have so many examples now where when
we go into a forest and we do the restoration work around our
communities, to do the thinning, to remove a significant amount
of the large trees and some of the smaller trees, so that when
a fire burns through an area--and fires will continue to
occur--that the severity of the wildfire is much less.
Mr. Schrader. So if I may--I have a limited amount of
time--I appreciate that. I just ask you to be more aggressive
and more public in some of your pronouncements to make sure
that there is a level playing field here within the
Administration on what is going on.
My other point: It would seem to me that AFRI and
Agricultural Research Service are not getting the same play in
the President's budget. He talks about innovation, excellence,
education, out-competing the rest of the world, out-innovating
the rest of the world. During the Recovery Act, there were lot
of increases that I approved of and research and development
projects, but ag seemed to fall short. Why is that?
Mr. Tidwell. I can respond to what we did though the
Recovery Act, and we had a significant amount of funds that
went to doing--restoring the forests, both our National Forests
and on our private lands through our states.
Mr. Schrader. I am talking about research. I am talking
about active research, actually.
Mr. Tidwell. And even within----
Mr. Schrader. They didn't see the increase the rest of the
research budgets did.
Mr. Tidwell. Yes, well, with our research budget, what we
are focused on is continuing to do the work, whether it is in
our wood products lab to develop new products that we can use
to encourage more utilization of wood, to deal with the
invasives. We currently have the largest research department,
when it comes to conservation, in the world. So we are just
continuing that work.
And we feel that the budget request that we have submitted
reflects the work that needs to be done to be able for us to
continue all of our research programs that are essential to be
able to deal with the threat, whether it is invasives or to
develop new use of wood products in this country.
Mr. Schrader. Thank you. I just, again, urge you to be a
little more aggressive for your share of the pie, if you will.
I am a little concerned with the Healthy Forest Reserve
Program. You referred to Oregon's northern spotted owl habitat
set-asides as a success. It has been, actually, quite the
opposite, not just on private land but on our public lands. We
found that the large set-asides of public lands have not
improved the sustainability or viability of the northern
spotted owl; and, in fact, they continue to decline. The
remarks in the audit that this is a success alarmed me greatly.
Some of the more recent proposals are to actually set aside
more land. In other words, it did not work the first time; we
will just double down on failure and see if we can get the same
result. There has been a lot of documentation that competition
with other owls is really the main problem. So I would ask you
to look at that a little bit.
And, frankly, on the stewardship program, I would urge you
to look at that as something you can use within the Forest
Service itself, on Forest Service land, not just private lands
but national Forest Service lands. Set-aside trusts, programs
that you talked about, I think that can actually do a great
deal to break down the barriers between the environmental
community and the timber community and have healthy forests at
the end of the day.
Mr. Tidwell. Thank you.
Mr. Schrader. Thank you, sir.
I yield back.
The Chairman. I thank the gentleman.
I just want to make Members aware that we have done so well
taking the 5 minutes I think we will be able to get, with the
few folks who are here, another round of questions in, if you
have such.
At this point, I recognize the gentleman from New York for
5 minutes.
Mr. Owens. Thank you, Mr. Chairman. I will be brief. I have
a cold, and I am having some trouble speaking.
I don't have a National Forest in my district, but I have
the Adirondack Park. And we have a number of businesses that
are developing biofuels and are attempting to move in that
direction. What I would like to know is, when you look across
the spectrum of the programs that the Federal Government
provides, what would be the three programs that you would
emphasize and like to see funded to enhance the growth of
biofuels? And is there anyway in which we can direct biofuels
growth to local delivery? That is allowing this funding to
deliver that energy to the local communities. Anybody can take
a shot at this.
Ms. Canales. Congressman, indeed, the goal and what the
President and Secretary Vilsack have put forward is that the
development of these biorefineries would occur throughout the
United States. Our goal right now is to do four in the next 2
years, and we are on our way.
Again, this is new. You know, I describe it as it has not
been a silver bullet yet in the sense of where these businesses
and what is going on in our country. But what you have just
described is exactly the case in the sense of taking advantage
of what the feedstock would be.
For example, the one that I mentioned in Florida, is
relying on agriculture waste. The one in Georgia is relying
on--he did not want us to use ``woody'' biomass, but it is
wood. And that would be something that would be in your area as
well, too. The notion is that these biorefineries can be
developed and dispersed throughout the United States and can
benefit and utilize whatever is derived from that region.
But, also, the important thing about this is that it brings
in financing that in the past may not have previously existed.
Because when you do put these projects together it does
require, not only this loan guarantee but private equity--
private investment; and that is an important draw for our rural
areas.
Mr. Owens. Thank you.
Mr. Tidwell. If I could add to that, our Community Wood
Energy Program provides the assistance and the technology to
communities so that they understand the benefits and the
options that they may have to be able to develop a proposal so
they can pursue. And what we are finding is so essential when
it comes to utilization of biomass or bioenergy is that it is
the transportation costs that are often the limiting factor.
And so that the more of these facilities that we can build
across the country and scale them for what is needed either for
that community or for that facility, that is where I think
where we will really start to see the expansion of this
infrastructure.
The other key program that we have is our Forest Biomass
for Energy Program that directs a competitive process for
research and development to be able to continue to expand the
knowledge that we currently have with what is working but also
to be able to continue to provide more efficiencies and how to
really convert biomass into energy.
Those are two key programs that I feel that are very
beneficial, not only the direct benefits to the community but
also when it comes to the research. It is just essential that
we continue to move forward to be able to understand how we can
make these operations more efficient.
Mr. Owens. Thank you.
Ms. Canales. If I may add, on the Rural Energy for America
Program, section 9007, there is an opportunity for a grant for
feasibility studies so that the first steps can be taken to
determine is there that viability for that particular type of a
business, this biorefinery. So there are initial steps. And
those are first, important investments so that you can get all
of your information together, including the financing that I
mentioned that, of course, is critical.
Mr. Owens. Thank you.
Mr. Chairman, may I have one additional question?
The Chairman. Yes.
Mr. Owens. I also have Fort Drum in my district. I am
wondering, are you working with DOD at all to see how biomass
can be utilized to take military installations off the grid and
enhance national security in that way?
Ms. Canales. We have entered--the U.S. Department of
Agriculture has entered into a Memorandum of Understanding with
the Department of Navy so that there can be what you have just
described, an opportunity to put together projects. This one
happens to be related to Hawaii, but it is not limited only to
that state. We are seeing the sort of initial steps in that
direction, but it is geared towards trying to get a project
that would be able to develop new biorefineries so that it can
go towards aviation fuel and other types of fuel that are being
used by the military.
So there is a definite interest, and there has been
communication to that effect.
Mr. Owens. Thank you very much.
I yield back.
The Chairman. I thank the gentleman.
With the witnesses' indulgence--we have been pretty
efficient with everybody's time--I would like to see if there
is an opportunity for one more questioning round for the
Members that remain here. I will take the liberty of starting
that.
Chief Tidwell--or any of the witnesses can comment--
recently, Secretary Vilsack announced a new green building
initiative responding to several Members of this Committee's
request whether the USDA was going to start using more wood--
frankly, the original green building material--in its
buildings, recognize all credible green building rating
systems, other than just LEED, and invest in research into the
better use of wood products.
Real quick, can you give us some idea of where is this
initiative and what steps you have taken to date following this
announcement?
Mr. Tidwell. Following that announcement, I sent a
directive out to all of our units that, as we move forward with
any new building construction, renovating facilities, that we
look first to using wood. It has always been something that we
always wanted in our facilities.
In addition to that, we are making sure that everyone is
aware of the latest developments that are coming out of our
forest products lab. For instance, they are working on
developing more of a laminated beam system that can be used
with some of the smaller diameter wood so that we can encourage
construction besides single-family homes using wood. In Europe,
often, they go four, five stories high with wood construction.
We want to be able to show folks that that is a good
construction, it is solid, and to be able to actually move
forward and develop some mills that can actually produce these
laminated beams.
And the other thing is just, to move forward, that we want
our buildings to be, of course, certified, be energy efficient,
but to be able to work with the certification programs out
there so that they fully recognize the benefits of wood. I
agree with you. It is the original green building material.
The Chairman. Thank you.
As I prepare myself for the farm bill, one of the things
that was created in the 2008 Farm Bill--and I haven't really
seen anything on it--the Forest Service, as part of the farm
bill there was a branch created, International Forestry, and I
really know nothing about that. Can you give us a quick
snapshot of what that is, what it has become, what it does?
Mr. Tidwell. Our international program is a relatively
small staff. But what they do, they work with other countries.
We are currently working with 88 other countries to help
countries understand the benefits of sustainable forestry, to
deal with the illegal logging so that there is less impact on
our markets, to be able to deal with invasives, to be able to
make sure that other countries understand the problems with the
wood material they are shipping to this country or any country,
about the issue with invasives, to be able to work together.
The other key program they have is dealing with migratory
birds, to make sure that countries are providing habitat for
birds that migrate out of this country, that, no matter what
habitat we provide here, if the birds head south, for instance,
and there is no habitat there, we are going to loose those
populations, and then we will have to continue to deal with
those issues in this country.
Those are kind of three of the main programs that we are
working on right now. The majority of the funding for our
international programs comes from USAID and through the State
Department. But it is really just essential work that we are
doing that really has direct benefits not only to the markets
but direct benefits to sustainable forestry worldwide.
The Chairman. That was helpful. Thank you.
Staying on the international perspective, as part of the
last farm bill there was a soft wood lumber imports provision
within the farm bill that looked at establishing an agreement
implementation that required declaration of lumber imports and
fees paid. Do you know the status of that initiative?
Mr. Tidwell. Mr. Chairman, I am not. I will have to get
back to you on that one.
The Chairman. That is fine. I would appreciate it if you
would do that.
I wanted to--I can't hardly go through a farm bill hearing
without at least touching on the Allegheny National Forest at
least once. That is where I am from. I just love the place.
This one has to do--as you know, the ANF is in the
district, and oil and gas production was certainly critically
important to my constituents in the communities well before it
was a National Forest in 1923. And despite attempts by some to
block this production over the years, the bottom line is that
the mineral rights in the forest--I believe it is over 93
percent, 92 percent--are privately held.
In recent weeks, I have been hearing a lot of concern from
my constituents about the unreasonably long periods of time
before the Forest Service issues notices to proceed. These
notices should be generated within 60 days, but they have
grown--and I have actually a quote from an article I will
submit for the record by a county commissioner--from 4 to 7
months as one of the county commissioners said.
[The information referred to is located on p. 529.]
The Chairman. In addition to the delays, the Forest Service
has also issued a letter to Shell Western Exploration and
Production which prohibits any ANF groundwater for the
company's natural gas drilling and production operations.
Can you explain the delays of notices to proceed and why
the Forest Service has taken this change after a pretty good
partnership since 1923? All of a sudden, in 2011, we have this
turnaround prohibiting the use of groundwater.
Mr. Tidwell. With the processing of the permits, we are
actually making progress. We are not to where we would like to
be as far as the length of time. But I think even a year or 2
years ago it was taking more like 5 to 5\1/2\ months. We are
now down to an average of 4 months. We processed 690 permit
applications last year.
One of the things that is occurring is the number of
applications is significantly increasing. So it is one of the
things we are going to have to look at to be able to find a way
to add some more capacity to that force to be able to deal with
this influx of additional applications.
The issue with groundwater is not part of the process
application. It is more of a concern about the groundwater and
the quality of that groundwater. And so it is one of the things
we need to continue to move forward with and look at some other
options, or to make sure that we are providing that there won't
be impacts to the quality of that groundwater.
This is a new issue that has recently come forward that we
weren't dealing with with the previous permits. It is one where
we are going to have to work with the industry and work with
the applicants to be able to find a way to be able to move
forward with those.
The Chairman. I also encourage you to work with other
partners and stakeholders, the Department of Environmental
Protection in Pennsylvania, agencies like the Susquehanna River
Basin Commission, who I think really have their arms wrapped
around the water issue and have a lot of confidence in it.
And, finally, I will close with just a request. This is a
joint request. My colleague from Florida was going to try to
make it back, so a joint request from Mr. Southerland and
myself.
If you could have some folks at the Forest Service take a
look at the Apalachicola National Forest and, frankly, report
back on why that Florida National Forest is only really at what
appears to be 15 percent of production of the actual forest
plan for millions of board feet harvesting. I think that would
be very helpful. I know the gentleman from Florida would
appreciate it; and, obviously, it is something I would be
interested in looking at myself.
And, with that, I recognize the gentleman from Oregon for
the final line of questioning here.
Mr. Schrader. I appreciate that, and I will try not to keep
everyone.
You mentioned--Chief Tidwell, you mentioned at one point
the need to do restoration work on a landscape scale to really
be effective and deal with it, I assume, on a watershed-type
basis, that sort of thing. And you also mentioned dealing with
it in terms of long-term contracts to provide, I assume, some
certainty; and your comments were probably more geared toward
private landowners.
Why couldn't we do the same thing on public forestland? Why
couldn't we have that? Are we pursuing that at all? I would be
interested in who in your agency deals with that.
Mr. Tidwell. Yes, we actually are doing that on the
National Forest to take these--it is more of a landscape scale
approach. And, ideally, when we even do our assessment, it also
factors in the work that is being done on adjacent private
forested lands, to be able to look at it together. But there is
just no question, we have to look at much larger areas than we
ever have in the past, and we can have some opportunities
there.
You know, in your state--I will use an example down in
areas of Arizona we have an initiative to look at four forests,
and we are doing the analysis on 750,000 acres with one
environmental impact statement. That would allow us to be able
to go forward and do work over at least the next 10 years. That
is an example of what we need to do in all of our states and
across the country.
And I will tell you today we have the support to do this
work. A lot of these initiatives are being strongly supported
by the environmental community. Our conservation groups are
there with the industry. They recognize that we need to be
doing more of this work on the landscape.
That is why I remain optimistic that we are going to be
able to move forward and do significantly more work on the
landscape, produce more jobs, produce more wood, not only for
our mills but also for other biomass uses.
Mr. Schrader. I appreciate that, and if there is an
opportunity I would love to get a visit from somebody in your
office on what you are doing and how we might work with you
more closely in Oregon on that.
The last comment, regards outcomes. I am a big outcome
measure fan. We are spending a lot of money in these budgets. I
appreciate the level of contacts you are making with different
private landowners and acres treated and this and that, but I
would like to see, if it is at all possible, that the Forest
Service set some targets. Given the amount of money we have, I
think it is an important criteria. Given the amount of money we
have or don't have, here is how much land we can effectively
treat or not treat at any given time.
And here are our goals: This much reduction in pest
infestation in an acreage given this amount of money, talking
about wildfire suppression, doing better in terms of acres
burned or what have you, given the type of fire severity year
it might be. For water quality, if we are investing in all of
these things to reduce runoff, what sort of improvements are we
getting in these local areas?
A lot of times I think we concentrate on lots of inputs and
lots of outputs, but we don't get down to what outcomes we are
actually trying to get at. And I would be very interested in a
discussion with your agency about that.
Mr. Tidwell. We will be glad to come up and visit with you
and provide not only the scale of the issues we are dealing
with but also what we expect we can accomplish in Fiscal Year
2011, what we expect to accomplish in Fiscal Year 2012, and
also be able to show what we actually accomplished. Because we
do have targets that we set with all of our programs every
year. Those are tracked throughout the year, and at the end of
the year that is how we basically determine our level of
performance. And we would be glad to show that information to
you.
Mr. Schrader. Thank you very much. I appreciate you all
coming here.
I yield back.
The Chairman. I thank the gentleman.
I want to thank our witnesses for being here, joining us
today, your preparation and your testimony and, frankly, your
leadership within the agencies that you lead and your level of
collaboration and teamwork with this group. We have a lot of
work ahead of us as we look at the 2012 Farm Bill and the
specific titles within that farm bill that are within the
responsibility of this Subcommittee. So thank you so much for
all of that.
Under the rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Subcommittee on Conservation, Energy
and Forestry is adjourned.
[Whereupon, at 11:29 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Submitted Article by Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
The Times Observer
Driller says USFS not living up to ruling
County commissioners discuss court filing
July 19, 2011
By Brian Ferry
According to oil and gas developers, the U.S. Forest Service is
taking too long to process proposals for development on the Allegheny
National Forest.
In a document filed Friday with the U.S. District Court of Western
Pennsylvania, the Pennsylvania Independent Oil and Gas Association
(PIOGA) asked why the Forest Service should not be held in contempt of
court.
``USFS is in violation of this court's Dec. 15, 2009, order
requiring USFS to process oil and gas development proposals in the ANF
in accordance with procedures established in United States v. Minard
Run Oil Co.,'' according to the document. ``USFS has failed to comply
with the Minard Run procedures and has instead engaged in a pattern of
interference with the lawful efforts of PIOGA members to develop their
ANF oil and gas estates.''
Warren County Commissioner John Bortz offered testimony in the
hearings that led to Judge Sean McLaughlin's December preliminary
injunction against a settlement that had the effect of dramatically
decreasing new drilling on the forest.
Bortz brought up the new development at the commissioners' work
session on Monday.
``There are already rules on the books as to how this works,''
Bortz said.
In the past, the Forest Service set a period of 60 days as a
reasonable time for addressing areas of concern and issuing notice to
proceed.
``That 60 day period has grown from 4 months to 7 months,'' Bortz
said Monday. The delay ``impacts the developers' ability to create and
sustain jobs'' as well as to access the property they have rights to.
The length of time isn't the only problem PIOGA members are
claiming.
``There has been a long-standing history that oil and gas producers
would have access to surface water'' necessary for development
operations, Bortz said.
``In addition to the increasingly lengthy delays in USFS's
processing of drilling proposals, USFS has issued a letter prohibiting
SWEPI LP (Shell Western Exploration and Production), a PIOGA member,
from using any ANF groundwater for SWEPI's natural gas drilling and
production operations,'' according to the document. ``USFS has refused
to negotiate with SWEPI at all . . . when such water use by oil and gas
developers has been commonplace for decades in the ANF.''
The right to ``drill for and use water'' from the property ``for
the purpose of operating the said premises for oil and gas . . .'' was
reserved when the title to the mineral estate changed hands, according
to the document.
The wells in question are Marcellus Shale natural gas wells,
according to the document.
Such wells generally require millions of gallons of water for
hydraulic fracturing.
The amount of water is not an issue, according to the document,
because the ``Kane water-flood operation in the ANF uses, and has used
for the past 4 decades, 10,000 barrels of water a day, year round, from
ANF groundwater wells. Such longstanding, large-scale operations
undermine any USFS assertion that the use of ANF groundwater by mineral
estate owners is `unprecedented.' ''
``Minard Run forbids USFS, the owner of the subordinate surface
estate, from imposing such a burdensome condition on SWEPI, the owner
of the dominant mineral estate,'' according to the document. ``Recent
actions and inactions by USFS have become so egregious that PIOGA is
compelled to seek further relief from this court.''
``USFS has violated this court's order . . . and should be found in
contempt,'' according to the document.
``It's going to be interesting to see how that plays out,''
Commissioner Terry Hawk said.
``The outcome of this does hold in the balance jobs in Warren
County,'' Bortz said.
______

Submitted Questions
Response from U.S. Department of Agriculture
Questions Submitted By Hon. Glenn Thompson, a Representative in
Congress from Pennsylvania
Question 1. Rural Energy for America Program (REAP): The Rural
Energy for America Program (REAP) assists small rural businesses and
producers with renewable energy and energy efficiency projects.
Recently, USDA included ethanol blender pumps as an eligible project?
How do blender pumps fit in with the goals of the program? Can blender
pumps be financed through other USDA programs?
Answer. The agency clarified that flex-fuel delivery systems,
including blender pumps, are one of many eligible purposes under REAP.
The statute makes it the program's responsibility to promote biofuel
infrastructure. Blender pumps are a critical part of that
infrastructure as the final step necessary to reach the consumer. No
separate funds are designated for flex-fuel projects. REAP is a
competitive grant and loan guarantee program in which renewable energy
systems and energy-efficiency improvement projects must compete on
their own merits against eligible projects for available funds. REAP is
not the only RBS program that can fund blender pumps; the Business and
Industry Guaranteed Loan program also has blender pumps as an eligible
activity.

Question 2. Rural Energy for America Program (REAP): Most Rural
Energy for America (REAP) projects seem to be located in the Midwest.
What challenges are preventing the REAP program from being implemented
nationally?
Answer. While the REAP program has been largely utilized by
applicants in Midwest states, it is a national program. Changes made in
the NOFAs for 2008, 2009, and 2010 and subsequent REAP Interim Rule
have modified scoring and project criteria. These changes, as well as
the implementation of State allocations, were made to increase the
diversity and geography of the projects selected, and we have already
seen a positive change in the geographic distribution of REAP awards.
In the first 3 years of the program, 24 states received awards for
2003, 27 for 2004, and 32 for 2005. In the most recent 3 years (not
counting 2011, which is still being processed), 41 states received
awards for 2008; 49 states as well as Puerto Rico and the Western
Pacific received awards for 2009; and 48 states and Puerto Rico
received awards for 2010.

Question 3. Bioenergy Program for Advanced Biofuels (Section 9005):
Could you identify what types of feedstocks are being used in the
biofuels facilities that are receiving payments in the Bioenergy
Program for Advanced Biofuels?
Answer. The types of feedstocks used by facilities receiving
payments for FY 2010 include:

Agricultural waste seed

Agricultural crops (sorghum, wheat starch)

Animal fat

Dairy waste/manure

Ethanol (from other than corn kernel starch)

Fatty acids

Food processing waste

Grasses

Greases (white, yellow)

Mixed substrates waste

Municipal waste

Oils (canola, crude corn, cottonseed, glycerin, palm,
soybean, sunflower seed, waste or used vegetable, other)

Poultry fat

Tress (pine, other)

Wood waste (sawdust, chips, pallets)

Question 4. Duplication: During the conservation title audit we
learned that several conservation programs can fund energy efficiency
projects. What programs outside of the energy title does USDA
administer that may fund renewable fuel projects or renewable energy
and energy efficiency projects?
For example, can the Business and Industry (B&I) loan program or
Value-Added Grant program accomplish some of the same goals as many of
the energy title programs? If not, what changes could be made to
existing programs outside of the energy title to accomplish the same
goals?
Answer. There are four other programs within USDA under which
certain types of energy projects may be financed. These are the Value-
Added Producer Grant (VAPG) program, Community Facilities, Business and
Industry Program, and the Environmental Quality Incentives Program
(EQIP). FSA farm loans could also be used for some of the projects, and
Forest Service also has some authorities for energy related projects.
The project eligibility category related to renewable energy under
the VAPG program was set by the 2008 Farm Bill and states that a Value-
Added Agricultural Product is ``a source of farm- or ranch-based
renewable energy, including E85 fuel.'' Thus, the VAPG program can
provide funds to a limited set of energy-related projects where an
agricultural commodity is used to generate renewable energy on a farm
or ranch owned or leased by the independent producer that produces the
agricultural commodity. On-farm generation of energy from wind, solar,
geothermal, or hydro sources are not eligible for VAPG.
Because of the differences in eligible entities and eligible
projects, there is little overlap with the Community Facility (CF)
program. Eligible entities under the CF program are: public bodies
(e.g., municipalities, counties, districts), nonprofit corporations and
associations, and Federally recognized Indian tribes in a rural area.
Eligible projects are generally activities associated with the
construction, enlargement, extension, or improvement to ``essential
community facilities providing essential services.'' Essential
community facilities are ``those public improvements requisite to the
beneficial and orderly development of a community operated on a
nonprofit basis.''
While some entities eligible for the CF program would also be
eligible under the Section 9003 program, the type of projects funded
under the Section 9003 program would not likely qualify as an eligible
CF project. Further, Community Facilities is a grant program, while the
Section 9003 is a guaranteed loan program, and grants would be an
insufficient source of funds for the construction of biorefineries.
Thus, there is little likelihood of overlap between these two programs.
For the Section 9004 program, the eligible entity must be a
biorefinery. Further, the types of projects that qualify for the
Section 9004 program would likely not qualify for the CF program. Thus,
there is no overlap with the CF program.
While some entities might be eligible for both the CF program and
the Section 9005 program, there would be no overlap because the CF
program would not make any payments for the production of advanced
biofuels.
For the Section 9007 Program, for the renewable energy system and
energy efficiency improvement portion, the eligible entities are
agricultural producers and rural small businesses. These entities are
also eligible for renewable energy system feasibility studies. Given
the difference in eligible entities, there is little, if any, overlap
with the CF program. For energy audits and renewable energy development
assistance under Section 9007, eligible entities include units of
state, tribal, and local governments, land grant colleges and
universities, rural electric cooperatives, public power entities, and
instrumentalities of state, tribal, and local governments. Thus, there
is some overlap in eligible entities. However, it is unlikely that
energy audits or Renewable Energy Development Assistance (REDA) would
meet the project eligibility requirements for CF.
The Business and Industry (B&I) Program provides guaranteed loans
to a wide range of projects, including energy projects. There have been
a number of projects financed under the B&I Program that may have been
able to have been financed under REAP if the assistance requested did
not exceed 75 percent of eligible project costs.
The NRCS has traditionally offered financial assistance for a
variety of conservation practices that also promote energy conservation
as a secondary benefit, such as reduced tillage. NRCS initially
expanded these energy efforts offering assistance for on-farm energy
audits. Currently, NRCS is retooling its conservation practice
standards and adding new standards with an increased emphasis on energy
conservation implementation. In 2012, NRCS will offer financial
assistance for many items identified in the on-farm energy audits such
as lighting, ventilation, airflow and milk harvesting.
Beyond these few programs, REAP does not overlap or duplicate of
any other USDA program.

Question 5. Biomass Crop Assistance Program: The intent of the
Biomass Crop Assistance Program (BCAP) is to help producers establish
dedicated energy crops. To date, how many acres of dedicated energy
crops have been created from the program? How much has been spent
through BCAP to date to get these acres?
Answer. As of August 22, 2011, nine project areas have been
designated, spanning across 168 counties in 10 states (AR, CA, KS, MO,
MT, OK, OH, OR, PA, and WA).
These nine project areas target the sign up of 117,184 acres in FY
2011 alone. Overall the project sponsors requested that these nine
project areas target a full-enrollment of 834,000 acres.
Approximately, 17,000 acres have been signed up since the sign ups
began on:

May 9, 2011 (Project Area 1);

June 20, 2011 (Project Areas 2 through 5); and

August 8, 2011 (Project Areas 6 though 9).

In addition, approximately 14,000 acres have been offered and are
in the phase of having conservation plans developed before approval
occurs.
Approximately $82 million has been allocated for the sign up of
acres in these nine project areas. The $82 million supports production
over a period of five year for herbaceous crops and nine years for the
woody crop. The allocations are as follows:

Project Area Allocation Break Down

Project Area 1 (sponsor Show Me Energy Cooperative) $18 million
Project Area 2 to 5 (sponsor MFA Oil Biomass & $18.25 million
Aloterra Energy)
Project Area 6 (sponsor Beaver Biodiesel) $.37 million
Project Area 7 (sponsor Abengoa Bioenergy) $6.2 million
Project Area 8 (sponsor AltAir Fuels) $20 million
Project Area 9 (sponsor ZeaChem Inc.) $18.82 million
-----------------
Total $ 81.6 million

The nine project areas target the establishment of four different
energy crops: native grasses, miscanthus, camelina, and hybrid poplar.
The intended conversion products are as follows: jet fuel drop-in;
biobased products; bio-ethanol; biodiesel; and fuel pellets.

Question 6. Biomass Crop Assistance Program: When creating the BCAP
program in the 2008 Farm Bill, Congress set two primary components. The
first was establishment of a new supply of energy crops and annual
payments to farmers to grow these perennial biomass crops. The second
allows matching payments to producers and forest landowners to offset
the costs of collecting, harvesting, storing and transporting of
eligible biomass materials. From a fiscal standpoint, the program was
initially scored at $70 million over 4 years, yet the actual spending
in FY 2010 was over $240 million. Can you talk more on the differences
in the way the program was initially administered to the way it is
currently? Has USDA followed the purposes of BCAP that Congress
initially set forth?
Answer. USDA's administration of BCAP is in accordance with the
statutory requirements set forth by Congress. The intent of BCAP is to
provide a financial incentive to farmers and forest landowners to
produce new supplies of biomass or to collect existing supplies of
biomass for the purpose of heat, power, bio-based products or liquid
biofuels. For new biomass, BCAP provides establishment and annual
payments to producers. For the collection and delivery of existing
biomass, BCAP provides matching payments to producers.
Initial funding for the matching payment component of BCAP began
with a Notice of Funding Availability (NOFA) operating from June 11,
2009 to February 3, 2010, which, as directed by statute, provided that:

``The Secretary shall make a payment for the delivery of
eligible material to a biomass conversion facility to a person
with the right to collect or harvest eligible material . . . at
a rate of $1 for each $1 per ton provided by the biomass
conversion facility in an amount equal to not more than $45 per
ton.'';

``The Secretary shall use the funds, facilities and
authorities of the Commodity Credit Corporation, including the
use of such sums as are necessary, to carry out this
section.'';

``The term `biomass conversion facility' means a facility
that converts or proposes to convert renewable biomass into
heat, power, biobased products or advanced biofuels'';

``The term `eligible material' means renewable biomass'';

``The term `renewable biomass' means . . . any organic
matter that is available on a renewable or recurring basis from
non-Federal land . . . including . . . trees and . . . wood
waste and wood residues.''

The NOFA generated important information from stakeholders on
issues not fully addressed in statute, including when BCAP incentives
are successful, when they may not be, or when incentives require
additional policy clarifications. In light of funding limitations
enacted in July 2010, USDA set tougher restrictions by which materials
qualify for matching payments. These conditions, outlined in the final
BCAP regulation on October 27, 2010, are that eligible materials
qualify for payment based on the sequence of collection, harvest,
storage, transportation and delivery; meaning the eligible material
must be collected or harvested directly from the land, before transport
and delivery (not ``collected or harvested'' after transport and
delivery by separating from a higher value material); must be collected
or harvested in accordance with an approved conservation, forest
stewardship or equivalent plan; and if a woody eligible material
outside of BCAP project areas it must also be a byproduct of preventive
treatments removed to reduce forest fire threats, reduce disease or
insect infestation, or to restore ecosystem health, and cannot have a
pre-existing market. Of course even if the material is eligible,
matching payments may not be available if other program needs exhaust
the available funding.
As reflected in the cost-benefit analysis conducted by Farm Service
Agency (FSA) and issued with the publication of the final BCAP
regulation, these conditions substantially reduce future outlays on
matching payments compared to the expenditure baseline of FY 2010.

Question 7. Forest Resource Coordinating Committee: The 2008 Farm
Bill established the Forest Resource Coordinating Committee (FRCC) to
coordinate nonindustrial private forestry activities within the
Department of Agriculture and with the private sector in order to
effectively address national priorities for private forest
conservation, clarify individual agency responsibilities and provide
advice on the allocation of Cooperative Forestry Assistance Act funds.
Discussions on and off the Hill are underway regarding the next farm
bill; yet, the FRCC has not yet been established. When does USDA intend
to stand up the FRCC?
Answer. To be clear, the 1990 Farm Bill created the FRCC, it has
been operational in the past, and it was amended by the 2008 Farm Bill.
Applications have been received to fill vacant positions on the
committee. Upon completion of background checks, members will be
appointed to the committee by the end of the calendar year.

Question 8. Partnering with NRCS on Conservation Programs: Clearly,
while the USFS and state forestry agencies don't directly implement the
farm bill's conservation programs, you play an important role in
providing basic landowner education, outreach, and technical assistance
that helps landowners implement conservation practices. In your
opinion, do you think there are areas for improvement, where NRCS could
work better with the USFS and state forestry agencies to implement
these programs, especially in light of the fact that forestry is still
only a small component of many of the conservation programs?
Answer. Since enactment of the 2008 Farm Bill, with the
coordination of the Joint Forestry Team, the Forest Service, NRCS,
State Foresters and Conservation Districts have successfully worked
together to better assure that landowner assistance program efforts and
investments are coordinated and complementary. Several states have
entered into agreements that clearly define complimentary partner
agency roles and this has resulted in more efficient use of resources,
better customer service and more impact on the ground. It has become
especially clear that much more can be accomplished where NRCS
conservation program cost-share dollars are focused on forest
management practice implementation, and complemented with Forest
Stewardship Program forestry expertise and planning assistance
delivered through state forest agencies and their already existing
network of partners and cooperators. Through the Forest Stewardship
Program, state forestry agencies can continue to function as the
technical experts with respect to forestry, enabling more landowners to
qualify for and participate in NRCS cost-share programs such as the
Environmental Quality Incentives Program (EQIP) and assuring quality
forest management projects are being funded.

Question 9. Delivery of Technical Assistance: In the last farm
bill, some changes were made to streamline the delivery of technical
assistance under the conservation programs, and I believe the intent
was to allow third-parties, like state forestry agencies and consulting
foresters, to help with the delivery of technical assistance. Do you
see progress on this issue? Do you think we are using these foresters
as much as possible in efforts to improve efficiencies and streamline
the programs?
Answer. Much progress has been made on this issue. The 2008 Farm
Bill recognizes Forest Stewardship Plans as meeting applicant
management plan requirements for EQIP. By operating under the Forest
Stewardship Program, state service foresters and private consultants
are not required to become NRCS Technical Service Providers (TSPs) in
order to provide forestry planning expertise. In 2011, the Forest
Service, National Association of State Foresters, NRCS and the American
Tree Farm System adopted a national Forest Stewardship Plan template
that is recognized by all parties as fulfilling the management plan
requirement for forest landowner access to a variety of assistance and
incentive programs, including internationally recognized third party
certification. In this way, the network of forestry expertise that is
supported by the Forest Stewardship Program is more fully leveraged.
The Forest Stewardship Program is serving increasingly as a ``gateway''
through which landowners can gain access to a variety of forestry
assistance and programs including USDA cost-share, state tax abatement,
forest certification and emerging ecosystem service and renewable
energy markets.

Question 10. Beginning Forest Owners: In the last farm bill,
several programs were included to address the education and assistance
needs of beginning farmers and ranchers, helping them understand good
farming practices, how to set up their businesses, etc. Do you see a
similar need for forest owners? Are there a lot of beginning forest
owners as well?
Answer. Of the 11 million forest owners in the U.S., 1.5 million
are over 75 years of age and control 46.9 million acres of forest. In
the next 10-15 years, we can expect these 46.9 million acres (20% of
all the private forest land in the U.S.) to be passed on to heirs, be
sold to developers, or change hands in some other way. This means that
beginning landowners will likely increase in number and will continue
to need help with forest management through programs like Forest
Stewardship.
This also means that succession planning is very important.
However, we still see families struggling to understand tax laws and
estate planning and it is clear that more continued assistance is
necessary for this essential planning process. There are a number of
educational programs that help landowners with potentially difficult
discussions with their families about passing land to heirs.

Question 11. Forest Legacy Program: There are several programs that
have not been funded within the Forest Legacy Program. Given the period
in which these programs have not been funded, do you see the necessity
in keeping them or does this give us some leeway in order to
consolidate programs without interrupting program delivery?
Answer. The Forest Legacy Program (FLP) is substantially different
from the other farm bill land easement programs, and consolidation of
programs, if it included FLP, would substantially alter FLP program
delivery. FLP has different primary partners, uses different land
protection tools, uses different financial assistance mechanisms,
selects projects through a different and nationally consistent process,
and has different program requirements. In addition, the Forest Service
has substantial oversight of FLP and it fits very well within the
mission of the agency.
FLP is implemented through state agencies, with only governmental
units holding title to the land or conservation easements. This
relationship allows the Forest Service to have substantial oversight of
not just completing projects, but ensuring the forests are conserved
and well managed.
Through FLP, land is protected by both fee-simple land acquisition
and permanent conservation easements. In the other farm bill land
protection programs, land is protected through short-term contracts or
permanent conservation easements, and not fee-simple land acquisition.
FLP projects are selected through a two-step competitive process
resulting in high quality projects that are supported locally and are
nationally significant. First, states identify and rank projects
working with the State Forest Stewardship Coordinating Committees.
Second, a national panel evaluates and ranks each project based on
national criteria--importance, threatened, and strategic. The result is
a list of ranked projects included in the President's budget request.
Consolidating FLP with other farm bill programs would eliminate this
well supported, transparent process.
In the 2008 Farm Bill, states were required to complete state-wide
forest assessments and resource strategies to identify the important
forests within the state, and threats to those forests. These forest
assessments are critical for integrating Cooperative Forestry
Assistance Act programs as well as focusing the State and Private
Forestry funding resources into well defined priority areas. Through
these state assessments, FLP is integrated with the other Cooperative
Forestry Assistance Act programs. Consolidating FLP with other farm
bill programs would most likely remove the integration between FLP and
these forest assessments and the other Cooperative Forestry Assistance
Act programs.

Question 12. Mr. Tidwell, as you may be aware, 35 years ago the EPA
adopted a regulation which defined forest management, including forest
roads as ``nonpoint'' sources to be managed through state best
management practices. For 35 years states have worked with stakeholders
on all sides to develop programs that meet local needs The 9th Circuit
recently overturned this regulation and ruled for the first time that
forest roads are point sources and using them for timber harvest
requires a Federal permit.
What are the challenges that could arise from a Federal permitting
program?
Describe any potential negative environmental effects associated
with these challenges.
Answer. There are many unknowns related to the character and
requirements of a potential ``Federal permitting program ''for forestry
roads. Depending upon the actual requirements of the permit program,
obtaining permits could be a substantial burden for the Forest Service
and other public or private forest landowners. On private working
lands, new regulatory requirements could increase the cost of forest
ownership. On National Forest System lands, permitting requirements
could result in only marginal increases in water quality-related
benefits due to the current use of Best Management Practices (BMPs) on
such lands.
If the regulatory requirements of a new permitting process were
substantial, increased costs could serve as a disincentive for private
forest landowners to maintain forest cover and result in loss of
forests to non-forest uses (e.g., commercial or residential
development) which have potentially far greater impacts to water
quality. Additionally, depending on the nature of the regulatory
system, permitting requirements would require the Forest Service to
devote personnel time, resources and funds to satisfying permitting
requirements. This could divert limited resources away from the Forest
Service's management activities on National Forest System lands.
Finally, there could be large variations among the permits developed by
the various permitting authorities, which could mean different
requirements for both permitting and road management in different
states. This variability amongst permits would further increase the
costs and personnel time to the Forest Service of managing forest roads
and complying with a permit program.
On public lands, the Forest Service currently implements BMPs and
associated monitoring to limit the environmental impacts associated
with logging road utilization, in particular those impacts related to
water quality. The BMP approach has been successful in addressing water
quality concerns and controlling the dispersed and relatively low
impact sources of non-point source pollution associated with forestry
activities. Any permits developed for forestry roads would likely
require the implementation of the same BMPs which are already being
implemented by the Forest Service on National Forest Systems lands.
Thus, depending on the regulatory regime, permit requirements may not
provide any additional benefits to water quality nor improve the
environmental outcomes.
Questions Submitted By Hon. Tim Holden, a Representative in Congress
from Pennsylvania
Question 1. Tidwell: I understand that the programs contained in
the forestry title of the farm bill have permanent authorizations. Can
you tell me if there is anything that would need to be done, any
authority, that would need to be considered for inclusion in the next
farm bill debate? Or is it your opinion that we would not need to
include a forestry title in the next farm bill given the permanent
authorizations?
Answer. A Forestry Title in the next farm bill could further define
and strengthen the complementary relationship between the Forest
Service and NRCS to support successful participation of private forest
landowners in NRCS and other USDA conservation cost-share programs,
particularly by reaffirming the important role the Forest Stewardship
Program plays in facilitating technical assistance for private
landowners not only in managing their forest lands, but also in
implementing farm bill conservation programs.

Question 2. Tidwell: As most of us here know, the Energy
Independence and Security Act contained a definition of biomass that
caused many of us here in Congress some concern. That definition does
not, among other things, allow the removal of woody biomass on Federal
lands. Are there any studies or reports on how much woody biomass is on
Federal lands? Do you currently remove woody biomass from Federal
lands? If so, how much do you remove and how do you do it? Is it an
invasive process?
Are there any studies or reports on how much woody biomass is on
Federal lands?
Answer. There are several key studies and reports on how much woody
biomass is on Federal lands as well as other forest lands.

1. The Forest Inventory and Analysis Program (FIA) of the USDA
Forest Service (Smith and others 2004). The plot data indicate
current stand conditions on all timberland, including all
Federal lands in the U.S. These analyses are based on the
interim updated FIA inventory of the 2000 Resources Planning
Act (RPA) projections (USDA Forest Service 2007). The website
link is: http://fia.fs.fed.us/.

2. The Department of Energy/USDA Billion-Ton Report examines the
nation's capacity to produce a billion dry tons of biomass
resources annually for energy uses without impacting other
vital U.S. farm and forest products, such as food, feed, and
fiber crops. The study provides industry, policymakers, and
agricultural community with county-level data and includes
analyses of current U.S. feedstock capacity and the potential
for growth in crops and agricultural products for clean energy
applications. The biomass resources identified in the report
could be used to produce clean, renewable biofuels, biopower,
or bioproducts. USDA Forest Service lands are included in the
analysis except for biofuel production since it is disallowed
under EISA, 2007. The website link is:
http://energy.gov/articles/department-energy-releases-new-
billion-ton-study-highlighting-opportunities-growth.

3. The USDA Forest Service has completed 20 coordinated resource
offering protocol (CROP) studies across the agency. CROP was
developed by Oregon-based Mater Engineering for the U.S. Forest
Service to increase investment in Federal forest landscapes in
bio-based projects through inter-agency coordination and
levelization of sustainable annual biomass offering. The CROP
protocol requires Federal resource managers within a defined
landscape to (a) specifically identify biomass removal they
believe they can perform each year for the next five years (not
what's inventoried); (b) coordinate their 5 year resource
offering with other Federal agencies included in the same CROP
landscape; and (c) levelize the supply offering within the CROP
landscape to provide higher risk reduction to both land
managers and investors. The website is: www.crop-usa.com.

Do you currently remove woody biomass from Federal lands? If so,
how much do you remove and how do you do it?
Answer. Yes, we remove woody biomass from Federal lands. USDA
Forest Service utilizes the residual woody biomass from forest health
restoration, hazardous fuels reduction, insect and disease infected
areas, wildfires, wildlife habitat improvement and watershed
restoration activities.
The annual target is 2.7 million green tons, which we have exceeded
each year. The removal of woody biomass is a mechanical method
utilizing small to medium sized specialized harvesting equipment
adapted for small diameter trees. The low to no value of woody biomass
dictates this type of mechanical treatment for economic efficiency.
This generally occurs after a timber sale, salvage, stewardship
contract or pre-commercial thinning operation. (See following table).

Table for Annual Woody Biomass Utilization Million Green Ton Target
----------------------------------------------------------------------------------------------------------------
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
----------------------------------------------------------------------------------------------------------------
Target 1.7 1.7 1.7 2.7 2.7 2.7 2.7 2.7
WB-E 1.7 1.7 1.7 2.91 2.34 3.12 3.31
WB-SC 0.74
----------------------------------------------------------------------------------------------------------------
Target--Is the annual national green ton target.
WB-E--Woody Biomass for Energy Purposes.
WB-SC--Woody Biomass from Stewardship Contracting.

Green Tons Accomplishment

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

The mechanical treatment of the residual is not an invasive
process. In general, it actually helps the future of the existing trees
to have better growing conditions in the form of increased sunlight,
higher soil moisture, and greater nutrient allowance. Of course, there
are variations due to local environmental, spatial and temporal
conditions.

Question 3. Tidwell: Pest infestation is a common problem for our
forests. What are you doing to battle pest infestation? Where are the
biggest problems now? How much, on average, does it cost to treat a
forest?
Answer. Battling forest insect and disease infestations involves a
multi-agency coordinated approach that, depending on the particular
pest, its status, and resources available, may include one or more of
the following actions: prevention, monitoring and detection,
eradication, and control and management. To respond effectively to
infestations, the Forest Service works in close cooperation with APHIS,
the agency with overall regulatory responsibility for invasive pests,
as well as state departments of forestry and agriculture.
Currently, the Forest Service has activities focused on significant
pest problems across the country including: western bark beetle
prevention and safety in the West, gypsy moth--slow the spread and
eradication in the East, southern pine beetle prevention in the South,
and invasive plants nationwide. Aerial surveys conducted by the Forest
Service and state partners indicated that tree mortality occurred on
over 9.2 million acres in 2010. Most of this mortality was caused by
bark beetles attacking conifer trees in the western U.S. Other emerging
pest and disease problems that the Forest Service is addressing
include: emerald ash borer, thousand cankers disease, Asian longhorned
beetle, hemlock woolly adelgid, and white pine blister rust.
The cost to treat a given forest varies greatly depending upon many
factors including: the size of the infested forest, the response
approaches employed (listed above), the effective tools and methods
available, and the biology of the pest.

Question 4. Tidwell: What programs and authorities do you rely on
to battle pest infestation and invasive species? How do you fund
activities related to the removal of pest infestation and invasive
species?
Answer. The program and authority that the USDA Forest Service
relies on to respond to insect and disease infestations is the
Cooperative Forestry Assistance Act of 1978 (as amended), SEC. 8. [16
U.S.C. 2104]. Some pests have a specific program to address the issue,
like the Slow-The-Spread Program for Gypsy Moth. USDA Forest Service
insect and disease activities are funded through annual appropriations.
Funds are used to support insect and disease activities on all forested
lands in the U.S., including National Forest System, other Federal, and
state and private lands. Activities on state and private lands are
commonly funded on a cost-share basis with partners to address a
prioritized response to a particular insect or disease.

Question 5. Tidwell: Has the FS conducted any analysis on the topic
of markets for carbon sequestration? If so, what do you think is the
potential for forest landowners to sell carbon sequestered by their
forests and forestry projects?
Answer. Individual Forest Service scientists have participated in
the development of the FASOM economic model which was used by the EPA
to model the impacts of the proposed cap-and-trade legislation in 2009
and 2010 which projected opportunities for carbon offsets. The Forest
Service will also be projecting future forest carbon changes under
various scenarios as part of the forthcoming 2010 Resource Planning Act
assessment. In addition, the forest inventory data collection and
scientific studies done by Forest Service Research & Development
program provides the foundational basis for many of the assessments
done by other agencies and external groups on forest carbon and
bioenergy opportunities, including the EPA's annual National Greenhouse
Gas Inventory, and DOE's recently released ``Billion Ton Study
Update.'' The Forest Service also developed the CVAL tool to evaluate
the costs and benefits of carbon sequestration contracts for managed
forests on the Chicago Climate Exchange.
The potential for forest landowners to sell carbon will be highly
dependent on the price of carbon, as well as the requirements, rules
and methodologies used for implementing and reporting forest carbon
projects. The potential for forest landowners to benefit from a carbon
market could be minimal or large depending on the program design.
At this point there are more opportunities for private landowners
to sell carbon sequestered by their forests and forestry projects in
the voluntary carbon market than within a regulatory market, although
the California cap-and-trade program, now scheduled to begin compliance
obligations in 2013, may create new opportunities.
Small acreage forest landowners face challenges to participating in
the voluntary carbon market. While there is no minimum acreage to
qualify/enroll, start-up and ongoing costs are generally too
substantial, and revenues too slight, on small parcels to produce an
economically viable project. The Climate Action Reserve has developed
``Guidelines for Aggregating Forest Projects'' with the understanding
that individual transaction costs on small parcels can make market
participation untenable, and aggregating projects on smaller
landholdings can reduce barriers to entry. However, some aggregation
companies may have their own minimum parcel size requirements.

Question 6. Tidwell: Currently there are several voluntary markets
for forest carbon projects. Do you know what forestry practices are
eligible for market participation and what the carbon price is?
Answer. All carbon credits purchased outside of an existing
regulatory compliance obligation are considered part of the voluntary
carbon market. Within the voluntary carbon market, carbon credits may
be purchased in an exchange or purchased ``Over-The-Counter'' (OTC)
through direct buyer and seller exchanges, a broker or retail
storefront. Voluntary forest carbon projects are governed by a variety
of carbon offset standards or protocols.
Eligible forestry practices vary between protocols. Three commonly
used protocols for voluntary forest carbon projects in the U.S. are the
Climate Action Reserve (CAR), Verified Carbon Standard (VCS), and the
American Carbon Registry (ACR).
Climate Action Reserve (CAR)--
Eligible Forestry practices:

Reforestation--A Reforestation Project involves restoring
tree cover on land that is not at optimal stocking levels and
has minimal short-term (30 years) commercial opportunities.

Improved Forest Management--An Improved Forest Management
Project involves management activities that maintain or
increase carbon stocks on forested land relative to baseline
levels of carbon.

Avoided Conversion--An Avoided Conversion Project involves
preventing the conversion of forestland to a non-forest land
use by dedicating the land to continuous forest cover through a
conservation easement or transfer to public ownership.

Verified Carbon Standard (VCS)--
Eligible Forestry practices:

Afforestation, Reforestation and Revegetation (ARR)--
Eligible ARR activities are those that increase carbon
sequestration and/or reduce GHG emissions by establishing,
increasing or restoring vegetative cover (forest or non-forest)
through the planting, sowing or human-assisted natural
regeneration of woody vegetation.

Improved Forest Management (IFM)--Eligible IFM activities
are those that increase carbon sequestration and/or reduce GHG
emissions on forest lands managed for wood products such as
sawtimber, pulpwood and fuelwood by increasing biomass carbon
stocks through improving forest management practices.

Reducing Emissions from Deforestation and Degradation
(REDD)--Eligible REDD activities are those that reduce net GHG
emissions by reducing deforestation and/or degradation of
forests. Deforestation is the direct, human-induced conversion
of forest land to non-forest land. Degradation is the
persistent reduction of canopy cover and/or carbon stocks in a
forest due to human activities such as animal grazing, fuelwood
extraction, timber removal or other such activities, but which
does not result in the conversion of forest to non-forest land
(which would be classified as deforestation).

American Carbon Registry (ACR)--
Eligible Forestry practices:

Afforestation/Reforestation (AR)--defined as activities to
increase carbon stocks by establishing, increasing and
restoring vegetative cover through the planting, sowing or
human-assisted natural regeneration of woody vegetation.

Improved Forest Management (IFM)--defined as activities to
reduce GHG emissions and/or enhance GHG removals, implemented
on lands designated, sanctioned or approved for forest
management (i.e., production of sawtimber, pulpwood, and
fuelwood).

Reducing Emissions from Deforestation and Degradation
(REDD)--defined as the reduction in GHG emissions from the
avoided conversion of forest to non-forest use (e.g., to
cropland, grassland, settlement, or development) or avoided
degradation of forests remaining as forests.

Forest Carbon Projects with a Biomass Energy Component--
Forest carbon activities may include a biomass energy component
if they provide biomass fuel for electricity generation,
heating, or transportation fuels.

Note: Urban forestry activities that meet the forest
definition could qualify as AR, IFM or REDD depending on the
specific activity.

Prices vary between protocol standards and within the standards
depending on project types. Within the voluntary carbon market in 2010,
the average price was $6 per metric ton of CO2 equivalent
(tCO2e).

Question 7. Tidwell: Funding is a concern for us all these days.
The Forestry title does not have any mandatory spending, but it is
mostly all appropriated funds. Is the appropriated money mainly used
for wildfire management? What percentage of your total appropriated
dollars is for wildfire? How much does that leave for other forestry
programs like the Forest Legacy or other important programs? Do you
think there is a good balance between money spent on wildfire and other
programs?
Answer. In FY11, approximately 40% of all appropriated funds for
the Forest Service support wildland fire programs to include the
Hazardous Fuels Treatment Program, Preparedness, and Suppression. All
of the wildland fire programs support the objective of the Forest
Service to sustain the health, diversity, and productivity of the
nation's forests and grasslands to meet the needs of present and future
generations. Fires in recent years have become larger and more
difficult to control due to a variety of factors, including climate
change, persistent drought, increasingly hazardous fuels conditions,
and the increased development in the Wildland Urban Interface. Current
budget levels for the wildland fire programs are essential to ensure
adequate resources are available to conduct emergency suppression
operations while allowing for other critical Forest Service activities
to continue.

Question 8. Tidwell: In the 2008 Farm Bill, we made sure that
forestry was explicitly mentioned in some of the conservation programs
to ensure forest landowner participation. What is the extent of your
involvement with these types of programs and do you communicate with
NRCS on these types of programs?
Answer. The 2008 Farm Bill has resulted in a much more effective
working partnership between the Forest Service and NRCS, particularly
with regards to getting more private forest landowners enrolled in
conservation programs. Leaders from our agencies and other partners,
including the National Association of State Foresters and the National
Association of Conservation Districts, have developed and implemented
creative strategies to make these programs much more accessible to
private forest landowners.

Question 9. Tidwell: In the last farm bill, as you mention,
Congress set a number of priorities for private forest conservation--
conserving working lands, protecting forests from threats, and
enhancing public benefits. In your opinion, how are we doing with each
of those priorities, are we accomplishing the needed work through the
programs that the USFS administers?
Answer. The Forest Service is accomplishing needed work through its
State and Private Programs in these three priority areas. As of FY
2011, the agency is in its fourth year of implementing a progressive
strategy (known as ``Redesign'') to focus and prioritize funds and
resources to better shape and influence forest land use on a scale, and
in a way, that optimizes public benefits from trees and forests for
current and future generations. The Redesign competitive effort focuses
almost $20 million each year on novel, landscape-scale projects that
are selected competitively. These projects have accomplished outcomes
in all three of these priorities--and in FY 2010 leveraged almost $24
million in partner dollars and in-kind contributions.
In addition to the competitive projects funded as part of
``Redesign'', each State and Private Forestry program area contributes
to conserving working lands, protecting forests from threats, and
enhancing public benefits. Since the 2008 Farm Bill was passed, over $2
billion has been invested by the U.S. Forest Service to address the
three national priorities (including funding from State and Private
Forestry; Research; Wildland Fire Management; and funding resulting
from the American Recovery and Reinvestment Act).
Since 2008, over 62 million acres were under management plans,
treated, or protected through FS programs and over two million
landowners were assisted or educated through FS programs. The work
accomplished by State Forestry Agencies in developing the Statewide
Forest Resource Assessments (Forest Action Plans) to identify and
prioritize national, regional and state forest management goals across
all ownerships, has become the foundation for agencies and partners to
work together.

Question 10. Tidwell: The Southern Forests Futures Project offers
some long-term, science-based analysis about the future of timber
production in the Southeast. Using this data, please elaborate on the
study's conclusion that timber demand is the primary limiting factor in
expansion of timber markets.
Answer. The Southern Forest Futures Project (Futures Project)
examines the history and potential future of timber markets in the
Southeast using forest inventory and timber market data along with
projection models. The South is the woodbasket of the United States,
providing nearly 60 percent of the nation's timber products--the South
alone produces more timber than any other country in the world. Private
landowners, who manage nearly 90 percent of the South's timberlands and
have invested heavily in their forest lands, produce more than 90
percent of the harvested timber. Strong timber markets bring income and
jobs to rural areas. Strong markets also provide strong incentive to
keep working forests intact, thereby protecting other resource values
including water and wildlife.
The Futures Project highlights the strong growth in timber
production that occurred in the region from the 1960s to the late 1990s
and examines the potential for future growth as well as decline. Timber
production peaked in the late 1990s and has since declined, signaling
structural changes in timber markets. These production declines are
most clearly related to changes in demand. Beginning in 1998, pulpwood
harvesting for the paper industry declined as paper production capacity
fell in the South. Beginning in 2007, demand for softwood solid wood
products fell precipitously due to the housing recession. Solid wood
products such as plywood and lumber are strongly linked to housing
markets, and housing starts in 2010 were only 25 percent of their 2005
values.
In spite of these declines in demands since 1998, private
landowners have continued to invest in forest establishment and
management. Declines in harvests, coupled with this ongoing investment,
have expanded the potential supply in the region, especially for
softwood pulpwood. In sum, supply potential has grown while demands for
timber have declined. The Futures Project's projections of timber
supply indicate that the region has the capacity to produce as much as
70 percent more timber than was produced in 2005, in effect, supporting
a return to market growth rates observed in the 1990s. The key
uncertainty and the limiting factor in determining the extent of future
timber markets will be recovery and growth in demand for these
products. In the near term, demand growth will depend on the recovery
of the housing market. Long term projections hinge on future demands
from paper industries and the potential emergence of demands for wood
in the production of bioenergy.
While housing has traditionally been a cyclical industry and would
be expected to recover in the next few years, demands for paper-based
products are tied to processing capacity and general economic growth.
Declines in the capacity of the paper industry through mill closures
may limit the growth potential from this sector. The Futures Project
concludes that the greatest potential for expansion in timber demand
would come in the form of new demands for wood in the production of
bioenergy. These new demands would, in turn depend on the development
of new technologies and on Federal and state energy policies aimed at
expanding bioenergy production.
Roundwood Production in the U.S. South, All Products, 1953 to 2008

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Source: Southern Forest Futures Project.

The ``other'' category includes hardwood sawtimber and
fuelwood.
Real Stumpage Prices in the U.S. South By Product, 1977 to 2008

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Source: Southern Forest Futures Project.

Question 11. Tidwell: You mention in your testimony the essential
assistance to private forest owners that is delivered through the
Forest Stewardship Program--you're only program focused on private
forestland management. You talk about the accomplishments in FY 2010
with the program--how does this compare with previous years? Are you
and your state forestry agency partners reaching more landowners with
these programs, if so, how many? And are we reaching the same
landowners or new landowners with this program, since the number of
family forest owners in the U.S. continues to grow--from 9 million in
2000 to 11 million owners in 2011.
Answer. The Forest Stewardship Program has for several years been
transitioning from a first-come first served approach to a much more
strategic and place-based approach to delivering technical assistance
to private forest landowners. This approach began with the Forest
Stewardship Program Spatial Analysis Project that assisted all states
in identifying forest resource management priority areas and
implementing innovative tactics for engaging landowners and communities
in those places. Tactics include social marketing campaigns targeted at
landowners that are less inclined to seek assistance.
More recently, Forest Stewardship Program managers from across the
country have developed a ``Landscape Stewardship Approach'' that
includes the development of landscape-scale Forest Stewardship Plans
for multiple landowners. All of these actions are attempts to have a
greater cumulative impact on pressing resource management concerns
while involving more landowners with the same level of investment.
In 2010, there were 19.7 million acres under current Forest
Stewardship Plans, of which 89% is being actively managed based on
monitoring. Approximately 15,000 new Forest Stewardship Plans, covering
about 1.9 million acres were created that same year. While this level
of accomplishment has been fairly consistent the past few years, the
total number of landowners benefitting from a variety of technical and
educational assistance activities supported by the program has declined
sharply because of state forestry agency budget constraints.
All Forest Stewardship accomplishments are tracked spatially with
respect to priority landscapes and underlying resource management
concerns.

Question 12. Canales: There is no more funding for any of the
energy title programs after the expiration for the 2008 Farm Bill.
Would you be able to handle some energy title project activity under
any of the other rural development programs? For example, would the
Rural Development B&I program be able to fund some types of activities
currently covered by the REAP program? Please provide a comprehensive
answer covering each energy title program and whether or not it could
be covered by another USDA program.
Answer. None of RBS's energy programs could be fully encompassed by
currently existing, funded programs. Please see the following
programmatic breakouts on the 9003, 9004, 9005, and 9007 programs.
Sec. 9003, Biorefinery Assistance Program: The Biorefinery
Assistance Program is not a duplicate of any other USDA program. There
are no other programs that have the sole purpose of funding
biorefineries involved in advanced biofuel production, and that involve
the private sector on each transaction. While the eligibility criteria
for the Business and Industry (B&I) Guaranteed Loan program would allow
the funding of biorefineries, the maximum loan that can be guaranteed
under the B&I guaranteed loan program is $25 million, which is
essentially too small for these types of projects, and thus it is
unlikely that anyone would seek to utilize the B&I program. The
Biorefinery Assistance Program can guarantee loans up to $250 million.
Sec. 9004, Repowering Assistance Program: The Repowering Assistance
Program is not a duplicate of any other USDA program. There are no
other USDA programs that could support these types of projects.
Sec. 9005, Advanced Biofuel Payment Program: The Advanced Biofuel
Payment Program is not a duplicate of any other USDA program. There are
no other programs that provide payments to biofuel producers to promote
advanced biofuels.
Sec. 9007, Rural Energy for America Program: There are four other
programs within USDA under which certain types of energy projects may
be financed. These are the Value-Added Producer Grant (VAPG) program,
Community Facilities, Business and Industry Program, and the
Environmental Quality Incentives Program (EQIP).

Question 13. Canales: In preparation for this hearing we attempted
to find project information for several programs and we were not
entirely successful. It appears USDA announces project information to
the public via press releases, but there is not an online database that
allows the public to easily access what has been funded and for what
amount. How does USDA make this available to the public? Can you please
provide the Committee with a breakdown of what projects have been
funded under each program, and for how much?
Answer. At this time, there is no public database. USDA uses press
releases as the mechanism for making this information available to the
public, however USDA is working on such a mechanism in the form of an
energy map which we expect to release in the near future.

Section 9003--Guaranteed Loan Awards and Obligations
(FY 2009 through 2011) (program level amounts)
------------------------------------------------------------------------
Fiscal Year
State Project --------------------------------------------------
2009 a 2010 2011
------------------------------------------------------------------------
Alabama Coskata b $87,850,000
Florida Ineos $75,000,000
Georgia Range $80,000,000
Fuels
Michigan Freemont $12,750,000
Mississip Enerkem b $80,000,000
pi
New Sapphire $54,500,000
Mexico
--------------------------------------------------
Totals $80,000,000 $54,500,000 $255,600,000
------------------------------------------------------------------------
a A loan guarantee application for $25 million was approved for SoyMor
Biodiesel, LLC, Minnesota, on June 10, 2009. However, the $25 million
was deobligated because SoyMor's lender no longer qualified as an
eligible lender and SoyMor was unable to obtain a new lender.
b The agency is working to close the loan.

Section 9004--Repowering Assistance

Of the nine applications, seven were selected to participate. These
seven projects were eligible for approximately $18 million. As of
August 25, 2011, only one awardee, Lincolnway Energy, LLC, has accepted
the offer for $1.9 million.

Section 9005--Advanced Biofuel Payment Program

All of the projects funded under this program produce an eligible
advanced biofuel. The following table presents the companies that
received payments for FY 2009 production, the amount of payment
received, and the type of advanced biofuel produced. For FY 2009
production, a total of $30 million was paid. For FY 2010, a total of
$80 million will be paid within the next several weeks. While some of
the companies that received payments for FY 2009 production will also
receive payments for FY 2010 production, there are a number of
companies that will be receiving payments for FY 2010 that did not
participate in the program for FY 2009 production.

Section 9005 Payments for FY 2009 Production
------------------------------------------------------------------------
Amount of
State Company Payment Biofuel Type
------------------------------------------------------------------------
AL Athens Biodiesel, $2,261.11 Biodiesel
LLC Mechanical
AR Arkansas Soyenergy $538.63 Biodiesel Trans
Group Esterification
AR Futurefuel $929,013.18 Biodiesel Trans
Chemical Company Esterification
AR Pinnacle Biofuels $34,250.89 Biodiesel Trans
Inc. Esterification
AZ Pinal Energy, LLC $2,280,865.06 Ethanol
Production
CA American $6,753.89 Biodiesel Trans
Biodiesel, Inc. Esterification
CA Energy Alternative $7,280.20 Biodiesel Trans
Solutions, Inc. Esterification
CA Imperial Valley $3,409.83 Biodiesel Trans
Biodiesel Esterification
CA Imperial Western $93,971.09 Biodiesel Trans
Products, Inc. Esterification
CA New Leaf Biofuel, $4,432.73 Biodiesel Trans
LLC Esterification
CA Yokayo Biofuels, $14,168.45 Biodiesel Trans
Inc. Esterification
FL Agri-Source Fuels, $12,11347 Biofuel From
LLC Waste Products
FL Bio Fuel $3,418.69 Biofuel From
Consultants Of NA Waste Products
FL G2 Energy $3,670.67 Landfill Gas
FL Suwannee Farms LLC $530.94 Anaerobic
Digester
GA Alterra Bioenergy $905.47 Biodiesel Trans
Of Middle Georgia Esterification
LLC
GA American Proteins, $32,935.57 Anaerobic
Inc. Digester
GA Down To Earth $1,062.62 Biodiesel Trans
Energy LLC Esterification
GA Middle Georgie $159.47 Biodiesel Trans
Biofuels Esterification
GA Nittany Biodiesel $335,855.02 Biodiesel Trans
Esterification
GA The Edge Group $8,167.17 Biofuel From
Inc. Waste Products
GA U.S. Biofuels Inc. $181,114.96 Biodiesel Trans
Esterification
HI Pacific Biodiesel, $14,760.78 Biofuel From
Inc. Waste Products
IA Blackhawk Biofuels $258,309.90 Biodiesel Trans
LLC Esterification
IA Central Iowa $194,810.82 Biodiesel Trans
Energy LLC Esterification
IA Iowa Renewable $369,351.71 Biodiesel Trans
Energy, LLC Esterification
IA Maple River Energy $16,613.40 Biodiesel Trans
LLC Esterification
IA Renewable Energy $1,422,147.46 Biodiesel Trans
Group, Inc. Esterification
IA Riksch Biofuels $10,401.22 Biodiesel Trans
LLC Esterification
IA Sioux Biochemical, $23,808.92 Biodiesel Trans
Inc. Esterification
IA Western Dubuque $432,622.85 Biodiesel Trans
Biodiesel, LLC Esterification
IA Western Iowa $508,985.44 Biodiesel Trans
Energy Esterification
ID Coeur D'alene $347,484.17 Pellets
Fiber Fuels
IL Archer Daniels $656,639.35 Biodiesel Trans
Midland Company Esterification
IL CNF Holdings Inc. $466.17 Biodiesel Trans
Esterification
IL Hunter Haven Farms $633.83 Anaerobic
Inc. Digester
IL Incobrasa $205,444.3 Biodiesel Trans
Industries, Ltd. Esterification
IL Nova Biosource $408,824.32 Biodiesel Trans
Fules Inc. Esterification
IL Valley Energy Inc. $4,717 Biodiesel Trans
Esterification
IN E Biofuels LLC $283,043.86 Biofuel From
Waste Products
IN Indiana Flex $8,806.07 Biofuel From
Fuels, LLC Waste Products
IN Kingsbury Energy $17,861 Biofuel From
Group Waste Products
IN Louis Dreyfus $1,431,051.17 Biofuel From
Agricultural Waste Products
Industries LL
IN T and M Limited $52,355.96 Anaerobic
Pasrtnership Digester
KS Arkalon Ethanol, $1,131,062.87 Ethanol
LLC Production
KS Bonanza Bioenergy, $454,050.13 Ethanol
LLC Production
KS East Kansas Agri- $58,833.32 Ethanol
Energy LLC Production
KS Emergent Green $2,900.33 Biofuel From
Energy, Inc. Waste Products
KS ESE Alcohol $30,163.97 Biofuel From
Waste Products
KS Healy Biodiesel, $9,005.83 Biofuel From
Inc. Waste Products
KS Kansas Ethanol, $1,176,781.75 Ethanol
LLC Production
KS Nesika Energy LLC $177,527.30 Ethanol
Production
KS Prairie Horizon $1,406,332.35 Ethanol
Agri-Energy, LLC Production
KS R-3 Energy, LLC $19.42 Biofuel From
Waste Products
KS Reeve Agri Energy $256.471.36 Ethanol
Inc. Production
KS Trenton Agri $223,165.92 Ethanol
Products LLC Production
KS Western Plains $1,447,782.85 Ethanol
Energy LLC Production
KY Griffin $29,464.47 Biofuel From
Industries, Inc. Waste Products
KY Owensboro Grain $401,187.10 Biodiesel
Company LLC Mechanical
ME Corinth Wood $301,588.30 Pellets
Pellets, LLC
ME Maine Woods Pellet $394,417.68 Pellets
Company, LLC
MI Hillside Farms, $1,353.14 Anaerobic
LLC Digester
MI Michigan Biodiesel $2,340.02 Glycerin
LLC
MI Scenic View Dairy, $17,427.01 Anaerobic
LLC Digester
MN Cargill Inc. $459,245.09 Biodiesel Trans
Esterification/
Anaerobic
Digester
MN Chippewa Valley $14, 597.35 Ethanol
Ethanol Coop LLP Production
MN Corn Plus, LP $311,080.39 Ethanol
Production
MN FUMPA Biofuels $43,985.30 Biodiesel Trans
Esterification
MN MN Soybean $964,669.83 Biodiesel Trans
Processo Esterification
MN Riverview LLP $6,810.11 Anaerobic
Digester
MN West River Dairy $8,312.80 Anaerobic Digeste
LLP
MO Abengoa Bioenergy $213,891.03 Ethanol
Corporation Production
MO Global Fuels LLC $23,444.64 Biodiesel Trans
Esterification
MO Mid-America $917,614.99 Biodiesel Trans
Biofuels, LLC Esterification
MO Natural Biodiesel $45,888.35 Biodiesel Trans
Plant LLC Esterification
MO Paseo Cargill $406,424.07 Biodiesel Trans
Energy LLC Esterification
MO Prairie Pride, $228,017.78 Biodiesel Trans
Inc. Esterification
MO Show Me Energy $75,863.50 Pellets
Cooperative
MS Greenlight $31,943.50 Biofuel From
Biofuels LLC Waste Products
MS Scott Petroleum $181,084.93 Biofuel From
Corporation Waste Products
MT Earl Fisher Bio $586.66 Biodiesel
Fuels LLP Mechanical
MT Huls Dairy Inc. $1,041.68 Anaerobic
Digester
NC Blue Ridge $3,992.71 Biofuel From
Biofuels, LLC Waste Products
NC North American Bio- $7,076.24 Biodiesel
Energies Mechanical
NC Piedmont Biofuels $13,148.21 Biodiesel
Industrial, LLC Mechanical
NC Triangle Biofuels $15,601.05 Biodiesel
Industries, Inc. Mechanical
NE Ag Processing Inc. $612,434.67 Biodiesel Trans
Esterification
NE Chief Ethanol Fuel $2,294,606.51 Ethanol
Inc. Production
NE Kluthe, Daniel W. $295.10 Anaerobic
Digester
NE Northeast Nebraska $9,264.65 Biodiesel Trans
Biodiesel LLC Esterification
NV Bently Biofuels $14,207.54 Biofuel From
Company Waste Products
NY Aurora Ridge $215.36 Anaerobic
Dairy, LLC Digester
NY MST Production Ltd $140,533.52 Anaerobic
Digester
NY Sunnyside Farms $491.81 Anaerobic
Inc. Digester
NY TMT Biofuels LLC $2,946.83 Biofuel From
Waste Products
OH American Ag Fuels, $923.99 Biodiesel Trans
LLC Esterification
OH Arlington Energy $2,898.58 Biodiesel Trans
LLC Esterification
OH Bridgewater Dairy $3,458.97 Anaerobic
LLC Digester
OK ECOGY Biofuels LLC $85,057.55 Biodiesel Trans
Esterification
OK High Plains $561,818.35 Biodiesel Trans
Bioenergy, LLC Esterification
OR Beaver Biodiesel $600.36 Biodiesel Trans
LLC Esterification
OR Green Fuels Of $1,097.06 Biodiesel Trans
Oregon Esterification
OR Sequential-Pacific $17,127.18 Biodiesel Trans
Biodiesel Esterification
OR Stahlbush Island $1,254.23 Anaerobic
Farms, Inc. Digester
PA Lake Erie $275,742.88 Biodiesel
Biofuels, LLC dba Mechanical
Hero BX
PA Middletown $29,861.04 Biodiesel
Biofuels LLC Mechanical
PA Soyenergy Inc. dba $5,767.93 Biodiesel
Custom Fuels Inc. Mechanical
TN Sunsoil, LLC 4,794.46 Biodiesel Trans
Esterification
TX Beacon Energy $118,437.54 Biofuel From
(Texas) Waste Products
Corporation
TX Double Diamond $14,856.36 Biofuel From
Energy, Inc. Waste Products
TX Green Earth Fuels $509,386.90 Biodiesel Trans
Of Houston, LLC Esterification
TX Levelland/Hockley $737,202.90 Ethanol
County Ethanol, Production
LLC
TX New Energy Fuels, $9,250.30 Biofuels From
LLC Waste Products
TX RBF Port Neches, $99,993.77 Biodiesel Trans
LLC Esterification
TX Texas Green $951.79 Biofuels From
Manufacturing LLC Waste Products
TX White Energy, Inc. $1,022,026.02 Ethanol
Production
VA Chesapeake Custom $21,211.41 Biofuel From
Chemical Waste Products
Corporation
VA Red Birch Energy $11,227.32 Biofuel From
Waste Products
VA Virginia Biodiesel $39,803.87 Biofuel From
Refinery LLC Waste Products
VT Audet's Cow Power $1,247.45 Anaerobic
Digester
VT Berkshire Cow $3,594.20 Anaerobic
Power LLC Digester
VT David and Cathy $999.79 Anaerobic
Montagne Digester
VT Gervais Family $284.36 Anaerobic
Farms Digester
VT Green Mountain $1,565.74 Anaerobic
Dairy LLC Digester
VT Neighborhood $416.51 Anaerobic
Energy LLC Digester
VT Westminster Energy $445.78 Anaerobic
Group LLC Digester
WA Farm Power $1,902.09 Anaerobic
Rexville LLC Digester
WA FPE Renewables, $11,915.35 Anaerobic
LLC Digester
WA GDR Power LLC $27,562.43 Anaerobic
Digester
WA Gen-X Energy Group $363,356.61 Biodiesel Trans
Inc. Esterification
WA Imperium Grays $333,674.58 Biodiesel Trans
Harbor LLC Esterification
WA Inland Empire $13,664.11 Biodiesel Trans
Oilseeds LLC Esterification
WA Qualco Energy $2,658.18 Anaerobic
Digester
WA Standard Biodiesel $5,490.93 Biofuel From
USA Inc. Waste Products
WA Whole Energy Fuels $18,181.28 Biodiesel Trans
Corporation Esterification
WI Badger Biodiesel, $329,523.89 Biodiesel Trans
Inc. Esterification
WI Best Biodiesel $10,486.83 Biodiesel Trans
Cashton LLC Esterification
WI Bio Blend Fuels $3,369.82 Biodiesel Trans
Esterification
WI Buckeye Ridge $17,937.12 Anaerobic
Renewable Power Digester
LLC
WI Clover Hill Dairy, $2,338.79 Anaerobic
LLC Digester
WI Double S Dairy $759.05 Anaerobic
Digester
WI Gordondale Farms $581.18 Anaerobic
Digester
WI Green Valley Dairy $9,777.25 Anaerobic
LLC Digester
WI Grotegut Dairy $1,819.40 Anaerobic
Farm, Inc. Digester
WI Holsum Dairies, $11,752.76 Anaerobic
LLC Digester
WI Lake Breeze Dairy $653.16 Anaerobic
LLC Digester
WI Norm E. Lane, Inc. $3,862.16 Anaerobic
Digester
WI NORSWISS Digester, $19,671.00 Anaerobic
LLC Digester
WI Pagel's Ponderosa $3,488.53 Anaerobic
Dairy, LLC Digester
WI Quantum Dairy, LLC $2,931.02 Anaerobic
Digester
WI Stargest Power, $19,843.11 Anaerobic
LLC Digester
WI Statz Brothers, $2,497.90 Anaerobic
Inc. Digester
WI Sun Power $15,433.46 Biodiesel Trans
Biodiesel, LLC Esterification
WI Walsh Bio Fuels, $11,351.95 Biodiesel Trans
LLC Esterification
------------------
$29,999,999.34
------------------------------------------------------------------------

Section 9007--Rural Energy For America Program

The following tables provide summaries of the funds provided by
type of project for FY 2009 and FY 2010. The agency is currently in the
process of making awards for FY 2011, but those have not yet been
finalized.

Section 9007 Awards for FY 2009
----------------------------------------------------------------------------------------------------------------
Number of
Technology Biomass Type Description Projects Grant Amount Loan Amount
----------------------------------------------------------------------------------------------------------------
Biomass 49 $7,431,859 $17,372,569

Anaerobic Digester 14 $4,117,368 $6,619,198
Biodiesel Production 7 $674,096 $1,341,692
Solid Fuel Production 5 $843,936 $754,679
Thermal Conversion 23 $1,796,459 $8,657,000

Energy Efficiency 1,099 $27,857,621 $18,252,122
Geothermal 47 $881,279 $229,599
Hybrid 4 $180,916 $133,996
Hydropower 4 $464,432 $600,000
Solar 166 $5,994,685 $3,399,253
Wind 116 $8,171,188 $17,471,490
--------------------------------------------------
Total 1,485 $50,981,980 $57,459,029
----------------------------------------------------------------------------------------------------------------

Section 9007 Awards for FY 2010
----------------------------------------------------------------------------------------------------------------
Number of
Technology Biomass Type Description Projects Grant Amount Loan Amount
----------------------------------------------------------------------------------------------------------------
Biomass 56 $11,006,140 $20,751,392

Anaerobic Digester 19 $6,042,676 $14,010,621
Biodiesel Production 6 $830,708 $3,485,000
Ethanol Production 1 $500,000 $--
Solid Fuel Production 16 $3,185,031 $2,110,771
Thermal Conversion 14 $447,725 $1,145,000

Energy Efficiency 1,830 $47,692,866 $22,280,851
Geothermal 40 $1,094,551 $292,000
Hybrid 4 $58,817 $--
Hydropower 4 $684,849 $5,000
Solar 294 $13,296,957 $8,356,177
Wind 147 $10,092,796 $21,313,084
--------------------------------------------------
Total 2,375 $83,926,976 $72,998,504
----------------------------------------------------------------------------------------------------------------

Question 14. Canales: Have you consulted with the DOE in the
operation of the USDA loan guarantees? How would you say that the USDA
program differs from the DOE program? Do they overlap?
Answer. We coordinate with the Department of Energy (DOE) using
their environmental reviews when available for Biorefinery Assistance
projects, and we work with DOE grant recipients where we provide
guarantee loans to build biorefineries that will help to end our
dependence on foreign sources of petroleum. The USDA works closely with
DOE to provide the best energy expertise to our field staff and ensure
that all of our project loans and grants are placed in accordance with
the highest professional standards.
There is overlap with DOE's Title 17 program. Title 17 can fund
biorefineries just like the Section 9003 Program. However, Title 17 can
be used for any type of energy production, including biorefineries
producing any type of biofuel, while the Section 9003 Program is solely
for the purpose of providing support for the creation and expansion of
advanced biorefinery facilities producing advanced biofuels.

Question 15. Canales: Can you please give us a breakdown of all the
projects that have received assistance under this program? Have there
been any losses to the government associated with this program to date?
If so, why and for how much?
Answer. The following table presents all of the advanced biofuel
biorefineries for which funds have been obligated as of August 22,
2011. Of these projects, loan note guarantees have been issued for
Range Fuels, Freemont Community Digester, and Ineos; for the other
projects, RBS has obligated the funds, but has not yet issued the loan
note guarantees.

As of August 22, 2011, the agency has not paid a loss, although
Range Fuels ceased operation in January.

Question 16. Canales: This was a new program for RD to implement.
What have been the biggest hurdles to clear during implementation? Do
you have any recommendations for changes to the program to make it more
attractive?
Answer. USDA's Rural Business Service has many different loan and
grant programs and has had extensive experience creating and
implementing new programs. Implementing individual programs did not
pose significant challenges. RBS's largest hurdle was the large number
of new programs that had to be created in a timely manner utilizing our
scarce staff resources.
We do not have any statutory recommendations at this time.

Question 17. Canales: Did interest in the Repowering program pick
up after you made changes to the way it operates by recognizing that
plants weren't able to get credit as easily as when the program and the
rules were written?
Answer. Yes, the Repowering Assistance Program received additional
applications through the most recent NOFA.

Question 18. Canales: There was a solicitation sent out for
applications for this program during the spring. When do you think you
expect to make an announcement or reward?
Answer. The Rural Business Service is currently in the process of
reviewing applications. Any announcements will be made in the coming
months.

Question 19. Canales: Why was the decision made to use REAP for
your blender pump initiative when REAP is already oversubscribed? Could
you have done blender pumps under other RD programs? Or could DOE have
done them under the Clean Cities Program?
Answer. The agency made flex-fuel delivery systems one of many
eligible purposes under REAP. No separate funds are committed
(designated) for flex-fuel projects. REAP is a competitive grant and
loan guarantee program in which renewable energy systems and energy-
efficiency improvement projects must compete on their own merits
against all others for available funds. As stated in the preamble to
the Interim Rule for REAP:

``The inclusion of flexible fuel pumps that dispense blended
liquid transportation fuel as an important new component of the
Federal government's strategy for encouraging the use of
renewable fuels. Section 9007(a)(2) authorizes the agency to
fund parts of renewable energy systems as well as renewable
energy systems in whole. The agency has determined that a
flexible fuel pump is a uniquely critical aspect of a biofuel
renewable energy system defined as the conversion of the
biomass through the dispensing of the biofuel to a vehicle. The
policy rationale for the agency to include flexible fuel pumps
in REAP is to address a barrier that the agency has determined
impedes the broader use of biofuels as a liquid transportation
fuel in the United States. For example, one major aspect of
this barrier derives from two scenarios. The first is one of an
insufficient availability of higher ethanol-blend fuels in the
market place that discourages Americans from purchasing
flexible fuel vehicles that can burn such higher ethanol-blend
fuels and does not provide a sufficient level of higher
ethanol-blend fuel to supply the existing flexible fuel vehicle
fleet to fully take advantage of the fleet's ability to consume
additional biofuel. The second is one of an insufficient number
of flexible fuel vehicles on the road to encourage fuel station
owners to expend the capital necessary to install flexible fuel
pumps in response to market forces. By allowing REAP to provide
financing through grants and loan guarantees to encourage the
installation of flexible fuel pumps in rural areas, the agency
believes it can help overcome this barrier. The agency
acknowledges that there are other similar biofuel examples,
including barriers to biodiesel. The agency recognizes that
REAP is designed to address a variety of renewable energy and
energy efficiency goals. With the inclusion of flexible fuel
pumps for REAP funding, the agency will ensure that it will not
ignore the other important goals and purposes of the program.''

To create a viable biofuel system, many Federal partners are
necessary. RBS's efforts do not duplicate the Business and Industry
Guaranteed loan program or DOE's Clean Cities program, rather it
compliments them by providing additional support in rural communities
to expand biofuel infrastructure.

Question 20. Canales: Can you please give us a breakdown of REAP
project funding? Please breakdown by state allocations and the kinds of
projects being funded (i.e., wind, solar, digesters).
Answer. The following table presents REAP funding for grants and
guaranteed loans for FY 2010 by state:

------------------------------------------------------------------------
State Grant Amt. Loan Amt. Number
------------------------------------------------------------------------
Alabama $1,096,161 $593,791 13
Alaska $254,123 $-- 17
Arizona $502,333 $-- 7
Arkansas $999,604 $44,813 44
California $1,417,328 $406,000 28
Colorado $474,562 $95,000 12
Connecticut $71,745 $63,500 3
Delaware $70,293 $-- 4
Florida $125,000 $-- 2
Georgia $3,319,908 $1,567,179 78
Hawaii $427,891 $232,200 8
Idaho $976,692 $1,500,000 34
Illinois $4,266,170 $2,434,970 141
Indiana $3,786,132 $1,531,118 114
Iowa $20,126,175 $24,055,933 559
Kansas $818,573 $148,345 37
Kentucky $1,440,948 $1,355,629 46
Louisiana $679,276 $1,000,000 6
Maine $534,569 $1,667,781 5
Maryland $747,994 $-- 13
Massachusetts $425,725 $1,588,613 17
Michigan $2,194,168 $391,131 60
Minnesota $5,799,265 $2,237,408 226
Mississippi $666,153 $-- 30
Missouri $1,986,417 $5,810,917 56
Montana $603,367 $10,200 6
Nebraska $2,834,914 $3,031,260 157
Nevada $213,748 $-- 5
New Hampshire $218,683 $409,997 5
New Jersey $1,234,253 $783,887 17
New Mexico $340,883 $600,000 2
New York $1,780,633 $1,219,487 76
North Carolina $2,705,082 $926,000 101
North Dakota $718,526 $530,684 22
Ohio $5,461,997 $7,029,505 85
Oklahoma $268,938 $136,152 15
Oregon $1,256,736 $81,093 38
Pennsylvania $1,647,086 $867,065 25
Puerto Rico $159,773 $-- 3
South Carolina $823,532 $923,521 11
South Dakota $1,768,333 $1,629,277 40
Tennessee $1,694,612 $1,658,691 43
Texas $1,114,006 $-- 24
Utah $172,091 $-- 8
Vermont $1,806,685 $3,710,252 41
Virginia $759,922 $-- 8
Washington $676,887 $1,386,500 6
West Virginia $355,860 $254,000 8
Wisconsin $2,103,224 $1,086,605 69
--------------------------------------------------
Total.............. $83,926,976 $72,998,504 2,375
------------------------------------------------------------------------

The following table provides a summary of the funds provided by
type of project for FY 2010.

----------------------------------------------------------------------------------------------------------------
Biomass Type Number of Amount
Technology Description Projects Grant Amount Loan Amount Leveraged
----------------------------------------------------------------------------------------------------------------
Biomass 56 $11,006,140 $20,751,392 $78,783,920

Anaerobic Digester 19 $6,042,676 $14,010,621 $34,730,610
Biodiesel Production 6 $830,708 $3,485,000 $11,923,618
Ethanol Production 1 $500,000 $-- $4,254,000
Solid Fuel Production 16 $3,185,031 $2,110,771 $24,434,653
Thermal Conversion 14 $447,725 $1,145,000 $3,441,040

Energy Efficiency 1,830 $47,692,866 $22,280,851 $131,286,333
Geothermal 40 $1,094,551 $292,000 $10,729,094
Hybrid 4 $58,817 $-- $201,106
Hydropower 4 $684,849 $5,000 $11,956,530
Solar 294 $13,296,957 $8,356,177 $46,462,233
Wind 147 $10,092,796 $21,313,084 $25,935,674
----------------------------------------------------------------
Total 2,375 $83,926,976 $72,998,504 $305,354,890
----------------------------------------------------------------------------------------------------------------

Question 21. Canales: An integral part of helping ag producers and
rural small businesses determine whether there are energy efficiency
gains to be made in their operations is an energy audit. Can you share
with the Committee what your agency is doing to ensure that there are
enough folks available across the country to help carry out energy
audits in rural areas and on ag operations?
Answer. REAP provides grants to fund energy audits. The REAP Energy
Audit and Renewable Energy Development Assistance Grant provides grant
assistance to entities that will assist agriculture producers and small
rural businesses by conducting energy audits and providing information
on renewable energy development assistance. Eligible entities include:
state, tribal, local government or their instrumentalities, land grant
colleges, universities and other institutions of higher learning, rural
electric cooperatives and public power. A Notice of Funds Available for
$2.4 million in funding to conduct Energy Audits and Renewable Energy
Development Assistance was published in the Federal Register on May 27,
2010. To date, REAP has provided approximately $5.3 million in grants
that have enabled approximately 4,900 energy audits.

Question 22. Canales: The Appropriations Committee sent you a
strong message by zeroing out the mandatory farm bill funding as well
as not providing any discretionary funding for REAP, and the House
passed bill ended up with $2.3 million as a result of two amendments.
What do you attribute to the cuts?
Answer. RBS understands that Congress works to appropriate funding
based on their priorities and constraints.

Question 23. Canales: Can REAP continue to be all things to all
people in terms of doing both energy efficiency as well as renewable
energy production? Is it better at doing some types of projects than
others and are there some projects that can't be done anywhere else?
Bottom line, as we're discussing which energy title programs to
continue or not, what would you say REAP's role should be, keeping in
mind the criticisms that have come about how the program has been
operated?
Answer. REAP serves both of the important purposes you outline. In
2010 alone, the REAP program provided $84 million in grants and $73
million in loans for 2,375 projects. We do not have any recommendations
to statutory eligibility at this time.

Question 24. Garcia: Can you explain how FSA works with other
agencies on program implementation? For example, who else does FSA
consult in selecting the project areas and making sure the selection is
in compliance with other regulations? Does FSA work with NRCS or ARS?
If so, what are the responsibilities of these other agencies?
Answer. Contributing agencies within USDA include the Natural
Resources Conservation Service (NRCS), U.S. Forest Service (USFS) and
State Foresters, Rural Development (RD) Rural Business Services (RBS),
Agricultural Research Service (ARS), Agricultural Marketing Service
(AMS), Office of Energy Policy and New Uses, Animal and Plant Health
Inspection Service (APHIS), Foreign Agricultural Service (FAS),
National Agricultural Statistics Service (NASS), National Institute of
Food and Agriculture (NIFA).
These collaborations allowed FSA to assemble a national review team
for project area proposals analysis of all aspects related to bioenergy
production. For example, APHIS and NRCS provide information on crop
invasiveness and management policy and implementation; NASS provides
soil survey data for the basis of land rental rates; ARS and USFS
provides expertise on crops and current USDA energy and measurement
analysis tools and research; and RD and RBS provides input on
conversion facility processes and business models.
Cooperation also was provided by the Department of Interior Bureau
of Land Management; Department of Energy and its National Laboratories,
such as the National Renewable Energy Laboratory (NREL), Idaho National
Laboratory, and Oak Ridge National Laboratory.
Questions Submitted By Hon. Martha Roby, a Representative in Congress
from Alabama
Question 1. Garcia: Alabama Forestry Commission's (AFC) forest
damage assessment due to the April 2011 tornadoes shows forested acres
damaged at 204,590, stumpage value for damaged timber at over $266
million on timber volumes in excess of 12 million tons of wood. To put
this in perspective, the volume of timber destroyed would provide fiber
to six medium size pulp and paper mills for one year. Much of this
volume will not be salvaged resulting in significant reforestation
costs and extreme risk of catastrophic fires. The AFC requested $66
million through Farm Service Agency's (FSA) Emergency Forest
Restoration Program (EFRP) but they will receive 5% or roughly $3.3
million of what was requested. Mississippi received less storm damage
but received 11.8% of their original request.
Alabama's share of EFRP funding needs to be increased, what is
FSA's plan to make this happen? Can other FSA funds be found and
shifted to help this state.
Answer. EFRP requests are processed in the order that they are
received and allocations are made based on a standard formula.
Additional funds may be requested; however, no EFRP funds are currently
available to provide additional EFRP financial or technical assistance
to states and counties. At this time, FSA does not have any other
funding sources that can be used to address unfunded EFRP requests,
which total over $49 million in the following states: Alabama,
Arkansas, Georgia, Massachusetts, Mississippi, North Carolina, Ohio,
Tennessee, Texas, and Virginia. The only funding provided thus far for
EFRP was $18 million under the Supplemental Appropriations Act of 2010.

Question 2. Garcia: United States Forest Service funding for
Cooperative State and Private Forestry has steadily declined over the
past few years. Other State Forestry agency funding sources have seen
similar declines. As states prioritize focus areas in their Forest
Action Plans they need enhanced flexibility to shift Federal funding
between programs?
What is the USFS's position on this need and what changes could be
made to provide states with this increased flexibility?
Answer. The agency understands the key role that Forest Action
Plans play in providing states the ability to prioritize their use of
Federal funds. A continued effort to assist states in meeting this need
can give flexibility. FS has worked with the State Foresters to
implement State and Private Redesign, in which 15% of the net available
funds (not including earmarks and national commitments) in the Forest
Health Management--Cooperative Lands, State Fire Assistance, Forest
Stewardship, and Urban and Community Forestry programs are distributed
to states for cross-cutting, high-priority projects.
Questions Submitted By Hon. Gregorio Kilili Camacho Sablan, a Delegate
in Congress from Northern Mariana Islands
Question 1. Canales: I understand it took awhile to implement the
Rural Energy programs. As a delegate of one of the territories, I am
concerned that USDA has not been proactive in extending its programs to
the territories despite its broad authority given by Congress under
P.L. 96-597. When making energy program allocations for the states, did
you consider the territories in your allocation plan?
Answer. Yes. The REAP program allocates funds to the territories,
as it does every state in the United States. The other three RBS energy
programs (i.e., Biorefinery Assistance Program, Repowering Payment
Program, and the Advanced Biofuel Payment Program) do not have state
allocations. All eligible entities, including those in the territories,
either compete for funds (Biorefinery Assistance Program, Repowering
Program) or are eligible for payments (Advanced Biofuel Payment
Program) if eligible.

Question 2. Canales: An integral part of helping agricultural
producers and rural small businesses determine whether there are energy
efficiency gains to be made in their operations is an energy audit. I
understand that energy audits are done for mainland producers, can you
share with the Committee what your agency is doing to ensure that there
are folks to help carry out energy audits for producers in the
territories?
Answer. RBS has an assigned Energy Coordinator who works with the
western pacific area. REAP provides grants to fund energy audits The
REAP Energy Audit and Renewable Energy Development Assistance Grant
provides grant assistance to entities that will assist agriculture
producers and small rural businesses by conducting energy audits and
providing information on renewable energy development assistance.
Eligible entities include: state, tribal, local government or their
instrumentalities, land grant colleges, universities and other
institutions of higher learning, rural electric cooperatives and public
power. A Notice of Funds Available for $2.4 million in funding to
conduct Energy Audits and Renewable Energy Development Assistance was
published in the Federal Register on May 27, 2010. To date, REAP has
provided approximately $5.3 million in grants that enables
approximately 4,900 energy audits. No applications have been received
and, thus, no awards for energy audits have been made to Western
Pacific territories.
Question Submitted By Hon. Chellie Pingree, a Representative in
Congress from Maine
Question 1. Canales: Can REAP be modified to enable more support
for small scale biomass combined heat and power (CHP) unit
demonstration projects?
As you know, the Community Wood Energy Program (CWEP) authorized a
new program to provide state and local governments with matching grants
of up to $50,000 to develop community wood energy plans and to fund a
program of competitive grants to acquire community wood energy systems
(that use woody biomass as the primary fuel) for public facilities. In
the 2008 Farm Bill, this program was authorized appropriations of $5
million annually for FY 2009-12. Do you support CWEP and do you believe
that the USDA has an important role to play in getting pilot projects
deployed in heating schools, hospitals, and municipal/county buildings?
Answer. To the extent that a CHP unit demonstration project meets
the definition a pre-commercial technology, REAP can assist such
project. Such projects must compete for available program funds with
other eligible projects.
Regarding CWEP, RBS supports this Forest Service program as
authorized under the 2008 Farm Bill. RBS defers to the Forest Service
in answering the question concerning the importance of this program
with regard to pilot projects. Also, the Forest Service supports this
program, and has requested full funding ($5 million) for this program
in both FY 2011 and FY 2012. However, no money has been appropriated to
date.

Question 2. Garcia/Tidwell: There appears to be considerable
opportunity to support the development of small scale cellulosic based
biofuel systems, such as combined heat and power (CHP) units, in homes
and businesses. Such systems could take advantage of waste biomass at
smaller scales, avoiding the economic dilemma posed by hauling low
grade materials long distances and provide a mechanism to address local
situations. How might existing USDA programs be tailored to pursue this
opportunity?
Answer. A lot depends on the availability of funds and competing
program needs. BCAP matching payments are designed to assist with
transportation costs of existing biomass that otherwise may be
uneconomically retrievable. Examples of such biomass include crop
residues remaining on the field after harvest, or forest residues where
removal is cost-prohibitive outside of a certain geographic range.
Collecting these types of biomass may provide additional public policy
benefits beyond energy purposes alone, such as the removal of invasive,
diseased, or forest fire fuel materials, providing an alternative
disposal method to the burning of discarded orchard and forest
materials, or allowing further improvements to forest ecosystem health.
In 2009, qualified facilities for BCAP matching payments included more
than 30 schools and universities that consumed biomass for their CHP
operations.
By comparison, BCAP project areas are designed for the development
of new supplies of biomass. The selection of BCAP project areas
considers the average distance of a facility from its biomass supply.
For example, five BCAP project areas support herbaceous materials that
can be densified through conversion methods such as torrefaction,
pelletizing, compression or dehydration. The resulting product may be
either a fuel pellet or briquette that cost-effectively can be
transported and marketed to smaller scale combined heat and power (CHP)
operations.
BCAP project areas also are selected in consideration of certain
criteria provided by the 2008 Farm Bill, which include the ability of
the local producer to take ownership in the biomass-to-bioenergy
operations and the commitment a biomass conversion facility makes to
the producers in a project area. Several selected BCAP project areas
involve the cooperation of farmer cooperatives, and facility ownership
is locally based.
BCAP complements other Federal and state programs that are aimed at
increasing renewable sources for heat and power, such as the USFS Fuel
for Schools Program or State Renewable Portfolio Standards (RPS). BCAP
allows a diversity of feedstocks to support these programs.
USDA is very supportive of developing appropriately scaled biomass
projects to meet the needs of regional and local situations to make
them economically viable; reducing haul distances is one important
variable to address. The Secretary's office initiated an effort across
the multiple agencies in USDA focused on Wood to Energy as part of
``Building a Forest Restoration Economy''. Four categories of work
items have been identified to achieve this goal:

(a) Supply--Reliability, predictability are crucial; Stewardship
Contracting is a critical tool for Federal land managers to
address supply, this authority expires in 2013. Most forestland
in the USA is owned by ``families'' and there is a critical
need to be able to coordinated sources across ownerships in a
geographic area. Support for developing business arrangements
to assure supply from these diverse landowners is needed.

(b) Social Infrastructure--this includes having expertise in
technical, financial, business, workforce and social
acceptability to implement projects. Integrated program
delivery needs to recognize the importance and support of all
of these elements and requires close working relationships with
private businesses and nongovernmental organizations.

(c) Agency Culture--Agencies have traditional modes of operation,
legislative and regulatory direction. Sometimes these create
barriers to implementing biomass energy systems holistically.
The Secretary's office is working through these barriers to
expand wood to energy. Cross training between agencies is being
carried out as part of this initiative.

(d) Opportunities--Through the Secretary's focus several areas for
project development have surfaced and are being developed.
Examples include the focus on rural businesses, agricultural
operations dependent upon expensive fuel oil, propane and
electric energy for heat. Rural Development has programs (RUS,
REAP, etc.) that are being leveraged against National Forest
wood supply from stewardship contracting and we are working to
expand those efforts. Projects that take advantage of economies
of scale, such as supplying heat and power to food processing
plants, wood manufacturing, cement and other high energy using
businesses offer significant opportunities.

Question 3. Garcia/Canales: How have BCAP and other energy programs
helped to promote small scale Thermoelectric or thermal energy systems
that use woody or other biomass? And, are there ways that BCAP, other
sections of the Energy title, or partnerships with agencies like DOE
could help promote Thermal energy systems that use woody biomass?
Answer. BCAP is designed to encourage the production of dedicated
bioenergy feedstocks to help us meet the goals of the Federal Renewable
Fuels Standard and state-level renewable electricity standards. Because
facilities that convert biomass into energy also must demonstrate long
term feedstock supply commitments to attract private capital
investment, the risk mitigation provided by BCAP can help bioenergy
entrepreneurs seeking to leverage public or private financial
assistance.
Many of the thermal production units often are retrofits. The
facility is retrofitted by the installation of a turbine alongside a
boiler to capture lost heat. The capture of the lost heat enables a
closed loop system allowing a facility to produce heat and power, often
in the form of steam. The RD programs can support these retrofits and
the facilities can apply for BCAP matching payments for their eligible
waste materials consumed for conversion to thermal power.

Question 4. Garcia/Tidwell: Given that the pellet industry plays a
major role in reducing heating oil consumption, is the production of
wood pellets from the removal of excess low value woody biomass being
provided adequate support under programs like BCAP for the purposes of
incentivizing these types of best forest management practices?
Answer. BCAP matching payments may provide opportunities for the
manufacture of wood pellets from so-called ``excess low value woody
biomass,'' but insufficient funds are available for matching payments
in FY 2011. Also, conditions vary by region and may require further
review to ensure that incentives are provided to feedstocks not
otherwise used for existing markets; removed directly from the land in
accordance to a forest stewardship or equivalent plan; are by-products
of preventative treatments that are removed to reduce hazardous fuels,
to reduce or contain disease or insect infestation, or to restore
ecosystem health; and if harvested or collected on Federal lands, are
done in accordance with the requirements for old-growth maintenance,
restoration, and management direction provided by 16 U.S.C. 6512 for
Federal lands.
Achieving good forest management practices by providing an economic
use for the low value material is an important goal, therefore it is
important to put the use of wood for energy into that broader context.
Wood pellets are one form of fuel, along with chipped or ground wood;
they each have an important niche within the energy market place. In
parts of the country where an integrated wood products industry exists,
higher value products such as lumber, paper, and wood composites can
help cover the cost of the forest treatment. The pellet and chip wood
fuel producers are a component of an integrated industry that can
effectively use the low value material. They are lacking adequate
markets/demand for their product more so than enough incentives for
more production of their product. Therefore the expansion of demand for
their products is the more important factor. Thus, providing incentives
to replace heating oil, propane and electric resistance heat would help
increase the demand.
In parts of the country without an integrated industry, the need
for incentives to transport biomass is much higher, along with the
increased demand for the products. A longer term solution for these
regions is the need to develop a woody biomass based energy production
sector. The net result will be better forest management results on the
land as the wood being removed has an economic value. As an example,
there are many USDA facilities in remote areas of the U.S. utilizing
either propane or oil for thermal energy. Some of these facilities are
leased from General Services Administration (GSA) that develop and
construct the leased buildings for USDA and other Federal agencies.
Creating the demand for high efficiency thermal energy could be
developed at the inception of the leased building. The end result could
be a constructed building using renewable energy such as pellets or
chips thus increasing the demand for these products. In addition, this
would assist the USDA and GSA in meeting Executive Order 13514
increasing the use of renewable energy.

Question 5. Canales: Conservation programs are vitally important,
but if forest owners don't also have markets for their products--
whether they are traditional wood markets, energy markets, or markets
for services like water or hunting and fishing--they will have a hard
time staying on the land and keeping their land forested. What is USDA
doing on this front to help forest owners participate in existing
markets and open up new markets? For example, is USDA's biobased
labeling program adequately supporting the need for creating new
markets for wood products? And, is there adequate funding to help
develop, maintain and improve long-term domestic markets for the broad
range of potential wood-based products?
Answer. USDA appreciates the opportunity to discuss the role of the
BioPreferred' program in creating new markets for wood
products. The legislative history of the BioPreferred program
authorized under section 9002 of the Farm Security and Rural Investment
Act of 2002 (FSRIA), as amended by the Food, Conservation, and Energy
Act of 2008 suggests Congress intended to use this program to speed the
development of new markets for biobased products, rather than to
support mature markets for products. As described in the conference
report accompanying FSRIA, the purpose of the biobased markets program
``. . . is to stimulate the production of new biobased products and to
energize emerging markets for those products.''
USDA believes that the widespread labeling of mature market
products could negatively affect the entry of new biobased products
into market segments in which mature products already have significant
market shares. The exclusion of mature market products from the
voluntary labeling program is consistent with the exclusion of such
products from the Federal procurement preference program. As Senator
Harkin stated in comments on USDA's proposed labeling rule:

Clearly, the objectives of the BioPreferred labeling program
are not served by granting the label to every product that is
made of biobased materials. For example, paper or wood
products, such as wood furniture, do not fall within the
intent, purpose, and goals of the statute creating the
BioPreferred labeling program because the market for paper and
wood products is established and functioning, and consumers
have sufficient information to make buying decisions regarding
paper and wood products without their being included in the
BioPreferred labeling scheme.

However, USDA's BioPreferred program makes every attempt to include
new wood products (employing technologies coming into existence after
1972) in this USDA program. The BioPreferred program works in
cooperation with the U.S. Forest Products Research Lab in Madison,
Wisconsin to identify and certify new industrial products made from
wood for both the federally procurement preference and label parts of
the program. One of the recent products receiving the USDA certified
biobased product label is a new wood product.

Question 6. Tidwell/Garcia: Since the major predisposing factor for
the beetle infestations of the West has been the lack of management and
resultant overstocked stands, what steps are being taken to address
this situation and prevent its reoccurrence? And, what is being done to
develop sustainable markets and delivery infrastructure to prevent such
problems from occurring elsewhere in the U.S.?
Answer. BCAP matching payments may provide opportunities for the
removal of beetle-infected biomass, but insufficient funds are
available for this programmatic assistance in FY 2011.
The bark beetle epidemic has affected over 41 million acres from
1997-2009 in the western U.S. This is a function of several converging
factors--a multi-year severe drought that weakened trees; years of fire
suppression which evolved over time as more people moved into remote
areas, which necessitated protecting property and lives; large expanses
of relatively homogenous stands of older, mature lodgepole pine,
created from the intensive harvesting of the 1880s and 1890s for
railroads and the mining industry providing extensive suitable beetle
habitat; and warming winters which have allowed beetles to survive
winters that in the past, reduced population sizes.
In response to this record outbreak the Forest Service has
developed a ``Western Bark Beetle Strategy'' focusing on three goals:
safety (mitigating risk to people and property from falling trees along
roads and trails), recovery (helping affected forests recover their
proper ecological function) and resilience (thinning forest stands so
they are more resilient in the future). The plan was put together to
outline the importance of the issue. Currently the FS treats about
250,000 acres per year in beetle country and has the capacity to
increase this by 2.5 fold. As the epidemic dies down the agency will
focus on creating more resilient forests and heterogeneous landscapes
that can sustain bark beetle attacks better in the future.

Question 7. Tidwell: On Limited Owners with Management Plans: Less
than 5% of forest owners nationwide have some sort of management plan.
This is troubling since we know that almost \2/3\ of the nation's
forests are privately owned, so we rely on these forests to be healthy
and supply every Americans with clean water, air, wildlife habitat,
forest products we use every day, and recreational opportunities.
Do you see this as a problem and if so how are you addressing this
problem?
Answer. Yes, this is a major challenge for us. We cannot
effectively address landscape-scale resource management concerns,
without getting private forest landowners. We continue, through the
Forest Stewardship Program, to develop and implement innovative tools
for reaching and involving more landowners in active forest management.
Through our Landscape Stewardship Approach, we have begun to develop
multi-landowner landscape-scale Forest Stewardship Plans that will
foster landowner communities of interest and create economies of scale
for traditional forest products and emerging ecosystem service markets.
We continue to work with states as they implement their State Forest
Action Plans, to leverage new place and community based partnerships.
We are also developing SMART--a web-based Stewardship Mapping and
Reporting Tool. Using this tool, landscape concerns and strategies for
addressing them are inherited by individual Forest Stewardship Plans.
In this way, not only will efficiencies be gained in assisting more
landowners, but these landowners will then, in aggregate, have a more
significant and lasting impact on some of our most pressing resource
management concerns including insect pest and disease infestations and
the threat of wildfire.

Question 8. Tidwell: Communities in Maine and across New England--
indeed in places across the country such as Montana and California--
have embraced acquisition of threatened forestland by local governments
as a conservation strategy. The 2008 Farm Bill authorized a new 50-50
matching grant program, the Community Forest and Open Space
Conservation Program, to help local governments, tribes, and local
nonprofits to create more of these locally-owned and managed community
forests. This would seem to fit well into your vision of forest
protection across all boundaries--Federal, state, local and private.
But, it seems like the program has been slow to emerge from
rulemaking and move into actual grant making since passage of the last
farm bill. Can you provide an update on where this program stands in
terms of establishment through rulemaking, and how you envision it
contributing to the agency's forest conservation objectives?
Answer. I am pleased to report that the final regulation is in its
last stages of review, and we hope to publish the final regulation this
Fall. Once published, we will move forward with soliciting
applications, and grant the available funds (through FY10 and FY11, we
have $1.5 million of available funds).
This new program fits well within our nation's forest conservation
objectives. Through this program, communities and Indian tribes can
sustainably manage forests community forests for many public benefits,
including recreation, income, wildlife habitat, stewardship
demonstration sites for forest landowners, and environmental education.

Question 9. Tidwell: How could the Healthy Forests Reserve Program
(HFRP) be structured to achieve the goals of maintaining working
forests, protecting important public benefits, and compensating private
landowners for maintaining these public benefits on their land?
Answer. As currently authorized, the Healthy Forest Reserve Program
(HFRP) as administered by the NRCS, targets the protection and
restoration of forests to assist in the recovery of threatened and
endangered species. If HFRP was broadened to maintain working forests,
protect important public benefits, and compensate landowners for those
public benefits, then the program would largely look like the existing
Forest Service's Forest Legacy Program. Currently, these programs have
complementary purposes, with limited overlap.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--Forestry
1. Program Name
Volunteer Fire Assistance Program.
2. Subprograms/Department Initiatives
The VFA program is split into two subprograms, VFA-SPVF and VFA-
SPS3.
VFA-SPVF funds are focused to address critical preparedness needs
for firefighter safety, increased initial attack capability, and
training. An emphasis is placed on funding areas that have developed or
are developing Community Wildfire Protection Plans, FEMA hazard
mitigation plans, or other collaboratively developed hazard mitigation
plans.
The program allocates funding based on acres of forestland to be
protected and the number of fire departments serving communities with
populations under 10,000 in each state. This part of the program is
funded through State and Private Forestry appropriations.
VFA-SPS3 funds provide financial assistance, technical assistance,
training, and equipment to ensure that Federal, state, and local fire
agencies can deliver a coordinated response to wildfire. The emphasis
is on improving fire planning, initial attack capabilities, adopting
the National Incident Management System (NIMS) and wildland fire
techniques training for local fire agencies
Funds are allocated on the basis of risk from catastrophic fires to
communities in the Wildland Urban Interface, the number of acres to be
protected, and the number of volunteer fire departments serving
communities of less than 10,000 inhabitants. Forest Service Regions,
the Northeastern Area, and the International Institute of Tropical
Forestry receive a fixed percent which they allocate to states and
Territories. This part of the program is funded through Wildland Fire
Management appropriations.
3. Brief History
VFA (formerly Rural Community Fire Protection) was first authorized
in 1972 as an amendment to the Rural Development Act and was first
funded in 1975.
4. Purpose/Goals
The VFA program provides Federal financial, technical, and other
assistance to State Foresters and other appropriate officials to
organize, train and equip fire departments in rural areas and rural
communities to suppress fires. A rural community is defined as having
10,000 or less population. A department may buy fire equipment, pay for
training or training materials, or cover the cost of department
incorporation, as long as the funds are matched. VFA funds are granted
on a 50/50 matching basis.
Volunteer fire departments also play a major role in suppressing
wildfires on Federal lands. The Forest Service and the Department of
the Interior land management agencies have entered into cooperative
agreements with many rural volunteer fire departments for the purpose
of protection of both communities and natural resources.
5. Success in Meeting Programmatic Purpose/Goals
The VFA program has been highly successful in assisting volunteer
fire departments in rural areas with training, purchasing equipment and
building capacity. The assistance provided to these volunteer fire
departments greatly benefits state and Federal land management agencies
through their increased capacity and capabilities to assist with
suppression of wildland fires. Detailed information on the number of
departments assisted, training provided, and departments created or
expanded is provided in Question 10.

6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Volunteer Fire 5,105 5,478 5,056 5,987 6,409 6,112 6,229 6,404 7,003 6,758
Assistance
National Fire Plan-- 8,342 8,186 8,222 11,959 9,288 9,285 9,306 9,059 9,026 9,357
Volunteer Fire
Assistance
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.

7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Volunteer Fire 4,117 3,900 5,120 4,400 8,069 6,776 6,002 5,550 6,248 4,901
Assistance
National Fire Plan-- 4,619 6,468 7,818 7,471 7,899 6,652 7,498 7,759 8,431 5,953
Volunteer Fire
Assistance
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.

8. Annual Delivery Cost (FY 2002-FY 2011) Direct and Indirect Costs
----------------------------------------------------------------------------------------------------------------
BFY
BFY BFY BFY BFY 2011
2007 2008 2009 2010 Est.
----------------------------------------------------------------------------------------------------------------
Volunteer Fire Assistance 0 0 0 0 0
National Fire Plan--Volunteer Fire Assistance 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
The program is limited to volunteer fire departments in rural areas
with a population of 10,000 or less. Applicants must be able to provide
a cost-share match of 50 percent of the grant amount.

10. Utilization (Participation) Data
------------------------------------------------------------------------
FY 2008 FY 2009 FY 2010
------------------------------------------------------------------------
Volunteer fire departments assisted 13,977 10,637 13,235
Volunteer firefighters trained 23,000 24,000 22,700
Volunteer fire departments created or 240 500 44
expanded
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
VFA works in concert with the State Fire Assistance program. The
Volunteer Fire Assistance program is duplicative of the Department of
the Interior's Rural Fire Assistance Program. However, the Rural Fire
Assistance Program has been proposed for termination due to the
duplication. The Department of Homeland Security also administers
programs that partially overlap with some VFA activities, including
training and the purchase of equipment, though DHS programs are
provided nationwide and not focused on rural communities.
12. Waste, Fraud and Abuse
There have been no documented cases of waste, fraud or abuse in
this program.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Woody Biomass Utilization.
2. Subprograms/Department Initiatives
None.
3. Brief History
This grant program started in 2005 to treat hazardous fuels near
communities threatened by wildland fire. It is not part of the farm
bill. From 2005-2010 the grants have focused on assisting businesses
and communities with the production, delivery and utilization of wood
residues. Projects have ranged from equipment such as grinders,
harvesters and new trucking methods to energy production facilities, to
roundwood manufacturing and production of wood shavings for animal
bedding markets. In 2011 the emphasis was changed to focus on
engineering design, permitting and other preconstruction work for wood
energy facilities.
4. Purpose/Goals
It has focused on utilization of wood residues from forest
treatments designed to reduce wildfire hazard.

5. Success in Meeting Programmatic Purpose/Goals
Six Year Summary of the Woody Biomass Utilization Grant Program--Table 1
----------------------------------------------------------------------------------------------------------------
Full
Year Pre-Applications Application Number Funded States Funded Tribes Funded
----------------------------------------------------------------------------------------------------------------
2005 159 44 19 12 1
2006 87 37 16 9 1
2007 93 36 26 13 1
2008 92 35 17 9 1
2009 109 43 28 12 1
2010 192 34 13 5 1
-----------------------------------------------------------------------------------
Total..................... 732 229 119 -- 5
----------------------------------------------------------------------------------------------------------------

Total Woody Biomass Utilization Grants Awarded by FS Region--Table 2
----------------------------------------------------------------------------------------------------------------
Region 1 2 3 4 5 6 8 9/NA 10
----------------------------------------------------------------------------------------------------------------
Total 2005-10 13 18 31 9 17 20 5 6 0
----------------------------------------------------------------------------------------------------------------
The Forest Service provided $30.3 million towards the projects.

Total Woody Biomass Utilization Grants Accomplishments--Table 3
----------------------------------------------------------------------------------------------------------------
% of grants
Year Dollar Amount Leveraged Funding awarded to Green tons removed
(millions) (millions) priority NFs and utilized
----------------------------------------------------------------------------------------------------------------
2005 $4.3 $16 15/19= 79% 93,856
2006 $4.2 $9 14/16=88% 120,900
2007 $6.2 $5 15/26=58% 438,877
2008 $4.2 $11 12/17=71% 535,017
2009 $7.2 $10 25/28=89% 283,076
2010 $4.2 $9 13/13=100% 516,215
----------------------------------------------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
$5 million/yr 2005-2011. Authorization was through the Healthy
Forest Restoration Act for FY 2005-FY 2008. Since 2008, the program has
been funded by annual appropriations.
7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
Outlays have been consistent with the authority.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
The program has been delivered through technical assistance
provided by Forest Service regional program managers and partners
generally with nonprofit economic development organizations or state
extension personnel.
9. Eligibility Criteria
Businesses, state, tribal and local governments with an emphasis on
use of woody biomass from National Forest system lands.
10. Utilization (Participation) Data
See Table 1 above. To date, 119 grants have been provided to
approximately 115 grantees.
11. Duplication or Overlap with Other Programs
There are other Federal programs that support woody biomass
development; however, this is the only program focused specifically on
reducing hazardous fuels and utilizing that biomass material as a
higher value product. Rural Development's Rural Energy for America
Program is focused on multiple kinds of renewable energy; it is not
specific to woody biomass. Rural Development also has the Community
Facilitates Program. That program provides small grants and guaranteed
loans for multiple different kinds of community facilities. In limited
cases, it has been used for community biomass heating systems. FSA's
Biomass Crop Assistance Program is focused on assisting with the costs
of transporting materials.
12. Waste, Fraud and Abuse
To date, only one ARRA grantee has been identified as problematic
by an OIG audit. There were some accounting procedures and record
keeping that was suspect. These issues have been resolved since the
accounting issues were not accepted as allowable expenses.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Community Forest and Open Space Conservation Program (Community
Forest Program--CFP).
2. Subprograms/Department Initiatives
None.
3. Brief History
The CFP is authorized by Section 8003 of the Food, Conservation,
and Energy Act of 2008, which authorizes the Forest Service to provide
financial assistance grants to Tribal governments, local governments,
and qualified nonprofit entities to acquire and establish community
forests that provide public benefits to communities. The CFP program is
the first funded Forest Service program for which tribes are eligible
to compete.
The Forest Service engaged tribes in the regulation making process
through a 145 day tribal consultation period, which concluded at the
end of a 60 day public comment period on March 7, 2011. The Forest
Service analyzed comments received during both processes and prepared
final regulations for the program. The final regulation is undergoing
departmental clearance to be published in the Federal Register this
year.
4. Purpose/Goals
The purpose of the program is to assist communities and tribes in
acquiring forestland that would provide public recreation,
environmental and economic benefits, and forest-based education
programs. The program also protects forestland that has been identified
as national, regional, or local priority for protection.
5. Success in Meeting Programmatic Purpose/Goals
Since the program was enacted, the Forest Service has received
strong support from conservation nonprofit organizations, local and
state governments, Indian tribes, and private citizens to implement
this program. The Forest Service believes once the regulations are
published, the program will be successful in meeting the programmatic
purposes and goals for this program.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
This program received $500,000 in appropriations in FY 2010 and
$1,000,000 in FY 2011.
7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
This program has not had any outlays because the agency is still in
the rulemaking phase. Once the final rule is complete, the agency will
implement a competitive grant program. When projects are selected to
receive funding as part of this process, outlays will begin.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
None.
9. Eligibility Criteria
A request for applications (RFA) has not yet been issued, but
according to the statue, grants under this program will be awarded to
eligible entities to acquire private forestland, to be owned in fee
simple, that--

(A) are threatened by conversion to non-forest uses; and

(B) provide public benefits to communities, including--

(i) economic benefits through sustainable forest management;

(ii) clean water and wildlife habitat;

(iii) benefits from forest-based educational programs, including
vocational education programs in forestry;

(iv) benefits from serving as models of effective forest
stewardship for private landowners; and

(v) recreational benefits, including hunting and fishing
10. Utilization (Participation) Data
Not applicable at this time.
11. Duplication or Overlap with Other Programs
This program complements the Forest Legacy Program and the Urban
and Community Forestry Program. CFP and FLP each engage unique partners
and utilize different tools for land protection. While a few projects
may align with the intent of both programs, most projects will qualify
for only one. Unlike U&CF, CFP is a land protection program, which
provides another tool to those entities that have demonstrated a
sustained commitment to community forestry.
12. Waste, Fraud and Abuse
There are no examples or occurrences of waste, fraud, and abuse in
Community Forest Program.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Forest Health Management--Forest Health Protection.
2. Subprograms/Department Initiatives
Forest Health--Federal Lands.
Forest Health--Cooperative Lands.
Forest Health--National Fire Plan Federal Lands.
Forest Health--National Fire Plan State Lands.
3. Brief History
The Forest Health Management (FHM) program provides insect,
disease, and invasive plant survey and monitoring information and
technical and financial assistance to prevent, suppress, and control
outbreaks threatening forest resources. FHM utilizes science, active
land management, and technology transfer expertise to restore and
sustain forest landscapes--across urban, private, state, Tribal, and
Federal forests. Recently completed State Forest Resource Assessments
have, in many cases, identified forest health as a key state priority.
These Assessments are being used to help guide priorities at the
national and regional levels.
Prevention, detection, and suppression of native and non-native
insects, disease, and invasive plant outbreaks make forest landscapes--
and the communities that depend on them--more resilient to climate
change and other abiotic factors. The technical and financial
assistance FHM provides helps ensure that forests remain healthy and
resilient by minimizing impacts of native and nonnative invasive
insects and diseases, and invasive plants. Healthy forests which
maintain their tree cover contribute to carbon sequestration processes.
They also are a major force in the moderation of local and regional
climates, as well as the conservation of high quality water and other
resources. In addition, FHM works on facilitating assisted tree
migration efforts and gene conservation that involve reforestation and
afforestation in those areas where species have been identified as
vulnerable to climate change.
4. Purpose/Goals
Protect trees, forests, wood products, and grasslands on Federal
and state lands from invasive pests, diseases, and plants in
cooperation with National Forest System, other Federal departments on
other Federal lands, and with state foresters, or equivalent state
officials, subdivisions of states, agencies, institutions,
organizations, or individuals on non-Federal Lands.
5. Success in Meeting Programmatic Purpose/Goals
Acres protected on all lands:

FY 2008 1,303,420
FY 2009 1,383,804
FY 2010 1,258,512

6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Forest Health--Federal 50,504 54,632 57,776 54,236 57,940 56,279 58,968 59,399 57,282 64,650
Lands
National Fire Plan-- 9,144 8,783 16,014 14,892 19,249 17,974 16,596 19,899 20,752 23,182
Forest Health--
Federal Lands
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.

----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Forest Health-- 11,683 18,296 31,407 36,665 46,427 49,748 43,998 46,934 46,377 30,084
Cooperative Lands
National Fire Plan-- 3,164 2,738 4,788 8,327 12,399 9,414 10,998 11,011 9,630 6,895
Forest Health--
Cooperative Lands
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.

8. Annual Delivery Cost (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY
BFY BFY BFY BFY 2011
2007 2008 2009 2010 Est.
----------------------------------------------------------------------------------------------------------------
Forest Health--Federal Lands (Indirect) 6,943 5,090 4,901 4,985 4,985
Forest Health--Federal Lands (Direct) 6,774 5,850 6,5450 6,592 5,074
National Fire Plan--Forest Health--Federal Lands (Indirect) 1,075 1,155 1,112 1,229 1,229
National Fire Plan--Forest Health--Federal Lands (Direct) 3,602 2,896 1,486 1,626 2,770
Forest Health--Cooperative Lands (Indirect) 775 723 696 797 797
Forest Health--Cooperative Lands (Direct) 756 596 930 1,053 1,192
National Fire Plan--Forest Health--Cooperative Lands (Indirect) 249 229 221 399 399
National Fire Plan--Forest Health--Cooperative Lands (Direct) 244 327 295 527 585
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Cooperative Lands and National Fire Plan State Lands funding is
sent to State Foresters; landowner eligibility is determined by state
partners.
10. Utilization (Participation) Data
The Forest Service does not collect this data.
11. Duplication or Overlap with Other Programs
No.
12. Waste, Fraud and Abuse
There are no documented cases of waste, fraud or abuse in this
program. The USDA OIG did complete an audit on the Invasive Species
program in 2010. The agency is working to implement the OIG's
Recommendations.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Forest Legacy Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
The Forest Legacy Program (FLP) was authorized in the Food,
Agriculture, Conservation, and Trade Act of 1990. Initially only the
four Northern Forest states (Maine, New Hampshire, Vermont, and New
York) and Washington were eligible to participate. Congress
appropriated funds for the program in Fiscal Year 1992.
Initially, only the Federal Government was authorized to hold title
to lands or interests in lands. This changed with the 1996 Farm Bill.
The 1996 Farm Bill amended the Forest Legacy Program, to include the
State Grant Option. This allowed states as well as the Federal
Government to acquire FLP tracts and conservation easements. In the 20
years since authorization, participation in the FLP has expanded to 49
states and four U.S. territories.
The Federal Government may fund up to 75% of project costs, with at
least 25% coming from private, state, or local sources.
4. Purpose/Goals
The purpose of the FLP is to protect environmentally important
private forest areas that are threatened by conversion to non-forest
uses. In partnership with participating states and the Forest Service,
FLP works to identify important forestlands and protect them for future
generations. The FLP provides the opportunity for the continuation of
traditional forest uses, including forest management activities and
outdoor recreation. Using conservation easements and fee-simple
purchases, FLP gives priority to lands that have important scenic or
recreational values, riparian areas, fish and wildlife values, and
other ecological values.
5. Success in Meeting Programmatic Purpose/Goals
More than 2.2 million acres have been conserved by the FLP.

6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Forest Legacy 65,000 69,941 70,813 65,240 70,870 63,746 61,984 60,903 75,960 56,363
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.

7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Forest Legacy 29,604 25,730 51,684 54,018 61,989 53,041 53,966 54,252 60,714 47,422
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.
Also, it often takes multiple years for real estate transactions to close.

9. Eligibility Criteria
All states and territories of the United States are eligible to
participate in the Program. To enter the Program states must first
conduct an analysis and identify areas, known as Forest Legacy Areas
(FLAs) where the state will target their efforts. Only lands within
these FLAs are eligible to enter the FLP. In the past, this analysis
was referred to as the Assessment of Need and was only tied to the FLP.
Now this analysis is part of the Statewide Forest Resource Assessment
and Strategy. This document identifies priority areas for all State and
Private Forestry Programs.
Each year participating states submit projects to the Forest
Service for consideration for funding. A panel of six Forest Service
representatives and four participating state representatives score all
projects submitted according to National Scoring Guidance. This scoring
guidance is provided to the states to assist them in developing their
project applications. The national panel meets in January to finalize a
prioritized project list. This prioritized project list is then
submitted to the Office of Management and Budget and is released as
part of the President's Budget.
10. Utilization (Participation) Data
2.2 million acres are now part of the FLP. Not all funds are
expended in the same year that those funds are appropriated. This is
because land acquisition is often a lengthy and complicated process.
Projects are funded through grants to states. These grants have an
initial 2 year period. This can be extended up to 5 years.
11. Duplication or Overlap with Other Programs
There are no other programs with the sole purpose of identifying
and permanently protecting environmentally important forestlands. The
FLP differs from the agency's and Department of the Interior's Land
Acquisition program in that it does not provide for acquisition of
lands within the National Forest System or on Department of Interior
lands. It differs from other easement programs, like conservation
programs funded by the Natural Resources Conservation Service, because
those are focused on protecting wetlands, wildlife habitat, and highly
erodible cropland, not forests.
12. Waste, Fraud and Abuse
We are not aware of any instances of waste, fraud or abuse. USDA
OIG did complete a report on the Forest Legacy Program in 2011. The
agency is working to implement the OIG's Recommendations.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Forest Stewardship Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
The Forest Stewardship Program was authorized with the 1990 Farm
Bill to encourage the long-term stewardship of ``nonindustrial''
private forestland, by assisting landowners to more actively manage
their forest and related resources. During the program's early years,
the Forest Service worked through state agency partners to build
technical assistance delivery capacity and establish related programs.
In recent years, the Program has employed new geospatial technologies
and innovative planning tools, to become more focused and strategic,
enabling the Forest Service to work more effectively on private forests
and to better coordinate with state as well as National Forest lands.
These coordinated efforts address pressing landscape-scale resource
management concerns such as fire, water quality, forest products and
renewable energy supply.
4. Purpose/Goals
The Forest Stewardship Program is the only Forest Service program
focused on private forestland management. The program delivers
assistance by leveraging an effective national network of forestry
technical assistance providers and programs. Because of this unique
role--and since most of America's forests are privately owned--the
Forest Stewardship Program is essential to addressing any important
forest resource management issue. Individual forest landowners are
assisted within the context of forest resource management issues that
cross boundaries and encompass multiple ownerships and jurisdictions.
The Forest Stewardship Program plays a fundamental role in keeping
forests as forests, preparing forest landowners for forest products and
ecosystem services markets, qualifying them for incentive programs, and
maintaining jobs and diverse forest products markets in rural
communities.
5. Success in Meeting Programmatic Purpose/Goals
Since being authorized by the 1990 Farm Bill, the Forest
Stewardship Program has:

Served as the primary, most extensive (in reach and scope)
private forest owner assistance program in the U.S.

Successfully created and helped sustain a vast, effective
network of forestry technical assistance providers and
programs.

Provided more that 330,000 comprehensive forest management
plans covering more than 38 million acres nationwide.

Reached more than five million forest landowners through a
variety of technical and educational assistance programs.

Established strong and effective partnerships with State
Foresters, Conservation Districts and many other partners to
provide for broader forest landowner participation in USDA
conservation programs.

6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Forest Stewardship 34,128 35,630 34,119 52,988 36,978 42,517 31,667 30,522 29,369 35,941
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.

7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Forest Stewardship 33,024 32,398 33,328 35,313 43,604 40,873 38,345 30,103 29,502 20,720
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.

9. Eligibility Criteria
Essentially any private forest landowner is eligible to participate
in the Forest Stewardship Program. However, the program strives,
through its delivery partners, to reach landowners who might not
otherwise have access to forest management information and assistance.
Program outreach and extension activities are also focused on priority
landscapes, such as those identified in State Forest Action Plans,
where management is most likely to address pressing resource management
concerns--or support the growth of local forest dependent markets and
economies.
10. Utilization (Participation) Data
The following table details program utilization and participation
for the past 3 years:

------------------------------------------------------------------------
2008 2009 2010
------------------------------------------------------------------------
Number of landowners receiving 149,260 145,976 132,348
assistance
Number of landowner education 723,155 569,968 229,959
programs conducted
New or revised Forest Stewardship 1,747,812 2,076,278 1,840,255
Plans (acres covered)
New or revised Forest Stewardship 14,231 15,949 14,764
Plans (number of plans)
Base NIPF acres in Important 315,309,885 315,220,112 438,202,042
Forest Resource Areas
Acres covered by current Forest 18,823,374 18,627,113 19,721,990
Stewardship Plans (cumulative)
Acres in Important Forest 8,088,291 8,559,798 9,180,010
Resource Areas covered by
current Forest Stewardship Plans
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
This program is not duplicative with others. It is the only Forest
Service program focused on private forestland management and it often
works in concert with the USDA Conservation Title programs.
12. Waste, Fraud and Abuse
There are no documented cases of waste, fraud or abuse in this
program.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Urban and Community Forestry.
2. Subprograms/Department Initiatives
None.
3. Brief History
For over 30 years, U&CF has provided assistance to cities, suburbs
and towns, where more than 80% of Americans live, to improve the health
of our urban and community forests for the benefit of all. The Urban
and Community Forestry Program (U&CF) has some of the broadest
authorities and mandates in the Agency to improve trees and forests
across public and private lands where people live. All Americans
benefit from the multitude of services that the urban tree canopy
provides: improved human health and wellbeing, green jobs, energy
conservation, improved air and water quality, carbon sequestration,
recreation, and wildlife habitat. Urban and Community Forestry also
provides support and funding for cutting-edge technologies and
information, such as the ``i-Tree'' suite of local decision support
tools that include urban forest benefits assessment, pest detection and
storm response protocols.
4. Purpose/Goals
The Urban and Community Forestry Program promotes the benefits of
tree cover in urban areas and communities; encourages maintenance of
trees and community forests; and expands research and education efforts
intended to improve the understanding of trees' economic,
environmental, social and psychological, and energy conservation
benefits. Technology advancements, such as i-Tree, educate communities
about the local, tangible ecosystem services that trees provide and
encourage the linkage of urban forest management activities with
environmental quality and community livability.
5. Success in Meeting Programmatic Purpose/Goals
The Urban and Community Forestry Program uses the Community
Accomplishments Reporting System (CARS) as a database to track state
performance accomplishments and financial assistance provided to
communities.

FY 2008 7,139 communities assisted, 177 million people

FY 2009 6,853 communities assisted, 173 million people

FY 2010 7,102 communities assisted, 177 million people

6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Urban 37,908 39,726 39,955 49,607 32,023 31,404 29,063 33,505 30,377 35,225
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.

7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Urban 33,363 31,504 34,106 35,727 38,208 34,562 39,576 27,529 29,513 22,188
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.

9. Eligibility Criteria
The Urban and Community Forestry Program is available to State
Foresters or equivalent state agencies, interested members of the
public, private nonprofit organizations and others. All states as well
as the District of Columbia, Puerto Rico, the United States Virgin
Islands, the Commonwealth of the Northern Mariana Islands, American
Samoa and Guam, and other territories and possessions of the United
States are eligible. To fully qualify for support from the U&CF
Program, states (including Washington D.C. and the U.S. affiliated
islands) are required to maintain the following elements: Urban and
Community Forestry Program Coordinator, Volunteer/Partnership
coordination, an Urban and Community Forest Council, and state program
strategic plan (5 year).
The Program is delivered through a continually expanding
partnership network of state forestry agencies, local governments,
nonprofit groups, the private sector, community organizations,
volunteers, other Federal agencies, and other Forest Service programs.
State forestry agencies are the primary partner in program delivery of
financial, technical and educational assistance to communities. Their
efforts include assisting communities to establish vital, sustainable
urban forestry programs.
10. Utilization (Participation) Data
The Urban and Community Forestry Program uses the Community
Accomplishments Reporting System (CARS) as a database to track state
performance accomplishments and financial assistance provided to
communities. UCF Program performance is measured on an annual basis by
tracking the percentage of U.S. population living in communities that
are ``Managing'' or ``Developing'' programs to plant, protect, and
maintain their urban and community forestry trees and forests (as
compared to total U.S. population living in communities). Communities
``managing'' programs have received state assistance to achieve all the
following national performance measures: management plans, professional
staff, ordinances/policies, and a local advisory group. Communities
with ``developing'' programs have received state assistance to achieve
at least one, but less than four of the national performance measures.

FY 2008 7,139 communities assisted, 177 million people

FY 2009 6,853 communities assisted, 173 million people

FY 2010 7,102 communities assisted, 177 million people
11. Duplication or Overlap with Other Programs
This program is not duplicative with other programs.
12. Waste, Fraud and Abuse
There are no documented cases of waste, fraud or abuse in this
program.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
State Fire Assistance (SFA).
2. Subprograms/Department Initiatives
The SFA program is split into two subprograms, SFA-SPCF and SFA-
SPS2.
SFA-SPCF funds are used to address critical preparedness needs for
firefighter safety, increased initial attack capability, and training.
An emphasis should be placed on funding areas that have developed or
are developing Community Wildfire Protection Plans (CWPPs), FEMA hazard
mitigation plans, or other collaboratively developed hazard mitigation
plans. This is funded in the State and Private Forestry appropriation.
SFA-SPS2 funds designated for community protection on priority
landscapes shall only be used on priority landscapes identified in
state assessments. The funds shall only be used for hazardous fuel
reduction projects adjacent to communities at risk with an emphasis on
biomass utilization in locations with existing biomass utilization
infrastructure. The funds will be allocated 60 percent to the Western
States, 25 percent to the Southern States, and 15 percent to the
Northeastern States. This is funded in the Wildland Fire Management
appropriation.
3. Brief History
SFA (formerly Rural Fire Prevention and Control) has been funded
annually since 1911 to provide technical and financial assistance to
states to improve wildfire protection capabilities.
4. Purpose/Goals
The SFA program provides matching financial assistance through
partnership agreements to State Foresters for all fire management
activities including preparedness activities, planning, training,
hazardous fuel treatments, and the purchase and maintenance of
equipment. Funding enables state and local fire protection
organizations to be effective first responders for initial attack on
wildland fires and to respond effectively to all types of disasters.
5. Success in Meeting Programmatic Purpose/Goals
The SFA program has been very successful in meeting its purposes
and goals. Additional communities at risk have been able to develop
Community Wildfire Management Plans (CWPPs) and to complete hazardous
fuels reduction projects. Detailed information on the number of
communities assisted, acres treated and CWPPs developed in provided in
the response to Question 10.

6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
State Fire Assistance 27,106 27,566 36,089 36,077 63,108 34,751 33,846 37,211 39,147 35,891
National Fire Plan-- 57,056 66,252 76,176 57,587 50,007 50,802 50,535 58,452 77,611 69,239
State Fire Assistance
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.

7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
State Fire Assistance 23,581 50,194 17,477 36,490 47,860 41,543 35,213 31,723 33,438 25,621
National Fire Plan-- 19,492 34,632 41,477 45,455 44,416 37,061 43,813 47,403 37,924 39,885
State Fire Assistance
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.

9. Eligibility Criteria
State Forestry Agencies.

10. Utilization (Participation) Data
------------------------------------------------------------------------
FY 2008 FY 2009 FY 2010
------------------------------------------------------------------------
Communities directly assisted 5,960 5,565 1,524
with management plans, risk
assessments, etc.
Hazardous fuels reduction or 8,149 6,743 3,499
mitigation projects conducted
Acres treated to reduce hazardous 292,804 179,544 156,804
fuels (direct Federal grant
only)
Acres treated to reduce hazardous 165,028 335,055 290,504
fuels (leveraged through Federal
funding)
Communities at Risk covered by 4,629 5,567 5,757
CWPP or equivalent
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
State Fire Assistance works in concert with the Volunteer Fire
Assistance Program, which is limited to rural communities of 10,000
people or less. The State Fire Assistance program is duplicative of the
Department of the Interior's Rural Fire Assistance Program. However,
that program has been proposed for termination due to duplication. The
Department of Homeland Security also administers programs that
partially overlap with some SFA activities, including training and the
purchase of equipment, though DHS programs are provided nationwide and
not focused on rural communities.
12. Waste, Fraud and Abuse
There have been no documented cases of waste, fraud or abuse in
this program.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Healthy Forests Reserve Program (HFRP), prepared by USDA's Natural
Resources Conservation Service (NRCS).
2. Subprograms/Department Initiatives
None.
3. Brief History
Title V of the Healthy Forests Restoration Act of 2003 (Public Law
108-148) authorized the establishment of the Healthy Forests Reserve
Program (HFRP) which was reauthorized by the 2008 Farm Bill.
HFRP provides financial assistance for specific conservation
actions completed by the landowner. As funds are made available, the
NRCS Chief solicits project proposals State Conservationists have
developed in cooperation with partnering organizations. States selected
for funding provide public notice of the availability of funding within
the selected area. HFRP offers four enrollment options:

10 year restoration agreement for which the landowner may
receive 50 percent of the average cost of the approved
conservation practices;

30 year easement for which the landowner may receive 75
percent of the easement value of the enrolled land plus 75
percent of the average cost of the approved conservation
practices; or

6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
FY Funding (dollars in thousands)
------------------------------------------------------------------------
2002 --
2003 --
2004 --
2005 --
2006 --
2007 --
2008 --
2009 $9,750
2010 $9,750
2011 $9,750
------------------------------------------------------------------------
Note: Healthy Forests Reserve Program began Mandatory funding in 2009.

8. Annual Delivery Cost (FY 2007-FY 2011)

Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Program
Program Items

Healthy Forests Reserve Program

Conservation Planning and 19 12 180 187 301
Technical Consultation
Conservation 21 15 382 398 641
Implementation
Financial Assistance-- 9 58 459 478 770
Program Administration
Indirect Costs 78 66 314 328 529
-------------------------------------------------------------------------------
Sub-total Technical 127 151 1,335 1,391 2,241
Assistance
-------------------------------------------------------------------------------
Financial Assistance--Cost 2,349 1,835 1,191 6,226 7,509
Share & Monetary
Incentive
===============================================================================
Total Costs 2,476 1,986 2,526 7,617 9,750
FTEs 1 2 5 6 23

Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual; Fiscal Year 2011 is an estimate from the Fiscal Year
2012 President's Budget submission. A copy of this section is an addendum to the Questionnaire.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
Incentives.'' Funds associated with technical assistance are on the remaining four lines.

Contract Fiscal Year 2010
------------------------------------------------------------------------
10 Year
Restoration 30 Year Permanent
Agreements Easements Easements
------------------------------------------------------------------------
Number 1 1 2 9
Acres 1 2,747 1,416 1,472
Dollars Obligated $599,988 $882,139 $4,994,249
------------------------------------------------------------------------
1 Numbers currently reported in NEST are undergoing an intense quality
assurance review.

1. Program Name
Emergency Forest Restoration Program (EFRP).
2. Subprograms/Department Initiatives
None.
3. Brief History
The Food, Conservation, and Energy Act of 2008 added EFRP which is
intended to provide emergency disaster assistance for nonindustrial
private forestland similarly to assistance provided for farm land by
the Emergency Conservation Program.
4. Purpose/Goals
EFRP was authorized by the 2008 Farm Bill to provide financial
assistance to owners of nonindustrial private forestland to carry out
emergency measures to restore land that has been damaged by a natural
disaster.
5. Success in Meeting Programmatic Purpose/Goals
A 2010 supplemental appropriation provided $18 million to be
available until expended. Over $15 million has been allocated which
reserves funding for errors, omissions, and appeals and technical
assistance. There are unfunded requests of approximately $23.6 million.

6. Annual Budget Authority (FY 2002-FY 2011)

Funding was appropriated by the 2010 Supplemental Appropriations Act. Funding for this program was obligated starting in FY 2011.

FY 2002 Through FY 2011 Budget Authority for Farm Service Agency Conservation Programs
(Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
BFY BFY BFY BFY BFY BFY BFY BFY BFY BFY
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
----------------------------------------------------------------------------------------------------------------
Emergency Forest 0 0 0 0 0 0 0 0 18,000 0
Restoration Program
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)

The EFRP is a discretionary program account.

8. Annual Delivery Cost (FY 2007-FY 2011)

Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:

Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically thriving.

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

Income Support and Disaster
Assistance

Emergency Forest 0 0 0 18,000
Restoration Program

9. Eligibility Criteria

Land that is eligible under EFRP includes NIPF land or which all of the following are true:

is physically located in a county or portion of a county that has been approved for EFRP

has existing tree cover (or had tree cover immediately before the natural disaster and is suitable for growing trees)

has damage to natural resources caused by a natural disaster that, if not treated, would impair or endanger the natural resources on
the land and would materially affect future use of the land.

10. Utilization (Participation) Data
Over $15 million in requests have been funded since the November
2010 publication of the EFRP rule in the Federal Register.

EFRP Allocations
------------------------------------------------------------------------
State Other--Winds Wildfire Tornado Total
------------------------------------------------------------------------
AL $3,310,000 $3,310,000
AR $2,000,000 $2,000,000
GA $844,000 $844,000
ID $726,000 $726,000
MN $620,000 $620,000
MS $6,631,900 $6,631,900
NH $551,900 $551,900
OH $80,000 $84,000 $164,000
VT $140,000 $34,000 $174,000
---------------------------------------------------------
Total....... $1,497,900 $0 $13,523,900 $15,021,800
------------------------------------------------------------------------

There are 33 requests for which funds are not available totaling
$23.6 million for EFRP as of July 12, 2011. Requests are from Alabama,
Georgia, Mississippi, North Carolina, Tennessee, and Virginia due to
April southeastern tornados, and Massachusetts and Ohio for June
tornados.

EFRP Unfunded Requests as of July 12, 2011
------------------------------------------------------------------------
Amount
State Counties Requested
------------------------------------------------------------------------
MS Attala, Clarke, Monroe, Neshoba, Newton $1,750,000
NC Bertie $500,000
MS Choctaw, Noxubee, Webster, Winston $3,255,741
NC Person $15,000
AL Elmore, Fayette, Lawrence, Tallapoosa $1,600,000
GA Jasper, Morgan $176,100
NC Johnston $10,000
AL Limestone $100,000
MS Lafayette $50,000
GA Bartow, Cherokee, Gordon, Harris, Pickens $740,000
GA Floyd, Polk $600,000
GA Catoosa, Dade, Walker $1,830,000
NC Harnett $50,000
NC Cumberland $350,000
GA Spalding $500,000
MS Alcorn, Tishomingo $55,000
OH Fulton $8,250
TN Bledsoe $100,000
NC Lee $50,000
AR Hot Springs $60,000
NC Jackson $10,000
AL Colbert $75,000
TN Marion, Sequatchie $600,000
TN Greene, Washington $125,000
TN Johnson $150,000
AL Washington $5,000
TN Bradley, Hamilton, Rhea $5,000,000
MA Hampden, Worcester $4,400,000
VA Smyth, Washington $600,000
AR Johnson $250,000
MS Lafayette $463,812
NC Caldwell $18,500
TN McMinn $65,000
---------------
Total..... $23,562,403
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
There are no other current programs that duplicate or overlap the
EFRP. The Conservation Reserve Program implemented the Emergency
Forestry Conservation Reserve Program to restore land impacted by the
2005 hurricanes. The Emergency Conservation Program restores farmland
impacted by Natural disaster but does not address nonindustrial
forestland
12. Waste, Fraud and Abuse
No waste fraud or abuse has been documented at this time.
13. Effect of Administrative PAYGO
Not applicable.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--Energy
1. Program Name
Biobased Markets Program (BioPreferred' program--Section
9002).
2. Subprograms/Department Initiatives
None.
3. Brief History
Section 9002 of the Farm Security and Rural Investment Act (2002
Farm Bill) and Section 9002 of the Food, Conservation, and Energy Act
(2008 Farm Bill) established a Federal procurement preference and
voluntary label for biobased products. As defined in the 2008 Farm
Bill, a biobased product is ``. . . determined by the Secretary to be a
commercial or industrial product (other than food or feed) that is
composed, in whole or in significant part, of biological products,
including renewable domestic agricultural materials and forestry
materials, or an intermediate ingredient or feedstock.'' Biobased
products include such industrial products as cleaners, lubricants,
biopolymers, building materials, insulation, roof coatings, fuel
additives, and other sustainable industrial materials made from
agricultural commodities.
4. Purpose/Goals
The mission of the BioPreferred' program is to develop
and expand markets for biobased products through (1) preferred Federal
procurement of biobased products government-wide and (2) a voluntary
labeling program to raise consumer awareness and stimulate biobased
product acquisition in the commercial sector.
5. Success in Meeting Programmatic Purpose/Goals
To date, USDA has promulgated BioPreferred' program
guidelines and six rounds of regulations designating categories of
biobased products for preferred Federal procurement. As a result, there
are now 50 designated product categories. A seventh designation rule
with 14 product categories should be promulgated later this month. When
Round 7 is published, 64 categories and almost 9,000 products will be
approved for preferred Federal procurement. USDA promulgated the
voluntary labeling rule earlier this year; and over 430 products from
150 companies have been certified to carry the USDA Certified Biobased
label to date. In FY 2010, 88 percent of all applicable USDA contracts
included biobased clauses or purchases, up from 80 percent in FY 2008
and 84 percent in FY 2009. In addition, there are over 20,000 biobased
products and the number and types of products continue to grow.

6. Annual Budget Authority (FY 2002-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
CCC Transfer 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 2,000,000 2,000,000 2,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: $2,000,000 was transferred from CCC annually to Departmental Management beginning in FY 2009 when Departmental Management took over the program
from the Office of the Chief Economist.

7. Annual Outlays (FY 2002-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (2,000,000) (2,000,000) (1,626,015)
Balance -- -- -- -- -- -- -- -- -- 373,985
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Outlays as of July 12, 2011

8. Annual Delivery Cost (FY 2002-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
OCE BA Transfer 420,000 890,000 900,000 992,000 883,000 850,000 650,000 810,000 657,000 657,000
Outlays (420,000) (890,000) (900,000) (992,000) (883,000) (850,000) (650,000) (810,000) (657,000) (629,563)
---------------------------------------------------------------------------------------------------------------------------------
Balance -- -- -- -- -- -- -- -- -- 27,437
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: A one-time transfer of $810,000 in BA was made from the Office of the Chief Economist in FY 2009. Outlays as of July 12, 2011.

9. Eligibility Criteria
Private companies ranging from very small businesses to very large
businesses, which make and/or distribute biobased products, are
eligible to participate in the BioPreferred' voluntary
labeling program. Federal agencies are required to participate in the
Federal procurement preference program.
10. Utilization (Participation) Data
Over 1,600 companies currently participate in the
BioPreferred' program. Approximately 150 companies have
products certified for the USDA Certified Biobased label.
11. Duplication or Overlap with Other Programs
There are no other programs that share the mission of the
BioPreferred' program.
12. Waste, Fraud and Abuse
There have been no Office of Inspector General or Government
Accountability Office audits of the program conducted on the
BioPreferred' program in the last 5 years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Biorefinery Assistance Program (Section 9003).
2. Subprograms/Department Initiatives
None.
3. Brief History
The Biorefinery Assistance Program is authorized under Section 9003
of the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill)
as amended by Section 9001 of the Food, Conservation, and Energy Act of
2008 (2008 Farm Bill). Through the 2008 Farm Bill, the Secretary of
Agriculture is directed to make available:

Grants to assist in paying the costs of the development and
construction of demonstration-scale biorefineries to
demonstrate the commercial viability of one or more processes
for converting renewable biomass to advanced biofuels; and

Guarantees for loans made to fund the development,
construction, and retrofitting of commercial-scale
biorefineries using eligible technology.

Because the 2008 Farm Bill and subsequent appropriations bills do
not provide any funds for the grant portion of the program, only the
guaranteed loan portion has been implemented to date.
As described below, the Biorefinery Assistance Program was
initially implemented through a series of notices published in the
Federal Register while a rule was being developed.
The Agency initiated that Biorefinery Assistance Program with the
issuance of a Notice of Funds Availability (NOFA) on November 20, 2008.
This NOFA announced the acceptance of applications for loan guarantees
and the availability of $75 million of mandatory budget authority in
Fiscal Year 2009 to support loan guarantees. In response to this
November 20, 2008, NOFA, a loan guarantee was approved for Sapphire
Energy for $54.5 million, in conjunction with a $50 million grant from
the Department of Energy (DOE). In addition, a Loan Note Guarantee was
issued on July 19, 2011, for a $12.8 million loan guarantee to Fremont
Community Digester.
On May 6, 2010, the Agency issued another NOFA requesting
applications for Fiscal Year 2010 funds of up to $150 million in budget
authority. In response to this NOFA, the Agency issued three
conditional commitments to INEOS New Plant Bioenergy, LLC, for $75
million, Enerkem Corporation for $80 million, and Coskata, Inc., for
$87.85 million.
On April 16, 2010, USDA published a proposed rule on which the
public was afforded the opportunity to comment. Comments were received
from 42 commenters, yielding 352 individual comments on the proposed
rule, which were grouped into categories based on similarity.
Commenters included biorefinery owner/operators, community development
groups, industry and trade associations, investment banking
institutions, Rural Development personnel, and individuals. The Agency
reviewed the comments and based, in part, on those comments developed
an Interim Rule, which was published on February 14, 2011.
Following the publication of the Interim Rule, the Agency issued a
NOFA on March 11, 2011, announcing the availability of approximately
$129 million in mandatory budget authority for Fiscal Year 2011. This
level of funding supports $463 million in available program level.
A NOFA of Application Deadline was published on June 6, 2011,
extending the period of time for acceptance of applications for Fiscal
Year 2011 program funds until July 6, 2011. The Agency is reviewing 11
applications requesting almost $1 billion in loan guarantee support.

Farm to Fly Project

In an effort to reach the Renewable Fuel Standard (RFS2) annual
renewable fuel volume targets, culminating in an overall level of 36
billion gallons in 2022, USDA is examining air transportation fuel as a
key component in achieving the mandate. Twenty-one (21) million gallons
of the RFS2 mandate will come from advance biofuels other than corn
kernel starch ethanol, which has nearly reached the 15 billion gallons
allowed under RFS2.
The purpose of this effort is to support the Administration's plan
to meet the RFS2 by identifying barriers associated with availability
of aviation biofuel commercialization and provide recommendations on
how to best overcome these barriers. The project seeks to develop a
program to fund and install commercial-scale biofuel production that
will provide aviation grade fuel.

USDA/Department of Navy Hawaii Project

The Department of the Navy (DON) plans to reduce its reliance on
foreign oil to meet its energy needs and views the use of advanced
biofuels as an important pathway to reach its energy security goals.
The USDA and the DON have signed a Memorandum of Understanding (MOU)
outlining the mutual effort to support the use of advanced biofuels and
other forms of renewable energy. The State of Hawaii has been selected
as a pilot for the development of a model for future mutual support for
accomplishing the DON's energy goals.
4. Purpose/Goals
The 2008 Farm Bill identifies the purpose of this program as: ``the
development of advanced biofuels, so as to--

(1) Increase the energy independence of the United States;

(2) Promote resource conservation, public health, and the
environment;

(3) Diversify markets for agricultural and forestry products and
agriculture waste material; and

(4) Create jobs and enhance the economic development of the rural
economy.''

The program also supports Presidential Energy Independence and
Security Goals:

To Develop and Secure America's Energy Supplies

To Provide Consumers with Choices to Reduce Costs and
Save Energy, and

To Innovate Our Way to a Clean Energy Future.
5. Success in Meeting Programmatic Purpose/Goals
To date, a total of $415.1 million has been obligated in loan
guarantee authorities to leverage an estimated $1.5 billion in total
project costs toward the construction and retrofitting of commercial
scale advanced biofuel facilities.
When operational, these facilities are expected to produce 113
million gallons of advanced biofuels, generate 24.6 million kilowatts
hours of renewable electricity, and reduce green house gas emissions by
an estimated 0.6 million metric tons of carbon dioxide.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
Funding Levels:
The 2008 Farm Bill provided $75 million (budget authority) in FY
2009 and $245 million in FY 2010 for commercial-scale biorefinery loan
guarantees. The farm bill also authorized discretionary funding of up
to $150 million per year starting in FY 2009 and continuing through FY
2012 for both demonstration and commercial scale biorefineries.
7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
The Biorefinery Assistance Program was enacted under the 2008 Farm
Bill. Thus, there were no annual outlays in Fiscal Years 2002 through
2008. Annual outlays for Fiscal Years 2009 through 2011 are shown
below.

------------------------------------------------------------------------
FY 2009 Actual FY 2010 Actual FY 2011 Est.
------------------------------------------------------------------------
0 $27,000,000 $23,000,000
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
As noted above, the Biorefinery Assistance Program was enacted
under the 2008 Farm Bill. Thus, there were no annual delivery costs in
Fiscal Years 2002 through 2008. Annual delivery costs for Fiscal Years
2009 through 2011 are shown below.

------------------------------------------------------------------------
FY 2009 Amount FY 2010 Amount FY 2011 Amount
(000) (000) (000)
------------------------------------------------------------------------
Direct administrative $474 $261 $261
costs
Indirect administrative $233 $671 $671
costs
------------------------------------------------------------------------

9. Eligibility Criteria
Being a guaranteed loan program, the Biorefinery Assistance Program
has eligibility requirements for both borrower and lenders; it also
identifies when an otherwise eligible borrower would be considered
ineligible. Of these requirements, only those for eligible borrowers
are specified in the 2008 Farm Bill.

A. Borrower Eligibility

Eligible borrowers. To be eligible, a borrower must meet the
requirements the following requirements:

(1) The borrower must be one of the following:

(i) An individual;
(ii) An entity;
(iii) An Indian tribe;
(iv) A unit of State or local government;
(v) A corporation;
(vi) A farm cooperative;
(vii) A farmer cooperative organization;
(viii) An association of agricultural
producers;
(ix) A National Laboratory;
(x) An institution of higher education;
(xi) A rural electric cooperative;
(xii) A public power entity; or
(xiii) A consortium of any of the above
entities.

(2) Each borrower must have, or obtain before loan
closing, the legal authority necessary to construct,
operate, and maintain the proposed facility and
services and to obtain, give security for, and repay
the proposed loan.

The Biorefinery Assistance Program also identifies certain
conditions under which a borrower will be considered ineligible
for a guarantee. These are if the borrower, any owner with more
than 20 percent ownership interest in the borrower, or any
owner with more than three percent ownership interest in the
borrower if there is no owner with more than 20 percent
ownership interest in the borrower:

(1) Has an outstanding judgment obtained by the U.S.
in a Federal Court (other than U.S. Tax Court),
(2) Is delinquent on the payment of Federal income
taxes,
(3) Is delinquent on a Federal debt, or
(4) Is debarred or suspended from receiving Federal
assistance.

B. Lender Eligibility

(1) An eligible lender is any Federal or state
chartered bank, Farm Credit Bank, other Farm Credit
System institution with direct lending authority, and
Bank for Cooperatives. These entities must be subject
to credit examination and supervision by either an
agency of the United States or a state. Credit unions
subject to credit examination and supervision by either
the National Credit Union Administration or a state
agency, and insurance companies regulated by a state or
national insurance regulatory agency are also eligible
lenders. The National Rural Utilities Cooperative
Finance Corporation is also an eligible lender. Savings
and loan associations, mortgage companies, and other
lenders as identified in 7 CFR 4279.29(b) are not
eligible.
(2) The lender must demonstrate the minimum
acceptable levels of capital specified in paragraphs
(c)(2)(i) through (c)(2)(iii) of this section at the
time of application and at time of issuance of the loan
note guarantee. This information may be identified in
Call Reports and Thrift Financial Reports. If the
information is not identified in the Call Reports or
Thrift Financial Reports, the lender will be required
to calculate its levels and provide them to the Agency.

(i) Total Risk-Based Capital ratio of ten
percent or higher;
(ii) Tier 1 Risk-Based Capital ratio of six
percent or higher; and
(iii) Tier 1 Leverage Capital ratio of five
percent or higher.

(NOTE: These three terms have the meaning
given them under applicable Federal Deposit
Insurance Corporation regulations.)

(3) The lender must not be debarred or suspended by
the Federal Government.
(4) If the lender is under a cease and desist order
from a Federal agency, the lender must inform the
Agency. The Agency will evaluate the lender's
eligibility on a case-by-case basis given the risk of
loss posed by the cease and desist order.
(5) The Agency, in its sole determination, will
approve applications for loan guarantees only from
lenders with adequate experience and expertise, from
similar projects, to make, secure, service, and collect
loans approved under this subpart.
10. Utilization (Participation) Data
To date, seven projects have been approved for Biorefinery
Assistance guaranteed loans. Of the seven approved projects, one
project entered into servicing and one project was de-obligated:

Range Fuels, Inc. (cellulosic ethanol)--$80 million
guaranteed loan approved 1/16/09. Loan closed on 2/10/10. On
January 3, 2011, Range Fuels failed to make the scheduled
payment for principal and interest on the Bonds. Range Fuels is
current on deferred principal/interest only payments and
working to find additional partners with capabilities of
financial support. The Agency is reviewing a plan from the
Lender outlining the potential transfer/sale.

SoyMor Biodiesel, LLC (waste corn oil/distillers syrup
from ethanol facilities)--$25 million application approved on
6/10/09. On September 1, 2010, RD received letter from
(American Bank) stating the lender no longer qualifies as an
eligible lender, having fallen below the minimum acceptable
levels of capital. SoyMor was unable to obtain a new lender.
The $25 million was de-obligated on 3/2/10.

Sapphire Energy (algae to advanced aviation fuel)--$54.5
million guaranteed loan approved 12/03/2009. Agency continues
to work with Lender to close the loan.

Freemont Community Digester (anaerobic digester/will
process community waste, mostly food and beverage; has a
contractual arrangement to sell waste CO2)--$12.75
million loan guarantee approved 10/15/2010. Loan closed; Agency
issued a loan note guarantee on July 19, 2011.

Enerkem Corporation (Cellulosic Ethanol)--$80 million
guaranteed loan approved 1/4/2011.

INEOS New Planet BioEnergy, LLC (Cellulosic Ethanol)--
$75 million guaranteed loan approved 1/4/2011. Agency continues
to work with Lender to close the loan.

Coskata, Inc. (Cellulosic Ethanol)--$87.85 million
guaranteed loan approved 6/3/2011. Agency continues to work
with Lender to close the loan.
11. Duplication or Overlap with Other Programs
The Biorefinery Assistance Program is not a duplicate of any other
USDA program. There are no other programs that have the sole purpose of
funding biorefineries involved in advanced biofuel production, and that
involve the private sector on each transaction.
12. Waste, Fraud and Abuse
The Biorefinery Assistance Program is a new program enacted with
the 2008 Farm Bill. No Office of Inspector (OIG) or Government
Accountability Office (GAO) audit of the program was conducted in the
past 5 years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Repowering Assistance Program (Section 9004).
2. Subprograms/Department Initiatives
None.
3. Brief History
The Repowering Assistance Program is authorized under Section 9004
of the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill)
as amended by Section 9001 of the Food, Conservation, and Energy Act of
2008 (2008 Farm Bill). Through the 2008 Farm Bill, the Secretary of
Agriculture is directed to ``make payments to any biorefinery that
meets the requirements of this section for a period determined by the
Secretary.'' The 2008 Farm Bill provided $35 million over the life of
the 2008 Farm Bill.
As described below, the Repowering Assistance Program was initially
implemented through a series of notices published in the Federal
Register while a rule was being developed.
The Agency initiated that Repowering Assistance Program with the
issuance of a Notice of Funds Availability (NOFA) on June 12, 2009.
This NOFA announced the acceptance of applications and the availability
of $20 million to make payments for the conversion of biorefinery
heating and power systems to renewable biomass. On May 6, 2010, the
Agency issued a NOFA releasing another $8 million in budget authority
for FY 2010.
On April 16, 2010, USDA published a proposed rule on which the
public was afforded the opportunity to comment. Comments were received
from eight commenters, yielding 30 individual comments, which were
grouped into similar categories. Commenters included biorefinery owner/
operators, Rural Development personnel, trade associations, and
individuals. The Agency reviewed the comments and based, in part, on
those comments developed an Interim Rule, which was published on
February 11, 2011.
Following the publication of the Interim Rule, a NOFA was published
on March 11, 2011, to announce the availability of approximately $25
million in assistance payments.
4. Purpose/Goals
The purpose of the program as encouraging eligible biorefineries
that use fossil fuels to produce heat or power to operate the
biorefinery to replace such fossil fuels with renewable biomass.
The program also supports Presidential Energy Independence and
Security Goals:

To Develop and Secure America's Energy Supplies;

To Provide Consumers with Choices to Reduce Costs and
Save Energy; and

To Innovate Our Way to a Clean Energy Future.
5. Success in Meeting Programmatic Purpose/Goals
One applicant, Lincolnway Energy, LLC, received an award of $1.9
million in response to the FY 2009 funding notice. Two applications,
which were recently received, are pending with the Agency and total
$5.5 million. Thus, to date, approximately $7.5 million of the
available $35 million for the program may be expended. The amount of
energy that would be replaced at these three projects is: 983,436
dekatherms; 1,696,678 dekatherms; and 2,050 kilowatt hours per day.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
Funding Levels:
The 2008 Farm Bill provided $35 million to remain available until
expended. The 2008 Farm Bill also authorizes additional discretionary
funding of up to $15 million per year, from FY 2009 through 2012. To
date, no discretionary funds have been appropriated.

------------------------------------------------------------------------
FY 2009 through FY 2011
------------------------------------------------------------------------
Repowering Assistance Payments 35,000,000
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
The Repowering Assistance Program was enacted under the 2008 Farm
Bill. Thus, there were no annual outlays in Fiscal Years 2002 through
2008. In addition, although the Agency has approved one application for
payment, no outlays in Fiscal Years 2009 through 2011 have yet to be
made.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
Because they are both Energy Assistance Payments, the Agency tracks
the Repowering Assistance Program and the Advanced Biofuel Payment
Program together. Thus, the Agency does not have information on Annual
Delivery Cost per program. The following table presents the Annual
Delivery Cost for both program combined. Please note that because these
two programs were initiated with the 2008 Farm Bill, there are no
delivery costs from Fiscal Years 2002 through 2008.

Energy Assistant Payments:
Repowering Assistance Payments & Bioenergy Program for Advanced Biofuels
Payments
------------------------------------------------------------------------
2009 2010 2011
------------------------------------------------------------------------
Program Level $0 $20,503 $85,000
Budget Authority 0 20,503 85,000
Administrative Costs 418 261 248
(Direct)
Administrative Costs 196 671 639
(Indirect)
-----------------------------------------------
Total Costs 614 21,435 85,887
------------------------------------------------------------------------
Note: These numbers are consistent with the published ``Full Cost by
Secretary's Strategic Priorities'' section of the Explanatory Notes
for Fiscal Years 2009 through 2012 President's Budget submissions. In
the table above, Fiscal Years 2007 through 2010 amounts are actual;
Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President's
Budget submission.

9. Eligibility Criteria
As stated in the authorizing statute: ``To be eligible to receive a
payment under this section, a biorefinery shall demonstrate to the
Secretary that the renewable biomass system of the biorefinery is
feasible based on an independent feasibility study that takes into
account the economic, technical and environmental aspects of the
system.'' The Interim Rule requires the applicant to submit a such
feasibility study that has been conducted by an independent qualified
consultant, who has no financial interest in the biorefinery.
The authorizing statute also requires that the biorefinery at which
the repowering project is to be implemented must have been in existence
on or before June 18, 2008 (the date of the 2008 Farm Bill).
The Interim Rule also includes additional criteria for an applicant
to be eligible for this program, as described below.

(1) Timely complete application submission. To be eligible for
this program, the applicant must submit a complete application
within the application period.
(2) Multiple biorefineries. Corporations and entities with more
than one biorefinery can submit an application for only one of
their biorefineries. However, if a corporation or entity has
multiple biorefineries located at the same location, the entity
may submit an application that covers such biorefineries
provided the heat and power used in the multiple biorefineries
are centrally produced. For example, a corporation or entity
may make one application, that application may include multiple
projects, so long as they are served by one repowering project.
Example of an acceptable application: Three plants use process
heat from a single Repowering Project located on the plant
site. Example of an unacceptable application: Two plants owned
by the same entity are located 10 miles apart and each is
powered by a different system in which the applicant proposes
two separate Repowering Projects to replace the two existing
systems.
(3) Cost-effectiveness. The application must be awarded at least
minimum points (at least five points) for cost-effectiveness.
(4) Percentage of reduction of fossil fuel use. The application
must be awarded at least minimum points (at least five points)
for percentage of reduction of fossil fuel use.
(5) Full project financing. The applicant must demonstrate that
it has sufficient funds or has obtained commitments for
sufficient funds to complete the repowering project taking into
account the amount of the payment request in the application.

In addition, a project is not eligible for this program if it is
using feedstocks for repowering that are feed grain commodities that
received benefits under Title I of the Food, Conservation, and Energy
Act of 2008. This ineligibility provision is included to prevent
payment to a feedstock that is an underlying commodity that received a
payment under Title I.
10. Utilization (Participation) Data
Since the program's inception, the Agency received ten applications
for repowering assistance. The current disposition of these
applications is as follows:

1 applicant has accepted the conditional commitment

2 applicants are currently under review

4 applicants were issued conditional commitments, but
elected to withdraw their applications

1 applicant accepted, but did not proceed with project
implementation

2 applicants were determined to be ineligible
11. Duplication or Overlap with Other Programs
The Repowering Assistance Program is not a duplicate of any other
USDA program. In addition, the Repowering Assistance Program does not
duplicate any other Federal program, based on our understanding of
those programs.
12. Waste, Fraud and Abuse
The Repowering Assistance Program is a new program enacted with the
2008 Farm Bill. No Office of Inspector (OIG) or Government
Accountability Office (GAO) audit of the program was conducted in the
past 5 years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Advanced Biofuel Payment Program (Section 9005).
2. Subprograms/Department Initiatives
None.
3. Brief History
The Advanced Biofuel Payment Program is authorized under Section
9005 of the Farm Security and Rural Investment Act of 2002 (2002 Farm
Bill) as amended by Section 9001 of the Food, Conservation, and Energy
Act of 2008 (2008 Farm Bill). Through the 2008 Farm Bill, the Secretary
of Agriculture is directed to ``make payments to eligible producers to
support and ensure an expanding production of advanced biofuels.''
As described below, the Advanced Biofuel Payment Program was
initially implemented through a series of notices published in the
Federal Register while a rule was being developed.
The 2008 Farm Bill provided $55 million in funding for 2009. A
Notice of Contract Proposals (NOCP) for $30 million to make payments to
biorefineries for the production of advanced biofuels (other than corn
kernel starch) was published in the Federal Register on June 12, 2009.
In December 2009, the Agency made payments to 141 producers totaling
$14.7 million for FY 2009 awards. A NOCP was published on March 12,
2010, making the remaining funding from the 2009 NOCP of $15.2 million
available; the application window closed on June 15, 2010. On August
18, 2010, the Agency issued another notice in the Federal Register that
rescinded the March 12, 2010, notice to allow previously excluded
advanced biofuel producers (i.e., those that did not meet the rural
area and citizenship requirements) to apply for and receive Fiscal Year
2009 program funds. Payments for Fiscal Year 2009 were made in August
and December, 2010.
On April 16, 2010, USDA published a proposed rule on which the
public was afforded the opportunity to comment. Comments were received
from 1,090 commenters yielding over 165 individual comments, which were
grouped into similar categories. Commenters included Members of
Congress, Rural Development personnel, trade associations, state
agencies, universities, environmental organizations, and individuals.
The Agency reviewed the comments and based, in part, on those comments
developed an Interim Rule, which was published on February 11, 2011.
A NOFA was published simultaneously with the interim rule to
announce $80 million in payment assistance to eligible producers for FY
2010 production. A second notice was published to extend the
application deadline until May 6, 2011. A NOFA to announce $85 million
in payment assistance for FY 2011 was published on March 11, 2011. The
Agency is currently reviewing the payment requests.
4. Purpose/Goals
The 2008 Farm Bill identifies the purpose of the program as
providing payments to producers to support and expand production of
advanced biofuels (refined from sources other than corn kernel starch.)
The program also supports Presidential Energy Independence and
Security Goals:

To Develop and Secure America's Energy Supplies

To Provide Consumers with Choices to Reduce Costs and
Save Energy, and

To Innovate Our Way to a Clean Energy Future
5. Success in Meeting Programmatic Purpose/Goals
To date, all funds made available under this program have been
either distributed or are to be distributed once final payment
calculations have been made.
6. Annual Budget Authority (FY 2002-FY 2011)
Funding Levels:
The 2008 Farm Bill provides mandatory funding of $55 million in FYs
2009 and 2010, $85 million in FY 2011, and $105 million in FY 2012.
Additionally, the 2008 Farm Bill authorizes discretionary funds of up
to $25 million per year, from FY 2009 to 2012.

7. Annual Outlays (FY 2002-FY 2011)
The Advanced Biofuel Payment Program was enacted under the 2008
Farm Bill. Thus, there were no annual outlays in Fiscal Years 2002
through 2008.

------------------------------------------------------------------------
2009 2010 2011
------------------------------------------------------------------------
Advanced Biofuel Payment $0 $18,547,000 $136,000,000
Program
------------------------------------------------------------------------
Note: Outlays are not a one to one correlation with Budget Authority.
Some programs disburse over numerous years. Undisbursed balances are
carried forward for future year outlays.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
Because they are both Energy Assistance Payments, the Agency tracks
the Repowering Assistance Program and the Advanced Biofuel Payment
Program together. Thus, the Agency does not have information on Annual
Delivery Cost per program. The following table presents the Annual
Delivery Cost for both programs combined. Please note that because
these two programs were initiated with the 2008 Farm Bill, there are no
delivery costs from Fiscal Years 2002 through 2008.

9. Eligibility Criteria
As provided in the authorizing statute, to receive a payment under
this program, the applicant must be an ``eligible producer,'' which
means a producer of advanced biofuels. In addition, to receive a
payment under this program, an eligible producer must meet any other
requirements of Federal and state law (including regulations)
applicable to the production of advanced biofuels. In addition, the
Interim Rule states that public bodies and educational institutions are
not eligible for this program.
The Interim Rule also has eligibility requirements specific to the
biofuel. For an advanced biofuel to be eligible, each of the following
conditions must be met, as applicable. Notwithstanding the provisions
for biofuel eligibility, flared gases are not eligible.

The advanced biofuel must meet the definition of advanced
biofuel and be produced in a state;

The advanced biofuel must be a solid, liquid, or gaseous
advanced biofuel;

The advanced biofuel must be a final product; and

The advanced biofuel must be sold as an advanced biofuel
through an arm's length transaction to a third party.

The Interim Rule also identifies conditions under which an
otherwise eligible producer will be determined to be ineligible. These
conditions are, if the producer:

Refuses to allow the Agency to verify any information
provided by the advanced biofuel producer under this subpart,
including information for determining applicant eligibility,
advanced biofuel eligibility, and application payments;

Fails to meet any of the conditions set out in this subpart,
in the contract, or in other Program documents; or

Fails to comply with all applicable Federal, state, or local
laws.

The Agency will determine an applicant's eligibility for
participation in this Program.
10. Utilization (Participation) Data
In FY 2010, 141 payments were disbursed providing $18.5 million in
advanced biofuel assistance. In FY 2011, 122 payments have been
disbursed to provide $11.5 million in advanced biofuel assistance. A
total of $30 million in advanced biofuels payment assistance has been
disbursed to date.
11. Duplication or Overlap with Other Programs
The Advanced Biofuel Payment Program is not a duplicate of any
other USDA program. In addition, the Advanced Biofuel Payment Program
does not duplicate any other Federal program, based on our
understanding of those programs.
12. Waste, Fraud and Abuse
The Advanced Biofuel Payment Program is a new program enacted with
the 2008 Farm Bill. No Office of Inspector (OIG) or Government
Accountability Office (GAO) audit of the program was conducted in the
past 5 years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Biodiesel Fuel Education Program (Section 9006).
2. Subprograms/Department Initiatives
Section 9004 of the Farm Security and Rural Investment Act of 2002
authorized competitive grants to educate governmental and private
vehicle operators, and the public about the benefits of biodiesel fuel
use. Section 9001 of the 2008 Farm Bill reauthorized the program and
renumbered its authorization statute as section 9006 of the 2002 Act.
The Secretary of Agriculture delegated this authority to the
Department's Chief Economist, who in turn formed the Biodiesel
Education Oversight Committee to direct the program. The Committee
includes members from USDA's Foreign Agricultural Service, Rural
Development, Office of Energy Policy and New Uses, National Institute
of Food and Agriculture (NIFA), and the Department of Energy. The
Committee established the initial guidelines and goals of the Program,
manages the grant selection process, and monitors the progress of the
Program.
3. Brief History
The 2002 Farm Bill authorized funding of $1 million per year from
FY 2003 through FY 2007 for competitively awarded education grants.
With guidance from NIFA, which has extensive experience in implementing
grant programs and rule making, the oversight committee drafted a
request for proposals, which was submitted to the Office of General
Counsel for clearance in January 2003. A notice of request for
applications and the proposed rule were issued in the Federal Register
July, 2003. The final rule was issued September, 2003. The oversight
committee selected a panel of experts from within and outside
government to review the proposals, identify eligible applicants, and
make recommendations to awarding officials. Two continuation grants
were awarded; one to the National Biodiesel Board (NBB) and the other
to the University of Idaho to implement the Program through FY 2007.
Funding was reauthorized by Section 9006 of the 2008 Farm Bill for
each fiscal year from 2008 through 2012. Once again with the help of
NIFA, the oversight committee drafted a request for applications that
was posted in August 2008. A panel of expert reviewers was selected by
the committee to review the applications that were submitted. Two
continuation grants were awarded; one to the National Biodiesel Board
(NBB) and the other to the University of Idaho to implement the Program
through FY 2012.
4. Purpose/Goals
The purpose of the Program is to provide education to the public,
government, and private entities on the benefits of biodiesel use.
Education raises the awareness of the benefits of using biodiesel,
resulting in a rise in consumer demand. Increasing the use of biodiesel
will help the U.S. diversify its transportation fuel supply and develop
new domestic sources of energy. The program includes the following
goals:

Identify and document the benefits of biodiesel, including
environmental and economic benefits

Enhance current efforts to collect and disseminate
information

Coordinate with other biodiesel programs to avoid redundancy
and leverage resources

Create a nationwide networking system that delivers
consistent information

Help insure fuel quality, fuel safety, and consumer
confidence
5. Success in Meeting Programmatic Purpose/Goals
Biodiesel production was minimal in the United States when this
program began in 2003, but thanks to Federal and state policy
initiatives, including the Biodiesel Education Program, the industry
has grown rapidly. Awareness of biodiesel among Americans has increased
markedly since the Biodiesel Education Program began in 2003--consumer
awareness of biodiesel has grown from 27 percent to 86 percent. Much
progress has been made over the past several years in garnering auto,
engine and equipment manufacturers support for the use of biodiesel. At
the onset of the Biodiesel Education Program, most engine manufacturers
were apprehensive about using biodiesel, but now nearly 60% of U.S.
manufacturers support the use of biodiesel blends in at least some of
their equipment.
The Program helped the biodiesel industry grow by providing
information to a broad spectrum of consumers and producers, including
government fleet managers, truckers, petroleum marketers, automobile
companies, and health groups. Education materials have been developed,
including biodiesel technical reports to help users better understand
the fuel properties of biodiesel, e.g., lower greenhouse gas emissions
compared to petroleum diesel. In addition, public radio and television
programs demonstrating the benefits of biodiesel have been broadcasted
nationally. The current grantees (the National Biodiesel Board and the
University of Idaho) have become information clearing houses for
biodiesel and have national reputations in providing expert guidance on
producing biodiesel, maintaining fuel quality, and insuring fuel
safety. Program funds have been used for organizing national
conferences, conducting technical workshops, and developing
partnerships with stakeholders, such as, biodiesel producers, engine
manufacturers, health organizations, environmental groups, and State
Department of Transportation Offices.

6. Annual Budget Authority (FY 2002-FY 2011)
FY 2002 Through FY 2011 Budget Authority
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biodiesel Education Program 0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Annual Outlays
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biodiesel Education Program 0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)
The cost to NIFA for administering the program is $40,000 per year.
9. Eligibility Criteria
Eligible entities are nonprofit organizations, institutions of
higher learning that have demonstrated knowledge of biodiesel
production, use, and distribution. Qualified entities have demonstrated
the ability to conduct educational and technical support programs.
10. Utilization (Participation) Data
Two continuation grants were awarded in 2003 to conduct the program
through 2007; and two continuation grants were awarded in 2008 to
conduct the program through 2012.
11. Duplication or Overlap with Other Programs
The Biodiesel Education Program is not a duplicate of other USDA
programs.
12. Waste, Fraud and Abuse
There have been no Office of Inspector General or Government
Accountability Office audits of the program conducted on the Biodiesel
Fuel Education Program in the past 5 years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Rural Energy for America Program (Section 9007).
2. Subprograms/Department Initiatives
None.
3. Brief History
Section 9006, Title IX, of the Farm Security and Rural Investment
Act of 2002 (2002 Farm Bill) established the Renewable Energy Systems
(RES) and Energy Efficiency Improvements (EEI) Program. On October 5,
2004, the Agency proposed a loan and grant program for renewable energy
systems and energy efficiency improvements under Section 9006 of the
2002 Farm Bill. Based on comments received, the Agency developed a
final rule, which was promulgated on July 18, 2005. This rule
established the RES and EEI program for making grants, loan guarantees,
and direct loans to farmers and ranchers (agricultural producers) and
to rural small businesses to purchase renewable energy systems and make
energy efficiency improvements. Funds were never authorized for the
direct loan program, such that the Agency never implemented the direct
loan portion of the program.
Subsequent to the 2002 Farm Bill, Congress passed the Food,
Conservation, and Energy Act of 2008 (2008 Farm Bill), which amended
Title IX of the 2002 Farm Bill. Under the 2008 Farm Bill and Section
9007 of the amended 2002 Farm Bill, the Agency was authorized to
continue providing to agricultural producers and rural small businesses
loan guarantees and grants for the development and construction of RES
and EEI projects. In addition to the current set of renewable energy
projects eligible for funding (i.e., bioenergy, anaerobic digesters,
electric geothermal, direct geothermal, solar, hydrogen, and wind), the
2008 Farm Bill expanded the program to include two new renewable energy
technologies: hydroelectric and ocean energy. Further, the 2008 Farm
Bill authorized the Agency to provide grants specifically for energy
audits, renewable energy development assistance, and RES feasibility
studies.
As provided in the 2008 Farm Bill, the expanded program is referred
to as the Rural Energy for America Program (REAP), which continues the
Agency's assistance to the adoption of both renewable energy systems
and energy efficiency improvements through Federal Government loan
guarantees and grants.
REAP has been operating since 2005 under 7 CFR part 4280, subpart
B, and, since the 2008 Farm Bill, through a series of Federal Register
notices implementing the provisions in the 2008 Farm Bill for RES
feasibility studies, energy audits, and renewable energy development
assistance. For the RES feasibility studies, these notices were
published on May 26, 2009 (74 FR 24769) and August 6, 2010 (75 FR
47525).
A Notice of Solicitation of Applications (NOSA) soliciting
applications for about $2.2 million in grants for Energy Audits and
Renewable Energy Development Assistance was published in the Federal
Register on March 11, 2009. A NOSA for the remaining portion of the $60
million available for FY 2009 was published in the Federal Register on
May 26, 2009. This funding was used for guaranteed loans and grants for
a wide range of energy efficiency improvements and renewable energy
systems and feasibility studies.
The Agency published a NOSA to solicit applications for the
purchase of renewable energy systems and to make energy efficiency
improvements in the Federal Register on April 26, 2010. A separate
Notice of Funding Availability (NOFA) for $2.4 million in funding to
conduct Energy Audits and Renewable Energy Development Assistance was
published in the Federal Register on May 27, 2010.
An Interim Rule was published on April 14, 2011. The Interim Rule
established a consolidated REAP program by including each part of the
program in a single subpart. The Agency also published on April 14,
2011, a NOFA announcing the availability of $70 million in mandatory
budget authority for FY2011 grants and guaranteed loans for renewable
energy systems (including flexible fuel pumps) and energy efficiency
improvements. A NOFA announced an additional $5 million in REAP
discretionary budget authority is pending.

Flex Fuel Infrastructure Project

The Rural Business and Cooperative Service (RBS) launched the FY11
REAP program making Flexible Fuel Pumps Eligible for funding through an
annual notice of funding availability (NOFA). Dispensers, tanks,
components and labor are eligible project costs. The application window
closed for energy programs on June 15th and for feasibility support on
June 30th.
The purpose of this effort is to support the investment, and
infrastructure necessary to implement a nationwide biofuels industry.
The scope of the project is to establish the necessary infrastructure
for ethanol fuel by supporting the development and deployment of flex
fuel pumps to meet increasing demand.

Anaerobic Digesters/Dairy Innovation Center Initiative

The Anaerobic Digesters Project Team has, with the help of EPA's
AgStar, developed a complete list of USDA programs that can be used to
support the Dairy MOU Agreement.
The Anaerobic Digester team is currently reviewing Renewable Energy
System applications and Feasibility grant applications under REAP and
awards should be delivered in the coming months. The purpose of this
project is to embark on a campaign to promote the development of
anaerobic digesters on dairy farms. The scope of the project is to
focus on applying REAP funding for anaerobic digesters and digester
feasibility studies to fulfill the 2009 Memorandum of Understanding
(MOU) between Dairy Innovation Center and USDA.
4. Purpose/Goals
The purpose of the renewable energy system and energy efficiency
improvements portion of the program is to provide financial assistance,
in the form of loan guarantees and grants, to agricultural producers
and rural small businesses to purchase and install renewable energy
systems and make energy-efficiency improvements. REAP funds can be used
for renewable energy systems including wind, solar, biomass, geothermal
sources, or that produce hydrogen from biomass or water using renewable
energy, and ocean and hydroelectric source technologies. Energy-
efficiency projects typically involve installing or upgrading equipment
to significantly reduce energy use.
The purpose of the Energy Audits, and Renewable Energy Development
Assistance portion of REAP is to provide financial assistance to such
entities as units of state, tribal, and local governments and land-
grant colleges and universities, among others, in the form of grants,
to assist agricultural producers and rural small businesses to become
more energy efficient; and to use renewable energy technologies and
resources.
The purpose of the Feasibility Studies portion of REAP is to
provide assistance, in the form of grants, to an agricultural producer
or rural small business to conduct a feasibility study for a project
for which assistance may be provided under REAP.The program also
supports Presidential Energy Independence and Security Goals:

To Develop and Secure America's Energy Supplies

To Provide Consumers with Choices to Reduce Costs and
Save Energy, and

To Innovate Our Way to a Clean Energy Future

5. Success in Meeting Programmatic Purpose/Goals
Energy Division, Energy Investments, Fiscal Years 2003-10, with Performance Measures
7/14/2011
----------------------------------------------------------------------------------------------------------------
Combination Energy GHG
Guaranteed Guaranteed Jobs Saved/ Btu Reduced **
Fiscal Projects Loans Only Loans and Grant Only Saved- Businesses Generated Equivalent * (metric
Year (millions) Grants (millions) Created Assisted (1,000 (1,000 Btu) tons of
(millions) kWh) CO2)
----------------------------------------------------------------------------------------------------------------
2003 114 $21.2 736 108 974,320 3,324,517 979,408
2004 163 $22.7 411 186 503,645 1,718,507 642,599
2005 158 $10.1 $22.2 289 103 589,771 2,012,381 611,455
2006 412 $24.2 $21.2 1,357 285 997,133 3,402,359 1,303,951
2007 436 $47.5 $18.1 $10.8 2,122 331 1,956,390 6,675,479 1,968,525
2008 764 $0 $30.2 $19.6 1,797 537 2,438,378 8,320,092 2,642,665
2009 1,557 $8.5 $76.8 $26.6 5,894 2,922 1,407,832 4,803,523 1,589,570
2010 2,400 $9.7 $98.4 $51.1 2,311 5,107 2,958,404 9,508,310 3,255,490
--------------------------------------------------------------------------------------------------------
Total 6,004 $99.9 $223.5 $196.0 14,917 9,579 11,825,87 39,765,167 12,993,664
s... 2
----------------------------------------------------------------------------------------------------------------
* 1 kWh = 3,412.1416 Btu.
** No CO2 was sequestered with these activities.

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)

Funding Levels:
The 2008 Farm Bill provides mandatory allocations of $55 million for FY 2009, $60 million for FY 2010, and $70 million for FYs 2011 and 2012. The
2008 Farm Bill also authorizes additional discretionary funds of up to $25 million per year, from FY 2009 through 2012. The 2010 Appropriation Act
provided $39 million in funding for grants and loan guarantees in addition to the $60 million of farm bill mandatory funding.

Funds Available in FY 2011: $70 million in mandatory authority
$5 million in discretionary authority

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Target
--------------------------------------------------------------------------------------------------------------------------------------------------------
$16,416,000 $16,821,000 $26,685,000 $59,578,000 $76,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Actual disbursements percentages based on obligation.

8. Annual Delivery Cost (FY 2002-FY 2011)
Business and Cooperative Programs
Full Cost by Department Strategic Goal

Strategic Goal: Assist Rural Communities to Create Prosperity so They Are Self-Sustaining, Repopulating and Economically Thriving.

2007 Amount 2008 Amount 2009 Amount 2010 Amount 2011 Amount
Program Items ($000) ($000) ($000) ($000) ($000)

Rural Energy for America Loans
and Grants

Program Level 2 $49,806 $333,644 $524,664 $66,238 $7,877
Budget Authority 35,748 60,000 128,130 39,325 4,990
Administrative Costs (Direct) 1,127 1,172
Administrative Costs 2,897 3,014
(Indirect)
S&E 6,931 8,999 9,782
-------------------------------------------------------------------------------
Total Costs 42,679 68,999 137,912 43,349 9,176
FTEs 62 80 84 34 34
-------------------------------------------------------------------------------
Performance measure:
mKWH produced (in Millions)
Target: 680 1,725 3,029 1,183 148
Cost per Measure (unit 62.76 40.00 45.53 36.64 62.00
cost)
Rural Energy for America Loans
and Grants--Mandatory
Program Level 2 $93,088 $109,200
Budget Authority 56,959 70,000
Administrative Costs (Direct) 1,690 1,758
Administrative Costs 4,346 4,521
(Indirect)
===============================================================================
Total Costs 62,995 76,279

2 Guaranteed Renewable Energy Loans and Grants funding contingent on farm bill for FY 2009.
Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
above, Fiscal Years 2007 through 2010 amounts are actual; Fiscal Year 2011 is an estimate from the Fiscal Year
2012 President's Budget submission.

9. Eligibility Criteria
Under REAP, there are applicant eligibility and project eligibility
criteria for each of the grant programs, while there are borrower
eligibility, lender eligibility, and project eligibility for the
guaranteed loan program.

Renewable Energy System or Energy Efficiency Improvement Grant

Applicant Eligibility. As required by the authorizing statute, to
receive a Renewable Energy System or Energy Efficiency Improvement
Grant under this subpart, an applicant must be an agricultural producer
or rural small business.
Project Eligibility. For a renewable energy system or energy
efficiency improvement project to be eligible to receive a RES or EEI
grant under this subpart, the proposed project must meet the following
criteria, as applicable:

The project must be for the purchase of a renewable energy
system or to make energy efficiency improvements. Energy
efficiency improvements to existing renewable energy systems
are eligible energy efficiency improvement projects.

The project must be for a pre-commercial or commercially
available, and replicable technology.

The project must have technical merit.

The facility for which the project is being proposed must be
located in a rural area in a state if the type of applicant is
a rural small business, or in a rural or non-rural area in a
state if the type of applicant is an agricultural producer. If
the agricultural producer's facility is in a non-rural area,
then the application can only be for renewable energy systems
or energy efficiency improvements on integral components of or
that are directly related to the facility, such as vertically
integrated operations, and are part of and co-located with the
agriculture production operation.

The applicant must have a place of business in a state.

The applicant must be the owner of the project and control
the revenues and expenses of the project, including operation
and maintenance. A third-party under contract to the owner may
be used to control revenues and expenses and manage the
operation and/or maintenance of the project.

Sites must be controlled by the agricultural producer or
rural small business for the financing term of any associated
Federal loans or loan guarantees.

Satisfactory sources of revenue in an amount sufficient to
provide for the operation, management, maintenance, and debt
service of the project must be available for the life of the
project.

For the purposes of this subpart, only hydropower projects
with a rated power of 30 megawatts or less are eligible. The
Agency refers to these hydropower sources as ``small
hydropower,'' which includes hydropower projects commonly
referred to as ``micro-hydropower'' and ``mini-hydropower.''

The project has demonstrated technical feasibility.

In addition to these requirements, no renewable energy system or
energy efficiency improvement, or portion thereof, can be used for any
residential purpose, including any residential portion of a farm,
ranch, agricultural facility, or rural small business. However, an
applicant may apply for funding for the installation of a second meter
or provide certification in the application that any excess power
generated by the renewable energy system will be sold to the grid and
will not be used by the applicant for residential purposes.

Renewable Energy System or Energy Efficiency Improvement Guaranteed
Loan

Borrower Eligibility. To receive a Renewable Energy System or
Energy Efficiency Improvement Guaranteed Loan, a borrower must meet the
same requirements as for the RES/EEI grant program.
Project Eligibility. The requirements are the same as for RES/EEI
grants except that guaranteed loan funds may be used for necessary
capital improvements to an existing renewable energy system. In
addition, the grant provision concerning residential purposes does not
apply.
Lender Eligibility. An eligible lender is any Federal or state
chartered bank, Farm Credit Bank, other Farm Credit System institution
with direct lending authority, Bank for Cooperatives, or Savings and
Loan Association. These entities must be subject to credit examination
and supervision by either an agency of the United States or a state.
Eligible lenders may also include credit unions provided, they are
subject to credit examination and supervision by either the National
Credit Union Administration or a state agency, and insurance companies
provided they are regulated by a state or national insurance regulatory
agency. Eligible lenders include the National Rural Utilities
Cooperative Finance Corporation.

Renewable Energy System Feasibility Study Grants

Applicant Eligibility. As required by the authorizing statute, to
be eligible for a renewable energy system feasibility study grant, the
applicant must be an agricultural producer or a rural small business.
In addition, the Interim Rule requires the applicant to be the
prospective owner of the renewable energy system for which the
feasibility study grant is sought.
Project Eligibility. Only renewable energy system projects that
meet the requirements specified in this section are eligible for
feasibility study grants under this subpart. The project for which the
feasibility study grant is sought shall:

Be for the purchase, installation, expansion, or other
energy-related improvement of a renewable energy system located
in a state;

Be for a facility located in a rural area if the applicant
is a rural small business, or in a rural or non-rural area if
the applicant is an agricultural producer. If the agricultural
producer's facility is in a non-rural area, then the
feasibility study can only be for a renewable energy system on
integral components of or directly related to the facility,
such as vertically integrated operations, and are part of and
co-located with the agriculture production operation;

Be for technology that is pre-commercial or commercially
available, and that is replicable;

Not have had a feasibility study already completed for it
with Federal and/or state assistance; and

The applicant has a place of business in a state.

Energy Audit and Renewable Energy Development Assistance Grants

Applicant Eligibility. To be eligible for an energy audit grant or
a renewable energy development assistance grant, the applicant must
meet each of the following criteria:

The applicant must be, as required by the authorizing
statute, one of the following:

A unit of state, tribal, or local government;

A land-grant college or university, or other
institution of higher education;

A rural electric cooperative;

A public power entity; or

An instrumentality of a state, tribal, or local
government.

The applicant must have sufficient capacity to perform the
energy audit or renewable energy development assistance
activities proposed in the application to ensure success. The
Agency will make this assessment based on the information
provided in the application.

Each applicant must have, or obtain, the legal authority
necessary to carry out the purpose of the grant.

Project Eligibility. To be eligible for an energy audit or a
renewable energy development assistance grant, the grant funds for a
project must be used by the grant recipient to assist agricultural
producers or rural small businesses located in a state in one or both
of the purposes specified in paragraphs (a) and (b), and must also
comply with paragraphs (c) through (e), and, if applicable, paragraph
(f).

(a) Grant funds may be used to conduct and promote energy audits
that meet the requirements of the energy audit as defined in
this subpart.

(b) Grant funds may be used to conduct and promote renewable energy
development assistance by providing to agricultural producers
and rural small businesses recommendations and information on
how to improve the energy efficiency of their operations and to
use renewable energy technologies and resources in their
operations.

(c) Energy audit and renewable energy development assistance can be
provided only to a facility located in a rural area unless the
owner of such facility is an agricultural producer. If the
facility is owned by an agricultural producer, the facility for
which such services are being provided may be located in either
a rural or non-rural area. If the agricultural producer's
facility is in a non-rural area, then the energy audit or
renewable energy development assistance can only be for a
renewable energy system or energy efficiency improvement on
integral components of or directly related to the facility,
such as vertically integrated operations, and are part of and
co-located with the agriculture production operation.

(d) The energy audit or renewable energy development assistance
must be provided to a recipient in a state.

(e) The applicant must have a place of business in a state.

(f) For the purposes of this subpart, only small hydropower
projects are eligible for energy audits and renewable energy
development assistance. Per consultation with the U.S.
Department of Energy, the Agency is defining small hydropower
as having a rated power of 30 megawatts or less, which includes
hydropower projects commonly referred to as ``micro-
hydropower'' and ``mini-hydropower.''
10. Utilization (Participation) Data
Since its inception, utilization of REAP has grown each year,
except in 2008 when fewer funds were made available to the program.
Program utilization and growth are illustrated in the following figures
and table.

REAP Utilization--Fiscal Years 2003-2010
------------------------------------------------------------------------
Combinations
Fiscal Guaranteed Grants and Grant Grant
Year Projects Loans Only Guaranteed Only Totals
Loans
------------------------------------------------------------------------
2003 114 $21,707, $21,707,
233 347
2004 163 $22,692, $22,692,
325 488
2005 158 $10,100,000 $22,237, $32,337,
267 425
2006 412 $24,158,882 $21,209, $45,368,
435 729
2007 436 $47,500,000 $18,114,430 $10,782, $76,397,
434 300
2008 764 $0 $30,172,387 $19,633, $49,806,
418 569
2009 1,557 $8,451,638 $76,782,101 $26,625, $111,860
502 ,797
2010 2,400 $9,675,613 $98,395,192 $51,117, $159,190
265 ,470
--------------------------------------------------------------
Total 6,004 $99,886,133 $223,464,110 $196,004 $519,361
,879 ,125
------------------------------------------------------------------------
Note: All numbers in this table represent Program Level.

11. Duplication or Overlap with Other Programs
There are four other programs within USDA under which certain types
of energy projects may be financed. These are the Value-Added Producer
Grant (VAPG) program, Community Facilities, Business and Industry
Program, and the Environmental Quality Incentives Program (EQIP).
The project eligibility category related to renewable energy under
the VAPG program was set by the 2008 Farm Bill and states that a Value-
Added Agricultural Product is ``a source of farm- or ranch-based
renewable energy, including E85 fuel.'' Thus, the VAPG can provide
funds to a limited set of energy-related projects--where an
agricultural commodity is used to generate renewable energy on a farm
or ranch owned or leased by the independent producer applicant that
produces the agricultural commodity. On-farm generation of energy from
wind, solar, geothermal, or hydro sources are not eligible for VAPG.
Because of the differences in eligible entities, there is little
overlap with the Community Facility program.
The Business and Industry (B&I) Program provides guaranteed loans
to a wide range of projects, including energy projects. There have been
a number of projects financed under the B&I Program that could have
been financed under REAP.
While NRCS also offers energy audits through the EQIP, the agencies
have entered into an agreement to avoid duplication by cross-checking
the locations and recipients of energy audits.
Beyond these few programs, REAP does not overlap or duplicate of
any other USDA program. The Department of Energy's Energy Efficiency
and Renewable Energy program offers financial assistance for
biorefineries, geothermal technologies, hydrogen technologies, solar,
wind, and hydropower. The focus of these programs is mainly on research
and development for these technologies (e.g., to improve the efficiency
of power generated through wind). With regard to biorefineries, USDA/
RBS through its guaranteed loan program has co-funded several
biorefinery projects that use DOE grant funds, however these programs
work in a complementary manner to provide support for this nascent
industry.
12. Waste, Fraud and Abuse
No Office of Inspector (OIG) or Government Accountability Office
(GAO) audit of the program was conducted in the past 5 years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Biomass Research and Development Initiative Program (BRDI).
2. Subprograms/Department Initiatives
None.
3. Brief History
Section 9001(a) of the Food, Conservation, and Energy Act of 2008
(FCEA) (Pub. L. 110-246), re-authorized the Biomass Research and
Development Initiative (BRDI) competitive grants program by amending
section 9008 of the Farm Security, and Rural Investment Act of 2002
(2002 Farm Bill), as amended, (Pub. L. 107-171) (7 U.S.C. 8108).
Collaboration between DOE and USDA on BRDI is directed under section
9008(e)(1) of the 2002 Farm Bill, as amended.
4. Purpose/Goals
Both DOE and USDA have been given responsibility to support the
development of a biomass-based industry in the United States. The
objectives of this responsibility are specified in section 9008(e) of
FSRIA, as amended, which requires the development of: (a) technologies
and processes necessary for abundant commercial production of biofuels
at prices competitive with fossil fuels; (b) high-value bio-based
products to enhance the economic viability of biofuels and biopower, to
serve as substitutes for petroleum-based feedstocks and products, and
to enhance the value of coproducts produced using the technologies and
processes; (c) a diversity of economically sustainable domestic sources
of renewable biomass for conversion to biofuels, bioenergy, and bio-
based products; and (d) use of waste streams to reduce environmental
footprint or impact, niche, opportunity to improve economics of
conversion processes and enhance the economic viability of the
production facility. The 2002 Farm Bill then stipulates several
programmatic requirements that are intended to help ensure that goals
(a)-(d) above are accomplished. These requirements include:

Distribution of funding among three technical areas (minimum
15% of funds per area):

Feedstock Development

Biofuels and Biobased Product Development

Biofuels Development Analysis

Cost Share: 20% of total project costs for Research and
Development and 50% for Demonstration projects

Multi-institution and multi-disciplinary consortia awards

Geographic distribution of awards
5. Success in Meeting Programmatic Purpose/Goals
USDA has executed the BRDI Program as prescribed by 2002 Farm Bill
and subsequently the Program is meeting the research, development, and
demonstration needs of the emerging market. The BRDI Program has always
maintained the minimum 15% distribution of program funds across the
three legislated technical areas as shown in Table 1.

Table 1. Funding Distribution by Technical Area FY 2003-2010
------------------------------------------------------------------------
Technical Area Distribution Distribution % Distribution
------------------------------------------------------------------------
Feedstock Development $35,625,430 27%
Biofuels and Bioproduct $73,646,642 56%
Development
Biofuels Development Analysis $23,241,965 18%
------------------------------------------------------------------------

The trend in funding distribution, as shown in Figure 1 is toward a
convergence of emphasis on both feedstock development and appropriate
conversion technologies. BRDI has the flexibility to allow the balance
of investment to shift toward technical challenges of increasing
importance in the market. The availability and densification of biomass
is key to the growing bioeconomy.
Figure 1. Trends in Technical Area Investment

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

The BRDI Program has also been effective in developing multi-
institutional and multi-disciplinary consortia awards, as required in
the legislation, as a means of increasing technology transfer and
commercialization. Over its 8 year history, BRDI awards have averaged
over four collaborating organizations per award. In FY 2010, BRDI
awards averaged over six collaborating organizations as the Program now
allows larger and more comprehensive grant opportunities. The Program
also supports a diversity of types of organizations in terms of project
leaders and project collaborators. Table 2 demonstrates that while BRDI
project leadership is dominated by Academia and Small Business, the
Program fosters balanced collaboration among different types of
organizations, indicating a high level of interdisciplinary work.

Table 2. Project Lead and Collaborator Type Distribution (2002-2010)
------------------------------------------------------------------------
Project Lead Type Collaborator Type
*
------------------------------------------------------------------------
NGO 12% 17%
Academia 43% 28%
Small Business 29% 27%
Industry 9% 11%
Federal 7% 13%
State 1% 4%
------------------------------------------------------------------------
* distribution based on funding amount.
distribution based on the count of collaborator types.

BRDI awardees have contributed 32% of total program funding as
cost-share since the program's inception in 2002. BRDI program funds
have been used to leverage over $61 M over the life of the Program.
Program awards have also been geographically diverse. Each year the
Program touches more than 18 states and in FY 2010 there were three
states per award. The Program is beginning to be effective in creating
extremely dynamic regional and national consortia to address our
nation's energy demand. Figure 2 illustrates the geographic
distribution of BRDI awards.
Figure 2. BRDI Geographic Distribution FY 2002-2010
Biomass Research and Development Initiative
Geographical Distribution of Grant Awards FY 2002-2010

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Map created by Gregory Sixt, USDA-NIFA.

Since FY 2009, USDA has placed increased emphasis on technology
commercialization by offering larger and more comprehensive grants that
are intended to allow awardees to address challenges throughout the
life-cycle of their technologies. In the early years of the BRDI
Program, grants were more focused and intended to address specific
technical challenges and new product development issues.
The Program now requires awardees to develop new products and
technologies in the context of the supply chain and target markets;
therefore, projects must address all three technical areas.
Additionally, the program has adopted an overarching theme of
sustainability, requiring awardees to address the environmental,
economic and social implications of the technology throughout its life
cycle. The intent of larger, comprehensive projects is to move
technologies to commercialization more quickly, and to ensure the
technologies have a positive impact on markets, the environment, and
rural development.

Examples of successful projects:

Adding Value to Commercial Polymers through the Incorporation of
Biomass Derived Chemistries (Iowa Corn Promotion Board)

The BRDI Program supported projects to develop isosorbide-
based polymers in FY 2002 and again in FY 2006.

The Iowa Corn Promotion Board has been developing this
technology not only in collaboration with USDA, but also with
DOE, General Electric, and others.

Several major end-users and customers are working to
commercialize the technology and have had success in developing
isosorbide as a replacement for bisphenol A, in the epoxy
market, and as an additive for PET hot fill bottles.

Biomass Gasification: A Comprehensive Demonstration of a Community-
Scale Biomass Energy System (University of Minnesota--Morris)

The project team constructed the Morris Gasification Plant
to generate combined heat and power for the University and the
Morris community using locally sourced biomass.

The project overcame significant technological barriers in
testing and selecting the appropriate feedstocks to power the
community. The project tested corn stover, corn cobs, prairie
grass, soybean residue, wheat straw, and wood each with
appropriate densification techniques. Corn cobs were determined
to be the most viable and sustainable feedstock for the Morris
community.

Emissions permits and appropriate densification technology
will be secured by the Fall of 2011 to initiate ongoing
gasification plant operation.

The University and its partners developed an extensive
outreach and education component to the project, which includes
a web-portal that reports real-time facility performance
monitoring so that students and the community can access
information and understand their energy usage on a daily basis.
The project also generated an undergraduate Renewable Energy
curriculum, three K-12 modules, 14 student research projects,
32 conference presentations, and over 200 community and
regional presentations.

Evaluation of the feasibility of sustainably achieving President's
Biofuel production goals (University of California--Santa Barbara)

University of California-Santa Barbara is designing a
dynamic tool to evaluate the feasibility of meeting renewable
fuel production goals in a sustainable manner.

Tool embodies an innovative combination of scenario
development, system dynamics modeling, Geographic Information
System (GIS), Life Cycle Costing (LCC) and Life Cycle
Assessment (LCA).

Results have been used to inform the United Nations
Environmental Program (UNEP), International Panel for
Sustainable Resources, Biofuel Working Group report, ``Towards
Sustainable Production and Use of Resources: Assessing
Biofuels.''

http://www.unep.fr/scp/rpanel/pdf/
assessing_biofuels_full_report.pdf

http://www.unep.org/Documents.Multilingual/
Default.asp?
DocumentID=599&ArticleID=6347&l=en&t=long

(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
6. Annual Budget Authority * 20,000 28,000 30,000

7. Annual Outlays

8. Annual Delivery Cost
----------------------------------------------------------------------------------------------------------------
* In addition to mandatory funding, $35M/yr is authorized for appropriation FY 2008-2012

Note: This program has only been operated in its current form
starting in FY 2009.
9. Eligibility Criteria
Eligible entities per section 9008(e)(5) of the 2008 Farm Bill, as
amended (7 U.S.C. 8108(e)(5)) include: (A) an institution of higher
education; (B) a National Laboratory; (C) a Federal research agency;
(D) a state research agency; (E) a private sector entity; (F) a
nonprofit organization; or (G) a consortium of two or more entities
described in subparagraphs (A) through (F).
10. Utilization (Participation) Data
Since 2003 the BRDI Program has been one of the most competitive
Federal grant programs. The annual success rate (of applications
funded) has always been less than 5%, In fact, in FY 2009 USDA and DOE
received over 800 pre-applications and made nine awards; a success rate
of 1%. In FY 2010, the Program success rate remained low at 1.6%. While
the low success rate indicates that there is tremendous demand for
Biomass energy research, development, and demonstration, the
competition through NIFA's rigorous peer-review process has ensured
projects of extraordinary quality.
11. Duplication or Overlap with Other Programs
There is no duplication or overlap with other programs. BRDI
supports projects in the applied/developmental and demonstration phases
of development.
12. Waste, Fraud and Abuse
There have been no Office of Inspector General or Government
Accountability Office audits of the program conducted on the Biomass
Research and Development Initiative Program in the past 5 years.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Feedstock Flexibility Program (FFP--Section 9010).
2. Subprograms/Department Initiatives
The Feedstock Flexibility (or ``sugar-to-ethanol'') Program (FFP)
was first authorized under the 2008 Farm Bill. USDA has not implemented
this program because the sugar market conditions required for its
operation have not yet occurred. FFP requires the Commodity Credit
Corporation (CCC) to purchase domestic sugar when U.S. supplies are
large and forfeitures are threatened under the sugar price support loan
program. Under the FFP, CCC will sell the surplus sugar to bioenergy
producers for use as a fuel feedstock. However, the U.S. sugar market
has been under-supplied since the program was authorized. Domestic
sugar prices have been significantly above the program support level
and there has been no threat of price support loan forfeitures,
preempting program operation. The FFP language also includes a
prohibition on the sale of CCC sugar for human consumption.
3. Brief History
CCC operated a sugar for ethanol program in the early 2000s as one
of many outlets for the million-ton CCC sugar inventory acquired when
the sugar market crashed in 2000. FSA sold 10,000 tons of sugar to the
highest-bidding ethanol producers in multiple auctions. All of the
purchasers mixed sugar into corn prior to fermentation. Ethanol
producers only bid an average of 4 cents per pound for the sugar, which
the CCC had acquired at an average of 22 cents per pound. These ethanol
producers bid less than the energy value of the sugar, citing the
experimental nature of the process, the lack of a guaranteed future
supply, the requirement of a material handling investment and other
factors. In addition, the CCC sold over a hundred thousand tons for
human consumption in 2003, when prices were at higher levels, at almost
no loss to the CCC. (Sales for human consumption are no longer an
option under the FFP language, as noted above.)
4. Purpose/Goals
The purpose of the FFP is to prevent the accumulation of
government-held stocks of sugar that impede price recovery. This was
the situation after the sugar market crash of 2000, when ending stocks
were over 20 percent of annual use, with CCC owning more than half of
that total. Normal carryover is 14-15 percent of annual use.
5. Success in Meeting Programmatic Purpose/Goals
Not applicable, as there has been no need to activate the program.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
Not applicable.
7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
Outlays are zero over the FY 2002-FY 2011 time horizon, for the
reasons discussed above.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
Delivery costs are zero over the FY 2002-FY 2011 time horizon, for
the reasons discussed above.
9. Eligibility Criteria
The FFP regulation is under development.
10. Utilization (Participation) Data
The FFP has not been implemented.
11. Duplication or Overlap with Other Programs
No overlap anticipated.
12. Waste, Fraud and Abuse
The FFP has not been implemented.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Biomass Crop Assistance Program (BCAP--Section 9011).
2. Subprograms/Department Initiatives
BCAP has two components:

Establishment and annual payments for production of new
biomass crops (Project Areas); and

Matching payments for the collection, harvest, storage and
transportation (CHST) of existing biomass.
3. Brief History
BCAP was authorized by the 2008 Farm Bill. On June 11, 2009, a
Notice of Funds Availability (NOFA) was published to make available
matching payments for the collection, harvest, storage, and
transportation of eligible material for conversion to bioenergy at
biomass conversion facilities. The 2008 Farm Bill provides ``such sums
as necessary'' for BCAP. However, subsequent appropriation acts have
capped the amount of funding available. The Department of Defense and
Full-Year Continuing Appropriations Act of 2011, enacted on April 14,
2011, limits funding for BCAP to $112 million in FY 2011.
In February 2010, a proposed rule was published in the Federal
Register which also terminated the NOFA. Over 24,000 comments were
received.
On October 27, 2010, a final rule was published and by January
2011, three qualified biomass conversion facilities were approved and
matching payments for herbaceous materials were authorized.
For the project area component of BCAP, proposals could be
submitted beginning October 27, 2011. With the enactment of funding
limitations on April 14, 2011, FSA announced on April 20, 2011 that
project proposals could be submitted no later than May 27, 2011, to be
considered for FY 2011 funding. Over 40 project area proposals were
received by the deadline. The proposals outlined projects that would
support the establishment and production of 1.5 million acres of
dedicated energy crops requesting more than $1 billion. The range of
feedstock proposed included camelina, algae, short rotation woody
crops, grasses, energy cane, kenaf, and sweet sorghum.
The first approved project area is located in a thirty-nine county
area in central and western Missouri and eastern Kansas and supports
the establishment of mixtures of perennial native grasses and forbs,
such as Switchgrass, Big Bluestem, Illinois Bundleflower and Purple
Prairie Clover. Additionally, the project allows enrollment of existing
suitable stands of native grasses, legumes and forbs; existing native
grass stands can be located on expired Conservation Reserve Program
(CRP) fields. The target enrollment for 2011 is 20,000 acres of
cropland and other agricultural land with targeted crops within the
approved area surrounding the biomass conversion facility. When fully
enrolled, this project area may have up to 50,000 acres, producing
roughly 3 tons of biomass per acre per year, or a total of 150,000 tons
per year from land enrolled in BCAP contracts. FSA has allocated about
$15 million for implementation of this project area in FY 2011.
Other project areas will support production of the perennial
Miscanthus giganteus (Giant Miscanthus) for energy biomass. Only the
planting of rhizomes of the ``Illinois Clone,'' a sterile cultivar of
Giant Miscanthus, is authorized for these project areas.
One of the projects is located within Clay, Craighead, Greene,
Jackson, Lawrence, Mississippi, Poinsett, and Randolph counties in the
State of Arkansas. FSA has allocated about $5.2 million for
implementation of this project area in FY 2011. The target for
enrollment in FY 2011 is 5,588 acres. This biomass may be used to
produce pellets that may be co-fired.
Another project area is located within Audrain, Boone, Callaway,
Cole, Cooper, Howard, Moniteau, Monroe, and Randolph counties in the
State of Missouri. FSA has allocated about $3.5 million for
implementation of this project area in FY 2011. The target for
enrollment in FY 2011 is 3,000 acres.
Another project area is located within Barry, Christian, Dade,
Jasper, Lawrence, Newton, and Stone counties in the State of Missouri.
FSA has allocated about $5.9 million for implementation of this project
area in FY 2011. The target for enrollment in FY 2011 is 5,250 acres.
The remaining project area is located within Ashtabula, Geauga,
Lake, and Trumbull counties in the State of Ohio, and Crawford, Erie,
and Mercer counties in the State of Pennsylvania. FSA has allocated
about $5.7 million for implementation of this project area in FY 2011.
The target for enrollment in FY 2011 is 5,344 acres.
4. Purpose/Goals
BCAP provides financial assistance to owners and operators of
agricultural and nonindustrial private forestland to establish,
produce, and deliver biomass feedstocks under two types of assistance:

Establishment and annual payments to produce eligible
biomass crops on contract acres within approved BCAP project
areas, and

Matching payments for the delivery of eligible material to
qualified biomass conversion facilities by eligible material
owners. Qualified biomass conversion facilities produce heat,
power, biobased products, or advanced biofuels from biomass
feedstocks.
5. Success in Meeting Programmatic Purpose/Goals
BCAP is the only energy program that is dedicated to the expansion
of the diversity of cellulosic feedstock for commercial conversion. The
program has demonstrated, through project area proposal submission and
designations and matching payment distribution, that the demand for
such diversity and feedstock support exists.
BCAP made over $250 million in matching payments to eligible
material owners in FY 2009 and FY 2010 for the supply of biomass to
over 400 biomass conversion facilities for the generation of heat,
power, biobased products and advanced biofuels under the NOFA. The
biomass supply was predominantly woody materials.
During FY 2011, about $2.65 million has been allocated to help
support producers who supply herbaceous materials (corn crop residues)
to three qualified biomass conversion facilities. Additionally, the
allocation of $35 million for the designated five project areas, will
support the establishment and production of up to 250,000 acres
dedicated energy crops for conversion to an advanced biofuel. The
remaining funding of about $75 million is expected to be allocated by
September 30, 2011.
BCAP has generated support and incentives for numerous biomass
conversion facilities to enhance their bioenergy output, much of which
has been accomplished through facility retrofits and entrepreneurial
startups. Project area designations have strengthened numerous
cooperatives and bioenergy startups and expanded the diversity of
available long term feedstocks.
The expansion of project area designations in FY 2011 may assist
many states in meeting Renewable Electricity mandates. BCAP incentives
for conversion to liquid biofuels have encouraged the submission of
proposals for drop-in fuel production and various advanced biofuels.

6. Annual Budget Authority (FY 2002-FY 2011)
FY 2002 Through FY 2011 Budget Authority for Farm Service Agency Conservation Programs
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biomass Crop Assistance Program 0 0 0 0 0 0 0 25,015 244,075 112,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-2011)

Budget authority for CCC programs is based on obligations. Funds that are obligated in one fiscal year may not be disbursed until a succeeding
fiscal year or fiscal years.

FY 2002 Through FY 2011 Outlays for Farm Service Agency Conservation Programs
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biomass Crop Assistance Program 0 0 0 0 0 0 0 2,147 248,202 112,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:

Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically thriving.

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

Income Support and Disaster
Assistance

Price Support and Marketing 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604
Assistance Loans
Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565
Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410
Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848
ACRE Payments 0 0 0 0 446,633
Milk Income Loss Contract 157,850 2,153 769,900 181,527 173,000
Payments
Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000
Other Direct Payments 25,695 29,768 84,375 103,432 80,504
NAP Payments 126,951 73,989 40,700 98,745 116,873
Crop Disaster Assistance 58,591 1,281 114,828 ^109 0
Livestock Indemnity Program 198 2 1,716 91,825 77,000
Emergency Livestock Assistance 664 25 1,926 ^403 0
Emergency Conservation Program 149,727 128,456 0 92,459 39,719
Biomass Crop Assistance 0 0 248,202 1 199,000
Emergency Forest Restoration 0 0 0 18,000
Program
Tree Assistance Program 1,973 1,010 68 90 0
CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635
Dairy Indemnity Program 181 144 651 162 200
Emergency Forestry 6,302 12,717 7,854 8,297 9,291
Conservation Program
USDA Supplemental Assistance, 0 0 83,814 295,600 295,600
appropriated
FSA Disaster Assistance, 0 2,541,733 0 0 0
appropriated
Reforestation Pilot Program 0 794 794 800 800
Agricultural Disaster Relief 0 0 6,000 1,573,278 1,926,134
Trust Fund
Aquaculture Grants (123317) 0 0 48,500 39,942 0
Farm Storage Facility Loans 548 0 12,500 0 0
Administrative costs 776,465 683,795 694,980 744,303 753,934
(direct)
Indirect costs 47,548 234,633 226,905 242,967 246,299
-------------------------------------------------------------------------------
Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049
FTEs 8,905 8,620 9,529 8,355 8,140

1 BCAP funding for Fiscal Year 2011 was subsequently capped at $112 million by the Department of Defense and
Full-Year Continuing Appropriations Act of 2011, Public Law 112-10.

9. Eligibility Criteria

Project Areas and Producers

Project areas are established based on proposals submitted to FSA by either a group of producers or an entity that converts biomass to heat, power,
a biobased product or an advanced biofuel.
Producers within a designated BCAP project area may apply to enroll land into the program and receive assistance to grow eligible biomass crops.
Biomass must be established, produced and harvested or collected according to an approved conservation, forest stewardship, or equivalent plan to
ensure that soil, water and other resource concerns are adequately addressed on the enrolled land.

Matching Payments

Matching payments provide payments to eligible material owners at a rate of $1 for each $1 per dry ton paid by a qualified biomass conversion
facility (BCF), in an amount up to $45 per dry ton. An eligible material owner may be a producer of an eligible crop or a person or entity with the
legal right to collect or harvest eligible material. Matching payments may be made to eligible material owners for a maximum of 2 years.
To qualify for a matching payment, the biomass must be an eligible material that also is collected or harvested directly from the land before
transport to the facility, in accordance to an approved conservation or forest stewardship plan, and if woody biomass, must not have a previously
existing market, and must also be a removal to reduce forest fire threats, disease or insect infestation, or to restore ecosystem health.

10. Utilization (Participation) Data

To date, three BCF's have been qualified from the 141 BCF applications submitted for qualification. These three qualified BCF's convert herbaceous
materials.
Approximately 105 eligible material owner applications for matching payments have been approved and more than $1.5 million in matching payments have
been disbursed. FSA has allocated $2.65 million to the states where these eligible material suppliers are located.
Of the 138 pending BCF applications to become qualified for matching payment purposes, a sample of 47 BCF applications provides evidence of an
estimated quarterly supply rate of more than 1 million dry tons of woody biomass. The matching payment estimates for the approximate 1 million dry tons
is over $45 million.
As of May 27, 2011, project area sponsors have submitted 46 project area proposals:

Five of the project proposals have been reviewed and approved (see table below); and

Forty-one project proposals were forwarded from state FSA offices on June 24, 2011, and are under review at the National FSA office.

Five project areas have been designated as follows:

----------------------------------------------------------------------------------------------------------------
Targeted FY Targeted Currently Acreage
Project Area Location Number of Eligible Crop 2011 Acreage Acreage Enrolled Offers
Name Counties Enrollments Total Acreage Pending
----------------------------------------------------------------------------------------------------------------
Project Area 1 Kansas, 39 Warm season 20,000 50,000 1 7,500 7,000 to
Missouri grasses 8,000
Project Area 2 Arkansas 8 Giant 5,588 50,000 (2) * 0
Miscanthus
Project Area 3 Missouri 9 Giant 3,000 50,000 (2) * 619
(Columbia) Miscanthus
Project Area 4 Missouri 7 Giant 5,250 50,000 (2) * 1,707
(Aurora) Miscanthus
Project Area 5 Ohio, 7 Giant 5,344 50,000 (2) * 219
Pennsylvania Miscanthus
-------------------------------------------------------------------------------------------------
Totals...... 3 66 39,182 250,000 7,500 10,545
----------------------------------------------------------------------------------------------------------------
1 Sign up for Project Area 1 began on May 9, 2011 and acreage offers pending are undergoing the development of
required conservation plans.
2 Sign up for Project Areas 2 through 5 began on June 20, 2011 and acreage offers pending are undergoing the
development of required conservation plans.
3 Four counties in Project Areas 1 and 3 overlap: Boone, Callaway, Cooper, and Howard.

The total number of acreage targeted for producer signup in the
five Project Areas:

39,182 acres for FY 2011.

250,000 acres at full-production-sign up.

The estimated yield of biomass, at full project performance:

Project Area 1 is 3 tons per acre, 150,000 tons annually;
and

Project Areas 2 through 5 is 10 to 12 tons per acre, 2.4
million tons annually.
11. Duplication or Overlap with Other Programs
BCAP complements other state and Federal programs that support
biomass conversion facility infrastructure by supporting the production
of crops and materials that these facilities convert. In addition, the
program's achievements help support the Renewable Fuel Standards
Program by providing states with output to meet state renewable
mandates and encourage renewable registrations.
12. Waste, Fraud and Abuse
Occasional cases of producer misconduct may have been identified
and addressed through investigations; no current systemic waste, fraud,
or abuse has been identified related to this program.
The Office of Inspector General (OIG) in December 2010 provided the
following recommendations in a Fast Report pursuant to the review of
BCAP matching payments administered in FY 2009 and FY 2010 in the
States of California, Maine, Alabama, and Missouri:

Develop a program handbook setting forth policies and
procedures governing program administration;

Develop forms specifically tailored to facilitate day-to-day
administration and capture relevant program data; and

Develop a data system with applied edit checks and a
designed structure to facilitate data validation, management
reporting, and data analysis.

BCAP responded to these recommendations and provided the following
adjustments to the program for FY 2011:

Release of the 1-BCAP Handbook with a second amendment in
May 2011;

Development of the forms BCAP-10 and BCAP-11 which track the
tracts and fields where harvest and collection occurs and
conservation, forest stewardship or equivalent plans are
required via technical service agreements with NRCS and a
developing agreement with USFS and State Foresters; and

A web based system was designed to automate the new forms,
moving away from the previously used System 36 or Conservation,
Reporting, and Evaluation System (CRES).
13. Effect of Administrative PAYGO
None.

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF TITLE IV NUTRITION PROGRAMS)

----------

THURSDAY, JULY 21, 2011

Subcommittee on Nutrition and Horticulture,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10 a.m., in Room
1300, Longworth House Office Building, Hon. Jean Schmidt
[Chairwoman of the Subcommittee] presiding.
Members present: Representatives Schmidt, King,
Southerland, Lucas (ex officio), Baca, Pingree, Sablan,
Peterson (ex officio), and McGovern.
Staff present: Tamara Hinton, Brandon Lipps, Pam Miller,
Mary Nowak, Matt Perin, Heather Vaughan, Liz Friedlander, Keith
Jones, Lisa Shelton, John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. JEAN SCHMIDT, A REPRESENTATIVE IN
CONGRESS FROM OHIO

The Chairwoman. Good morning. Thank you all for being here
today.
I especially want to thank Ms. Audrey Rowe, the
Administrator of the USDA's Food and Nutrition Service, for
joining us and enlightening me, and I look forward to a great
working relationship.
I also want to thank my good friend Ranking Member Baca in
joining me in holding this hearing today. It is well known that
a certain degree of comity and bipartisanship exists here on
the Agriculture Committee, and I look forward to working with
my friend as we go through this farm bill process.
This hearing on nutrition programs in Title IV of the farm
bill is part of a series of audits of farm programs. We are
holding these audits to gather information and data on each of
the programs we operate, and to give all the Committee Members
a chance to learn more about how each program fits into the
broader picture of farm policy. We will be looking at how
programs use their funds, how effectively they serve their
stakeholders, and whether there is duplication or waste that
can be eliminated.
These audits are very critical for every farm bill program,
but perhaps nowhere more so than the nutrition title. The
USDA's Food and Nutrition Service is the agency charged with
administering Title IV nutrition programs. Major programs they
administer are the Supplemental Nutrition Assistance Program,
commonly referred to as SNAP; the Emergency Food Assistance
Program, commonly referred to as TEFAP; the Commodity
Supplemental Food Program, CSFP; the Fresh Fruit and Vegetable
Program, FFVP; the Senior Farmers Market Nutrition Program,
SFMNP; and the Food Distribution Program on Indian
Reservations, FDPIR. FDPIR, if you want to call it that.
Two weeks ago this Subcommittee heard from AMS and APHIS
about how they operate Title X Specialty Crop Programs. I
enjoyed the review of how the programs are being administered
and operated today. Likewise, I look forward to hearing from
FNS with a general snapshot of the spending of each program
that they administer. We will study the financial aspects of
these programs and consider whether or not the programs' goals
are being met and whether the programs are financially prudent.
More than 75 percent of the Agriculture Committee's budget
goes to nutrition programs, which serve a broad range of people
throughout our country. The largest of our nutrition programs
is the SNAP Program. SNAP provides assistance to low-income
households to supplement food budgets. Although it is
administered by the USDA's Food and Nutrition Service, each
state has a great deal of flexibility in how the program is
implemented. SNAP has become an integral part of our country's
overall social support system for families in need. It is, in
fact, the fourth largest needs-tested program in our country.
The size and scope of SNAP has dramatically increased over
time. Participation in SNAP has risen by nearly 70 percent,
from 26 million in 2007 to more than 44 million as of April
2011, and I think there is a direct correlation with our
economic recession and this dramatic growth, although there
might be some other reasons. This increase is due to the
economy, the stimulus bill, and less strict eligibility
requirements.
The SNAP Program is designed to adjust to the needs of our
population, increasing when more people need food assistance
and decreasing when the economy improves. However, this
dramatic growth has strained our resources. The average monthly
benefit was $226 in 2008. Today it is $289. That is a 27
percent increase. In total, we spent $33 billion on SNAP in
2007, but we are on pace to more than double that to more than
$69 billion in Fiscal Year 2011. Sixty-nine billion dollars is
a substantial sum, and given our current budget situation, we
have a responsibility to examine whether we can reduce the
amount without compromising the integrity of the SNAP Program.
I look forward to hearing Administrator Rowe's testimony on
the quality control system that FNS has in place to ensure
accuracy in payments and target fraud. The program is there to
help those truly in need, and it is unfortunate when abuses
like this occur. I plan to look into the program more to see
how we can stop abuse and fraud in the program. Of particular
interest to me is how FNS works with other agencies in the
Federal Government to monitor, investigate, conduct, and
prosecute those traffickers.
As I listen to our witness today, I encourage my fellow
Members to consider how we can find savings in these programs
while continuing to provide nutrition assistance to our
families in need.
Ms. Rowe, I look forward to your testimony, and I hope to
learn how we can make our nutrition assistance program more
effective and efficient.
[The prepared statement of Mrs. Schmidt follows:]

Prepared Statement of Hon. Jean Schmidt, a Representative in Congress
from Ohio
Good morning, and thank you all for being here today. I especially
want to thank Ms. Audrey Rowe, the Administrator of USDA's Food and
Nutrition Service, for joining us.
I also want to thank my friend, Ranking Member Baca, for joining me
in holding this hearing today. It is well known that a certain degree
of comity or bipartisanship exists here on the Agriculture Committee
and I look forward to working with my friend as we go through this farm
bill process.
This hearing on nutrition programs in Title IV of the farm bill is
part of a series of audits of farm programs.
We're holding these audits to gather information and data on each
of the programs we authorize, and to give all of the Committee Members
a chance to learn more about how each program fits into the broader
picture of farm policy.
We will be looking at how programs use their funds, how effectively
they serve their stakeholders, and whether there is duplication or
waste that can be eliminated.
These audits are critical for every farm bill program, but perhaps
nowhere more so than the nutrition title.
USDA's Food and Nutrition Services is the agency charged with
administering Title IV nutrition programs.
The major programs they administer are the Supplemental Nutrition
Assistance Program (SNAP), the Emergency Food Assistance Program
(TEFAP), the Commodity Supplemental Food Program (CSFP) the Fresh Fruit
and Vegetable Program (FFVP), the Senior Farmers Market Nutrition
Program (SFMNP), and the Food Distribution Program on Indian
Reservations (FDPIR).
Two weeks ago this Subcommittee heard from AMS and APHIS about how
they operate title X specialty crop programs. I enjoyed the review of
how the programs are being administered and operated today.
Likewise, I look forward to hearing from FNS with a general
snapshot of the spending of each program that they administer. We will
study the financial aspects of these programs and consider whether or
not the programs' goals are being met and whether the programs are
financially prudent.
More than 75 percent of the Agriculture Committee's budget goes to
nutrition programs, which serve a broad range of people throughout the
country.
The largest of our nutrition programs is the Supplemental Nutrition
Assistance Program, or SNAP for short.
SNAP provides assistance to low-income households to supplement
food budgets. Although it is administered by USDA's Food and Nutrition
Service, each state has a great deal of flexibility in how the program
is implemented.
SNAP has become an integral part of our country's overall social
support system for families in need. It is, in fact, the fourth-largest
needs-tested program in the country.
The size and scope of SNAP has dramatically increased over time.
Participation in SNAP has risen by nearly 70 percent--from 26 million
in 2007 to more than 44 million in April of 20 11.
This increase is largely due to the economy, the stimulus bill, and
less strict eligibility requirements. The SNAP program is designed to
adjust to the needs of our population; increasing when more people need
food assistance and decreasing when the economy improves.
However, this dramatic growth has strained our resources. The
average monthly benefit was $226 in FY 2008. Today it is $289. That's a
27% increase. In total, we spent $33 billion on SNAP in FY 2007, but
are on pace to more than double that to nearly $69 billion in FY 2011:
$69 billion is a substantial sum, and given our current budget
situation, we have a responsibility to examine whether we can reduce
that amount without compromising the integrity of the SNAP program.
I look forward to hearing Administrator Rowe's testimony on the
Quality Control system that FNS has in place to ensure accuracy in
payments and target fraud. The program is there to help those truly in
need, and it's unfortunate when abuses like this occur.
I plan to look into the program more to see how we can stop abuse
and fraud of the program. Of particular interest to me is how FNS works
with other agencies in the Federal Government to monitor, investigate,
combat, and prosecute traffickers.
As we listen to our witness today, I encourage my fellow Members to
consider how we can find savings in these programs while continuing to
provide nutrition assistance to families in need.
Ms. Rowe, I look forward to your testimony, and I hope to learn how
we can make our nutrition assistance more effective and efficient.

The Chairwoman. And with that, I will now turn to the
Ranking Member, Mr. Baca, for opening remarks.

OPENING STATEMENT OF HON. JOE BACA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA

Mr. Baca. Thank you very much, and good morning to all of
you. And thank you, Chairwoman Schmidt, for holding this
hearing. And thank you, Audrey Rowe, for being here this
morning. I would also like to welcome our Chairman from the
Agriculture Committee for being here this morning, Frank Lucas.
As a legislator, a husband, a father, and a grandfather,
the effectiveness of Federal nutrition programs is of the
utmost importance to me. Throughout my years serving on the
Agriculture Committee, I have worked to build a bipartisan
record that links the importance of nutrition and health.
In 2007, we held a hearing that demonstrated the importance
of food stamp benefits to the overall health and long-term
success of children. Then in the 2008 Farm Bill, we provided
record funding for safety net programs like SNAP and TEFAP for
food banks. We also worked to promote healthy eating by funding
new pilot programs and expanding the Fresh Fruit and Vegetable
Snack Program to all 50 states.
In July of 2008, the Subcommittee heard testimony on the
economic costs of poor nutrition in the United States. We
learned that hunger costs our country $90 billion a year in
lost work productivity. So we have to look at the balance of
costs and benefits.
We also learned that poor participation in nutrition
programs means lost revenues for our local communities and
counties. When people use the SNAP Program, money and sales tax
goes right back to the community. With a record number of
participants-- up from 26 million to 44 million people--it is
clear that this is a result of the economic situation that we
are in right now.
I know many of the individuals who are on the program don't
want to be on it. They want to be sustaining themselves. I know
because I personally was on food stamps myself at one point. I
know there are times when we have no choice; when you have to
feed your family, and put food on the table.
So we have established a clear body of evidence linking the
ties between the Federal nutrition programs, health, and the
economic well-being of our communities. Make no mistake, in
these tough times, the Federal nutrition programs are the
safety net between hunger and health for millions of Americans.
In my home of San Bernardino County, California, we face an
unemployment rate of 17 percent countywide. Programs like SNAP,
WIC, and TEFAP are putting food on the table for many of my
neighbors.
Despite economic stress, nutrition programs continue to
meet the needs of our constituents. This speaks to the basic
strength of these programs. But nothing is perfect, and
especially in these difficult times, we must to work to make
these programs as effective and efficient as possible. And
there must be accountability so we can stop fraud.
As we prepare for the 2012 bill, I am committed to working
with all of my colleagues to strengthen and improve Federal
nutrition programs.
I want to thank, again, our witness, Audrey Rowe, for being
here this morning. I look forward to hearing your testimony.
I yield back the balance of my time.
The Chairwoman. Thank you.
The Chairwoman. And before I ask our Chairman of our
Agriculture Committee if he would like to have some opening
remarks, I would like to ask for unanimous consent to have the
gentleman from Massachusetts, Mr. McGovern, who is not a Member
of this Subcommittee but has joined us today, to allow him to
sit here and take part in this process. Do I have unanimous
consent? Thank you.
Mr. Lucas.

OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA

Mr. Lucas. Thank you, Madam Chairman, and I would like to
thank both you, Chairwoman Schmidt, and Ranking Member Baca for
holding this hearing, and I would also like to welcome
Administrator Rowe to the Subcommittee today.
I believe that we would be holding these audits regardless
of the time period in which we will be writing the next farm
bill. With 14 separate titles covering a variety of programs
ranging from nutrition to forestry, it is important for all of
us to understand why our current policies are structured as
they are. We also need to know how our separate programs work
together to form a comprehensive framework to support America's
farmers, ranchers, and consumers. These audits are meant to
develop a deeper knowledge of agricultural policy so our
Committee Members are better able to develop the next farm
bill.
But in our current fiscal climate, the audits have taken on
greater significance. There are proposals for billions and even
trillions of dollars' worth of cuts to get our fiscal house in
order. The farm bill programs will not be spared the chopping
block.
Considering that farm and nutrition programs together make
up less than three percent of the national budget--yes, less
than three percent of the national budget--large cuts will be
challenging. This Committee is charged with supporting our
country's agricultural industry and ensuring that our consumers
have a safe, high-quality, and affordable food supply. To meet
that responsibility, we must ensure we have well-designed farm
programs that can function efficiently in the face of budget
cuts.
As Chairman Schmidt mentioned, nutrition programs make up
more than 75 percent of farm bill spending. The SNAP Program is
the largest of these programs. In 2008, we worked to improve
the integrity of the nutrition assistance under SNAP, but there
is still room for improvement. For instance, many states are
using broad-based categorical eligibility which makes most, if
not all, households categorically eligible for SNAP if they
receive any noncash Temporary Assistance for Needy Families
benefit. And of the 42 states that have adopted broad-based
categorical eligibility, only one state has imposed an asset
limit. That means there is no limit on the amount of assets a
household can hold while still receiving nutrition assistance.
Categorical eligibility is meant to simplify program
administration, but I know that it also raises some questions
about whether we are really targeting the families most in
need.
Certainly, we shouldn't be sacrificing the integrity of
this program for the ease of administration. We all need to
eat, and when families fall on hard times, SNAP is a valuable
resource that helps ensure that no one goes hungry. In the
current economic environment, we need to ensure that SNAP
benefits are going to those families that truly need support.
I am concerned that the broad-based categorical eligibility
increases opportunities for waste, fraud, and abuse. We are
spending more than twice the amount of SNAP now than we were in
2007. Program participation has nearly doubled in that time. We
have a responsibility to ensure that the $69 billion we are
spending on nutrition assistance is being properly used and is
helping the people it is meant to help. That is exactly the
type of information we need to gather in these audits.
Are the Title IV programs being targeted effectively? Are
the taxpayers dollars being spent properly? Are there areas
that we can streamline or eliminate? It won't be easy, but we
need to find savings throughout all the farm bill programs.
I look forward to learning more about the Food and
Nutrition Service's perspective on these challenges,
Administrator Rowe, and again, I thank you for your testimony
here today, and yield back the balance of my time, Madam
Chairwoman.
The Chairwoman. Thank you, Mr. Chairman.
And I would ask other Members to submit their opening
statements for the record so that our witness may begin her
testimony and that there is great time, ample time for
questions.
So, with that, I would like to introduce Ms. Audrey Rowe,
who is the head of this program. And you come from Connecticut
via Washington, D.C., so you have great experience. And having
said that, I want to give you the microphone.

STATEMENT OF AUDREY ROWE, ADMINISTRATOR, FOOD AND NUTRITION
SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

Ms. Rowe. Good morning, and thank you, Madam Chairwoman,
Ranking Member Baca, other Members of the Committee. It is
indeed an honor and an opportunity to appear here before you
today to discuss the progress we have made since enactment of
the Food, Conservation, and Energy Act of 2008, also known as
the farm bill.
I want to begin by commending the Committee on the last
farm bill. This strong legislation, passed by wide margins in
the House and the Senate, reflects the Committee's long-
standing bipartisanship. No matter who holds the gavel, you
have consistently worked across the aisle and with the
Administration to make nutrition programs successful. USDA
appreciates this commitment and is committed to administering
the bill in accordance with the intent and the vision of the
Congress.
Achieving ongoing success in the program under your
jurisdiction is at the heart of reauthorization, an opportunity
for Congress and the Administration to take stock of the last
farm bill and find potential improvements to pursue and enact.
As Administrator of the Food and Nutrition Service, I bring
20 years of state government and private-sector experience in
human service policy, fiscal management and accountability,
program design, and service delivery, with a focus on
vulnerable populations, low-income, children and youth. That
background frames my thinking about USDA's nutrition programs
and their mission to reduce hunger and improve diets.
Roughly one in four Americans currently participate in
these programs over the course of a year. The programs work
together as a safety net to ensure that whatever challenges we
face due to economic disruption, national disaster, disease, or
disability, we can meet our basic nutritional needs.
These programs are vitally important today. Even as signs
emerge that the economy is beginning to improve, families
continue to struggle with the aftermath of the worst economic
downturn since the Great Depression. This dynamic fuels record
demands for programs like SNAP, with roughly 45 million
Americans participating as of this past April.
You may wonder who are these 45 million people. The answer
may surprise you. In SNAP, half of all clients are our
children; one in six households have elderly members; one in
five have one or more disabled people. These are hardworking
Americans who may be facing furloughs or underemployment, and
who need resources to put food on their table until they can
get back on their feet. Again, that mission, the FNS mission,
has never been more important.
The farm bill improves access and accountability in the
Supplemental Nutrition Assistance Program, also known as SNAP;
the Fresh Fruit and Vegetable Program; the Food Distribution
Program on Indian Reservations; the Commodity Supplemental Food
Program; the Emergency Food Assistance Program; the Senior
Farmers Market Nutrition Program. While my written statement
addresses each one of these programs, I will focus my oral
remarks primarily on SNAP, the largest Federal program.
Formerly known as Food Stamps, SNAP received its new name
as part of the 2008 Farm Bill. SNAP is our nation's front line
of defense against hunger, providing low-income individuals and
families an electronic benefit debit card to buy food at
authorized stores. Its flexible, responsive structure is
central to its success.
When the economy takes a downturn, more families struggle,
and more tend to become eligible for SNAP. When they apply,
SNAP responds to make sure they do not go hungry until they get
back on their feet. As the economy improves, fewer families are
eligible and apply, and our investment tends to decrease, a
hallmark of an efficient and an effective program. Congress has
maintained this key feature throughout many previous farm
bills.
As SNAP provides food to participants, it also provides
economic benefits to communities across the nation. Our
research shows that for every $5 in new SNAP benefits, it
generates as much as $9 in economic activity. Every time a
family uses SNAP to put healthy food on the table, it benefits
the store, the employees where the purchase was made, the truck
driver who delivered the food, the warehouses that stored it,
the plant that processed it, and, of course, the farmer who
produced the food.
SNAP's success also extends to integrity, which relies on a
cooperative partnership between FNS and the states that operate
the program. SNAP's quality control system is part of a payment
accuracy approach which uses state bonuses and sanctions to
achieve continuous and sustained improvement. This approach
delivers real results for taxpayers.
Payment accuracy in SNAP has increased to over 96 percent,
an all-time high, even as participation has increased to record
levels. Payment errors are less than half what they were 10
years ago, reducing improper payments by $3.3 billion.
FNS is also responsible for authorizing the over 200,000
retailers that accept SNAP and monitoring them for compliance
with program rules. The program is designed to operate through
normal channels of trade, and the overwhelming majority of
businesses and benefits are redeemed in responsible grocery
businesses that play by the rules.
That said, the agency takes any noncompliance very
seriously. We have made major strides in reducing trafficking,
the sale of SNAP benefits for cash, which is an illegal
activity punishable by criminal prosecution. Over the last 15
years, our aggressive surveillance and enforcement have helped
to reduce the prevalence of trafficking down to about one
percent. The 2008 Farm Bill provided new anti-trafficking
tools, including the authority to disqualify recipients for
such activities as selling food purchased with SNAP benefits or
dumping contents of returned deposit bottles in order to get
cash, as well as new sanctions for noncompliant retailers.
We must also ensure that the program promotes healthy
eating. The N in SNAP is for Nutrition, and it is essential
that we make use of its great reach to reduce the risk of diet-
related disease. Almost every American's diet is in need of
improvement, and the SNAP-specific nutrition strategies
mandated by Congress and administered by FNS reinforce efforts
to foster healthy diets across the general population.
Let me turn briefly to the Emergency Food Assistance
Program, TEFAP, which provides food and administrative funds to
state agencies to local emergency feeding organizations such as
food banks, soup kitchens, and food pantries. They play a
critical part in the hunger safety net. The farm bill increased
funds for TEFAP food to $250 million annually, indexed to
inflation in future years.
While USDA provided the authorized funding for SNAP, market
conditions have limited the availability of surplus food beyond
this amount in recent years. USDA will provide more surplus
food to the program should it become available. USDA also
published a farm bill rule in 2009 to streamline operations by
making TEFAP state plans permanent.
Let me conclude by thanking you again for this opportunity
and reiterating that the nutrition assistance mission has never
been more important. The Administration is committed to
maximizing transparency, access, accountability, and integrity,
and Secretary Vilsack has directed the Department to provide
all Americans with the excellence they deserve from our
government. I am personally committed to ensuring that we live
up to those expectations as we manage these programs to meet
the needs of eligible families and individuals who rely on them
during challenging economic times.
Let me mention in closing that in my career I have never
held a job at the state level where budgets were not tight, so
it is not a new experience for me to face an extremely tight
Federal budget and consideration of significant program
changes. Reauthorization allows us to carefully assess the
impact of potential changes so we can preserve our successes
while meeting new challenges and improving performance, and in
that light, I am happy to review these programs and answer your
questions.
I have with me a number of staff people who I may call on
from time to time. As I mentioned to some of you, I am in my
fourth month in the position of Administrator. I want to give
you the best information that I possibly can, so I have brought
the resources to make sure we can do that.
[The prepared statement of Ms. Rowe follows:]

Prepared Statement of Audrey Rowe, Administrator, Food and Nutrition
Service, U.S. Department of Agriculture, Washington, D.C.
Madam Chairwoman, Ranking Member Baca, and Members of the
Committee, thank you for the opportunity to be here today to discuss
the United States Department of Agriculture's (USDA) nutrition programs
and the progress we have made since enactment of the Food, Conservation
and Energy Act of 2008--the 2008 Farm Bill.
I want to begin by commending the Committee for its hard work in
crafting the 2008 Farm Bill. I understand that this Committee had to go
through a lot of hard-fought battles and make some really tough
decisions, and the end result was a strong, bipartisan piece of
legislation that passed by overwhelmingly large margins in both the
House and Senate. We understand how hard it was to accomplish that
task, and the Food and Nutrition Service at USDA is strongly committed
to ensuring that the legislation is administered in accordance with the
intent and vision of Congress.
I also want to express my appreciation for the bipartisan approach
that this Committee has taken over the years when it comes to
supporting USDA nutrition assistance programs. No matter which party
holds the gavel, there has always been a shared commitment to working
across the aisle and with the Administration to ensure that these
programs are successful.
The goal of ensuring success in the programs under your
jurisdiction is at the heart of the 5 year reauthorization cycle for
farm bill programs, which offers Congress and the Administration a
great opportunity to take stock of where we are at today, what we did
in the last farm bill, and what we need to do in this farm bill to get
where we need to be. Like you all, we in the Administration appreciate
very much the political and budgetary climate in which we find
ourselves as the reauthorization process gears up. Federal programs are
under heightened scrutiny right now. Members of Congress, the public,
and this Administration all want to know that scarce resources are
being used wisely.
I understand that context as the Administrator of the Food and
Nutrition Service, where I am responsible for the operations of the
Federal nutrition assistance programs. I bring with me over 20 years of
experience in both state government and the private sector working in
human services policy development, fiscal management, program design,
service delivery and marketing with a particular focus on vulnerable
populations, low income women, children and youth. That background
inevitably shapes and guides my thinking about administering USDA
nutrition programs, which work both individually and in concert with
one another to reduce and prevent hunger and improve the diets of
children and low-income households. While about one in four Americans
currently participate in Federal nutrition programs over the course of
a year, these programs are a critical safety net for every American,
designed to ensure that, whatever other challenges they face due to
economic disruption, natural disaster, or personal challenges such as
disease and disability, they need not experience food insecurity and
hunger.
We see the vital importance of these programs today. Even as signs
emerge that the economy is beginning to recover, families across the
country continue to struggle with the aftermath of 3 years of
recession. The unemployment rate is down substantially from the recent
peak of 10.1 percent in since October 2009, but remained unacceptably
high at 9.2 percent as of June. Census Bureau figures shows that the
poverty rate in 2009 was 14.3 percent, the highest rate since 1994.
There were 43.6 million people in poverty in 2009--the largest number
in the 51 years for which poverty estimates are available.
And demand for the nutrition assistance programs remains extremely
high. In April 2011, 44.6 million people received SNAP benefits.
Participation in the school meals programs remains at near-record
levels, with about 32 million children receiving a meal through the
school lunch program on an average school day, and two out of three
served free or at reduced price.
Who are today's nutrition assistance clients? The answer may
surprise you. In SNAP, about half of all clients are children, and
about \3/4\ of benefits go to households with at least one child.
Nearly \1/3\ of participants are in households that include elderly
people or people with disabilities. And the SNAP clientele has
undergone a major shift in its focus from welfare to work over time.
Many are hardworking families who may be facing furloughs or
underemployment in these difficult times. All need assistance with
money for food until they can get back on their feet.
These sobering statistics underscore the fact that the nutrition
assistance programs have never been more important to our nation. Title
IV of the 2008 Farm Bill resulted in changes that improved access and
accountability in many of these programs, including the Supplemental
Nutrition Assistance Program (SNAP), the Fresh Fruit and Vegetable
Program (FFVP), Food Distribution Program on Indian Reservations
(FDPIR), the Commodity Supplemental Food Program (CSFP), the Emergency
Food Assistance Program (TEFAP), and the Senior Farmers Market
Nutrition Program (SFMNP). In my statement I will describe our progress
in implementing these changes as I review some of the key issues facing
our programs today.
I also want to underscore at the outset my strong focus on proper
management of resources--a fundamental strategy in ensuring both
program access and integrity. Secretary Vilsack has charged all the
USDA mission areas to ensure our services are accessible and properly
administered; to work collaboratively with our partners; and to seek
opportunities for efficiency and effectiveness in all our programs.
Additionally, Undersecretary Concannon recently testified before the
Senate that Americans deserve excellence from their government. That is
not just a slogan. The leadership team at USDA Food, Nutrition and
Consumer Services takes that charge seriously when it comes to
effective accountability in the nutrition assistance programs. We are
committed to a long-term, sustained effort, working closely with our
program partners, and my team and I are seeking every opportunity to
build on our successes with new strategies to tackle the challenges
that remain. I believe that we can improve accountability without
compromising service to those in need, and we look forward to working
with you in this effort.
Supplemental Nutrition Assistance Program (SNAP)
Let me begin with SNAP--the largest and most widely used nutrition
program authorized in the farm bill, the former Food Stamp Program,
which received its new name as part of the 2008 Farm Bill, supplements
the food purchasing power of low income individuals and families by
providing an electronic debit card which is used at authorized stores.
Benefits are 100 percent federally-financed, while administrative costs
are shared between Federal and state governments.
One of the most important aspects of SNAP is that it is structured
to respond quickly to the needs of the hardest-hit households, based on
national eligibility standards. Benefits flow into communities as
economic conditions worsen, providing an economic boost even as they
meet the nutrition needs of low-income people. Research shows that
every $5 in new SNAP benefits generates as much as $9 in economic
activity. Every time a family uses SNAP benefits to put food on the
table, it benefits the store and the employees where the purchase was
made, the truck driver who delivered the food, the warehouses that
stored it, the plant that processed it, and the farmer who produced the
food.
I raise this in part to underscore that while this flexible,
responsive program structure leads the program to expand when need is
greatest, it also causes program participation, and expenditures, to
contract as conditions improve and needs lessen. We see this dynamic at
work in SNAP. When the economy takes a downturn, more families
struggle, and more families look to SNAP until they can get back on
their feet. When that happens, the program responds to make sure that
families do not go hungry. The opposite is also true though. As the
economy improves, and more Americans find jobs, fewer families need the
program in the first place. When that happens, our investment tends to
decrease. This efficient and effective aspect of SNAP is one of the
keys to its success.
State agencies are responsible for the administration of the
program according to national standards set by Federal law and
regulations. Applicants must meet certain financial, non-financial and
citizenship or immigration status requirements, including gross and net
income tests, and resource limits. States have the flexibility to
modify some of these requirements to align SNAP with their Temporary
Assistance for Needy Families (TANF) policies. Forty-two state agencies
have implemented an optional policy called broad-based categorical
eligibility (BBCE), which allows states to utilize their TANF income
and resource limits for their SNAP applicants, providing administrative
simplification for states, and allowing the same gross income and
resource policy to apply for both programs.
The SNAP eligibility and certification changes made in the 2008
Farm Bill were implemented quickly after passage starting on October 1,
2008 by all states via an implementation memorandum; a proposed rule
which promulgates these provisions into regulation was published in the
Federal Register in May, and the comment period closed July 5. A final
rule is expected to be published by the end of this calendar year.
These changes were important for program access and integrity.
With regard to work requirements, able-bodied adults without
dependents (ABAWDs) between 18 and 50 who do not have any dependent
children can get SNAP benefits only for 3 months in a 36 month period
if they do not work or participate in a workfare or employment and
training program other than job search. This requirement is waived in
some locations in accordance with unemployment rates and job
availability triggers determined by the Department of Labor. With some
exceptions, all adults participating in SNAP between 16 and 60 must
register for work, accept suitable employment, and take part in an
employment and training program to which they are referred by the local
office. Failure to comply with these requirements can result in
disqualification from the program.
It is worth noting in this regard that a large proportion of SNAP
households are working families. In fact, the primary source of income
among SNAP participants has shifted from welfare to work over time. For
these working poor households, SNAP provides an important resource to
see them through tough economic times.
In cooperation with FNS, each state agency is responsible for
monitoring and improving its administration of SNAP. As a part of this
requirement, SNAP's Quality Control System is used to measure the
accuracy of the states' certification process. The Quality Control
system is part of a payment accuracy approach which uses bonuses and
sanctions to encourage states to continuously improve performance. This
approach has helped to deliver real results, and payment accuracy in
SNAP is at an all-time high--over the last decade participation among
eligibles has gone from 57% to 66%, while payment errors have gone from
8.91% to a record-low of 3.81%. Over 98 percent of those receiving SNAP
benefits are eligible to receive benefits; the overall payment accuracy
in FY 2010 was 96.19 percent. Payment error rates are less than half
what they were 10 years ago, which has reduced improper payments by
$3.3 billion. That said, any error is too much, and for that reason we
do not intend to rest on this success. The President's November 2009
Executive Order directed all agencies to further rein in improper
payments while making sure that those eligible for government
assistance continue to have access to these programs, and we are
working with states to meet his ambitious goals for ongoing
improvement.
SNAP Retailer Operations
Our program responsibilities do not end once the benefits have been
issued; SNAP must also manage the program so that benefits are used
effectively and with integrity. FNS authorizes retailers to accept and
redeem SNAP benefits in accordance with Federal statute and
regulations, monitors them through ongoing systems analysis and
undercover on-site investigations, and manages an administrative review
of those firms that contest a disqualification or civil money penalty.
Over 220,000 retailers are currently authorized to redeem SNAP benefits
through electronic benefit transfer (EBT). EBT works like a debit
transaction--SNAP participants scan their EBT card at the point of sale
and the funds are deducted from the food account on the card. Eighty-
three percent of all SNAP transactions happen at super markets, super
stores, and large grocery stores, while the majority of the stores
authorized are smaller stores.
FNS is also responsible for monitoring participating retailers for
compliance with SNAP rules. The sale or purchase of SNAP benefits for
cash is called trafficking, an illegal activity punishable by criminal
prosecution. Over the last 15 years, FNS has aggressively implemented a
number of measures to reduce the prevalence of trafficking in SNAP from
about four percent down to its current level of about one percent.
Despite this significant decline in trafficking USDA continues to
implement aggressive measures to improve program integrity and to
detect and stop fraud. SNAP uses a fraud detection system, the Anti-
Fraud Locator for Electronic Benefit Transfer Transactions (ALERT), to
monitor electronic transaction activity and identify suspicious retail
grocers for analysis and investigation. FNS also works closely with its
state and Federal partners to investigate and prosecute trafficking.
The 2008 Farm Bill provided some significant tools for SNAP in this
area including revised definitions of trafficking that provide for
disqualification of recipients for such activities as selling food
purchased with SNAP benefits, and dumping contents of return deposit
bottles in order to get cash; as well as new sanction authority for
non-compliant retailers. These provisions are in various stages of
implementation, but all provided strong tools to deal with misuse and
abuse of program funds.
SNAP and Food Choices
We are also charged with ensuring that the program does all that it
can to promote good nutrition and reduce or prevent obesity among its
clients. As we all know, the ``N'' in SNAP is for nutrition, and it is
essential that we make use of its great reach to promote better
nutrition and reduce the risk of diet-related disease.
It is important to recognize in this context that almost every
American's diet is in need of improvement. Virtually all of us eat too
few whole grains, dark green and orange vegetables, and too much fat
and added sugar. Our SNAP-specific nutrition strategies must complement
and reinforce efforts directed to foster healthy diets across the
general population.
The 2008 Farm Bill codified nutrition education as a component of
the program. Recently, the Healthy, Hunger-Free Kids Act (HHFKA) of
2010 reformed the nutrition education component of SNAP (known as SNAP-
Ed) to provide for a focus on obesity prevention and nutrition
education, expanding reach and providing states increased flexibility.
FNS has spent the months since the passage of the HHFKA meeting with
state partners, nutrition education providers, public health officials,
universities, the Health and Human Services' Center for Disease Control
and Prevention, the White House Task Force on Childhood Obesity, and
others to get input into the implementation of this important
provision. A rule is scheduled to be published in January 2012.
As this Committee knows, some have suggested that SNAP rules should
restrict the use of benefits so that only ``healthy'' foods can be
purchased. USDA has long held a preference for strategies to support
and encourage healthy choices rather than restricting access to
particular foods. Congress has also preferred this approach, and most
recently spoke to this issue in the 2008 Farm Bill by authorizing and
funding a demonstration and rigorous evaluation of the impact of
financial incentives at the point of sale on purchases of fruits and
vegetables. We have been working carefully to design and implement this
project--the Healthy Incentives Pilot--to maximize the chance of its
success, and to ensure that, whatever the results, the test will
provide clear evidence that will support policy decisions made by
Congress and the Administration. Operations will begin in Massachusetts
later this year.
The Department is also working to increase the number of farmers'
markets that accept SNAP benefits. These outlets help introduce low-
income households to a variety of fresh and nutritious foods, and
expand opportunities for small farmers. Our goal is to authorize an
additional 200 farmers or farmers' markets and increase redemptions by
$750,000 each year. In addition, a number of farmers' market incentive
projects work in coordination with SNAP by providing privately-funded
bonus dollars to clients for purchases made with SNAP benefits.
We think that these positive and proactive strategies are the most
effective way for USDA and its partners to address the challenges of
poor diets and obesity. We look forward to working with the Committee
to advance and strengthen these strategies into the future.
Let me turn now to the other nutrition assistance programs
authorized under the farm bill.
Fresh Fruit and Vegetable Program (FFVP)
The Fresh Fruit and Vegetable Program (FFVP) provides free fresh
fruits and vegetables in elementary schools with high percentages of
children receiving free and reduced price school meal benefits to help
children develop positive dietary habits during their formative years.
FFVP began as a pilot program authorized by the 2002 Farm Bill,
operating in 25 schools in each of four states and seven schools in one
Indian Tribal Organization (ITOs). Following nationwide expansion under
the 2008 Appropriations Act, the 2008 Farm Bill permanently authorized
FFVP and increased its funding from $40 million in 2008 to $150 million
in 2011. USDA was able to get this increased funding out timely, and is
working to publish a regulatory proposal on the program in the near
future. The 2008 Farm Bill also mandated and funded an evaluation to
assess the impact of the FFVP on fruit and vegetable consumption. The
project is underway, and we expect the results to be available in 2012.
Food Distribution Program on Indian Reservations (FDPIR)
The Food Distribution Program on Indian Reservations (FDPIR) was
first authorized in 1977 as an alternative to SNAP for low-income
households living on Indian reservations, and was subsequently expanded
to include American Indians living in other approved areas near
reservations or in Oklahoma. The program provides a monthly package of
USDA Foods, including fresh fruits and vegetables, to participating
households. Households may not participate in FDPIR and SNAP in the
same month. FDPIR currently serves about 77,000 individuals each month.
The 2008 Farm Bill directed USDA to study the nutritional quality
of the FDPIR food package. Our review concluded that the package
provides a nutritious variety of foods, and sufficient calories to meet
the energy needs of most sedentary individuals and many moderately
active children. While as for American diets in general, there is room
for improvement in the quantities of fruits, vegetables, low-fat dairy
products and whole grains, the nutritional content of the package is
considerable. Individuals consuming FDPIR foods in the quantities
provided would achieve a Healthy Eating Index score, which measures
consistency with the Dietary Guidelines, of 81 out of 100, considerably
better than Americans in general (58 out of 100) and SNAP participants
(52 out of 100).
The 2008 Farm Bill also authorized the purchase of bison and
traditional and locally-grown foods for FDPIR participants, but
specific appropriations have not yet been made for these items.
Commodity Supplemental Food Program (CSFP)
CSFP was first authorized under the Agriculture and Consumer
Protection Act of 1973 to distribute USDA-purchased food to low-income
women, infants, and children to supplement their nutritional needs.
Legislation permitted individuals age 60 or more to participate
beginning in the 1980s, and with the expansion in available of WIC, the
program's caseload transitioned so that today, almost 97 percent of the
over 580,000 individuals that participate in CSFP each month are
elderly.
As of 2011, 39 states, two Indian Tribal Organizations (ITOs), and
the District of Columbia are participating in CSFP. CSFP monthly food
packages are good sources of the nutrients typically lacking in the
diets of participants. The 2008 Farm Bill removed the priority status
for women, infants, and children in receiving CSFP service; USDA
published a final rule to implement this provision in February 2010.
The Emergency Food Assistance Program (TEFAP)
The Emergency Food Assistance Program (TEFAP) began in 1981 as a
means of reducing stocks of surplus food held by the Federal Government
by distributing it to households in need. In 1998, Congress authorized
appropriations for USDA to purchase food specifically for TEFAP.
Through TEFAP, USDA provides food and administrative funds to state
agencies which distribute them to local emergency feeding organizations
such as food banks, soup kitchens and food pantries.
The 2008 Farm Bill increased funds for TEFAP food purchases to $250
million annually, indexed to inflation. The 2008 Farm Bill also
authorized up to $100 million annually for administrative costs and up
to $15 million annually for TEFAP infrastructure grants. In addition,
the Secretary has authority to provide food that USDA acquires through
certain price or market support activities (i.e., bonus food) to TEFAP.
TEFAP currently operates in all 50 states, the District of Columbia,
Puerto Rico, the Virgin Islands, Guam, and the Commonwealth of the
Northern Mariana Islands.
While USDA has provided the 2008 Farm Bill's increased appropriated
funding for TEFAP, market conditions have limited the availability of
surplus food for TEFAP in recent months. USDA will continue to provide
surplus food to TEFAP should more become available and the President's
FY 2012 budget requests the authorized level for TEFAP food purchases.
Legislation provided $6 million in 2010 for TEFAP infrastructure grants
which USDA awarded to 39 emergency feeding organizations in rural and
urban areas to help improve their ability to provide food to low-income
individuals. USDA also published a final regulation in November 2009,
to implement the 2008 Farm Bill requirement to make TEFAP state plans
permanent; this rule has streamlined TEFAP operations.
Senior Farmers' Market Nutrition Program
The Senior Farmers' Market Nutrition Program (SFMNP) was created as
a pilot program in FY 2001; it was established by Congress as a
permanent program through the 2002 Farm Bill, and has been reauthorized
through 2012 under the 2008 Farm Bill. The program provides low-income
seniors with coupons that can be used to purchase fresh fruits,
vegetables, honey and herbs from farmers at authorized farmers' markets
or roadside stands, or with shares in community supported agriculture
(CSA) programs for regularly distributed bags or boxes of eligible
foods. Fifty one state agencies and federally recognized Indian tribal
governments received grants to operate the SFMNP in FY 2011. Over
20,000 farmers at 4,600 farmers' markets as well 3,800 roadside stands
and 163 CSAs participated in the program in FY 2010, enabling over
844,000 seniors to receive fresh fruits and vegetables during the 2010
market season.
Conclusion
Let me conclude by thanking you all again for this opportunity and
by reiterating that the mission and the work of the nutrition
assistance programs have never been more important to our nation. The
Administration is committed to a more responsible government that
maximizes transparency, accountability, and integrity. I am committed
to ensuring that we live up to those expectations as we continue to
manage these programs to meet the needs of the eligible people who rely
on them, especially in these times of fiscal and economic challenges.
I should also mention that I have never come into a job at the
state level where budgets were not tight, so I guess I should not be
surprised that in this new Federal role I come together with you all at
a moment where budgets are extremely tight, and when substantial and
significant changes are being considered for many Federal programs. As
the Committee begins its work in writing the next farm bill, it is
important to recognize that such changes can have both intended and
unintended consequences. That is what is so valuable about the
reauthorization process. It allows us to carefully work through and
consider those impacts before we move forward so that we can preserve
our successes while moving to meet new challenges and improve
performance. In that light, I am particularly appreciative of the
opportunity to join you today and review these programs, and I look
forward to any questions that you may have.

The Chairwoman. Thank you.
The sign of a good Administrator is when they bring their
team so that they can look really, really smart.
I would like to remind the Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival, and I do appreciate the
Members' understanding in this. And now I would like to begin
my own set of questions.
Ms. Rowe, on the questionnaire, I found it interesting that
the Department did not offer many details in regards to how
programs might be duplicative or have overlap. Does this mean
the Department didn't find any duplication or overlap in the
farm bill nutrition programs or something else?
Ms. Rowe. Well, thank you for that question. When we looked
at the programs, certainly they serve different vulnerable
populations. They provide a safety net for individuals who may
not qualify for certain programs, but still need food
assistance. The Congress, in the past, in its wisdom, has
undertaken various program initiatives to close some of these
gaps so that we can have a safety net that provides benefits to
our youngest, to our seniors, to those who are disabled, and to
those who face employment challenges.
The Chairwoman. Okay. It seems you did not find any
duplication?
Ms. Rowe. We did not find duplicates. There are individuals
who may participate in more than one program. For example, you
may have individuals that benefit from the FDPIR Program, but
also benefit from the School Lunch Program. So there are
different populations that benefit for different purposes.
The Chairwoman. Okay. And in your testimony, you said
payment error rates are less than half of what they were 10
years ago, which has reduced improper payments by $3.3 billion.
Ms. Rowe. Correct.
The Chairwoman. Could you clarify for me if this is a
reduction of $3.3 billion over 10 years, 1 year?
Ms. Rowe. It is over 10 years.
The Chairwoman. Okay. While I can appreciate the fact that
the Department has reduced improper payments by $3.3 billion
over 10 years, I think it is still troubling that the GAO
reports that there was $2.2 billion in overpayments in Fiscal
Year 2009 alone. What is FNS doing to rein in improper
payments?
Ms. Rowe. We have undertaken a number of strategies. For
example, in states where there are or there have been improper
payments, either overpayments or underpayments, to an
individual, we have provided technical support and assistance
to those states. We have identified best practices in other
states that can help a state that is having some challenges in
those areas, provide a number of additional resources to the
state so that they can look at how they are administering their
program, and can target and be strategic in where they need to
devote their resources to reduce the improper payments. We have
been very aggressive in working with states to help them
understand both how to reduce improper payments and the
importance of continuing to reduce improper payments.
The Chairwoman. And along that same line, what is the
process in recovering overpayments made to SNAP participants?
Ms. Rowe. It is a state function. States can--as a former
administrator, a state does have the ability to either take an
action to reduce, if the person is continuing to be on the SNAP
Program--to reduce their benefits to recoup. There are other
recoup options that states have before them, and different
states administer it in different ways.
The Chairwoman. Following up on that a little bit more, we
are giving all this money to states to create the program, and
there might be some problems. Do you think we need to have more
oversight at the Federal level to make sure that when there are
bad actors, that the states are doing due diligence to, A, go
after the bad actors, and, B, get whatever resources they can
get back from those bad actors?
Ms. Rowe. Well, when I was on the state side, I would have
had a different answer, but on the Federal side, I can honestly
say that we have been very focused in reminding states--Under
Secretary Concannon, not only in visiting states and meeting
with Governors and state commissioners and administrators--has
reiterated again and again the importance of maintaining
integrity in the various programs. He has sent letters to all
the states. We have worked with the states to remind them--at a
time when caseloads are increasing, states are facing fiscal
challenges--it is not time to take your eye off the mark. We
have to stay focused.
And I think states have been very responsive. They have
sought consultation. They have asked us to send in staff to
help them manage some of the challenges they have. We do
management reviews. Our regional office staff go out to the
states, pull records. We look at information that states have
available to help us determine how well they are doing.
The Chairwoman. Thank you.
And I see that my time has expired, so I am going to ask
Mr. Baca if he has any questions for this witness.
Mr. Baca. Yes, I do. Thank you very much, Madam Chair.
Thank you again, Ms. Rowe, for testifying this morning, and
I appreciate your efforts to ensure the integrity of SNAP and
other programs at FNS.
I will start with a statement. Nutrition education and
access to healthy food are two key components necessary for
improving the health of all Americans, especially those who
rely on SNAP benefits to feed their families. In my district
there is a huge problem with obesity amongst the Latino
population, particularly children. The First Lady has done a
great job in highlighting these problems, but I am also
encouraged that new data from the Journal of Nutrition
Education and Behavior showed that California has seen a 37
percent increase in fruits and vegetable consumption among low-
income adults. This is the kind of information that helps us
make good policy decisions. So, with this and other data out
there, can you tell me about FNS's evaluation of nutrition
educational efforts?
Ms. Rowe. Well, yes, certainly, Congressman. As you know,
the Healthy, Hunger-Free Kids legislation required us to
rethink and relook at our SNAP Education Program, to engage in
much more collaboration, to provide additional opportunities
for states to learn what is going on in another state and how
effective it has been. The kind of research that you are
talking about we would disseminate to states so that they can
see the importance of staying very focused on nutrition.
We have created within FNS a Latino outreach plan which is
going to focus not only on California, but on Latino
communities around the country, making sure that they
understand the program, what is available to them, the
importance of nutritious eating, healthy lifestyles, and
healthy habits.
We continue to share information. When I was in California
and had an opportunity to see some of the outreach and SNAP
education programs there, I immediately grabbed the information
and brought it back to our other states. We have talked to
states about what California is doing and encouraged them to
adopt similar strategies and similar activities.
Mr. Baca. Okay. As part of a follow-up, how would the
changes made to SNAP nutrition and in the child nutrition bill
passed in December 2010 affect these numbers?
Ms. Rowe. That I am not really sure, Congressman. I would
like to get back to you on that. I think what we are hoping is
that it would allow us to do nutrition education in a more
strategic way, in a more collaborative manner, but the impact
on numbers, I really can't answer that.
Mr. Baca. Okay. Thank you.
And I know you elaborated a little bit on this. Does FNS
have any specific outreach plans to include nutrition education
in minority communities?
Ms. Rowe. Yes. As I had mentioned, we have designed the
Latino outreach plan. We have been working with a number of
national organizations, such as the National Urban League and
others, to have them focus and provide information through
their networks on nutrition education. We are developing new
messages, messages that we have developed with focus groups,
that help to focus individuals and remind individuals of
nutritious feeding; not only nutritious feeding, but how to
prepare food. It is one thing to buy the food and bring it into
your home, but if you don't have the tools and skills to
prepare the food, so we are doing a number of things to help
educate individuals.
Mr. Baca. Thank you.
I understand that the SNAP national enrollments are at an
all-time high of 45 million people. Do you have any of the
latest enrollment numbers for California?
Ms. Rowe. We do have those, and I certainly can get those
to you, sir.
Mr. Baca. Okay. And how has the recession affected the
sign-ups in states with traditionally low enrollments?
Ms. Rowe. I beg your pardon, I am sorry?
Mr. Baca. How has the recession affected sign-ups in states
with traditionally low enrollments in the SNAP Program?
Ms. Rowe. Well, we have encouraged states to reach out to
populations that previously have not participated in these
programs. We are doing--we have just talked to the Labor
Department and other Federal agencies to look for ways in which
we can get information out to individuals who participate in
their programs about the availability of SNAP. One of the
things that we find quite often is individuals don't realize
that they are eligible for a SNAP benefit even while they are
receiving some level of unemployment compensation.
Mr. Baca. Okay. I know that my time has run out, but you
mentioned earlier that trafficking has gone down to about one
percent.
Ms. Rowe. Correct.
Mr. Baca. What else, then, can we do to limit abuse and
fraud? Is there anything else that we might need to implement
both at the Federal or state level that would stop abuse and
fraud that still occurs?
Ms. Rowe. Well, one of the areas that we are looking at is
the definition of retailers who can participate in the program.
We have been able to develop profiles, if you will, on the
types of businesses that may be prone to have trafficking
activity, but we also want to make sure that we don't limit
access. And so that is one of the areas that we may want to
come back and talk to you about.
Mr. Baca. I know my time has run out.
The Chairwoman. Thank you, and I am sure we will have more
questions on that, so you will get a better clarification, sir.
I am now going to give 5 minutes to my good friend from
Iowa, Mr. King.
Mr. King. Thank you, Madam Chair.
Administrator Rowe, thank you for your testimony and for
coming prepared. I would just like to back us up historically a
little bit and ask you if you could inform us as to what the
original reason for the nutrition program at its inception?
Ms. Rowe. For the SNAP Program?
Mr. King. Well, for the nutrition program all together. I
could call it food stamps. I think that might be historically
more accurate.
Ms. Rowe. Well, the original statutory purpose was to
alleviate such hunger and malnutrition, which will permit low-
income households to obtain a more nutritious diet through
normal channels of trade by increasing purchasing power for all
eligible households who apply for participation.
Mr. King. And what year was that policy established?
Ms. Rowe. 1977.
Mr. King. And prior to that, we didn't have any Nutrition
or Food Stamp Program?
Ms. Rowe. No, and I am leaning back--no, we did have a Food
Stamp Program, but the policy cited was from 1972.
Mr. King. Fair enough. I guess I grew up in an environment
that didn't have this program, and I wasn't aware that it
didn't exist prior to 1977. So thanks for that information on
it, and the basis of it would be to alleviate hunger and
malnutrition.
Now, then, in the current environment, can you
statistically identify children that are suffering from
malnutrition?
Ms. Rowe. I would like to get you that. We do have that
information. I did not come with that information available
today, but I can get you that information in terms of food
insecurity.
Mr. King. What about malnutrition? That is two different
things, isn't it?
Ms. Rowe. Right, right. And in terms of malnutrition, we
can certainly talk with our sister agency, the Center for
Nutrition Policy and Promotion, to see if they have statistics.
Mr. King. Okay. I would ask you formally to produce that
data for the Committee to statistically identify children that
are suffering from malnutrition.
Mr. King. I think it is important that we anchor ourselves
on the basis for this program originally, and hunger is another
statistic that can be measured. I would expect everybody has
been hungry at one time or another. I don't know how you
quantify that. If there is a means, I would like to know what
that data is.
Ms. Rowe. Well, there is--we do have a study that was
released last year. I know the Food Research Action Council has
released studies. We have looked at the food insecurity, and
that is a data set that we have not only by state, but we can
give it to you by Congressional districts. We can break down
the food insecurity population for children and families.
Mr. King. Okay. And I would just--let us expand this if we
can, as I focused on children, but as we look at this data, I
presume it will be also equally available for adults and then
perhaps seniors separated from that as a group as well. I would
like to know in percentages of children that are suffering from
malnutrition, adults, and then senior adults, and maybe perhaps
three separate categories. And if it gives me some information
by region, even by Congressional district, that would be
useful.
And I say this because I am concerned that we might have
gotten away from our original mission. In fact, we have gotten
away from our original mission, because I have heard you say a
couple of times the words food insecurity, and that is a
different definition. And I remember the testimony that we had
here in 2007 about food insecurity, and I happen to have saved
it in my BlackBerry.
This is a witness before this Committee March 13, 2007, who
said, ``There is also mounting evidence that the overweight and
obesity trends in the United States are due in part to high
levels of food insecurity.'' That is a bit of a concept that is
difficult for a lot of my constituents to get their mind
around, that people are overweight because of food insecurity,
and presumably if we can resolve the insecurity, we can resolve
some of the obesity. Do you adhere to that position statement?
Ms. Rowe. Sir, when people have limited resources, and they
need to put food on their table, the prevalence is for them to
buy those foods that are high in starch, that will fill the
need for hunger, which then increases their tendency to be
overweight, to have obesity issues, as well as diabetes and
other health-related issues.
Mr. King. Thank you. I do know these arguments, and they
are the ones that I had anticipated. But I just make the point
that it is hard for taxpayers to understand that more food
stamps solves obesity. That is a messaging problem; however,
there might be a basis in it in fact, and I could take issue
with that.
I would ask also are illegals--are they eligible for the
SNAP Program?
Ms. Rowe. No, they are not.
Mr. King. And do you have a verification program?
I would ask unanimous consent for an additional minute.
The Chairwoman. No, I will give you a chance later, because
I want everybody to have a good 5 minutes.
Mr. King. Noting the objection, then I yield back the
balance of my time.
The Chairwoman. I hate to be hard about that, but I do want
to be fair to everybody on the Committee, and I will now give 5
minutes to Mr. Sablan.
Mr. Sablan. Thank you, Madam Chair, and to you and the
Ranking Member for holding this hearing.
Good morning, Ms. Rowe. My name is Kilili. I am from the
most remote part of the United States. It takes you a day to
get there, so you can just imagine how much it costs to ship
things there, whether it is the chicken from Arkansas or the
rice from California. Or we should actually ship more apples
from Washington maybe and less SPAM from Minnesota.
But I have several questions. Unlike all the other United
States Territories, the Northern Mariana Islands has no
statutory mandate to receive nutrition assistance other than
the Secretary's authority to extend USDA programs at his
discretion under Public Law 96-597. The Secretary has decided
it would be in a block grant, and you just testified earlier
the difficulties of block grants at the time when people are
having the most difficult time.
I come from a place where one of the islands I represent,
it costs $4 a pound for frozen chicken, $4. You can buy a
chicken at less than a dollar a pound in many of the places
here in the United States.
I need to work with you, Ms. Rowe, on this issue, because,
again, besides the high cost of those products, my government
in the past 3 years has lost almost 50 percent of its GDP. Many
people are either laid off--if you are not laid off and lucky,
you get furloughed, your hours are reduced, and the world
economic conditions, everything is going up.
I look at myself and I say, when I go home and I see the
difficulties, the way for me to console myself is I thank God I
am not in Haiti, because I can't compare it to any part in the
United States.
You said the fundamental mission of FNS is to ensure that
people have food. Now, we have--they reduced the program, the
Block Grant Program you have afforded the Northern Mariana
Islands where an individual gets an average of $111 a month.
Fifty miles away in Guam, an individual gets $281 a month. We
have just a couple of months ago reduced by 36 percent the
benefits to everyone in the program and see an increase of 500
on the wait list now.
I need to work with you before I go into my questions,
really, because you, FNS, review and approve the integrity of
the programs for the Northern Mariana Islands, and you know all
of these things that violates what the fundamental mission is,
and you won't lift a finger to fix it. You should.
I really need to work--I need your commitment right now,
Ms. Rowe, that you will work with me on this. We have reached
out to the Secretary. Mr. McGovern was kind enough to sign the
letter for us to send to Secretary Vilsack, and I have not even
received a response, and maybe it is because I don't have a
vote here.
I hope that when you look at me, you see an American here,
because those Americans out there that I live with are going
hungry, seriously, and I know because I go to their homes. And
I need your commitment, Ms. Rowe, please, to work with me on
this. And I will move on to my questions, and hopefully there
is enough--thank you, thank you. May I have your commitment?
Ms. Rowe. I was going to say you have my commitment, sir. I
would----
Mr. Sablan. Because we have in the past--I will be very
honest. Under Secretary Concannon has really been gracious to
us, and we need to address this, get into the food program,
because I think that is where Americans need the most help. I
am just trying--there are more details. If you want more
details, I can share it to you. I am just a little embarrassed
that I am telling the whole world that Americans in my district
are not getting enough to eat, because the Americans are
supposed to carry out the program, fulfill the number one
reason it exists, approves plans that they know doesn't serve
the program. That is where I need your commitment. I appreciate
it, and I yield back.
The Chairwoman. Now, I would like to give Mr. Southerland
from Florida, another Member of the Committee, a full 5
minutes.
Mr. Southerland. Thank you, Madam Chair. I would like to
yield as much time as my friend from the Northern Mariana
Islands needs to finish his point.
Mr. Sablan. Thank you, Mr. Southerland. I have Ms. Rowe's
commitment. She will work with me. I shouldn't be airing any
more of this. I am really grateful that you consider that.
Thank you. I yield back.
Ms. Rowe. You have my commitment on the record.
Mr. Sablan. Thank you very much.
Mr. Southerland. Ms. Rowe, thank you for appearing today. I
am going to ask just some basic fundamental questions.
I am one of the newest Members of the Committee, so I am
trying to get my arms around all of this. Tell me if you would,
what is the average length of time SNAP recipients participate
in the program?
Ms. Rowe. The average length of time that new recipients
are participating in the program is about 8 months, 8 or 9
months.
Mr. Southerland. Is there a--is there a maximum amount of
time? Are there any limits on that?
Ms. Rowe. There are no time limits on participating for
most eligible people.
Mr. Southerland. Okay. And tell me about in calculating
benefits, can you tell me what is excluded from household
income and what deductions are allowed?
Ms. Rowe. I am going to need some assistance from----
Mr. Southerland. That is fine, and I understand.
Ms. Rowe. Let me just confer with the staff.
Mr. Southerland. Sure.
The Chairwoman. Ms. Rowe, if you would like to have one of
your assistants answer for you, that might be better.
If you could state your name for the record, and I will
give you an extra 20 seconds.
Ms. Shahin. My name is Jessica Shahin, and I am the
Associate Administrator for SNAP at the Food and Nutrition
Service.
I believe your question was around the eligibility
requirement.
Mr. Southerland. Yes, it was. In calculating benefits, what
is excluded from household income, and what deductions are
allowed?
Ms. Shahin. Oh, okay. If I could start with the household
income in the regular program, it is 130 percent of poverty,
and then to receive benefits you need to get to a net of 100
percent of poverty. The deductions are around things like if a
state uses a standard deduction that looks at shelter,
utilities, those kinds of things. So the deductions are related
to their household expenses.
Mr. Southerland. Okay. So those are all deducted. Tell me
those again. Housing, utilities?
Ms. Shahin. Shelter deduction, utilities.
Mr. Southerland. Okay. All right. And what is--I heard--
what is the average? I see on here that the budget for Fiscal
Year 2010 was $68 billion. What is the average benefit at any
given time of the people that are recipients of the program?
What is the average benefit?
Ms. Shahin. I think the average benefit for a family of
four is around--for an individual person, it is around $130.
You don't multiply that by four people, because you get less
and less as the family grows.
Mr. Southerland. Sure. So that would be $100----
Ms. Shahin. Thiry dollars more per person average.
Mr. Southerland. Okay. And then finally, I noticed, Ms.
Rowe, we were talking or discussions earlier about the states.
What is the incentive for the states to track and prosecute, in
your term, bad actors? Where is--well, what is the incentive?
What is the penalty if they don't?
Ms. Rowe. Well, first of all, states will face a fiscal
penalty for failing to achieve an error rate at a certain level
based on the national error rate. You must maintain your error
rate at or below the national error rate. States receive
penalties. That is not something that any state wants to have
to explain to the legislature or to their Governor, that they
are going to receive a fiscal penalty for failure to perform.
States also receive bonuses, and it is the bonuses that
encourage states and--encourage states to not only stay focused
in this area, but to have additional resources to apply,
whether it is for additional investigators, additional staff,
outreach.
I will tell you, when I was a state administrator both in
the District of Columbia and for the State of Connecticut, we
were competitive among our colleagues. We wanted to have as low
an error rate as possible. We wanted to be able to go to our
Governors and our legislatures and talk about the efficiency in
which we were operating the programs. Not only are you here in
Congress concerned, but legislatures are concerned, and members
of state legislatures and Governors, about the error rate and
ensuring that the program is operated efficiently.
So it is the efficient operation of the program, as well as
staying very focused on what you need to do to maintain your
error rate and to continue to have it drop.
Mr. Southerland. Okay. Thank you, Madam Chair, and I yield
back.
The Chairwoman. Thank you.
And, Mr. McGovern, you are recognized for 5 minutes. And I
would like to--before the clock begins--to recognize that the
Ranking Member of the full Committee, Mr. Peterson, is here,
and because I am a tough nut, you are going to be number 5 on
the list, but we will give you a chance to make a statement as
well as a chance to ask questions, sir.
Mr. McGovern. Well, thank you very much, and thank you,
Madam Chair, for letting me participate in this hearing. Thank
you, Administrator Rowe, for being here.
You know, I just want to say a couple of things. First of
all, when the Chairman of the full Committee opened up, he
talked about the fact that we are in tough economic times, we
all have to make difficult choices, but I would like to state
for the record that I don't think all programs are equal, and
certainly programs that provide nutrition and food to people in
this country to ensure that they don't go hungry I think need
to be prioritized.
And the problem we have here, quite frankly, is we still
have a hunger problem in America. There is not a community in
this country that is hunger free. What we need is a holistic
plan that involves, quite frankly, more than just the programs
in your Department and in USDA, but we need a holistic approach
to try to eradicate this problem once and for all.
It was mentioned that we are spending more on the SNAP
Program than ever before. That is because more people are
falling into poverty, more people are out of work, more people
are eligible. If the economy gets better, the amount we spend
goes down.
The Chairman of the full Committee also talked about the
Categorical Eligibility Program, or Cat El, I guess, is what
they call it, which I think helps make SNAP a more efficient
program, and I think repealing Cat El would decrease
participation and make it more difficult and costly for states
to administer the SNAP Program, and I think would result in
increased error rates, exactly the opposite of what our goal
should be. So I guess I don't want to--I hope this Committee
doesn't go down that road.
I would appreciate your comments on that. You mentioned how
the SNAP Program is now more efficient than at any other time
in its history, and when you compare it to a lot of other
government programs, it looks really, really efficient. And
amongst the error rate, is included in that number the number
of cases of underpayments; in other words, where people who are
eligible for a benefit don't get the entire benefit?
Ms. Rowe. Correct.
Mr. McGovern. I appreciate your comment on that.
And then finally, there are a lot of people still who are
eligible who are not in this program, and I would be--I would
like you to answer the question of how many people are eligible
but are not participating, and are they senior citizens, or are
they children, or where does that--you know, where do those
numbers fall?
But look, these are really vital programs. I am sorry my
colleague from Iowa left. I have to tell you, I think all of us
when we go into our districts, we see people who are in really
tough situations, who--quite frankly, these are the programs
that actually put food on the table to allow their kids to have
enough to eat. So in any event, I will yield to you to answer
the questions.
Ms. Rowe. Well, you are absolutely right, the problem is
hunger. People need to be able to put food on their table, and
this program allows them to be able to do that; not only to put
food, but to put healthy food on their table.
With regard to broad-based categorical eligibility, it just
allows states the ability to simplify their SNAP administration
by aligning the income and the resource limits with their TANF
Program, something I wish I would have had when I was
administering programs. It is a simplified way of making the
application process easier for both clients and states.
I also should mention that the household must still have a
net income low enough to receive SNAP benefits, so even though
they are categorically eligible, they still have to have a
household net income low enough to receive benefits.
In looking at some of the data, almost 98 percent of those
receiving SNAP benefits have an income at or below the regular
SNAP income limit of 130 percent, even in states with broad-
based categorical eligibility. So it hasn't opened up. What it
has done is made it easier for people who want to participate
to understand what is necessary for them to participate, and
also to support the staff in terms of the administration and
the application of the program.
Underpayments and overpayments are all part of that payment
error. We continuously work to ensure that we have neither
underpayments nor overpayments, again, something that states
are very focused on. And there are those who think that we are
more focused on the overpayments, but my experience is we are
focused on both. We want the right amount of money to go to the
family and individual who is participating in the program. So
we focus a great deal on underpayments and overpayments.
Those who are eligible who are not in the SNAP Program--and
I was hoping somebody was pulling that data together and was
going to hand me a note--but I will make sure, but it is a
large percentage, and we can give it to you by the percentage
of elderly and other individuals who are eligible but not
participating.
Mr. McGovern. Thank you.
The Chairwoman. Thank you.
I would like to now recognize my friend from Maine, Ms.
Pingree, for 5 minutes.
Ms. Pingree. Thank you, Madam Chair. I appreciate that, and
I appreciate both of you holding this hearing today. Thank you
very much for the work that you do and the way that you help
some of our most vulnerable citizens. Welcome to your job after
4 months. I am also new on this job. I am a new Member of the
Committee and am very pleased to be here.
This is a tough economy, as many of my colleagues have
stated, and I appreciate the thinking that my other colleagues
are putting in on helping you think about how to make sure we
reduce fraud and abuse in this program. And in tough times I
think we do have to make sure that all the states are spending
their money wisely and there is sufficient oversight. So I
appreciate that discussion.
I also know in my State of Maine, where we are 38th in per
capita income, we have lost a tremendous number of
manufacturing and other natural resource jobs, about 250,000
residents of our state take advantage of the SNAP Program, and
that is a lot of people in a state of 1,300,000 people. I also
know that we do have many vulnerable citizens who do still not
receive access to the program, so I do appreciate the
importance of outreach, I think particularly to seniors who
often don't take sufficient advantage of the program.
I have a lot of concerns about this, and I will try to get
a couple of questions out. One of my issues in Maine that you
have helped us deal with--and we are very appreciative of the
work that Secretary Concannon did. As you may know, he spent
some time in Maine, and we think highly of him, and I hope that
doesn't ruin his reputation in the Department. We really
struggle with high heating costs and other excessive expenses.
As I am sure you know, as one of 17 states to obtain a standard
utility assistance waiver offered by the USDA in 2009, I really
appreciate the 40,000--on behalf of the 40,000 Mainers who
benefited from the Administration's decision to extend that
waiver twice so Mainers could get through the winter, but the
final adjustment came down to many people losing $20 a week in
benefits. I know to many people that doesn't sound like a lot
of money, but I know too many seniors and other very vulnerable
citizens who are out of work, who have been out of work for a
long time, have depleted their benefits, they are at the end of
the line, and that was very difficult.
I guess one of my questions, which goes counter to some of
the concerns that people have, is when was the last time we
updated the SNAP formula, and how does the Department plan to
deal with assuring adequate nutrition for those people who I
think in a state like mine where we are the most oil-dependent
state in the country, we pay high heating oil costs, tough
winter like the last one, a lot of people just couldn't make
ends meet, and we didn't feel the cost adjustment was
sufficient or representative for us?
Ms. Rowe. Again, I am going to ask Jessica if she would
join me with regard to the last time that we looked at the
standard utility allowance and made any updates.
Ms. Shahin. Actually, yes, ma'am. The standard utility
allowance is adjusted by states on an annual basis in
accordance with what their rates are, so it is updated every
year. Each state does their own methodology, but it does have
to be approved by FNS as a methodology for determining that
year's standard utility allowance, and its basis is the cost
that the state has incurred in the previous year.
Ms. Pingree. I am sure we will end up having more
conversation on that over time, but I thank you for that. And I
just wanted to reiterate that it is a continuing challenge for
my state, and I am sure in other places as well.
I want to switch gears here a little in the time I have
available. One of the things that I am particularly interested
in is this convergence, particularly being on the Agriculture
Committee where we think about the interests of farmers. And I
represent a lot of small farmers in my state, and I know how
important it is to work as efficiently as possible in your
Department, but we are very interested and excited about the
idea that there are many programs in Maine and other states
that are utilizing the SNAP Program for participants at local
farmers markets.
I may have to discuss some of this in my second round, but
let me just sort of put it out there, and we can follow up on
it later. It all seems like a win-win idea. To me, it gets into
this issue of adequate nutrition, how do we make sure that
people have access to healthy foods. It is good for our
farmers. They sell more at the markets, and, frankly, many of
them are excited to see seniors and other people in vulnerable
populations coming in, buying fresh food, learning how to cook
them, and a whole variety of other things.
I do sense that there are some challenges in working with
the program. There is some overlap in the departments, there is
some difficulty in getting EBT readers in many of our farmers
markets, and some of that has to do with what we see as a
little bit of overlap between FNS and AMS, not to get into too
many initials.
I am about to run out of time, so I may just put this out
there when I get back to my second round, which I assume we are
going to have a second round probably. I would like to talk
more about that because that seems like a solvable problem and
deals with a lot of the things that we are talking about today.
The Chairwoman. Thank you.
Now I would like to recognize the Ranking Member of the
full Committee, Mr. Peterson.
You may give an opening statement and ask follow-up
questions if you choose.
Mr. Peterson. No, Madam Chair. I just have a couple
questions.
Ms. Rowe, you proposed regulations for school nutrition
standards that are supposed to keep the standards current
within Dietary Guidelines and consider the recent IOM report,
yet your proposed rule would significantly change the way
tomato sauce and tomato paste is counted, which would
substantially increase the cost of serving school lunches and
generally make pizza uneconomical for schools to serve. As I
understand it, you are miscounting tomatoes. Apparently there
is nothing about crediting tomato products in the Dietary
Guidelines, and there is nothing about it in this IOM report.
We don't think there is any scientific justification for the
proposal, so could you explain to me why you proposed a change
in accrediting tomato products?
Ms. Rowe. Well, what I can say is that it was--as we looked
at the standards of the Dietary Guidelines, as well as the
standards within the IOM recommendations, it was a
determination by our staff that that was a necessary change to
make, which is why we included it in our proposal. Now, we did
receive over 130,000 comments on those proposed rules. Just
yesterday I received an executive summary of the comments,
which was about 150 pages. We will be looking very closely at
that issue as well as other issues that have been raised and
make some determinations as to how to move forward.
Mr. Peterson. I don't see what justification there is, and
if you are going to go ahead with this, then maybe what I will
propose is we will reduce the funding for this program by
whatever the increased cost of this is, if that is how people
want to operate.
The second thing on the categorical eligibility issue, can
you tell me how many more people became qualified for this
program through categorical eligibility?
Ms. Rowe. As I understand, based on looking at some
preliminary data, it is about 2 to 2\1/2\ percent.
Mr. Peterson. So that is--what is it, 44 million people?
Ms. Rowe. So it is about 2 or 2\1/2\ percent of that
number.
Mr. Peterson. But do you have any idea how much cost that
added to the system, these 2, 2\1/2\ percent? I guess they have
to go through this benefit formula calculation to figure out
what they are going to get, like everybody else does, but----
Ms. Rowe. The comment that my staff is sharing with me is
it is about one percent of the benefits, so it would be about
$100 million.
Mr. Peterson. And we----
Ms. Rowe. About $600 million, I am sorry.
Mr. Peterson. We had the IG in here talking about the fraud
issue. From what I could tell, a lot of the problem are these
small mom-and-pop operations that only have a cash register and
a tape. We have had the problem before where they were selling
these food stamps outside the door for half price. Now
apparently they are ringing this up and giving whoever has the
card half of the money, and they keep half the money. Is that,
in fact, the case? And what are you doing about this? I am not
even sure we should let people buy food in some of these places
because it is two or three times as expensive as it is in a
grocery store.
Ms. Rowe. Well, in response to your question, we have--that
is trafficking. We have been looking very carefully, very
closely at that issue. We do have identification through our
ALERT system. We identify the stores where we see trafficking
patterns that may exist. We are looking at our retailer
definitions, who participates in the SNAP Program. We are
working with the IG on some investigations. Many of the things,
investigations and notoriety, that has arrived in the newspaper
are stores that we already have been looking at. So
trafficking, understanding what the profile is of stores who
are trafficking, that are possibly trafficking, who are in the
program, but also having some understanding of those--sorry,
applying that knowledge to stores who are interested in
participating in the program will also address some of the
challenges that we face in not having stores come into the
program who we think may very well be coming in, and the end
result is they would participate in trafficking.
We are also increasing the penalties for stores who are
found to be conducting these unethical business practices. We
have increased our working relationship and our coordination
with the OIG's office, as I have said. We are looking at
specialized investigators. We have investigators who are very
adept at looking at the data that we have, the data mining that
we are doing. To profile a store, we can go in, we can
determine through our own undercover investigation whether or
not this activity is going on. So there is a lot going on.
Even though we are at one percent, we do not find that
satisfactory. So we are doing a number of things within the
agency to continue to take that number down and to target those
stores who are participating in these unethical practices.
Mr. Peterson. Could I just follow up?
The Chairwoman. Since you are the Ranking Member of the
full Committee, absolutely.
Mr. Peterson. What percentage of these stores that don't
have the current technology, are a problem? Is it one percent
of them or ten percent of them? Do you have any idea?
Ms. Rowe. I am not quite clear what you mean by the current
technology.
Mr. Peterson. Well, I mean they don't have electronic
scanners.
Ms. Rowe. The electronic scan card.
Mr. Peterson. So they just have a tape. And so they don't
have to ring anything up.
I was talking to the IG about whether you could set this
system up so that as they ring up the groceries, the items
actually are put on the card so you could have an audit trail,
and one of the answers I received is that some of them don't
have the technology, so you can't do that.
I understand all these things that you are doing, but
errors and fraud are still hard to catch. So the question is,
are we getting at 95 percent of the problem, or is this much
bigger? Should we actually look at limiting the ability of some
retailers to be in the program if you haven't got a way to
control it? That is the question I have.
Ms. Rowe. As I understand it, there are very few stores
that don't have the EBT electronic devices, the point-of-sale
devices. And those stores that don't have the point-of-sale
devices would be stores--as I said, we have stores that we set
up.
Mr. Peterson. How many are there out of the total? I mean,
do you have any idea what percentage of the total food stamp
retailers are that kind of a store?
Ms. Rowe. We can certainly get back to you on the
percentage and the number of stores that do not have the point-
of-sale devices. But I will say that as we look at
strategically how do you think about managing this program,
those would be stores that may be a store that is on a high-
profile alert that we watch more carefully than stores that do
have the electronic benefit device.
Mr. Peterson. I would like to have that information if you
could get it.
Ms. Rowe. Certainly.
Mr. Peterson. Thank you.
Thank you, Madam Chair.
The Chairwoman. And thank you, sir.
Now we will go to the second round of questions.
Ms. Rowe, Administrator Rowe, the 2010 Dietary Guidelines
for Americans published by the USDA in January of this year
specifically list four new trains of concern: potassium,
dietary fiber, calcium, and vitamins. Unfortunately, Americans
young and old are not getting enough of these important
nutrients. One medium-sized potato has 18 percent of the daily
recommendation of potassium and eight percent of dietary fiber.
For potassium, potatoes are considered to be an excellent
source, and for dietary fiber they are considered to be a good
source. Knowing this, do you think potatoes are unhealthy? Yes
or no.
Ms. Rowe. Within our program for children who participate,
no, I don't think potatoes are unhealthy.
The Chairwoman. Okay. If so, if they are not unhealthy, do
you think Americans, and kids in particular, should reduce
their consumption of potatoes as proposed by the USDA's meal
plan, also issued in January?
Ms. Rowe. What we have said in that plan in looking at it
is that children have meals outside of the school meals; that
they would have access and the opportunity to have sufficient
potato consumption and consumption of other vegetables that are
limited under our guidelines. So we do not think that it is
necessary to have unlimited white potatoes, within our dietary
guidelines, in our meal pattern guidelines.
The Chairwoman. Well, I am kind of surprised at that
assumption, ma'am, because in my city of Cincinnati that I
represent, there are some kids that the only food they get all
day long is the School Lunch Program and maybe the School
Breakfast Program. So to think that they are going to get these
things outside of going to school is just not going to happen.
And I really work to try to eradicate poverty in my
district, and in some cases the only meals they get are when
they are at school. In fact, I just read a book by Jeannette
Walls about her issue with poverty, and she now works for
MSNBC, and she talked about the fact that the only time she
ever got a hot meal was when she was in school, and she is now
into her 40s. So it is the school, whether we have had a SNAP
Program or another nutrition program, that has really been the
baseline for our children.
But having said that, some proponents of the current USDA
proposed meal plan rule believe that other revenue sources
authorized in the child nutrition reauthorization will offset
the cost increase contained in the proposed rule. USDA's
analysis indicates that schools will have to develop innovative
solutions to the funding gap created by the proposed rule. In
other words, they are talking about $5 billion over 10 years,
of which 80 percent of the schools that have to bear that cost
are the ones in my district that can least afford to do it.
Does the USDA continue to stand by their estimates of the
impact of the proposed rule, or do you now believe that
revenues from paid meals and other administrative changes will
be sufficient to make schools whole as they attempt to
implement the proposed rule? And if you continue to believe
that schools will face a revenue shortfall as they implement
the proposed rule, do you have any suggestions that I might
pass on to the schools in my district? And by the way, I have a
district that has got a lot of poverty.
Ms. Rowe. Well, let me answer the end of your question
first. We continue to work with schools to help them identify
strategies that they can use to meet the meal pattern
guidelines. There are many schools who, at the time the IOM
issued their recommendations, started changing their School
Meal Program to try and meet those guidelines, identifying ways
in which they could use more farm-to-school products that would
maybe reduce their food costs. It may have an initial increase
in their prep costs and their personnel costs, but eventually
they were able to see some savings and be cost-efficient.
In addition, by allowing schools to now charge the adequate
amount for both the paid meals as well as their a la carte, it
is an additional revenue source that is coming into schools.
We are prepared to work with schools to ensure that they
are able to manage the new meal patterns within the budget
constraints that they face within their schools, and we are
doing that now. We are working with the National Food Service
Management Institute. We have been working with a number of
other organizations, School Nutrition Association, et cetera,
to help schools think about how they can meet these guidelines
and still be within their budget constraints.
The Chairwoman. Okay. And because I am a strict timekeeper,
I am going to now yield to my good friend Mr. Baca.
Mr. Baca. Thank you.
Again, Ms. Rowe, thank you very much for providing us with
a lot of information. I am intrigued with the statistic
mentioned, that one percent of the total fraud is trafficking.
That is quite low, particularly now that there are record
enrollments. And it seems like we are focusing a lot on this
number. But, when we stop to look at one percent, consider that
is less than the rate of fraud in Federal contracts. There is a
lot more fraud and abuse in contracts. And it seems like we are
not concentrating on the need to feed people here in the United
States. We have a lot of people that are abusing our defense
contracts and monies that are being wasted. If all we care
about is fraud, we should be focusing a lot more in that area
than on SNAP.
But getting back to one of the questions I want to ask,
what are your thoughts about the recent movement by some
localities, most notably in the City of New York, to limit the
choice of food available with SNAP benefits?
Ms. Rowe. Well, as I said, we are looking at the New York
waiver that they have submitted. We have it under careful
review, and we will be making a determination. I would be happy
to share the outcome of that decision with all of you.
With regard to the other--your question in terms of the
dietary behavior of most Americans, most Americans, I know
myself, do not have a good diet, and we are constantly looking
for ways to increase information to Americans so that they can
improve their dietary habits and lifestyles. So I think what we
see happening in state after state, the states are becoming
more and more concerned about the diets of their citizens,
states are taking actions. We are looking for ways to
incentivize activities within states to reinforce, provide
incentives that reinforce positive food--positive habits around
healthy nutrition and healthy lifestyles. That is an approach
that we have been taking.
Mr. Baca. Okay. Do you feel that these initiatives will
either improve health or save money?
Ms. Rowe. Well, I think the initiatives--and the final
information is still not available to us, but as we look at
incentives, we certainly see greater participation in
individuals who are purchasing fresh fruits and vegetables. As
we look at availability, farmers markets, et cetera,
particularly farmers markets where we do have--where they are
able to use SNAP benefits, or use the Senior Farmers Market
vouchers, or the WIC vouchers, or any of those programs, we are
seeing greater consumption and participation in fresh fruits
and vegetables. We think that does carry over into people's
buying habits as well.
Mr. Baca. Thank you.
One of the programs that I am very much concerned about is
the Food Distribution Program on Indian Reservations, FDPIR.
Too many times we ignore that many of these tribes are very
poor and don't have adequate access to food. What role does
USDA play in helping tribes reach out to promote FDPIR?
Ms. Rowe. We work very closely with tribes. One of my first
visits when I came onboard was to one of the major meetings of
tribal leaders. We work very closely with them. We have an
overview work group that looks at the types of foods that are
distributed. We keep trying to make sure that the foods are
healthy, but also meet tribal needs and tribal guidelines. We
have continued to expand, work with the tribes members to
explain to them the importance of the food package that we have
available and how healthy that food package can be for
themselves and for their families.
Mr. Baca. Okay. I am also curious to know how FDPIR and
SNAP work side by side, since, as I understand it, no one can
be enrolled in both programs at the same time. Is FDPIR only
used in areas that are remote and have little or no access to
stores? Also, do you know the percentage of reservations that
contain food stores that accept SNAP benefits?
I had to throw in both questions because I am running out
of time.
Ms. Rowe. With regard to the participation in SNAP and
FDPIR, it is operating in locations where there is not easy
access to any other food stores and members who live on Indian
reservations can participate in. So, yes, it is that
individuals can participate in SNAP, or they can participate in
FDPIR. They are not able to participate in both.
With regard to the second part of your question, the
availability of stores. That information we can get back to you
on. I am sorry. The availability of stores. We can get that.
The Chairwoman. Thank you so much.
And before I turn it over to Mr. Southerland, I would just
like to recognize that we have students in the audience from
the Future Farmers of America in my district at Fayetteville-
Perry, and they are seeing democracy in action. And I think it
is very timely that they are here while we are discussing the
merits of the food safety program--or I mean the food nutrition
program in the farm bill.
And so with that I will give 5 minutes to my friend from
Florida.
Mr. Southerland. Thank you, Madam Chair.
I would like to recognize the efforts of Florida
Partnership to End Childhood Hunger and Florida Impact. Both
organizations are based in my Congressional district in
Florida, and I am proud of their efforts to work with over 50
organizations committed to work collaboratively to address
childhood hunger and those in need. The partnership leverages
public and private partnerships and Federal nutrition dollars
to reach low-income families.
What is your--and I know you are new in your post here.
What is, in your opinion, the role between these public and
private partnerships and what they--how they should work
together to really address hunger?
Ms. Rowe. The role of these partnerships is critical,
particularly as they work together in a state leveraging both
their resources and their knowledge, being able to target their
resources, being able to be strategic in thinking through how
do we reduce, how we move the dial, as I often call it, from
where it is today to where we want it to be to reduce hunger,
to improve nutrition.
We support these partnerships. Many of them, our regional
offices work closely with them. We provide staff support to
them. They are an integral part of the work that we do at the
regional level and at the national level. It is very important
to have these public-private partnerships.
Mr. Southerland. I am assuming you have similar
partnerships around the country in states everywhere and
communities everywhere?
Ms. Rowe. We have them around the country, and just for
summer feeding alone, the partnerships, the work that goes on
in a state with these major partnerships to get information
out, to recruit families, to get them involved, but also to
provide information and data, those partnerships are extremely
important.
Mr. Southerland. Very good.
I also want to mention, I know that our Florida Agriculture
Commissioner Adam Putnam, a colleague of many of those on this
panel this past year, I know he has a current pending
application before USDA Food and Nutrition Service, and it is
basically the Healthy Schools for Healthy Lives Act, and so I
just would like on behalf of my state to just ask for your
consideration in that application.
Ms. Rowe. Absolutely.
Mr. Southerland. And I know that we are eager to work to
make a difference not just in my district, but in the State of
Florida.
Madam Chair, I know I have 2\1/2\ minutes, but we want to
be good stewards of our time, so I don't want to just ramble,
so I am going to yield back.
The Chairwoman. Let me now give 5 minutes to my good friend
who may not feel that he has a vote, but he always has a voice,
from the farthest part of our Americas, Mr. Sablan for 5
minutes.
Mr. Sablan. Thank you very much, Madam Chairman. Thank you
for your kind words. I say I have a voice right now, but I
prefer to vote actually eventually.
Ms. Rowe, again, 4 months on the job, and I am asking you
so many details about this place that you probably never have
heard of maybe 4 months ago unless you have been there, right?
Ms. Rowe. I will tell you that I have heard a lot about it
since I have been in this position.
Mr. Sablan. I am sure.
Anyway, I want to compliment you. WIC is one of the best
programs that has happened to the Northern Mariana Islands, and
on behalf of the babies and women and children, it is just a
wonderful program.
I have--the School Lunch Program, you see, because we are
again from the territories, like I said earlier, almost \1/2\,
a decrease of almost \1/2\, 50 percent of our GDP, increase in
layoffs, increase in furloughs, but our Census count won't come
up until the summer of 2012. That is a year away from now. But
all of these economic conditions have seen an increase of
students eligible for the School Lunch Program, and I have my
education people on my back all the time asking for the release
of the Census because they know, they know that there is an
increase of eligible students for the school lunch. They also
know that without that increase in numbers, they can't justify
to you an increase in the need for increased funding for the
program. So, again, I would like to ask you to join me again in
looking into that, and I am just associating this new issue in
food commitment we have to work together earlier.
I am also going to ask, if possible, to ask for a response
to the letter that Mr. Jim McGovern, Mr. Sam Farr, and I wrote
on June 24th to Secretary Vilsack, and I appreciate that.
And let me just--let me give you a little information on
how much attention--and this is not specific to your
Department, this is to many Federal offices--how much attention
they have for the Northern Mariana Islands. Yesterday I went to
your website. I wanted to find out in your public affairs,
government affairs, who I should talk to. And did you know that
in your website as of yesterday, I don't know if they made
changes today, that under Region 9 they are still listed as
covering the Trust Territory of the Pacific Islands. The Trust
Territory of the Pacific Islands ceased to exist 25 years ago,
but it doesn't cover the Northern Mariana Islands, which became
a part of this nation in 1978, over 30 years ago.
This, Miss Rowe, with all due respect, and in all
sincerity, is what I am saying when I say--and you are not the
only one. Don't think you are exclusive in this. The absence of
the necessary attention that Federal agencies need to give to
the territories, and in particular to America's newest
territory, the Northern Mariana Islands, and those are
Americans out there. Thirty percent of our high school
graduates put on a uniform. I don't know if that happens
anywhere else in America. Thirty percent of our high school
graduates. And we are talking about a very small population.
They deserve the attention from Federal Government employees,
and it breaks my heart.
And I am the most grateful person from the Northern Mariana
Islands to all Americans. My gratitude and appreciation for the
American people has grown exponentially in the little over 2
years that I have been here. Grateful. I tell my people back
home, if you see an American taxpayer, by God say thank you,
and I mean that from the bottom of my heart.
But Federal offices, I know we are all busy, going through
this 175 page report and all these statistics that I don't read
basically. But those are Americans, and they are entitled to no
less than the attention that we give Americans, we give Members
of Congress. No less; not more, but no less.
For that, I yield back, and I thank you for your presence
here today.
The Chairwoman. Thank you. And isn't this a powerful voice?
Ms. Rowe. I was going to say, you have my attention, and
you have my commitment.
Mr. Sablan. And you know I love you, Ms. Rowe.
The Chairwoman. Mr. McGovern, do you have any more
questions?
Mr. McGovern. Yes, I do.
The Chairwoman. Five minutes, sir.
Mr. McGovern. Thank you.
Let me first say with regard to a couple things that were
brought up, this New York waiver, and the suggestion by my
colleague Mr. Peterson about limiting where SNAP beneficiaries
can shop, I would urge you to proceed with extreme caution on
both of those things.
I was at the press conference with the First Lady yesterday
dealing with food deserts. There are some people who do not
have access to supermarkets and stores that provide the kind of
nutritious food that we all define as nutritious, and while it
sounds nice to say we are going to make sure people can only
spend money on good food, we should be thinking about how to
give people more access as well as the issue of affordability.
So it sounds good, the New York waiver, but I would urge you to
proceed with caution.
I have a few questions, and then--let me get through them
all, and then you can answer them.
Following up with the categorical eligibility issue, isn't
it true that if we cut Cat El, that that would result in
increasing--it would result in an increase in error rates and
fewer people receiving SNAP?
And then on the benefit level, does the SNAP last a full
month? What happens when someone runs out of their SNAP
benefit? Where do they turn to for food?
And then finally, going back to a point I brought from my
original statement, I do not believe that we have a
comprehensive or holistic plan to deal with hunger in America,
and I have been suggesting to the White House and the Secretary
of Agriculture, and I am going to suggest to you, we should
have a White House conference on food and nutrition. We need to
connect the dots because ending hunger is not just about SNAP,
it is not just about WIC, it is about a whole bunch of other
things. We need to connect these dots.
And the President made a pledge that we would end childhood
hunger in America by 2015. We are not, at the rate we are
going. And I want to be able to keep that pledge, and I would--
my follow-up question would be would you agree with me that we
should do a White House conference on food and nutrition so
that we can come up with a holistic plan so we all know what
our assignments are? Again, it falls under the jurisdiction of
not just what happens in this Committee and not just what
happens in government, it is the private sector, it is the NGO
community, it is the faith-based communities. But we don't have
a plan. We do not have a plan. I would urge you to help me
convince the President to go ahead with that conference.
So with that, I will let you answer my questions.
Ms. Rowe. Well, let me answer the question in terms of any
reduction in the food stamp program, any changes in categorical
eligibility or any reductions would result in people having to
leave the program and not being able to meet their basic needs.
I think the other part of your question, you and I see it
all the time, and I am sure others as well, individuals run out
of benefits sometime toward the--after the middle of the month.
They spend--and when that happens, they have to turn to food
pantries. They have to turn to the food pantries in their
churches, they turn to the food pantries and the food banks
that are in their communities, so they turn and look for
resources very quickly.
Benefits are usually spent in the first 3 weeks. So, the
last week of the month, that is also in response to the
question about the obesity issues, because when those benefits
are spent, that is when individuals turn to foods that will
fill the stomachs of their children and themselves, which may
not be the healthy foods, and they may be the foods that lead
to obesity and other health-related illnesses.
The broad-based categorical eligibility simplifies and thus
reduces error rates when you think about how, as a state, we
apply that program or that rule. So I think if we eliminate it,
we would find ourselves talking about a different number or
additional resources being spent to try and maintain the error
rate that we currently have in place.
With regard to a comprehensive process for planning, I
agree with you that we need to have a comprehensive process for
planning. To the extent that that would be a White House
conference or some other vehicle, we would--I would certainly
be prepared to support it.
Mr. McGovern. I appreciate it. I do have a request in to
the President calling for a White House conference. I just feel
it needs to be--this issue needs to be brought up to that
level, if we are going to be serious about it. I think
everybody, Republican and Democratic, are all committed to
trying to end hunger in America, but we don't have a plan. We
don't have a comprehensive plan, and I don't know any other way
to get to one where we can hold people accountable other than
bringing it up to the Presidential level. The First Lady's
press conference was really good yesterday, but she didn't talk
a lot about hunger or poverty, and, as you have mentioned,
hunger is a contributing--food insecurity is a contributing
factor to obesity. But, anyway, I would appreciate any support
I can get on this idea. Thank you.
Ms. Rowe. You are welcome.
The Chairwoman. Thank you.
In our final set of questions before we go to two closing
statements, one by Mr. Baca that will be delivered by Ms.
Pingree and the final one by myself, and any closing remarks
that you may have, so I am going to turn it over to Ms. Pingree
in her role as Ranking Democratic Member for 5 minutes of
questions.
Ms. Pingree. Thank you.
Thank you for persevering here and again for your good
work, and to our Chairwoman for holding this hearing. I will
try to be brief here because some of these things I think I
will just submit to you in writing.
But just to go back to if you recall 100 questions ago, I
am very interested around the things in EBTs and farmers
markets, and one of the things I have heard, we talked to a lot
of our farmers markets, I know many of them struggle. Some
don't have Internet access, but sometimes it is just other
parts of the bureaucracy. I have been told that there is some
argument that if they were able to combine the work that went
on at FNS and AMS, and this may be way in the weeds for you at
this moment, but it could streamline some of the processes, the
application processes they have to go through. Our only
interest in the end goal is making sure that more people who
participate in the SNAP Program are able to buy food from the
local farmers market. So I am not sure if you have an answer to
that question, but one of our issues is around that and how to
make this work better, and I think we could work with the
Department on that.
Ms. Rowe. We have started to have meetings with AMS earlier
year this year before the season opened for farmers markets to
find ways in which we could be more collaborative in--both in
financing farmers markets, but also in approving them,
authorizing them, and getting point-of-sale devices in. I think
we were a bit better this year. We will continue to work toward
it. I would be happy to have further conversations with you
about it as well and members of your staff.
I became interested in the nutrition area because of my
involvement in my church's farmers market, and so I saw the
benefits on the south side of Chicago when people came out and
had a farmers market where they could make purchases.
Ms. Pingree. Great. Well, I am glad we are on the same page
on this. I would be happy to work with you and talk more about
it. I do think it is one of those things, a few bureaucratic
hurdles we get out of the way, and we can make this work.
I just want to bring up one other topic, and I know there
are many this morning. It is my understanding there are more
applications from eligible schools for the Fresh Fruit and
Vegetable Program than there are funds available. Again, this
is one of the interests in my district. We have seen the huge
change in schools that are able to provide more fresh foods,
buy from local farmers. It spurs on the interests of young kids
in what they are eating. Sometimes they take the information
home to their families. I have sat next to kids in elementary
school who are happily gobbling up their kale and Swiss chard.
I think we deny them the opportunity to eat some very health
foods when we don't do that.
So can you give me some background on the number of schools
or percentage of schools that apply but are denied? And if you
can't provide that now, that is okay.
Ms. Rowe. We don't have the breakdown, but I agree with
you. When I started going out, that was the one thing I heard
from schools: We would like to be able to participate in this
program.
Ms. Pingree. Great. I just want to put it out there again.
We have seen the changes in our state. Again, it is great for
local farmers, it creates new markets, but it also allows our
kids to eat more foods.
And I will just--in my own end of this, I appreciate the
work the Chairwoman is doing on behalf of the lowly potato. As
a potato-raising state, I understand the issues around too many
carbohydrates and starches in kids' diets, but the benefits of
an actual potato, the nutritional value, and the importance of
that is critical, and so I am glad that that is being much
discussed.
And I will yield back the balance of my time.
The Chairwoman. Thank you.
And now on behalf of Mr. Baca, would you care to give the
closing statement?
Ms. Pingree. Thank you, Madam Chair, and as I mentioned to
you, this makes me a far better pitcher in life. I feel I can
play baseball again.
So his closing statement, on behalf of Ranking Member Baca,
I would like to thank you, Ms. Rowe, for your participation in
today's hearing and your thoughtful testimony. Your knowledge,
ideas, and experiences will, I hope, be used by Congress to
ensure adequate nutrition continues to be available to the
neediest Americans in the most efficient manner.
Again, thank you to Chairwoman Schmidt for holding this
hearing. I know we share an interest in the health and wellness
of our constituents, and I look forward to working with you
during this next farm bill to put those interests into
practice.
The Chairwoman. Thank you.
Now for my closing statement. There was so much that I
could have--I wish I had the opportunity to ask, but I am going
to combine it in a closing statement.
I think that most Americans recognize we have an obesity
problem in the United States, and that we have to find ways to
tackle it, but I think sometimes we reach wrong conclusions
when we look at current trends and make a decision that is not
going to make folks eat more healthy or have trimmer bodies.
And I look at your agency and others involved in food marketing
guidelines, and there is--people think, well, the kids are
getting heavy because they are watching too much TV, and I
agree. I think the sedentary lifestyle that we have today with
our children, the fact that they lack as much playground
activity as I had as a child tends to build a broader
waistline. But, I think that while we both might believe that
the TV is the root cause, I think we are reaching the wrong
conclusions as to why.
I think that sometimes people say, well, it is the
advertisement that is going on on the television that is
helping to broaden those waistlines, and I am just not sure
that is true, because I had those same advertisements when I
was a kid, but my mother made me go outside and kick the can.
Much of the products banned by the Interagency Working
Group's proposals are the same ones the USDA has recently
determined to be important in the Special Supplemental
Nutrition Program for Women, Infants and Children to promote
healthy children under Title V. I assume that the reason the
four agencies created a working group on this issue was for
consistency of the Federal food nutrition recommendations, yet
looking at the HealthierUS School Challenge criteria, the
National School Lunch Program proposed rule, the WIC food
package criteria, and the IOM Competitive Foods Report,
inconsistencies abound. If the point is to encourage healthy
food, isn't it important that the Federal Government speak with
one voice and a consistent voice?
And I would like to add that it is not always about the
food, it is about how in many cases the food is prepared.
Cereal in the morning isn't a bad product if you make sure that
you are only having \3/4\ of a cup, or \1/2\ cup, or a cup,
whatever is recommended, and that you are using either a low-
fat or a skim milk with it and not adding sugar. That is not a
bad actor. In fact, sometimes healthy cereals with a lot of
granola and grain can have twice as many calories as, say, Tony
the Tiger's great cereal. So it is not about the advertising,
it is about how we prepare the food.
The war on potatoes, which I am so glad I have a fellow
lady helping me with this, the potato is one of the best foods
a person can eat, especially folks that have a modest income,
because of all the nutrients that are in it. But, if you deep
fry it, and you put a lot of cheese on it, and you put a lot of
salt, then maybe it becomes a less attractive animal. But when
you just eat it as a potato, whether it is mashed and with a
little skim milk and a little pepper, that is not a bad thing
to eat. And so I caution arbitrary conclusions based on
unhealthy ways that we prepare products rather than the food
group itself.
I am concerned about recent findings in the Global Insight
suggesting that the proposal could cause the loss of
significant number of American jobs. I am concerned that it
would cost our schools more money for the proposed rules that
are there when it is not going to make our children thinner, it
is not going to make them have more healthy foods. And most
importantly, I am concerned at what will happen to those
children, especially the at-risk children, when they leave
school. To think that they are going to get those kinds of
foods outside the school, that just may not be the case.
And I am just throwing that out there because I think you
and I are on the same page. We want to attack obesity, we want
to make sure our children and our adults are healthy folks, and
I really think that it is education. It is educating the food
preparer, whether it is the mother or the father or the aunt or
the grandmother, on how to prepare the foods in an appropriate
way. And I know most schools are doing this now.
So the problem is really not so much inside the school, but
inside the home, but to arbitrarily think that seeing Toucan
Sam or Honey Nut Cheerios or Tony the Tiger is making our kids
fat, I just don't think that is the case.
So those are my thoughts, and I really thank you, and if
you have any closing thoughts, I will give you the microphone.
Ms. Rowe. Thank you so much. And I really do agree, and I
appreciate your perspective and your passion on this subject.
It is one that I am equally passionate about, and I am looking
forward to working with you and Members of the Committee so
that we can ensure that our future generations are healthy and
have healthy lifestyles.
I do want to make two clarifications. I did indicate that
there was not a Food Stamp Program prior to 1977. I was not
correct. Food Stamp Act of 1964 did exist, it established the
program, and then there have been subsequent changes. So I
wanted to put that clarification out there.
The other was on time limits. There is a small category of
individuals, able-bodied, working adults, who participate in
the program who have a limit of 3 months and 36 months to
participate in our SNAP Program. So I did want to make those
two clarifications.
I want to thank you for giving me and our staff an
opportunity for being here. As my first foray out before a
Congressional Committee, I can say that this experience has
been both learning for me, and I hope I have been able to
contribute to your thinking as you go forward.
The Chairwoman. Thank you. And I think it is great, 4
months on the job, you really have a great deal of information
and history lessons. That is okay. I make mistakes as well.
In closing, I would just ask if I can impose on you to
introduce you to my FFA children, young adults actually,
because this is their first foray into Washington, and to meet
the Administrator of the Food and Nutrition Service Program I
think would really help them with their educational experience.
So thank you very much.
Ms. Rowe. My honor.
The Chairwoman. With that, this meeting is adjourned.
Ms. Rowe. Thank you.
[Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by Lisa Davis, Vice President of Public Policy,
Feeding America
Chairwoman Schmidt, Ranking Member Baca, and Members of the House
Committee on Agriculture, Subcommittee on Nutrition and Horticulture,
thank you for the opportunity to submit this statement for the record
on behalf of Feeding America and for holding this hearing.
Feeding America is the nation's leading domestic hunger-relief
charity with a network of more than 200 food banks serving all 50
states through over 61,000 local food assistance agencies, 55% of which
are faith-based. Feeding America food banks, as well as food pantries,
soup kitchens and other assistance agencies, rely on a variety of
public and private funding streams to feed 37 million Americans a year,
including 14 million children and nearly 3 million seniors.
During the worst economic downturn since the Great Depression, the
number of American families struggling to make ends meet has increased
significantly. With unemployment currently at 9.2 percent, the need for
food assistance continues to remain high and food banks continue to be
pressed to meet the need in their communities. Last year, one in eight
Americans, received emergency food assistance through the Feeding
America network. This represents an increase of 46 percent since 2006.
As a result, approximately 5.7 million people per week are now
receiving emergency food assistance through Feeding America food banks.
For those individuals facing food insecurity, the nation's Federal
food assistance programs and emergency food providers provide a
critical safety net. In April 2011, the last month for which data is
available, nearly 45 million Americans were participating in the
Supplemental Nutrition Assistance Program (SNAP), formerly known as
food stamps. In addition, in FY 2011, the Commodity Supplemental Food
Program (CSFP) is providing nutritious monthly food boxes to a caseload
of more than 604,000 people, more than 96 percent of them low-income
seniors. Moreover, in FY 2011, the Emergency Food Assistance Program
(TEFAP) is providing more than $350 million worth of nutritious,
American-grown commodities to help food banks supplement their food
supplies and feed those in need.
As the Committee hears testimony from the United States Department
of Agriculture (USDA) regarding the Title IV Nutrition Program
contained within the farm bill and the beneficial impact of these
programs, Feeding America respectfully offers several policy
recommendations that would further strengthen these programs and could
provide a more stable and reliable stream of food to the food
assistance network and to the millions of Americans we serve who are at
risk of hunger.
Policy Recommendations
The Emergency Food Assistance Program (TEFAP) Commodities: TEFAP is
a means-tested Federal program that provides food commodities at no
cost to Americans in need of short-term hunger relief through
organizations like food banks, pantries, soup kitchens, and emergency
shelters. Healthy and nutritious food commodities provided through
TEFAP are an essential resource that enables Feeding America food banks
to meet the need in their communities.
TEFAP commodities currently account for approximately 25 percent of
the food moving through Feeding America food banks nationwide. In most
instances, local food banks supplement TEFAP commodities with privately
donated foods to extend TEFAP program benefits beyond the budgeted
amount for the program. As the unprecedented demand for food continues
at food banks across the country, TEFAP commodities are essential for
the provision of a steady emergency food supply. However, the level of
commodities USDA provides is projected to drop off significantly in FY
2011 and FY 2012.
In FY 2010, TEFAP provided approximately $655 million worth of
nutritious foods to low-income Americans. This figure includes
commodity purchases mandated by the 2008 Farm Bill as well as bonus
commodity purchases that were appropriated in FY 2010 Agriculture
Appropriations and those bonus purchases made by USDA when necessitated
by market conditions.
Unfortunately, in FY 2011, even as the need remains at
unprecedented levels, USDA has made no indication that there are plans
to make any additional bonus commodity purchases beyond those already
made this fiscal year. Without additional bonus purchases in FY 2011,
TEFAP spending levels will fall by nearly 44 percent to approximately
$370 million. This $285 million decrease in TEFAP commodity spending
for FY 2011 will significantly impact efforts to address the growing
need for emergency food assistance throughout the country. Without
additional r commodity purchases, too many Americans may go without
adequate access to the food they need and food banks face the prospect
of empty shelves.
With agriculture commodity markets projected to remain strong in
the coming years thereby driving a marked decline in the availability
of bonus TEFAP commodities, Feeding America recommends that the amount
of annual funding for mandatory TEFAP purchases be increased in the
2012 Farm Bill. Further, with respect to bonus commodity purchases,
Feeding America recommends that the committee explore the development
of an economic, need-based trigger that would prompt Section 32 bonus
commodity purchases not only when agriculture markets are weak, but
also when unemployment or other economic factors are driving up the
demand for emergency food assistance. Last, with respect to the
inflationary index already attached to mandatory TEFAP purchases, we
recommend that a floor be placed on this program so that spending
levels are precluded from being reduced below prior year levels.
TEFAP Administrative Funding and TEFAP Infrastructure Grants:
Federal administrative funding helps defray the costs of storing,
transporting, and distributing TEFAP commodities, helping ensure food
banks and partner agencies can get emergency food assistance to those
in need. Recognizing the critical importance of these funds, the 2008
Farm Bill increased the authorization level to $100 million per year.
However, despite that recognition, Congress has never provided more
than $50 million per year in annual Agriculture Appropriations
legislation.
Food banks are struggling to respond to a significant increase in
demand that is likely to continue for some time. Without adequate
Federal assistance, they will be unable to afford the rising costs
associated with storing and distributing emergency food commodities.
While the increase in TEFAP products that require refrigeration or
freezer capacity has been a welcome addition for clients, these
products are more costly to store and deliver across large service
areas. Compounding these challenges are rising fuel costs that in some
cases have nearly doubled transportation and delivery costs. To help
address these challenges and ensure that states and emergency food
providers have the resources needed to store and distribute TEFAP
commodities, Feeding America recommends that the Committee provide
mandatory TEFAP Administrative funding of $100 million per year in the
2012 Farm Bill.
Similarly, TEFAP Infrastructure Grants are essential to helping
emergency food providers meet a variety of infrastructure needs and
ensure the effective and efficient delivery of TEFAP foods to those in
need. Funding provided through this competitive grant program may be
used to help emergency food providers implement, improve, and expand
their infrastructure activities and projects. Specific items that may
be funded include: developing computerized systems for tracking time-
sensitive food products; improving the distribution of perishable foods
(such as fresh fruits and vegetables); rescuing prepared, unserved
food; identifying donors and eligible recipients; and improving
facilities and equipment.
In FY 2010, USDA awarded $6 million in TEFAP Infrastructure Grants
to 39 emergency food providers, 19 of whom primarily served rural
areas. However, USDA had at least 4 times as many applicants for these
grants as they had funding to award, demonstrating there is a great
demand for these grants. In recognition of the need and demand for this
funding, Feeding America recommends that this program be reauthorized
at a level of $15 million per year in the 2012 Farm Bill so that even
more emergency food providers can benefit from this valuable program.
Commodity Supplemental Food Program (CSFP): Administered by USDA,
the Commodity Supplemental Food Program leverages government buying
power to provide monthly, nutritionally-balanced food packages to more
than 604,000 low-income participants in 39 states, two tribal
organizations, and the District of Columbia. More than 96 percent of
those benefiting from this program are seniors with incomes of less
than 130 percent of the Federal poverty line (approximately $14,000 for
a senior living alone). For many of these seniors, CSFP may be the only
nutrition assistance program readily accessible to them.
CSFP is an efficient and effective program. While the cost to USDA
to provide this package of food is, on average, $20 per month, the
average retail value of the foods in the package is $50. For the
seniors participating in this program, CSFP provides more than just
food and nourishment, it also helps to combat the poor health
conditions often found in seniors who are experiencing food insecurity
and at risk of hunger.
According to analysis of data from the 1999-2002 National Health
and Nutrition Examination Survey, seniors over the age of 60 who are
experiencing some form of food insecurity are significantly more likely
to have lower intakes of major vitamins, significantly more likely to
be in poor or fair health, and more likely to have limitations in
activities of daily living. CSFP food packages, specifically designed
to supplement needed sources of nutrients typically lacking in
participants' diets like protein, iron, zinc, and vitamins
B6 and B12, can play an important role in
addressing the nutrition needs of low-income seniors.
Recognizing the role that this program plays in the lives of our
nation's most vulnerable seniors, Feeding America recommends that this
program be reauthorized in the 2012 Farm Bill and expanded to all 50
states. Additionally, Feeding America recommends that the income
threshold for seniors wishing to participate in CSFP be raised to 185
percent of the Federal Poverty Line, bringing it in line with the
threshold already applied to women and children participating in this
program.
Supplemental Nutrition Assistance Program (SNAP): While Feeding
America food banks and the 61,000 local agencies we support are often
the first place families turn to for emergency food assistance when
they fall on hard times, the Supplemental Nutrition Assistance Program
(SNAP) is the cornerstone of the nutrition safety net, ensuring
families have adequate resources for food until their household
economic conditions stabilize and improve. Many of our food banks
conduct SNAP outreach to inform clients about their potential
eligibility for SNAP and connect them with the long-term benefits they
need.
SNAP is the nation's largest Federal nutrition program, providing
nearly 45 million participants with monthly benefits in the form of an
electronic benefit (EBT) card that they can use like cash at most
grocery stores to ensure access to an adequate diet. Nearly 80 percent
of SNAP households include either a child or an elderly or disabled
person.
One of the most attractive features of SNAP is that benefits can be
redeemed at any of the more than 200,000 retail stores nationwide that
are authorized to participate in the program. Almost 80 percent of SNAP
benefits are redeemed within 2 weeks of receipt, and 97 percent are
spent within a month. Because the benefits can be quickly and
efficiently delivered to recipients via EBT cards, and recipients are
likely to spend the benefits quickly, many economists view SNAP as one
of the most effective forms of economic stimulus during an economic
downturn. The United States Department of Agriculture (USDA) estimates
that every $1.00 spent on SNAP benefits generates $1.79 in local
economic activity.
Another critical feature of the SNAP program is its ability to
respond with additional assistance amidst economic downturns or
emergencies. SNAP responds quickly to changing economic circumstances,
whether they occur locally, such as a plant closing, or nationally,
like a recession. Enrollment increases during such times and then falls
as need declines. SNAP demonstrated this responsiveness during the
recent recession by providing millions of newly unemployed families
with a stable source of money for food, proving it to be one of the
most effective safety net programs available to families hardest hit by
the recession. SNAP responds just as effectively to natural disasters.
During the aftermath of disasters like Hurricanes Katrina and Rita in
2005, victims of the hurricane were able to have their immediate need
for food addressed quickly because of SNAP. Similarly, the program is
responding to immediate need in areas hit by recent flooding or
tornados.
Congress made many significant improvements to SNAP in the last
farm bill. As we move toward consideration of the 2012 Farm Bill, it is
essential that Congress build upon those improvements and protect the
integrity of SNAP so that the program can continue to respond quickly
and effectively as the foundation of the nutrition safety net. As such,
we offer the following initial recommendations for consideration:
Benefit Adequacy: Current SNAP benefit levels are often
insufficient to last a family throughout the month. Over 90 percent of
SNAP benefits are used up by the third week of the month, leaving many
SNAP families food insecure for portions of the month. Adequate
benefits would also provide families with opportunities to access more
nutritious food.
Congress approved a temporary boost in SNAP benefit levels in ARRA
to help families make ends meet during the recession. Congress
rescinded some of the boost in 2010 by using $2.5 billion of the
increased benefits to fund the Healthy, Hunger-Free Kids Act and $11.9
billion to fund the Education jobs and Medicaid funding bill. As a
result, the remaining increase in benefits is now expected to sunset in
November 2013.
Just as concerning as the cut to the ARRA boost itself is how the
cut would be implemented. Congress carefully crafted the ARRA increase
to protect families from a ``cliff effect.'' By designing the increase
to phase out incrementally as food prices rise to catch up with the
higher benefit, Congress made a promise not to pull the rug out from
underneath our nation's most vulnerable families. Under the recent
cuts, this is exactly what would happen. A typical family of four would
see their monthly benefits abruptly drop by some $54 per month, as
estimated at the time the cuts were enacted.
While the ARRA SNAP boost was intended to be temporary, it was also
desperately needed, and Congress must take steps to permanently improve
the adequacy of the SNAP benefit. Feeding America strongly urges the
House Agriculture Committee to restore the ARRA SNAP funds and protect
the remaining boost to SNAP benefit levels from being used to fund
other priorities. We also recommend that the Committee look at long-
term ways to improve benefit adequacy, such as reviewing the Thrifty
Food Plan as the basis for benefit levels, increasing the standard
deduction to bring benefit levels in line with where they would be now
had the inflationary peg not been removed for the period 1996 to 2008,
and strengthening nutrition and other education to help participants
maximize nutrition on a limited food budget.
Improve Access and Participation: The Committee should continue to
strengthen the SNAP's ability to meet need by breaking down access and
participation barriers. Not all who are eligible for SNAP participate
in the program, whether because of stigma, misinformation about
eligibility and potential benefits, or cumbersome enrollment
procedures. While SNAP has made steady improvement in participation
rates over the last several years, still only about \2/3\ of those
eligible are served. Participation is especially low among certain
subpopulations, like Latinos and seniors. Continued outreach is needed
to make sure all who are eligible and in need of assistance are
informed of and enrolled in the program, especially among under-served
and vulnerable populations. Congress should take steps to improve
program education and outreach, streamline the application and
eligibility-determination process, and increase coordination with SNAP
across other programs. For example, categorical eligibility has been
shown to both improve program access while at the same time allowing
states to reduce administrative costs and simplify administration.
Congress should strengthen categorical eligibility and encourage states
to take advantage of the expanded option.
Congress can also improve access to SNAP among vulnerable
populations by eliminating or easing specific restrictions on
subpopulations, including the harsh time limits on jobless adults, the
5 year waiting period for legal permanent residents, and the permanent
ineligibility of drug felons:

Able-bodied adults without dependents (ABAWDs) who are not
working a minimum number of hours are limited to only 3 months
of SNAP benefits out of every 3 years, although states with
unemployment rates above ten percent may request a waiver. The
time-limit for ABAWDs is too restrictive even when unemployment
is low, but with unemployment at 9.2 percent nationally and
many people returning to work forced to accept reduced hours,
ABAWDs should be allowed to re-apply more frequently and for
longer durations.

Adult legal permanent residents are subject to a 5 year
waiting period before they may participate in SNAP.
Furthermore, the confusion about eligibility created by this
policy decreases participation among eligible children of
ineligible parents. Eligible adult immigrants who are here
legally, many of whom are on a path to citizenship, should not
have to wait five years to receive nutrition assistance.

Federal policy permanently prohibits drug felons from
participating in SNAP, presenting an additional challenge to
self-sufficiency for formerly institutionalized persons who
already face difficulties in re-entering the labor force.
Recognizing this, 40 states have either lifted the Federal ban
or modified the ban to make it less punitive. Congress should
repeal the lifetime prohibition on drug felons participating in
SNAP.

Program Integrity: In addition to making further progress to
strengthen SNAP, Feeding America urges the Committee to protect the
program from harmful policy changes that have been recently proposed,
such as converting the program to a block grant, subjecting it to a
global spending cap, imposing additional work or citizenship
requirements, or restricting the kinds of groceries participants may
purchase. Imposing an arbitrary cap on funding would fundamentally
change the structure of the program and would undermine SNAP's ability
to respond quickly to changing economic circumstances, whether a
natural disaster or a recession. SNAP already has strict time
limitations for unemployed adults and legal immigrants. Adding further
work or citizenship requirements will eliminate this important source
of nutrition assistance for vulnerable families, increasing food
insecurity and shifting more low-income households to the emergency
food system. Ensuring food choice within the SNAP program allows
families to make decisions that balance cost, nutrition, and time for
preparation of meals.
Reviewing Programs for Duplication and Efficiency
In light of Congressional attention to the budget deficit, we
recognize that the next farm bill will be written with limited
opportunities for new program investments and a commitment to making
sure existing dollars are being well-spent. While we support the goal
of eliminating duplication and inefficiencies in Federal nutrition
programs, we urge you to ensure that any changes are made carefully and
with the goal of improving service delivery, increasing program access,
and strengthening benefit levels.
Our food banks and the clients they serve know all too well the
importance of stretching a tight budget. Given the extent of hunger and
food insecurity in our country, it is important that we maximize the
impact of each dollar spent through our network of emergency food
providers. Likewise, we believe that Federal tax dollars should be
spent effectively and efficiently to ensure a strong and responsive
nutritional safety net.
We support efforts to eliminate duplication in program delivery.
However, it is important to keep in mind that programs with overlapping
eligibility are not per se indicative of duplication. Nutrition
programs work together to weave a comprehensive safety net and no one
program is intended to meet the needs of all populations. Federal
nutrition programs have been developed to respond to identified
nutritional needs of specific populations or to reach eligible people
in settings not addressed by other existing programs.
We also support efforts to eliminate inefficiencies and streamline
program administration. In many cases, the same changes that would
result in administrative savings would also reduce barriers to
enrollment, such as streamlining the application and eligibility-
determination process.
As the Committee works to identify opportunities to streamline
programs and eliminate redundancy, members must ensure that such
efforts are undertaken with thoughtfulness and careful deliberation.
Our ultimate goal must be to better deliver benefits more effectively
to all eligible people. As such, we offer the following principles to
guide your work:
Benefit Adequacy: Programs must provide resources sufficient to
meet the nutritional needs of participants and any savings from greater
efficiencies should be reinvested in improving benefit adequacy.
Participation: Programs should be designed and implemented in ways
that promote participation by all people in need of food assistance and
savings should not be achieved by reducing eligibility or imposing
access barriers.
Coordination: Enrollment in nutrition assistance programs should be
streamlined and integrated where possible with enrollment in other
Federal programs serving low-income people, and eligibility rules
should be consistent across programs.
Data-Driven: Any changes to nutrition assistance programs,
including those intended to eliminate duplication and inefficiency,
must be data-driven and undertaken only after careful study and
analysis of the potential impact on benefit levels, eligibility, and
participation.
Stakeholder Input: Recommendations should be developed in
collaboration with stakeholder input from the public, private, and
nonprofit sectors, including those responsible for administering
programs at the Federal and state level and those providing delivery of
services and benefits to low-income families at the local level.
Conclusion
We greatly appreciate the opportunity to submit testimony today on
behalf of Feeding America, our over 200 member food banks, and the 37
million Americans our network fed last year. For these growing numbers
of Americans, food banks are truly the first line of defense, and many
times the only resource standing between them being able to put food on
the family dinner table or going to bed with an empty stomach. However,
our food banks and the charitable food assistance network cannot meet
the needs of these families alone. It is only through our public-
private partnership with Federal government through programs like TEFAP
and CSFP and sustained support for SNAP and other programs in the
nutrition safety net that we can make real strides in the fight against
hunger.
We are continuing to explore opportunities to enhance support for
Federal nutrition programs through programmatic or policy innovations,
and look forward to working with you as you review the Title IV
Nutrition Programs and begin the work of crafting the next farm bill.

Lisa Davis,
Vice President of Public Policy,
Feeding America.
______

Submitted Letter and Statement by Sam Stone, Vice President, Government
Relations, Dairy Farmers of America, Inc.
August 2, 2011

Hon. Jean Schmidt,
Chairwoman,
Subcommittee on Nutrition and Horticulture, House Committee on
Agriculture,
Washington, D.C.;

Hon. Joe Baca,
Ranking Minority Member,
Subcommittee on Nutrition and Horticulture, House Committee on
Agriculture,
Washington, D.C.

Dear Chairwoman Schmidt and Ranking Member Baca,

On behalf of the nearly 16,000 producer-members of Dairy Farmers of
America, Inc. (DFA), I respectfully submit the attached testimony in
regards to nutrition programs and the 2012 Farm Bill. We believe that
milk and other dairy products, provided through Title IV of the farm
bill, serves an important role in addressing hunger issues for many
Americans.
Please do not hesitate to contact me at [Redacted] should you have
any further questions or need more information.
Sincerely,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Sam Stone,
Vice President, Government Relations,
Dairy Farmers of America, Inc.

CC:

Hon. Frank D. Lucas, Chairman, House Agriculture Committee;
Hon. Collin C. Peterson, Ranking Minority Member, House Agriculture
Committee.
attachment
Dairy Farmers of America, Inc. (DFA) respectfully submits comments
in response to the House Agriculture Subcommittee on Nutrition and
Horticulture's hearing titled ``Agricultural Program Audit: Examination
of Title IV Nutrition Programs.''
DFA is a milk marketing cooperative that is owned and governed by
nearly 16,000 dairy farmers nationwide. Our cooperative's success is
built on the success of our farmer-owners who raise their dairy herds
and their families on family farms across the nation. As the House
Agriculture Committee begins the process of examining Title IV of the
2012 Farm Bill, DFA encourages the Committee to consider cost-effective
ideas that can further expose needy families and individuals to milk
and other nutritious dairy products.
Historically, nutrition programs authorized under Title IV of the
farm bill such as the Commodity Supplemental Food Program (CSFP), the
Supplemental Nutrition Assistance Program (SNAP) and The Emergency Food
Assistance Program (TEFAP) have played an important role in providing
millions of Americans with the nutritional assistance needed to lead
active and healthy lives. DFA strongly supports these programs because
dairy products have continued to serve as an important component to
meet the nutritional needs for many individuals.
We also recognize the budget challenges Members of the House
Agriculture Committee will face when writing the 2012 Farm Bill. Due to
growing concerns related to the Federal deficit, we understand that
drafting the next Farm Bill will be a difficult task due to the current
budgetary constraints. As Congress continues efforts to address the
Federal deficit, we have also witnessed attempts to reduce funding for
several programs administered under Title IV of the farm bill.
At the same time, the economic outlook for millions of Americans
across the country remains dire as conditions have not improved since
the most recent recession. For the month of June, the Department of
Labor reported that 9.2 percent of America's labor force was
unemployed. Also, food banks have reported a record number of
individuals and needy families seeking help through various hunger
channels including soup kitchens and food pantries.
Additionally, the U.S. Department of Agriculture (USDA) has
witnessed a record number of individuals participating in hunger and
feeding programs like CSFP, SNAP and TEFAP. Based on the latest
statistics, approximately 45 million Americans are currently seeking
help through SNAP and other hunger assistance programs. Clearly, people
are in need during these challenging times.
With this in mind, DFA has been identifying cost-efficient methods
that could expand and increase the consumption of milk without
expanding the size and scope of current nutrition programs. One merited
idea to consider would be the creation of a milk voucher program to
provide fluid milk to those who access food banks and food pantries and
that would be administered under TEFAP.
Through this program, USDA would issue vouchers similar to those
currently used in the Women, Infants and Children program to be
distributed through local food banks and entities food banks support.
Milk vouchers could be provided to food bank recipients and they could
be redeemed at local participating grocery stores and be specified to
fluid milk. It is our understanding that Congress could authorize such
a program and appropriate funds through TEFAP. As you know, TEFAP
provides food to food banks around the country, which they distribute
to shelters, pantries and soup kitchens in their region.
The use of milk vouchers would enhance the food banks' ability to
offer additional food and nutrition to their participants without
requiring any new capital expenditures for refrigeration units or extra
personnel to handle cases of milk. While we have learned that many food
banks have upgraded their facilities to include refrigeration units,
many others have not, do not have enough capacity or are serving
shelters, pantries and soup kitchens with little to no refrigeration
capacity.
In closing, DFA is committed to identifying future programs that
can address the need for nutritious and wholesome foods, including
dairy products. It is our hope that implementing the milk voucher
program through TEFAP will help many Americans currently suffering from
financial hardship due to today's economic conditions. Please consider
including this merited program when drafting the 2012 Farm Bill.
______

Submitted Questions
Response from Audrey Rowe, Administrator, Food and Nutrition Service,
U.S. Department of Agriculture
Questions Submitted By Hon. Chellie Pingree, a Representative in
Congress from Maine
Question 1. A 2002 USDA report found that $5 in Federal benefits
generates almost double, $9.20, in economic activity. In Maine we have
a very innovative and effective program, called the Maine Senior Share
Program. The state uses the dollars they receive from the Senior
Farmers' Market Nutrition program to pay farmers at the beginning if
the season for shares allotted to low-income seniors. This increases
nutrition to a vulnerable population and supports our struggling local
agriculture community. Do you see benefit in these programs and if so,
does the department hope to incorporate similar ideas on a national
level?
Answer. The Senior Farmers' Market Nutrition Program (SFMNP) is
designed to improve the diets of America's low-income seniors by
providing them with coupons that can be used to purchase fresh,
nutritious, unprepared, locally-grown fruits and vegetables at farmers'
markets, roadside stands, and community supported agriculture (CSA)
programs. The SFMNP also serves to increase the awareness and use of
farmers' markets, roadside stands, and CSA programs throughout the
country. The FMNP and the SFMNP are administered through cash grants
provided to states, United States Territories, federally-recognized
Indian Tribal Organizations, and the District of Columbia. Federal
SFMNP regulations give state agencies considerable flexibility in the
design of the Program's operation, thus enabling them to provide a
program that best serves the needs of its senior participants as well
as the farmers who benefit from SFMNP sales. Thus, some state agencies,
including the Maine Department of Agriculture, have found that
operating the SFMNP through the use of a CSA program model works best,
while other state agencies have found it more effective and economical
to deliver SFMNP benefits through the more traditional check or coupon
distribution system. The Food and Nutrition Service (FNS) believes that
each state agency is best qualified to choose the benefit delivery
model that is appropriate for its individual circumstances. However,
examples of successful program models are frequently shared among state
agencies interested in innovative enhancements to their existing SFMNP
operations, as well as prospective SFMNP state agencies that are in the
process of choosing the best way to make fresh fruits and vegetables
more accessible to their low-income seniors.

Question 2. During the pilot phase of the Fresh Fruit and Vegetable
Program, around 12% of participating schools sourced their fresh
produce from local growers. This is a great way to support local
economies. Are there ways you would recommend that we can support the
program to expand the percentage of produce that is sourced locally?
Answer. FNS has undertaken a number of initiatives with the goal of
increasing local sourcing in all the Child Nutrition programs,
including the Fresh Fruit and Vegetable Programs (FFVP). On April 22,
2011, the agency issued the final rule titled Geographic Preference
Option for the Procurement of Unprocessed Agricultural Products in
Child Nutrition Programs. This rule allows school districts to apply an
optional geographic preference in procurement of unprocessed locally
grown or locally raised agricultural products.
FNS has taken a number of steps to assist FFVP operators in
utilizing the geographic preference and other strategies for successful
local sourcing. The agency has established a Farm to School website to
provide an online resource to assist schools in expanding Farm to
School activities; assist in the communication between local producers
and schools; share information about Farm to School activities across
the Nation and keep schools informed of the legislative and regulatory
changes that influence the procurement of local produce. FNS also
recently issued Q&As for program operators which further explain the
geographic preference procurement option. Additionally, in the past
months the agency has conducted webinars on geographic preference for
state and local program operators.
FNS plans to continue providing guidance and technical assistance
such as webinars on geographic preference in order to better inform
FFVP operators of the program regulations and how to best procure local
produce within the contours of the program.

Question 3. Would you update the Committee on efforts within the
agency to enable further access at farmers markets and CSA's to the
expanding WIC Cash Value Fruits and Vegetable Voucher Program? There is
now over $500 million in this key program. I understand the current
guidance issued by FNS to the states is cumbersome. Simplifying the
regulations would make it easier for several million WIC mothers and
their children to shop at farmers market, many now year round, with
direct benefits to both farmers and WIC families.
Answer. Under the interim rule governing the food packages offered
in the Special Supplemental Nutrition Program for Women, Infants and
Children (WIC), WIC state agencies have the option of authorizing
individual farmers to accept Cash Value Vouchers (CVVs) issued to WIC
participants for the purchase of fresh fruits and vegetables at
farmers' markets. Each woman and child participating in the WIC Program
receives a voucher in the amount of $10 or $6, respectively, as part of
the monthly package of supplemental foods issued to all WIC
participants. At present, 17 WIC state agencies have elected to allow
CVVs to be used at farmers' markets, although not all state agencies
have implemented such authorization on a statewide basis; two more
state agencies will authorize farmers to accept CVVs during Fiscal Year
(FY) 2012.
FNS received comments related to authorization of CVVs at farmers
markets during the public comment period for the interim rule that
closed February 1, 2010. FNS will address these comments in a final
rule.

Question 4. One of the areas that most concerns me in SNAP is that
there are many needy eligible people who do not participate. This
problem is most prevalent amongst low-income senior citizens. By USDA's
own measurement about \2/3\ of eligible seniors do not participate in
the program. Can you tell me what steps USDA is taking to increase
participation amongst our nation's greatest generation? And, I'd also
like to hear from you on how efforts to increase senior participation
would be affected under a capped spending regime or a block grant?
Would states have an incentive or a disincentive to connect poor
seniors who aren't participating to the program under a block grant?
Answer. The Food and Nutrition Service (FNS) strives to ensure that
all eligible people, including low income people over 60, have barrier-
free access to the nutrition benefits of the Supplemental Nutrition
Assistance Program (SNAP). Elderly individuals who are eligible for
benefits participate at a rate substantially lower than other eligible
groups. In 2009, the participation rate for elderly individuals was 34
percent, compared to 72 among all eligible people.
SNAP eligibility policies take into account the special
circumstances faced by seniors. They provide for deduction of medical
expenses, no gross income limits, a higher asset limit and special
eligibility status for seniors who receive Supplemental Security Income
(SSI) because of their age and low income. Seniors may also designate
authorized representatives to represent their interests during the
application process to purchase food with SNAP benefits on their
behalf.
Special procedural requirements include certification periods up to
2 years; interviews over the telephone, instead of at the local office;
the ability to apply for SNAP through the Social Security
Administration when applying for SSI. A total of 42 states have
implemented broad based categorical eligibility which can ease the
asset test. In addition, Combined Application Projects make it easier
for the elderly and disabled SSI recipients to receive SNAP benefits by
reengineering the SNAP application process and eliminating the need for
this population to visit the SNAP local office.
FNS has also awarded a number of grants to test approaches to
increasing participation among persons over age 60. SNAP awarded $3.1
million to three states to increase access and participation in the
SNAP among low-income seniors, those who receive Medicare's Extra Help,
also known as the Low Income Subsidy, which helps low-income
individuals or couples with limited resources pay for their Medicare
prescriptions. SNAP also awards $5 million annually for projects aimed
at developing and implementing simplified applications and eligibility
determination systems and measures to improve access to SNAP benefits
by eligible households. Over the last 3 years, FNS has awarded six
grants totaling almost $3.5 million for projects that focus on elderly
persons or involve entities whose missions are to assist the elderly.
In addition, FNS engages in numerous outreach efforts to educate
eligible people over 60 about the nutrition benefits of SNAP and how to
enroll. For example, SNAP develops and airs radio advertisements that
target elderly audiences. Radio buys each year include spots
specifically designed to address myths held by the elderly and air on
stations with high rating among the elderly. SNAP offers a toll free
information line in English and Spanish to provide information about
the program and connect callers to their states for further details.
Finally, FNS has fostered numerous partnerships with stakeholders
trusted by the senior population, including the AARP Foundation,
Catholic Charities, Feeding America, and with fellow Federal agencies
including the Administration on Aging.
This country has a long-standing national commitment to food
security--and SNAP is well designed to respond quickly to economic
conditions and meet food security needs until clients can get back on
their feet. A block grant would undermine the program's responsiveness
to changing economic conditions. States currently have a great deal of
flexibility provided through state options and waivers that further the
purpose of the Program without degrading access to food for those in
need. Block grants tied to past spending levels leave no room to
address low participation rates among specific populations or ability
to respond to changes in local economic conditions. A block grant would
hinder the ability of states to support increased participation unless
they cut benefits to accommodate increased caseload growth.

Question 5. While many CSFP participants are also eligible for
SNAP, there are many components to CSFP that make it more suitable for
some low-income seniors. CSFP provides a monthly food package with
commodities that are chosen because they provide nutrients found to be
lacking in the diets of low-income seniors. The cost of providing the
same nourishment using SNAP's retail-based structure rather than CSFP's
commodity-based structure would cost more than twice as much. CSFP
relies on USDA commodities, which are a great value. It costs the USDA
$20 to fill the monthly food package but the retail value is about $50
to the participant, providing a great return on investment to the
Federal Government. Despite this value however, some have suggested
that SNAP and CSFP are duplicative programs. Do you see the two
programs as interchangeable? Or do you see value in continuing to have
two separate programs.
Answer. The Commodity Supplemental Food Program (CSFP) was
authorized by Congress to supplement the diets of low-income women,
infants, children, and seniors age 60 years and over; today, almost all
participants are seniors. Both CSFP and the Supplemental Nutrition
Assistance Program (SNAP) provide valuable supplemental nutrition
assistance to the clients they serve. Each has aspects of its structure
and services that may better serve the needs of some clients than
others. These and other USDA nutrition assistance programs work
together to create a strong nutrition safety net for those Americans in
need.
______

House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
Commodity Supplemental Food Program (CSFP).
2. Subprograms/Department Initiatives
CSFP provides supplemental USDA Foods to low-income elderly people
at least 60 years of age, as well as some pregnant and breastfeeding
women, other new mothers up to one year postpartum, infants, children
up to age 6.
3. Brief History
CSFP was first authorized under the Agriculture and Consumer
Protection Act of 1973 to distribute foods to low-income women,
infants, and children to supplement their nutritional needs. The 1985
Farm Bill expanded CSFP to include low-income elderly participants, but
gave priority to eligible women, infants, and children for service. The
2008 Farm Bill removed the priority status for women, infants, and
children. Despite beginning as a program for women, infants, and
children, CSFP now serves mostly elderly individuals, who make up over
95 percent of current participants.
4. Purpose/Goals
CSFP works to improve the health of participants by supplementing
their diets with nutritious USDA Foods. CSFP monthly food packages are
good sources of the nutrients typically lacking in the diets of women,
infants, children, and the elderly. CSFP also supports domestic
agricultural markets by providing an outlet for products that USDA
acquires through its agricultural market and price support activities.
5. Success in Meeting Programmatic Purpose/Goals
As of 2011, 39 states, two Indian Tribal Organizations (ITOs), and
the District of Columbia are participating in CSFP.

6. Annual Budget Authority (FY 2002-FY 2011)
Commodity Supplemental Food Program (CSFP)
Budget Authority 2002-2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
CSFP $92,813 $113,756 $98,335 $106,854 $111,202 $107,202 $139,715 $160,430 $171,409 $175,697
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
Commodity Supplemental Food Program (CSFP)
Outlays 2002-2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
CSFP $89,006 $94,812 $87,927 $100,871 $100,667 $99,868 $133,226 $153,192 $152,768
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

Commodity
Assistance FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Program Account

Commodity 112,445 107,828 140,807 164,579 181,892 192,624
Supplemental
Food Program
(CSFP)
The Emergency 55,655 50,310 49,823 49,500 49,834 49,500
Food Assistance
Program (TEFAP)
Administrative
Cost
ARRA TEFAP 25,000 54,609
Administrative
Funds
ARRA TEFAP 100,000
Commodity Funds
TEFAP 5,956 44
Infrastructure
Grants
Farmers' Market
Programs:
Farmers' 23,814 22,109 21,838 20,658 22,089 20,003
Market
Nutrition
Program
Seniors' 15,844 16,203 21,402 19,865 22,459 20,606
Farmers'
Market
Program
Commodity 3,882 2,756 3,736 4,224 5,114 3,883
Assistance
(Nuc. Affected
Isld, Disaster
Asst., NSIP
Comm.)
Nutrition 15,523 15,561 15,553 15,616 15,923 15,828
Programs
Administration
(Allocation to
this program)
Other Program 103,412 90,066 195,628 195,397 366,987 366,987
Costs 1
-----------------------------------------------------------------------------------------------
Total Cost $330,575 $304,833 $448,787 $594,839 $724,863 $669,475
FTEs 97 95 95 100 112 112
-----------------------------------------------------------------------------------------------
Unit Costs
CSFP (Total $361.64 $349.43 $344.72 $394.27 $385.11 $348.09
Annual Cost
per
Participant)
Performance 463.1 466.1 475.3 473.5 518.9 604.9
Measure:
Average monthly
CSFP
participation
(thousands)

1 Includes bonus commodities for TEFAP, CSFP, Disaster Assistance, Nuclear Affected Island, and other commodity
assistance.

9. Eligibility Criteria
States establish an income limit for elderly participants that is
at or below 130 percent of the Federal Poverty Income Guidelines.
States also establish income limits for women, infants, and children
that are at or below 185 percent of the poverty guidelines, but not
below 100 percent of these guidelines. Women, infants, and children who
receive Supplemental Nutrition Assistance Program (SNAP) benefits,
Temporary Assistance for Needy Families (TANF), Medicaid, or certain
other public assistance programs, as determined by the state, are
considered automatically eligible for CSFP.
Clients must reside in one of the states or on one of the Indian
reservations that participate in CSFP. States may establish local
residency requirements based on designated service areas (but may not
require a minimum period of residency). States may also require that
participants be at nutritional risk, as determined by a physician or by
local agency staff.

10. Utilization (Participation) Data
Commodity Supplemental Food Program (CSFP)
National Average Monthly Participation
----------------------------------------------------------------------------------------------------------------
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
----------------------------------------------------------------------------------------------------------------
U.S. Total 512,433 462,349 466,075 475,307 466,615 518,838
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
While CSFP was initially designed to serve low-income pregnant
women, new mothers up to one year postpartum, infants, and children up
to age 6, such clients now represent less than five percent of total
caseload. Most CSFP clients are elderly people 60 and over. While some
CSFP participants receive SNAP, many of them would be eligible for the
minimum or no benefit due to differences in the program's eligibility
criteria. Participants may not simultaneously receive WIC and CSFP.
12. Waste, Fraud and Abuse
In FNS's FY 2011 improper payment risk assessment conducted and
forwarded to the Department, the CSFP was determined to have a low risk
of significant improper payments or fraud. Federal management
evaluations conducted on this program have not identified significant
incidents of improper payments.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Fresh Fruit and Vegetable Program (FFVP).
2. Subprograms/Department Initiatives
3. Brief History
Farm Security and Rural Investment Act of 2002 (P.L. 107-171)--
authorized $6 million for a pilot program to promote children's
consumption of fresh fruits and vegetables. The pilot was limited to 25
schools in each of four states and seven schools in one Indian Tribal
Organization (ITOs).
Child Nutrition and WIC Reauthorization Act of 2004 (P.L. 108-
265)--amended the National School Lunch Act making the FFVP a permanent
program in 11 states and three ITOs and providing $9 million in
permanent annual funding. The program was authorized in 25 schools in
each state and 25 schools among three ITOs.
Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies Appropriations Act, 2006 (P.L. 109-97)--One time
appropriation of $6 million, added six states, 25 schools in each
state.
Consolidated Appropriations Act 2008 (P.L. 110-161)--expanded the
program nationwide, and included the District of Columbia. One time
funding of $9.9 million provided.
Food, Conservation, and Energy Act of 2008 (P.L. 110-234)--added
section 19, the FFVP, to the National School Lunch Act which
establishes a nationwide program with a new structure that increases
FFVP funding gradually over 4 years, from $40 million in 2008 to $150
million in 2011. Funding adjusts each July 1 thereafter to reflect
changes in Consumer Price Index for All Urban Consumers.
4. Purpose/Goals
To introduce and provide free fresh fruits and vegetables in
elementary schools representing the highest percent of children
receiving free and reduced price school meal benefits and to help
combat childhood obesity by helping children develop positive dietary
habits during their formative years.
5. Success in Meeting Programmatic Purpose/Goals
The FFVP operates in all 50 states and is highly regarded by
Members of Congress, nutrition advocates, the health care community,
parents and students; over 5,000 schools participate in the FFVP.

6. Annual Budget Authority (FY 2002-FY 2011)
The Fresh Fruit and Vegetable Program (FFVP)
Budget Authority 2009-2011
(dollars in thousands)
------------------------------------------------------------------------
FY 2009 FY 2010 FY 2011
------------------------------------------------------------------------
Fresh Fruit and Vegetable $56,000 $74,000 $109,000
Program
------------------------------------------------------------------------
* Amounts displayed for budget authority reflect transfers authorized on
July 1st of each fiscal year as modified by the annual appropriations
bills by a delay of a portion of the transfer from July 1 to the
following October 1; the total transfers authorized for each FY are as
follows: FY 2009--$105 million; FY 2010--$101 million; FY 2011--$150
million.

7. Annual Outlays (FY 2002-FY 2011)
The Fresh Fruit and Vegetable Program (FFVP) Outlays 2009-2011
(dollars in thousands)
------------------------------------------------------------------------
FY 2009 FY 2010 FY 2011
------------------------------------------------------------------------
Fresh Fruit and Vegetable $28,910 $56,125 $152,424
Program
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

The FFVP is administered as part of the Child Nutrition Programs (CNP) and the administrative costs associated with running this program are not
specifically allocated within the CNP account. The table below provides the costs associated with the CNP account as a whole.

Child Nutrition
Program FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Child Nutrition
Programs
School Lunch $7,569,757 $7,836,174 $8,365,115 $9,071,783 $9,932,814 10,451,023
Program
School 2,086,098 2,228,842 2,393,028 2,633,048 2,895,356 3,115,300
Breakfast
Program
Child and 2,141,088 2,303,732 2,245,195 2,513,852 2,583,232 2,693,384
Adult Care
Food Program
Summer Food 284,224 297,933 312,203 357,984 374,203 375,518
Service
Program
Special Milk 15,155 14,225 15,120 14,941 12,064 12,563
Program
State 156,061 162,844 174,134 178,994 195,532 206,943
Administrativ
e Expense
-----------------------------------------------------------------------------------------------
Total, Cash 12,252,383 12,843,750 13,504,795 14,770,602 15,993,201 16,854,731
Grants to
States
Commodities (Sec 480,684 537,057 631,849 741,209 735,782 907,919
6e Entitlement)
Child Nutrition 25,619 25,378 30,550 39,128 75,472 59,916
Program
Discretionary
Activities
ARRA NSLP 100,000
Equipment
Grants
Child Nutrition 36,452 91,069 32,457 172,327
Program
Permanent
Activities (not
including the
FFVP)
Fresh Fruit and 42,993 79,902 134,000
Vegetable
Program
Nutrition 30,215 30,422 30,383 30,724 36,189 35,972
Programs
Administration
(Allocation to
this program)
Other Program 560,965 681,800 575,997 667,645 527,325 527,325
Costs
-----------------------------------------------------------------------------------------------
Total Cost $13,349,866 $14,118,407 $14,810,026 $16,483,370 $17,480,328 #########
FTEs 392 368 379 393 414 437
-----------------------------------------------------------------------------------------------
Unit Costs
Child $1.57 $1.59 $1.70 $1.82 $1.86
Nutrition
Total Cost
per Meal
Served ($/
service)
Performance 30.0 30.6 30.9 31.6 31.6 32.1
Measure: Avg.
daily NSLP
participation
(millions)
Performance 9.8 10.1 10.6 11.0 11.6 12.4
Measure: Avg.
daily SBP
participation
(millions)

9. Eligibility Criteria

--Elementary schools with 50 percent or more students certified eligible for free or reduced price meals.

--Elementary schools with the highest percent of students eligible have priority for selection.

--All children participating in eligible schools receive free fresh fruits and vegetables outside of school meals.

--Number of participating elementary school limited by funding.

10. Utilization (Participation) Data

Approximately 5,000 schools participated in the FFVP during the 2010-2011 School Year. Although we have no information on the number of children
served, the level of funding provided would support between approximately 1.5 million and 4.4 million students.

11. Duplication or Overlap with Other Programs

FFVP is authorized by section 19 of the Richard B. Russell National School Lunch Act. The Program provides fresh fruits and vegetables to elementary
schools, targeted to schools with a high percentage of children certified for free and reduced-price school meals. Schools are reimbursed for the cost
of making fresh fruits and vegetables available to students during the school day outside of the school meals.

12. Waste, Fraud and Abuse

The size and nature of this program puts it at a very low risk for improper payments and fraud. FNS is not aware of any issues regarding fraud,
waste and abuse in the FFVP.

13. Effect of Administrative PAYGO

None.

______

1. Program Name
The Emergency Food Assistance Program (TEFAP).
2. Subprograms/Department Initiatives
TEFAP provides USDA Foods and administrative support to states,
which in turn provide these resources to emergency feeding
organizations such as food banks, soup kitchens and food pantries.
TEFAP administrative costs help state and local agencies defray costs
associated with distributing USDA and privately-donated foods. Key
program components include:
Food Funds--USDA purchases food for distribution to TEFAP state and
local agencies.
Administrative Funds--USDA provides administrative funds to defray
costs associated with processing, repackaging, storage, and
distribution of Federal and privately donated food.
Infrastructure Grants--Provides local emergency feeding
organizations, such as food banks, food pantries, and soup kitchens,
with funds to expand and improve their infrastructure, including their
storage and distribution facilities.
3. Brief History
TEFAP was first authorized as the Temporary Emergency Food
Assistance Program in 1981 to distribute surplus foods to households.
The name was changed to The Emergency Food Assistance Program under the
1990 Farm Bill. The program was designed to help reduce Federal food
inventories and storage costs while assisting the needy. Stocks of some
foods held in surplus had been depleted by 1988. Therefore, the Hunger
Prevention Act of 1988 authorized funds to be appropriated for the
purchase of USDA foods specifically for TEFAP.
The 2008 Farm Bill increased funds for TEFAP food purchases to $250
million annually, indexed to inflation. The 2008 Farm Bill also
authorized up to $100 million annually for administrative costs and up
to $15 million annually for TEFAP infrastructure grants. In addition,
the Secretary has authority to provide food that USDA acquires through
certain price or market support activities (i.e., bonus food) to TEFAP.
4. Purpose/Goals
TEFAP helps supplement the diets of low-income Americans by
providing them with emergency food assistance at no cost. TEFAP also
supports domestic agricultural markets by providing an outlet for
products that USDA acquires through its agricultural market and price
support activities.
5. Success in Meeting Programmatic Purpose/Goals
TEFAP currently operates in all 50 states, the District of
Columbia, Puerto Rico, the Virgin Islands, Guam, and the Commonwealth
of the Northern Mariana Islands. The allocation of food and
administrative funds to states is based on a formula that considers the
states' unemployment levels and the number of persons with income below
the poverty level.

6. Annual Budget Authority (FY 2002-FY 2011)
The Emergency Food Assistance Program (TEFAP)
Budget Authority 2002-2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
TEFAP Commodities $140,000 $140,000 $140,000 $140,000 $140,000 $140,000 $190,000 $250,000 $248,000 $247,500
TEFAP Admin. Costs 50,000 49,675 49,705 49,600 55,500 49,500 49,650 49,500 49,500 49,401
TEFAP Commodities--ARRA 100,000
TEFAP Admin. Costs--ARRA 50,000 28,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
The Emergency Food Assistance Program (TEFAP)
Outlays 2002-2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
TEFAP Commodities $139,293 $137,106 $137,458 $135,428 $135,422 $137,462 $186,822 $245,466 $242,225
TEFAP Administrative Costs 39,467 37,646 36,116 40,916 37,494 37,001 36,352 37,389 38,804
TEFAP Commodities--ARRA 99,984
TEFAP Admin. Costs--ARRA 13,629 35,654
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
The Emergency
Food Assistance
Program (TEFAP) FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
1
----------------------------------------------------------------------------------------------------------------
The Emergency $55,655 $50,310 $49,823 $49,500 $49,834 $49,500
Food Assistance
Program (TEFAP)
Administrative
Cost
ARRA TEFAP 25,000 54,609
Administrative
Funds
ARRA TEFAP 100,000
Commodity Funds
TEFAP 5,956 44
Infrastructure
Grants
TEFAP 139,832 140,000 189,936 250,000 247,994 247,500
Entitlement
Foods
TEFAP Bonus 67,000 58,200 178,100 373,700 346,639 0
Foods
-----------------------------------------------------------------------------------------------
TEFAP Total 262,487 248,510 417,858 798,200 705,032 297,044
----------------------------------------------------------------------------------------------------------------
1 Federal cost to administer this program included in the Commodity Assistance Program account.

9. Eligibility Criteria
Households receiving food for consumption at home must meet
eligibility criteria set by the state, including, but not limited to,
an income standard and state residency. Households receiving prepared
meals through a soup kitchen or other onsite feeding program are
presumed to be needy and are not subject to a means test.
10. Utilization (Participation) Data
USDA does not collect data on the number of individuals served by
TEFAP. A recent analysis by Feeding America, a national network of food
banks, found that 54 percent of affiliated food pantries reported
receiving TEFAP food.
11. Duplication or Overlap with Other Programs
TEFAP targets low-income individuals that seek food through local
feeding organizations such as food pantries and soup kitchens. These
individuals are sometimes but not always eligible for SNAP, and an
individual may receive SNAP and TEFAP concurrently. However, TEFAP's
more limited eligibility criteria and flexible structure supports its
specific purpose in getting needed food directly into the hands of low-
income Americans during times of emergency and natural disasters.
12. Waste, Fraud and Abuse
In FNS's FY 2011 improper payment risk assessment conducted and
forwarded to the Department, TEFAP was determined to have a low risk of
significant improper payments or fraud. Management evaluations
conducted by FNS Regional offices have not identified significant
incidents of improper payments to state agencies, local organizations,
or individuals. In addition, a comprehensive, ongoing audit conducted
by OIG has identified no problems with waste, fraud and abuse in the
Program. In addition, the benefit provided to individuals participating
in the program is relatively low, so any errors in certification will
not result in large improper payments program participants.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Food Distribution Program on Indian Reservations (FDPIR).
2. Subprograms/Department Initiatives
FDPIR provides a monthly package of USDA Foods, including fresh
fruits and vegetables, to low-income households living on Indian
reservations, and to American Indian households residing in approved
areas near reservations or in Oklahoma. Many households participate in
FDPIR as an alternative to the SNAP, because they do not have easy
access to SNAP offices or authorized food stores. Key components
include:
Food: USDA purchases food for distribution to Indian Tribal
Organizations and state agencies administering FDPIR.
Administrative Funds: FDPIR Indian Tribal Organizations (ITOs) and
state agencies receive funds for program administrative costs.
Nutrition Education Grants: Funds projects developed by ITOs and
state agencies administering FDPIR to enhance the nutrition knowledge
of FDPIR participants and to foster positive lifestyle changes for
eligible household members.
Department initiatives on FDPIR include:
Food Package Improvements: FNS continuously reviews the FDPIR food
package, in consultation with program customers, to improve its
nutritional profile and acceptability. On a regular basis, a work group
consisting of tribally appointed FDPIR directors, procurement
specialists from FSA and AMS, nutrition and health experts from the
Indian Health Service and the Centers for Disease Control and
Prevention (CDC), and FNS nutritionists and program staff considers
changes to the food package and makes recommendations to FNS. The work
group is continuing to focus on ways to reduce saturated fat, sugar,
and sodium and is also exploring ways to improve the desirability and
convenience of products in the food package.
Improved Access to Fresh Fruits and Vegetables: In FDPIR, the Fresh
Produce Program began as a pilot program in FY 1996 at two sites. This
initiative, a joint venture with the Department of Defense, provides
fresh fruits and vegetables that program participants may select in
lieu of canned goods. In FY 2009, about 91 percent of the FDPIR
programs were enrolled in the Fresh Produce Program, allowing most
FDPIR participants to receive a variety of fresh fruits and vegetables
that would otherwise be very difficult for them to obtain
3. Brief History
FDPIR was authorized under the Food Stamp Act of 1977 as an
alternative to the Food Stamp Program, now the Supplemental Nutrition
Assistance Program (SNAP), for households living on Indian
reservations. In 1981, legislation allowed Tribes in Oklahoma that did
not have traditional reservation boundaries to also participate in
FDPIR. The program is currently authorized through 2012 under Section
4(b) of the Food and Nutrition Act of 2008, and Section 4(a) of the
Agriculture and Consumer Protection Act of 1973.
4. Purpose/Goals
FDPIR serves as an alternative to the SNAP for areas that do not
have easy access to SNAP offices or authorized food stores, and for
households in designated areas who prefer USDA foods to regular SNAP
benefits.
5. Success in Meeting Programmatic Purpose/Goals
Currently, there are approximately 276 Tribes receiving benefits
under FDPIR through 100 ITOs and five state agencies.
Pursuant to the 2008 Farm Bill, USDA conducted a review of the
nutritional quality of the FDPIR food package, comparing its content to
scientific standards including the Dietary Guidelines for Americans,
the Dietary Reference Intakes (DRIs), the Thrifty Food Plan nutrient
standards and the Healthy Eating Index--2005. It found that:

The package provides a nutritious variety of foods, and
sufficient calories to meet the energy needs of most sedentary
individuals and many moderately active children.

While as for American diets in general, there is room for
improvement in the quantities of fruits, vegetables, low-fat
dairy products and whole grains, the nutritional content of the
package is considerable.

Individuals consuming FDPIR foods in the quantities provided
would achieve a HEI-2005 score of 81 out of 100, considerably
better than Americans in general (58 out of 100) and SNAP
participants (52 out of 100).

6. Annual Budget Authority (FY 2002-FY 2011)
Food Distribution Program on Indian Reservations (FDPIR)
Budget Authority 2002-2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDPIR $75,800 $82,165 $86,237 $82,200 $79,500 $77,557 $88,477 $114,914 $112,797 $96,958
Recovery Act:
FDPIR Equipment 5,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
Food Distribution Program on Indian Reservations (FDPIR)
Outlays 2002-2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDPIR $69,810 $68,782 $75,195 $72,469 $78,553 $61,535 $79,116 $111,060 $105,012
Recovery Act:
FDPIR Equipment 5,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

Supplemental
Nutrition
Assistance FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Program Account

Supplemental $32,984,909 $33,198,354 $37,557,661 $49,324,256 $57,820,329 $65,340,734
Nutrition
Assistance
Program (SNAP)
ARRA SNAP 4,478,246 10,763,853 10,486,716
Benefits and
Admin. Funds
Nutrition 1,517,752 1,551,167 1,622,521 1,760,435 1,746,351 1,744,605
Assistance for
Puerto Rico
(NAP)
ARRA NAP Funds 240,133 254,217 255,963
Food 78,760 77,554 88,339 114,866 112,756 96,958
Distribution
Program on
Indian
Reservation
(FDPIR)
ARRA FDPIR 3,712 1,367 0
Equipment Funds
The Emergency 139,832 140,000 189,936 250,000 247,994 247,500
Food Assistance
Program (TEFAP)
Commodities
American Samoa 4,795 5,219 5,204 7,006
ARRA American 964 1,021 1,028
Samoa Benefits
Program Access/ 24,026 23,816 14,852 27,009 38,368 25,792
Community Food
Project/CNMI/
Pilot Projects
Nutrition 72,013 72,508 72,416 70,934 69,482 69,066
Programs
Administration
(Allocation to
this program)
Other Program 895 2,726 3,918 703 377 377
Costs
-----------------------------------------------------------------------------------------------
Total Cost $34,818,187 $35,066,125 $39,554,437 $56,276,477 $71,061,319 $78,275,745
FTEs 683 631 613 612 591 618
-----------------------------------------------------------------------------------------------
Unit Costs
SNAP (Total $1,236.28 $1,256.97 $1,324.50 $1,597.48 $1,703.50 $1,686.54
Annual Cost
per
Participant)
FDPIR (Total $887.65 $928.48 $1,024.98 $1,123.26 $1,077.93 $966.65
Annual Cost
per
Participant)
Performance 26.736 26.466 28.408 33.7 40.3 45.0
Measure:
Average
monthly SNAP
participation
(millions)

9. Eligibility Criteria
Low-income American Indian and non-Indian households that reside on
a reservation and households living in approved areas near a
reservation or in Oklahoma that contain at least one person who is a
member of a federally-recognized Tribe, are eligible to participate in
FDPIR. Households are certified based on Federal income and resource
standards which are largely the same as those for SNAP. Households may
not participate in FDPIR and SNAP in the same month.

10. Utilization (Participation) Data
Food Distribution Program on Indian Reservations (FDPIR)
National Average Monthly Participation
----------------------------------------------------------------------------------------------------------------
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
----------------------------------------------------------------------------------------------------------------
U.S. Total 98,905 89,867 86,629 90,153 95,369 84,577
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
Funds are appropriated by Congress to carry out the FDPIR under
section 4(b) of the Food and Nutrition Act of 2008. The Program is
administered locally by either Indian Tribal Organizations (ITOs) or
other state agencies. USDA purchases and ships FDPIR foods to ITOs
based on orders from a list of available foods. Many households
participate in FDPIR as an alternative to SNAP due to availability.
Households are not allowed to participate in both programs at the same
time.
12. Waste, Fraud and Abuse
The last improper payment risk assessment conducted for FDPIR was
in FY 2009. It was determined that the Program is at a low risk for
improper payments or fraud. The benefit level for FDPIR is
approximately $78 per person per month in FY 2009. Additionally, FDPIR
benefits from simplified program requirements, regulatory controls and
a continuous process for reviewing certification actions and taking
appropriate corrective action to resolve problems with internal
controls place FDPIR at a low level of risk.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Senior Farmers' Market Nutrition Program (SFMNP).
2. Subprograms/Department Initiatives
None.
3. Brief History
The program was created as a pilot program in FY 2001; it was
established by Congress as a permanent program in FY 2002, and has been
reauthorized through 2012 under the 2008 Farm Bill (Public Law 110-
234).
4. Purpose/Goals
The SFMNP provides low-income seniors with coupons that can be used
to purchase fresh fruits, vegetables, honey and herbs from farmers at
authorized farmers' markets or roadside stands, or with shares in
Community Supported Agriculture (CSA) programs for regularly
distributed bags or boxes of eligible foods. SFMNP seeks to increase
the consumption of agricultural commodities by expanding, developing,
or aiding in the development and expansion of domestic farmers'
markets, roadside stands, and community supported agriculture (CSA)
programs.
5. Success in Meeting Programmatic Purpose/Goals
51 state agencies and federally recognized Indian tribal
governments received grants to operate the SFMNP in FY 2010.

20,106 farmers at 4,601 farmers' markets as well 3,861
roadside stands and 163 community supported agriculture
programs participated in the program in FY 2010.

844,999 people received SFMNP coupons in FY 2010.

6. Annual Budget Authority (FY 2002-FY 2011)
Senior Farmers' Market Nutrition Program (SFMNP)
Budget Authority 2002-2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
SFMNP $10,000 $15,000 $15,000 $15,000 $15,000 $15,000 $20,600 $20,600 $20,600 $20,600
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
Senior Farmers' Market Nutrition Program (SFMNP)
Outlays 2002-2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
SFMNP $6,533 $8,599 $8,343 $10,542 $9,979 $9,346 $11,872 $13,264 $12,314
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
Commodity
Assistance FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Program Account
----------------------------------------------------------------------------------------------------------------
Commodity $112,445 $107,828 $140,807 $164,579 $181,892 $192,624
Supplemental
Food Program
(CSFP)
The Emergency 55,655 50,310 49,823 49,500 49,834 49,500
Food Assistance
Program (TEFAP)
Administrative
Cost
ARRA TEFAP 25,000 54,609
Administrative
Funds
ARRA TEFAP 100,000
Commodity Funds
TEFAP 5,956 44
Infrastructure
Grants
Farmers' Market
Programs:
Farmers' 23,814 22,109 21,838 20,658 22,089 20,003
Market
Nutrition
Program
Seniors' 15,844 16,203 21,402 19,865 22,459 20,606
Farmers'
Market
Program
Commodity 3,882 2,756 3,736 4,224 5,114 3,883
Assistance
(Nuc. Affected
Isld, Disaster
Asst., NSIP
Comm.)
Nutrition 15,523 15,561 15,553 15,616 15,923 15,828
Programs
Administration
(Allocation to
this program)
Other Program 103,412 90,066 195,628 195,397 366,987 366,987
Costs 1
-----------------------------------------------------------------------------------------------
Total Cost $330,575 $304,833 $448,787 $594,839 $724,863 $669,475
FTEs 97 95 95 100 112 112
-----------------------------------------------------------------------------------------------
Unit Costs:
CSFP (Total $361.64 $349.43 $344.72 $394.27 $385.11 $348.09
Annual Cost
per
Participant)
Performance 463.1 466.1 475.3 473.5 518.9 604.9
Measure:
Average
monthly CSFP
participation
(thousands)
----------------------------------------------------------------------------------------------------------------
1 Includes bonus commodities for TEFAP, CSFP, Disaster Assistance, Nuclear Affected Island, and other commodity
assistance.

9. Eligibility Criteria
Low-income seniors, generally defined as individuals who are at
least 60 years old and who have household incomes of not more than 185%
of the Federal poverty income guidelines, are the targeted recipients
of SFMNP benefits.

10. Utilization (Participation) Data
Senior Farmers' Market Nutrition Program (SFMNP)
National Average Monthly Participation
----------------------------------------------------------------------------------------------------------------
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
----------------------------------------------------------------------------------------------------------------
U.S. Total 771,285 825,691 803,985 833,026 809,711 844,999
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
The SFMNP was established by the Farm Security and Rural Investment
Act of 2002. Program grants are awarded to states to provide low-income
seniors with coupons that can be exchanged for eligible foods at
farmers' markets, roadside stands, and community supported agriculture
(CSA) programs. The goals of the SFMNP are to provide resources in the
form of fresh, nutritious, unprepared, locally grown fruits,
vegetables, honey and herbs from farmers' markets, roadside stands and
CSA programs to low-income seniors; increase the domestic consumption
of agricultural commodities by developing new or expanding existing
domestic farmers' markets, roadside stands, and CSA programs. The
Program is similar in design and function to the Farmers' Market
Nutrition Program, but serves senior citizens rather than WIC
recipients.
12. Waste, Fraud and Abuse
The last improper payment risk assessment for this program,
conducted for FY 2010, concluded that SFMNP presents a very low risk
for erroneous payments. Guidelines provided in the SFMNP State Plan
Guidance consistently require state agencies to provide FNS with
detailed descriptions of their systems for ensuring that SFMNP benefits
are issued to and used only by eligible recipients, and that SFMNP
checks, coupons or vouchers are submitted for payment by authorized
farmers through appropriate farmers' markets, roadside stands, and/or
community supported agriculture programs. FNS further requires that all
SFMNP vouchers be matched to an authorized farmer and recipient before
payment is made, either by the contracted banking facility or by the
State Treasurer's office. These controls are more than adequate to
avoid significant improper payments. There have been no audits or
management reviews which have identified significant fraud, waste and
abuse issues.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Supplemental Nutrition Assistance Program (SNAP).
2. Subprograms/Department Initiatives
The subcomponents of SNAP include:
Nutrition Education (SNAP-Ed): The goal of SNAP-Ed is to improve
the likelihood that persons eligible for SNAP will make healthy food
choices with in a limited budget and choose physically active
lifestyles consistent with the current Dietary Guidelines for
Americans.
Employment and Training (E&T): States are required to establish an
E&T program to help able-bodied SNAP recipients find work or gain the
skills, training, and experience that lead to employment.
Quality Control (QC): Each state agency is responsible for
monitoring and improving its administration of SNAP. As a part of this
requirement, the SNAP QC System is used to determine the accuracy of
the benefits authorized. The data collected is also used to determine
areas for program improvement.
Disaster Supplemental Nutrition Assistance Program (D-SNAP):
Through D-SNAP, households affected by a disaster receive streamlined
certification and benefit issuance, speeding assistance to these
vulnerable disaster victims and reducing the administrative burden on
state agencies operating in post-disaster conditions. D-SNAP recipients
usually receive 1 month of benefits. Generally, states may request to
operate a D-SNAP when the area has received a Presidential disaster
declaration of Individual Assistance from the Federal Emergency
Management Agency. Benefits are issued on an EBT card, similar to SNAP
benefits.
Retailer Authorization, Reauthorization, and Investigation: FNS is
responsible for policy and oversight of authorization and
reauthorization of applicant and licensed retailers; the monitoring of
retail firms through ongoing systems analysis and undercover on-site
investigations; and the administrative review of those firms which
contest a disqualification or civil money penalty.
Farmers' Markets: USDA is committed to increasing participation by
farmers' markets in SNAP. At the end of FY 2010, 1,611 direct marketing
farmers and farmers' markets participated in SNAP which is a 263
percent increase in the number of authorized farmers and markets over
the previous 5 fiscal years. Over that same period, SNAP redemptions at
farmers' markets increased 49 percent.
Nutrition Assistance for Puerto Rico (NAP): Each year, Puerto Rico
submits and gains approval for the program plan for its nutrition
assistance block grant. The plan must assess the food and nutrition
needs of the island's most needy residents; describe the assistance
needed; describe how it would be provided to the neediest residents;
describe the amount of administrative expense needed and meet other
such requirements as the provided by regulation. In the NAP, 75 percent
of the nutrition benefits are targeted to the purchase of food while 25
percent are in cash. During an average month in FY2010, an average of
1.3 million people were served monthly by the NAP.
Nutrition Assistance for American Samoa: Each year, American Samoa
submits a Memorandum of Understanding specifying how the block grant
will be operated, including the eligibility requirements to stay within
the capped block grant amount. FNS reviews and approves the annual
Memorandum of Understanding and monitors program operations to ensure
program integrity. An average of 3,388 people were served monthly by
the program in Fiscal Year 2010.
Nutrition Assistance for the Commonwealth of the Northern Mariana
Islands (CNMI): CNMI submits a Memorandum of Understanding each fiscal
year, specifying how the program will be operated, including the
eligibility requirements to stay within the capped block grant amount.
FNS reviews and approves the annual Memorandum of Understanding and
monitors program operations to ensure program integrity. A monthly
average of 8,922 people were served monthly by the program in Fiscal
Year 2010.
3. Brief History
SNAP has a long history of meeting the nutrition needs of low
income people. The very first SNAP, then known as the Food Stamp
Program (FSP), operated from May 16, 1939 to the spring of 1943. It
included a purchase requirement.
The FSP began again on May 29, 1961 when President Kennedy's first
Executive Order called for expanded food distribution. The FSP became
permanent with the Food Stamp Act of 1964. The Food Stamp Act of 1977
eliminated the purchase requirement and included a number of important
access and integrity provisions.
The late 1980s and 1990s were the dawn of Electronic Benefit
Transfer (EBT). With EBT pilots spreading across the nation, EBT was
made mandatory in 1996. At this time, welfare reform also affected the
policies of the FSP, including establishment of time limits for able-
bodied adults without dependents and eligibility restrictions for legal
immigrants.
Major changes arrived once again with the Farm Bill of 2002. This
legislation restored benefits for certain legal immigrants, emphasized
program access, simplified program rules, and offered states a large
number of options to improve administration of the program. The quality
control system was also reformed, enhanced funding for performance was
eliminated, and performance bonuses were established and set at $48
million total.
In June 2008, Congress ratified the Food, Conservation, and Energy
Act of 2008 which reauthorized the program as the Supplemental
Nutrition Assistance Program (SNAP) under the newly named Food and
Nutrition Act. This farm bill strengthened integrity, simplified
administration, maintained state flexibility, and improved access.
4. Purpose/Goals
The Food and Nutrition Act statutorily defines the purpose of the
program as ``to alleviate such hunger and malnutrition, a supplemental
nutrition assistance program is herein authorized which will permit
low-income households to obtain a more nutritious diet through normal
channels of trade by increasing food purchasing power for all eligible
households who apply for participation.''
As such, SNAP is the cornerstone of the Federal food assistance
programs. SNAP supplements the income of low income individuals and
families by providing an electronic debit card which is used to
purchase food at authorized stores. SNAP provides crucial support to
needy households and helps those making the transition from welfare to
work.
State agencies are responsible for the administration of the
program according to national eligibility and benefit standards set by
Federal law and regulations. Benefits are 100 percent federally-
financed, while administrative costs are shared between the Federal and
state governments.
SNAP is a countercyclical program that expands in tough economic
times and contracts when the economy improves. SNAP has an economic
multiplier effect. Every $5 in new SNAP benefits generates as much as
$9.00 in total economic activity. SNAP uses multiple strategies to
encourage participants to make healthy food choices and engage in
active lifestyles. These include nutrition education, encouraging more
farmers' markets to participate in the program and a demonstration
project to examine the impact of incentives on participant purchases of
fruits and vegetables.
While Americans support helping struggling families put food on the
table they want to know that taxpayer dollars are being spent wisely.
USDA actively works on behalf of American taxpayers to protect the
Federal investment in SNAP and make sure the program is targeted
towards those families who need it the most. To further this effort,
FNS focuses on three key areas of oversight: reducing improper payments
and errors; pursuing recipient fraud; and combating abuse and misuse of
benefits.
5. Success in Meeting Programmatic Purpose/Goals
SNAP helped put food on the table for an average of 40.3 million
people (or 18.6 million households) per month during Fiscal Year 2010.
In that year, the average monthly benefit per person was $133.79 and
the average monthly benefit per household was $289.61. Five years ago,
in Fiscal Year 2006, SNAP helped put food on the table for a monthly
average of 26.5 million people (or 11.7 million households). In that
year, the average monthly benefit per person was $94.75 and the average
monthly benefit per household was $214.41. SNAP families and
individuals spend benefits promptly, rather than save them. About 80
percent of SNAP benefits are used within 2 weeks of receipt and 97
percent are spent within a month.
Most SNAP recipients are children or elderly. The most recent
administrative data (for Fiscal Year 2009) show that nearly half (48
percent) of recipients were children and another eight percent were age
60 or older. Working-age women represented 28 percent of the caseload,
while working-age men represented 16 percent. These figures have not
changed greatly in the last 5 years. In Fiscal Year 2004, 50 percent of
participants were children and eight percent were age 60 or older. At
that time, working age women represented 28 percent of the caseload and
working age men represented 13 percent.
Notably, the primary source of income among SNAP participants has
shifted from welfare to work over time. In 1989, 42 percent of all SNAP
households received cash welfare benefits and only 20 percent had
earnings. In 2009, less than ten percent received cash welfare, while
29 percent had earnings. In Fiscal Year 2009, 40 percent of all SNAP
participants lived in a household with earnings. For these households,
earnings were the primary source of income.
In Fiscal Year 2008, among those eligible for SNAP, the
participation rate was 66 percent at the national level. In Fiscal Year
2004, the participation rate among those eligible was 61 percent. Rates
are consistently lower for some subgroups like the elderly, Latinos and
working poor. FNS and the states continue to direct outreach efforts to
these underserved populations to raise their awareness of the nutrition
benefits of SNAP and how to apply.
Recent historic growth in the number of households receiving SNAP
benefits has had a tangible impact on the number of authorized
retailers. As of September 30, 2010, there were 216,738 firms
authorized to accept SNAP benefits. The number of SNAP authorized firms
increased 12 percent within the past year, and 49 percent since 2003
when just over 145,000 firms were in the Program.
FNS is committed to working with our state and Federal partners on
strategies to improve accuracy, as well as to identify and address
fraud, while ensuring access and customer service. Over 98 percent of
those receiving SNAP benefits are eligible. Payment accuracy was 96.19
percent in Fiscal Year 2010, a historic high. The FY10 rate reflects
the fourth continuous year of improvement and a decade long trend.
Payment errors are less than half what they were 10 years ago, which
has reduced improper payments by $3.3 billion in 2010.

The prevalence of trafficking dropped from approximately four percent in the late 1990s to one percent in the mid 2000s. Over the last 10 years,
8045 retail stores were permanently disqualified due to trafficking, reflecting our work to root out and eliminate bad actors from the program.

6. Annual Budget Authority (FY 2002-FY 2011)
Supplemental Nutrition Assistance Program 1
Annual Budget Authority
(in millions)
----------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Regular
Appropriati
ons:
SNAP $21,390 $24,598 $29,190 $33,422 $38,959 $36,377 $37,705 $51,805 $56,152 $66,782
Puerto 1,356 1,401 1,419 1,501 1,524 1,557 1,629 1,768 1,753 1,752
Rico and
American
Samoa
Commonweal 6 8 11 8 8 9 10 12 12 12
th
Northern
Mariana
---------------------------------------------------------------------------------------------------
Subtotal 22,752 26,006 30,620 34,932 40,492 37,944 39,344 53,584 57,917 68,546
,
Regular
Appropr
iations
---------------------------------------------------------------------------------------------------
Supplemental
Appropriati
ons:
DOD SAE 0 0 0 0 0 0 0 0 400 0
Recovery
Act:
Benefits 0 0 0 0 0 0 0 4,804 10,376 10,487
Administra 0 0 0 0 0 0 0 145 150 0
tive
Costs
ARRA 0 0 0 0 0 0 0 240 254 256
Benefits-
-Puerto
Rico NAP
American 0 0 0 0 0 0 0 1 1 1
Samoa
Benefits
---------------------------------------------------------------------------------------------------
Subtotal 0 0 0 0 0 0 0 5,190 10,782 10,744
,
Recover
y Act
===================================================================================================
Total 22,752 26,006 30,620 34,932 40,492 37,944 39,344 58,774 69,099 79,290
Appro
priat
ions
----------------------------------------------------------------------------------------------------------------
1 Note: Does not include appropriations for TEFAP or FDPIR.

7. Annual Outlays (FY 2002-FY 2011)
Supplemental Nutrition Assistance Program 1
Annual Outlays
(in millions)
----------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
----------------------------------------------------------------------------------------------------------------
Regular Program
Outlays:
SNAP $19,862 $23,072 $26,234 $30,909 $32,820 $33,040 $37,364 $48,883 $58,901
Puerto Rico and 1,274 1,307 1,329 1,480 1,519 1,587 1,634 1,734 1,750
American Samoa
Commonwealth 5 7 6 11 9 10 9 10 12
Northern Mariana
-----------------------------------------------------------------------------------------
Subtotal, Regular 21,141 24,386 27,570 32,400 34,348 34,637 39,007 50,626 60,662
Appropriations
-----------------------------------------------------------------------------------------
Supplemental Outlays:
DOD SAE 0 0 0 0 0 0 0 0 126
Recovery Act Outlays:
Total Recovery Act 0 0 0 0 0 0 0 4,568 10,968
=========================================================================================
Total Outlays 21,141 24,386 27,570 32,400 34,348 34,637 39,007 55,194 71,756
----------------------------------------------------------------------------------------------------------------
1 Note: Does not include outlays for TEFAP or FDPIR.

The difference between budget authority and outlays for the SNAP program is usually related to either use or non-
use of the contingency fund. In 2010, for example, budget authority is shown as $69 billion, whereas outlays
were $71.8 billion. In that year, over $2 billion in contingency funds carried forward from the previous
fiscal year were used to fund participation.

8. Annual Delivery Cost (FY 2002-FY 2011)

Supplemental
Nutrition
Assistance FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Program Account

Supplemental $32,984,909 $33,198,354 $37,557,661 $49,324,256 $57,820,329 $65,340,734
Nutrition
Assistance
Program (SNAP)
ARRA SNAP 4,478,246 10,763,853 10,486,716
Benefits and
Admin. Funds
Nutrition 1,517,752 1,551,167 1,622,521 1,760,435 1,746,351 1,744,605
Assistance for
Puerto Rico
(NAP)
ARRA NAP Funds 240,133 254,217 255,963
Food 78,760 77,554 88,339 114,866 112,756 96,958
Distribution
Program on
Indian
Reservation
(FDPIR)
ARRA FDPIR 3,712 1,367 0
Equipment Funds
The Emergency 139,832 140,000 189,936 250,000 247,994 247,500
Food Assistance
Program (TEFAP)
Commodities
American Samoa 4,795 5,219 5,204 7,006
ARRA American 964 1,021 1,028
Samoa Benefits
Program Access/ 24,026 23,816 14,852 27,009 38,368 25,792
Community Food
Project/CNMI/
Pilot Projects
Nutrition 72,013 72,508 72,416 70,934 69,482 69,066
Programs
Administration
(Allocation to
this program)
Other Program 895 2,726 3,918 703 377 377
Costs
-----------------------------------------------------------------------------------------------
Total Cost $34,818,187 $35,066,125 $39,554,437 $56,276,477 $71,061,319 $78,275,745
FTEs 683 631 613 612 591 618
-----------------------------------------------------------------------------------------------
Unit Costs:
SNAP (Total $1,236.28 $1,256.97 $1,324.50 $1,597.48 $1,703.50 $1,686.54
Annual Cost
per
Participant)
FDPIR (Total $887.65 $928.48 $1,024.98 $1,123.26 $1,077.93 $966.65
Annual Cost
per
Participant)
Performance 26.736 26.466 28.408 33.7 40.3 45.0
Measure:
Average monthly
SNAP
participation
(millions)

9. Eligibility Criteria
To qualify for SNAP, applicants must fill out an application and
submit it to the local office. Applicants must meet certain financial,
non-financial and citizenship requirements. Illegal immigrants are not
eligible for SNAP benefits.
To qualify, there is a gross income test of 130 percent of the
Federal poverty guidelines and a net income test of 100 percent of the
Federal poverty guidelines. SNAP allows for certain deductions from
gross income like housing and utility costs, child support, medical
expenses, or child-care costs to calculate net income. Households with
an elderly person or a person receiving certain types of disability
payments only have to meet the net income test.
There is also a resource test. Households may have $2,000 in
countable resources or $3,000 if at least one person is age 60 or older
or disabled. In SNAP, examples of countable resources would include
bank accounts. Certain resources are not counted, such as a home and
lot, the resources of people who receive Supplemental Security Income
(SSI), the resources of people who receive Temporary Assistance for
Needy Families (TANF), certain education savings accounts, and most
retirement and pension plans.
Households are also eligible for SNAP through categorical
eligibility in SSI, General Assistance, and TANF: 42 states have
adopted TANF broad-based categorical eligibility, a program
simplification measure allowing states to adjust the gross income test
up to 200 percent of poverty test and raise or eliminates the resource
test. States can change the TANF program that confers broad-based
categorical eligibility to exclude households that receive a large lump
sum payment or to create a resource limit of some amount.
In addition, applicants must also meet some non-financial
requirements, such as citizen/legal immigrant status and work
requirements in some cases. Generally, Able-Bodied Adults without
Dependents (ABAWDs) between 18 and 50 who do not have any dependent
children can get SNAP benefits only for 3 months in a 36 month period
if they do not work or participate in a workfare or employment and
training program other than job search. This requirement is waived in
some locations in accordance with unemployment rates and job
availability triggers determined by the Department of Labor. With some
exceptions, all adults participating in SNAP between 16 and 60 must
register for work, accept suitable employment, and take part in an
employment and training program to which they are referred by the local
office. Failure to comply with these requirements can result in
disqualification from the program.
Applicants must also provide verification such as pay stubs and
bank statements, along with their application. In addition, the
eligibility worker will conduct automated data matches with the Social
Security Administration and other organizations to verify information.
Benefits are provided at the household level. In SNAP, a household
is defined as either an individual living alone or a group of people
who live together and purchase and prepare meals together. The amount
of benefits, called an allotment, is based on the Thrifty Food Plan, a
low-cost model food plan that reflects current nutrition standards, the
nutrient content and cost of food and consumption patterns of low-
income families and varies with household size and net income. While
SNAP has uniform national benefit levels with cost-of-living
adjustments for outlying states and territories, allotment s vary with
household size and net income.

10. Utilization (Participation) Data
Supplemental Nutrition Assistance Program (SNAP)
National Level Average Monthly Participation
----------------------------------------------------------------------------------------------------------------
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
----------------------------------------------------------------------------------------------------------------
U.S. 25,602,975 26,524,597 26,293,437 28,200,022 33,463,212 40,266,867
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
SNAP is one of 15 nutrition assistance programs administered by
USDA's Food and Nutrition Service. Programs target the diverse needs of
different subgroups of low-income persons by providing supplemental
assistance through a variety of forms and settings.
The programs are designed to work together to form a nutrition
safety net to ensure that no American in need goes hungry. For example,
children from households receiving SNAP benefits or, alternatively, the
Food Distribution Program on Indian Reservations (FDPIR) are
categorically eligible to receive free meals at school through the
National School Lunch and School Breakfast programs without a separate
household application. This is done through direct certification, which
typically involves matching SNAP or FDPIR records against student
enrollment lists, either at the state or school district level.
12. Waste, Fraud and Abuse
SNAP has a demonstrated Quality Control system that has been in
effect since the 1970s. The system includes provisions for state
liabilities for sustained poor performance and bonuses for states that
excel. FNS takes seriously its responsibility to make sure that only
those families who are actually eligible for the program participate,
and that the correct amount of benefits is provided to them. Over the
past decade, FNS has made major strides to improve the accuracy of
SNAP's eligibility determination and benefit payment systems. In Fiscal
Year 2000, the error rate was 8.91 percent. The Fiscal Year 2010 error
rate was an all-time low of 3.81 percent, which is 57 percent less than
the Fiscal Year 2000 error rate. Similarly Payment errors are less than
half what they were 10 years ago, which has reduced improper payments
by $3.3 billion in 2010.
While recipient fraud undermines public confidence and jeopardizes
the ability of SNAP to serve the tens of millions of struggling
families who need it, the most recent data suggests that it is
relatively rare. FNS works through our state partners to investigate
recipient fraud and hold bad actors accountable, and recipients who
purposely commit fraud to get benefits are subject to disqualification.
In Fiscal Year 2010, states conducted 781,000 fraud investigations,
disqualified 44,408 individuals, and collected $287 million in
recipient claims. An additional $1.3 billion in delinquent SNAP
recipient claims has been collected since 1992 via the Treasury Offset
Program.
FNS recently sent a letter to all states to encourage them to be
more active and vigilant in the area of recipient trafficking. FNS is
in process of contacting each state to engage in a discussion about
doing more to promote integrity and remove bad actors from the program.
FNS will work with each state to develop new approaches to fraud
detection and prevention such as providing additional data to track and
investigate fraud by recipients and by looking at sensible procedural
changes and policy options.
The sale/purchase of SNAP benefits for cash is called trafficking,
an illegal activity punishable by criminal prosecution. Over the last
15 years, FNS has aggressively implemented a number of measures to
reduce the prevalence of trafficking in SNAP from about four percent
down to its current level of about one percent. FNS also continues to
work closely with its state and Federal partners to investigate and
prosecute trafficking.
Retailers found guilty of trafficking are referred to OIG for
consideration for criminal prosecution. If OIG accepts the case and the
store is criminally prosecuted, it may be subject to asset forfeiture
in addition to administrative penalties levied by FNS. If OIG declines
a case against a retailer found guilty of trafficking, FNS initiates
administrative action to permanently disqualify the retailer from
further SNAP participation. The retailer is barred from future SNAP
participation, including opening a new store in a different location.
If a retailer convicted of trafficking sells the store, they are
assessed a transfer of ownership civil money penalty. If they
participate in the Special Supplemental Nutrition Program for Women,
Infants, and Children, they are disqualified from that program as well.
13. Effect of Administrative PAYGO
See attached under ``Costs--Title XIX Treatment Facilities.''

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF TITLE I AND THE SURE PROGRAM)

----------

WEDNESDAY, JULY 27, 2011

Subcommittee on General Farm Commodities
and Risk Management,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300, Longworth House Office Building, Hon. K. Michael
Conaway [Chairman of the Subcommittee] presiding.
Members present: Representatives Conaway, Schmidt, Austin
Scott of Georgia, Crawford, Huelskamp, Ellmers, Gibson,
Hultgren, Hartzler, Schilling, Lucas (ex officio), Ribble,
Boswell, McIntyre, Walz, Kissell, McGovern, David Scott of
Georgia, Sewell, and Peterson (ex officio).
Staff present: Matt Schertz, Brandon Lipps, Bart Fischer,
Heather Vaughan, Tamara Hinton, Debbie Smith, Clark Ogilvie,
Anne Simmons, Liz Friedlander, John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE
IN CONGRESS FROM TEXAS

The Chairman. This hearing of the Subcommittee on General
Farm Commodities and Risk Management entitled, Agricultural
Program Audit: Examination of Title I and the SURE Program,
will come to order.
We have two witnesses here this morning, both relatively
new to the FSA top leadership, both of them bring long, long
credentials to their jobs. We have Bruce Nelson, who is now the
Administrator of the Farm Service Agency, U.S. Department of
Agriculture. We have the favorite son from Texas, Juan Garcia,
the Acting Deputy Administrator for Farm Programs at the Farm
Service Agency.
So gentlemen, welcome. Rather than making any kind of long
winded statement, I am going to recognize our Chairman of the
full Committee for his opening statement and then the Ranking
Member for his.
[The prepared statement of Mr. Conaway follows:]

Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
As you know, we are performing an extensive audit of all policies
under the jurisdiction of the House Agriculture Committee. Today, we
examine Title I of the farm bill, known as the Commodity Title, and
standing disaster assistance, commonly known as SURE.
Not long ago, this Subcommittee reviewed Federal Crop Insurance. We
know that without this public-private partnership, something as basic
as multiple peril crop insurance would be out of reach for U.S.
producers. That's something everybody can get their arms around and
appreciate.
Less obvious are the reasons behind a commodity title to the farm
bill and to standing disaster. People understand the production risks
producers face. But folks are inclined to ask, what is so unique about
the price risk and market volatility that producers face? Don't all of
us face this sort of thing?
Texas Tech University did a good job during the last farm bill of
helping people understand the market conditions U.S. producers face. I
would encourage each of my colleagues to get a copy of the ``Foreign
Subsidies and Tariffs Handbook'' to gain a better sense of the
distorted global markets in which our producers must compete. I can
assure you, the kind of dollars we are talking about here today pale by
comparison to what foreign countries, both developed and developing,
are providing their producers. In fact, U.S. producers receive only a
very basic level of support, and our markets are among the most open in
the world.
As an accountant, I never faced these distorted global markets. I
have never woken up one morning to learn that the U.S. has imposed an
embargo on American accountants doing work for clients living in the
former Soviet Union, causing a collapse in my prices. I never
encountered China turning on and off my access to clients in that
country. I've never had to fight for access to clients in countries
where the government has a single desk where it buys and sells all
accounting work. I never had a situation where the government was
buying my competitors their equipment for them. I never experienced a
price volatility where what I could charge a client one year was $100,
and the next year it was $20. And, I never had clients walk into my
office and tell me the prices I could charge. Are there risks in all
businesses? Absolutely. Businesses open and close every day. But few
are dealing with the incredible risks our producers face.
The question for me, then, is not whether we need a farm policy but
what it should look like, and how to make it the most effective not
only for the producers but also for the taxpayer. Agriculture and farm
policy are too important to our economy and jobs to short shrift.
President Reagan recognized this in the mid 1980s when he initiated the
largest ad hoc effort in U.S. history to stop the farm financial
crisis. A decade later, Congress stepped in to address another farm
crisis. These ad hoc efforts were very expensive. So, having policies
in place to not only deal with a crisis but hopefully prevent one is
the key to being cost-effective for taxpayers and producers.
There are a few guiding principles that I will apply when working
with colleagues to develop the farm policy provisions of the 2012 Farm
Bill and I offer them here to help facilitate a good conversation in
this audit.

(1) Does the policy undermine Federal Crop Insurance?

(2) Is the policy bankable to the producer? In other words, does
the policy mean anything to the lender?

(3) Is the policy tailored to producer risk?

(4) Are the crops covered under Title I treated equitably under the
policy?

(5) Can producers--and their lenders--understand the policy?

With finite resources, we need to be wise in how we invest in U.S.
farm policy. These are some basic principles we can apply to make sure
this happens.
With that, I yield to my friend, the Ranking Member, Mr. Boswell,
for any opening statement he may have.

The Chairman. Mr. Lucas.

OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA

Mr. Lucas. Good morning and thank you, Chairman Conaway and
Ranking Member Boswell, for holding this hearing. I would like
to thank Bruce Nelson and Juan Garcia for joining us from the
Farm Service Agency.
Today's hearing is the eighth audit of farm programs
conducted by the Agriculture Committee's Subcommittees. We have
evaluated everything from conservation to nutrition assistance
so far. We gathered information about which programs are most
effective and which can be streamlined. Having these facts on
hand will help us make difficult decisions when we begin
developing the next farm bill. Each of those audits was
important in their own right, but I believe today's audit of
Title I's programs and disaster assistance is particular
significant.
Along with crop insurance, Title I programs form the very
fabric of our farm safety net. They ensure that dramatic swings
in commodities prices and volatile weather don't put our
farmers and ranchers out of business. As a rancher I understand
how difficult it is for producers to invest in a crop and see
any hope of profit vanish because of factors beyond their
control.
Not only are producers engaging in a risky industry, but
they have to significantly leverage their assets to do so.
Farmers and ranchers borrow more money each year than most
Americans will borrow in a lifetime. And in addition to the
high personal risk and questionable returns farmers accept as
part of doing business, they also put in the hard labor every
day.
I can tell you in these temperatures every chore is that
much harder. And while we can avoid the heat here in Washington
by crossing between our offices in the Capitol in air
conditioned tunnels, our farmers and ranchers have no such
luxury. There are no tunnels out to the pasture.
That is why I am so grateful to the men and women who
choose farming as a career. They work hard every day, braving
the uncertainties of weather and commodity markets to produce
high quality food for Americans and consumers around the world.
While they do the hard work of producing our food, we have
to do our part to support them. Without a safety net, a few bad
seasons can put a farm out of business. When we lose that
source of production, we don't usually get it back. So maybe
instead of speaking about this as a farm safety net, we need to
start calling it a food safety net. Perhaps that will get the
message out that commodity support keeps farmers in business,
which keeps food on our plates. And that is the message that
seems to be getting lost.
When I talk to farmers and ranchers I hear a constant
refrain, we are not asking for a handout, we just need a floor
in place when the bottom drops out. That is what crop insurance
and Title I programs provide, a floor, a safety net for food
production.
So when opponents of farm policy start talking about the
enormous amount of money that can be saved by eliminating this
safety net, and they truly believe it is an enormous amount of
money, I wonder what numbers they are using. The cost of losing
food production surely outweighs the cost of a safety net,
especially when you consider that many Title I programs don't
kick in until prices fall below a set trigger.
I would like to get one thing straight right off the bat.
There aren't enormous savings to be found from cutting farm
programs. They comprise less than \1/2\ of 1 percent of the
Federal budget. That is only 50 cents out of every $100.
Now these are difficult times and the agriculture community
is going to have to accept budget cuts. We don't believe that
we should take a disproportionate hit. We are prepared to
reduce our spending, however, and these audits help us
determine the best places to trim our budget and streamline
programs. We are here to take an honest look at the Title I
programs to see how they are working in the countryside. Are
they the helping one group of producers over another? Are they
more effective in certain regions? Is there duplication?
We need to evaluate the new programs from the 2008 Farm
Bill. For instance, are there ways to improve the ACRE program.
I don't believe the SURE Program has worked the way most of us
hoped it would. And it does not have a budgetary baseline once
the 2008 Farm Bill expires. So we need to consider how that
fits in with both our budget and our safety net.
We have to look at our legacy programs, too. Should the
three-legged stool of direct payments, and the countercyclical
programs and marketing loan assistance be updated to reflect
the new trends in prices? I think we also need to look at the
repercussions of eliminating programs. Do we eliminate all
incentives for producers to participate? And then in turn when
they do opt out do we lose the conservation compliance that
comes with program participation? We need to consider the
potential consequences of any program changes.
I am pleased that Mr. Nelson and Mr. Garcia are here to
answer all of these questions. Understanding the true cost and
benefits of our Title I programs will help us develop a better
farm bill moving forward.
I look forward to your testimony, gentlemen, and I thank
you once again for being here, and yield back the balance of my
time, Mr. Chairman.
[The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress
from Oklahoma
Good morning. I'd like to thank Chairman Conaway and Ranking Member
Boswell for holding this hearing. And I'd like to thank Bruce Nelson
and Juan Garcia for joining us from the Farm Service Agency.
Today's hearing is the eight audit of farm programs conducted by
the Agriculture Committee's Subcommittees.
We've evaluated everything from conservation to nutrition
assistance so far. We gathered information about which programs are
most effective and which can be streamlined. Having these facts on hand
will help us make difficult decisions when we begin developing the next
farm bill.
Each of those audits was important in their own right, but I
believe today's audit of Title I programs and disaster assistance is
particularly significant.
Along with crop insurance, Title I programs form the very fabric of
our farm safety net. They ensure that dramatic swings in commodity
prices and volatile weather don't put our farmers and ranchers out of
business.
As a rancher, I understand how difficult it is for producers to
invest in a crop and see any hope of profit vanish because of factors
beyond their control.
Not only are producers engaging in a risky industry, but they have
to significantly leverage their assets to do so. Farmers and ranchers
borrow more money each year than most Americans will borrow in a
lifetime.
In addition to the high personal risk and questionable returns
farmers accept as part of doing business, they also put in hard labor
every day.
I can tell you--in these temperatures every chore is that much
harder. And while we can avoid the heat here in Washington by crossing
between our offices and the Capitol in air conditioned tunnels, our
farmers and ranchers have no such luxury. There are no tunnels out to
the pasture.
That's why I'm so grateful to the men and women who choose farming
as a career. They work hard every day, braving the uncertainties of
weather and commodity markets to produce high quality food for
Americans and consumers around the world.
While they do the hard work of producing our food, we have to do
our part to support them. Without a safety net, a few bad seasons can
put a farm out of business. When we lose that source of production, we
don't usually get it back.
So maybe instead of speaking about this as a farm safety net, we
need to start calling it a food safety net. Perhaps that will get the
message out that commodity support keeps farmers in business, which
keeps food on our plates.
That message seems to be getting lost.
When I talk to farmers and ranchers, I hear a constant refrain:
we're not asking for a handout; we just need a floor in place for when
the bottom drops out.
That's what crop insurance and Title I programs provide: a floor. A
safety net for food production.
So when opponents of farm policy start talking about the
``enormous'' amount of money that could be saved by eliminating this
safety net, I wonder what numbers they're using.
The costs of losing food production surely outweigh the costs of a
safety net. Especially when you consider that many Title I programs
don't kick in until prices fall below a set trigger.
I'd also like to get one thing straight right off the bat: there
aren't enormous savings to be found from cutting farm programs. They
comprise less than \1/2\ of 1 percent of the Federal budget. That's
only 50 cents out of every $100.
Now, these are difficult times, and the agricultural community is
going to have to accept budget cuts. But we don't believe that we
should take a disproportional hit.
We are prepared to reduce our spending, however, and these audits
help us determine the best places to trim our budget and streamline
programs.
We are here to take an honest look at the Title I programs to see
how they are working in the countryside. Are they helping one group of
producers over another? Are they more effective in certain regions? Is
there duplication?
We need to evaluate the new programs from the 2008 Farm Bill. For
instance, are there ways to improve the ACRE program?
I don't believe the SURE program has worked the way most of us
hoped it would. And it does not have a budgetary baseline once the 2008
Farm Bill expires. So we need to consider how that fits in to both our
budget and our safety net.
And we have to look at our legacy programs too. Should the three-
legged stool of direct payments, the countercyclical program, and
marketing loan assistance be updated to reflect the new trends in
prices?
I think we also need to look at the repercussions of eliminating
programs. Do we eliminate all incentives for producers to participate
and in turn when they do opt out, do we lose the conservation
compliance that comes with program participation. We need to consider
the potential consequences of any program changes.
I'm pleased that we have Mr. Nelson and Mr. Garcia here to help
answer all of these questions.
Understanding the true costs and benefits of our Title I programs
will help us develop a better farm bill moving forward.
I look forward to your testimony, and I thank you once again for
being here.

The Chairman. Thank you, Mr. Chairman. I now recognize the
Ranking Member for an opening statement.

OPENING STATEMENT OF HON. LEONARD L. BOSWELL, A REPRESENTATIVE
IN CONGRESS FROM IOWA

Mr. Boswell. Thank you, Mr. Chairman, and I appreciate you
having this hearing today. I want to thank everyone for joining
us as we review our farm safety net system. I would especially
like to thank our witnesses, Mr. Nelson and Mr. Garcia.
I am one of those around this place who knows my way
through the FSA office. There have been times when we went
through what we refer to in the farm business, and I think the
Chairman has been there too, where we have had to remember the
farm crisis of the late 1970s, early 1980s. And wow, I
personally know our director in Iowa, John Whitaker and I thank
you for his service and for selecting him. He is doing an
outstanding job and has a great crew.
As a farmer, as I said I have always considered myself an
eternal optimist, I used that word once or twice. You kind of
have to be that way to do what Frank Lucas and Leonard Boswell
do because you have to believe. No matter how hot it gets or
how hard it rains or how dry it gets, we hope as much as we can
that it will get better and our crop will grow and our
livestock will survive and remain healthy.
Unfortunately, this is not always the case. Every now and
then because of Mother Nature, the farmers and ranchers who
feed our nation feel painful consequences to their operation,
whether a storm tears down a grain bin or the sun wears down
our livestock and even in some cases not only stops the
efficiency of the feeding but causes death. I had farmers
yesterday come into my office; turkey people as you know, have
lost thousands of birds and it is not because they did
something wrong. So if they are not protected, it has the
impact to dramatically increase the cost of food.
The heat risks our producers face are happening before us
across the nation. The news from the past week has shown
livestock losses in Virginia all the way to Minnesota as well
as my home State of Iowa and many other places. While those
losses attribute to the need for a safety net, the ongoing farm
income is also affected with this kind of weather. Unable to
cool down, cattle feed less and gain less and in many cases
die. As well, poor conditions cause a dairy cow to produce
less, and after years of investment these issues skim profits
and production off of each and every animal every day.
A big reason our producers succeed in an industry that
relies on uncontrollable forces of rain, the sun, the soil, the
market is because we provide a support system. And in return,
and I think Chairman Lucas just pointed it out, and I know that
Chairman Conaway has many times, we give the Americans the most
abundant, safe and affordable food on this Earth, because we
all invest in it. Whether you live in downtown New York or LA
or Miami, we invest in it and that is what we get. And we are
constantly from the Agriculture Committee telling our
colleagues that are in these positions that you have an
investment, you have a vital concern. This is not something you
are just handing out to the farmers and ranchers. It is to
protect the safe, affordable, abundant food supply better than
any place in the world. I am constantly sharing that because we
have a vested interest in this.
Programs in Title I, the farm bill, like ACRE, Livestock
Indemnity, and this is what the turkey farmers were talking
about yesterday, as you already know, and other disaster
assistance programs are critical to maintaining our food supply
and its affordability.
This Committee under the leadership of Chairman Lucas and
Chairman Conaway is dedicated to working to ensure that policy
in D.C. is practical for farmers and ranchers across America.
So thank you for your being here. And your testimony will
be essential for us to move forward on the next farm bill I am
sure. Thank you very much. I yield back.
[The prepared statement of Mr. Boswell follows:]

Prepared Statement of Hon. Leonard L. Boswell, a Representative in
Congress from Iowa
Thank you Chairman Conaway. I would like to thank everyone for
joining us here today as we review our farm safety net system. I would
especially like to thank our witnesses. Mr. Nelson and Mr. Garcia, my
colleagues and I look forward to hearing from you and to having the
opportunity to review these programs with you.
As a farmer, I have always considered myself an eternal optimist.
No matter how hot it gets or how hard it rains, I hope as much as I can
that it will get better--that my crop will keep, and that my livestock
will survive and remain healthy.
Unfortunately, that is not always the case. Every now and then,
because of Mother Nature, the farmers and ranchers who feed our nation
face painful ramifications to their operation. Whether a storm tears
down a grain bin or the sun wears down our livestock the inputs and
investments, if not protected, have the ability to dramatically
increase the cost of food.
The heat risks our producers face are happening before us across
our nation. News from the past week has shown livestock losses in
Virginia all the way to Minnesota, as well as my home State of Iowa.
While these losses attribute to the need for a safety net, the ongoing
farm income is also affected by this kind of weather. Unable to cool
down, cattle feed less and gain less. As well, poor conditions cause a
dairy cow to produce less. After years of investments these issues skim
profit and production off of each animal every day.
A big reason our producers succeed in an industry that relies on
uncontrollable forces--the rain, sun, and soil--is because we provide a
support system. In return, they have given Americans the most abundant,
safe, and affordable food on the planet. Programs in Title I of the
farm bill, like ACRE, Livestock Indemnity, and other disaster
assistance programs are critical to maintaining our food supply and its
affordability.
Our Committee is dedicated to working to ensure that policy in D.C.
is practical for the farmers and ranchers across America. Thank you
again, your testimony will be essential for us as we continue to move
towards the next farm bill.

The Chairman. I thank the gentleman. I will make a couple
of comments here. Not long ago this Subcommittee reviewed the
Federal Crop Insurance Program. We know that without this
public-private partnership something as basic as multi-peril
crop insurance will be out of reach for most U.S. producers.
That is something that everybody can get their arms around and
appreciate.
Less obvious, however, are the reasons behind a commodity
title to the farm bill and to standing disaster. People
understand the production risks producers face, but folks are
inclined to ask what is so unique about price risk and market
volatility that producers face? Don't all of our small business
owners face these sorts of things?
Texas Tech did a good job during the last farm bill of
helping people understand the market conditions U.S. producers
face. I would encourage each of my colleagues to get a copy of
the Foreign Crop Subsidies and Tariffs handbook to gain a
better understanding and sense of the distorted global markets
in which our producers must compete. I can assure you the kind
of dollars we are talking about here today pale by comparison
to what foreign countries, both developed and developing, are
providing their producers. In fact U.S. producers receive only
a very basic level of support and our markets are among the
most open in the world. As an accountant, I never faced these
distorted global markets.
I never woke up one morning to learn that the U.S. has
imposed an embargo on American accountants doing work for
clients living in the former Soviet Union causing a collapse in
my prices. I never encountered China turning off or on my
access to clients in that country. I have never had to fight
for access to clients in countries where the government has a
single desk where it buys and sells all accounting work. I
never had a situation where the government was buying my
competitors their equipment for them. And I never experienced a
price volatility where I could charge a client one year $100
and the next $20. I rarely had a client that big. You boys are
a tough audience. I never had a client walk into my office and
tell me the prices they would charge.
Are there risks in all businesses? Absolutely. Businesses
open and close every day, but few are dealing with the
incredible risks our producers face. The question for me is not
whether to have a farm policy but what it should look like and
how to make it the most effective, not only for producers but
also for our taxpayers.
Agriculture and farm policy are too important to our
economy and jobs to short shrift. President Reagan recognized
this in the mid-eighties when he initiated the largest ad hoc
effort in U.S. history to stop the farm financial crisis. A
decade later Congress stepped in to address another farm
crisis. These ad hoc efforts are very expensive, so having
policies in place to not only deal with the crisis, but
hopefully prevent one is the key to being cost effective for
taxpayers and producers.
There are few guiding principles that I would like to apply
when our colleagues and I develop the farm policy provisions
for the 2012 Farm Bill. One, does the policy undermine crop
insurance? Two, is the policy bankable to the banker--to the
producer? In other words, does the policy mean anything to a
lender? Is the policy tailored to producer risks? Are crops
covered under Title I treated equitably under the policy? Can
producers and their lenders understand the policy? With finite
resources we need to make wise decisions as we invest in U.S.
farm policy. These will be some of the guiding principles that
I hope we can use.
The Chairman. The chair would request that other Members
submit their opening statements for the record so that the
witnesses may begin their testimony and to ensure there is
ample time for questions.
[The prepared statements of Mr. Peterson and Mr. McGovern
follow:]

Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Thank you Chairman Conaway and Ranking Member Boswell for holding
today's hearing and continuing this Committee's agricultural program
audits in preparation for the next farm bill. This is the eighth audit
hearing, focusing on Title I and the SURE program.
I have said this many times, but the budget is going to be our
biggest challenge when we sit down to write a new farm bill. There is
no doubt that we need to get our fiscal house in order. I have said
repeatedly that agriculture can, and will, do its part. My concern is
that we are being asked to cut agriculture spending three to four times
more than other areas of the budget.
While only a small portion of farm bill spending comes from Title
I, folks outside of agriculture have repeatedly targeted these programs
for cuts, arguing that high commodity prices mean we can dismantle the
farm safety net. We've been down this road before. In 1995 and 1996, we
had high prices and a new Congressional majority who didn't like farm
programs and wanted to cut the deficit. We passed a farm bill, Freedom
to Farm, which saved a little money right away but we ended up spending
a lot more when prices collapsed. The environment looks much similar
now. These prices are not going to last forever and if we don't have an
adequate safety net in place when prices fall we could screw up the one
part of the economy that's actually working.
One Title I program that is of particular concern to my
constituents in Minnesota is the sugar program. With so much focus on
the budget, it is important to note that this is a no cost program. The
sugar program is working as it is supposed to, it is administered well
and it is something we should not mess with.
Of course, today's hearing is happening in a very uncertain budget
climate. At this point, there is a lot of speculation about what will
ultimately happen. I am hopeful that any cuts to agriculture are
reasonable and fair compared to other parts of the budget.
Again, I thank the Chairman for holding today's hearing and look
forward to hearing from our witnesses.
______

Prepared Statement of Hon. James P. McGovern, a Representative in
Congress from Massachusetts
Mr. Nelson, I regret not being able to stay longer at the July 27th
Subcommittee hearing but I had to leave early due to a scheduling
conflict. I would like to make a few points that I feel are important
to keep in mind as we move forward with our work on the next farm bill.
I have several questions for you and I respectfully request a written
response.
On July 21st, I participated in the Subcommittee on Nutrition and
Horticulture's audit hearing on Title IV Nutrition Programs. One area
of discussion was eligibility requirements for receiving SNAP benefits,
including income and asset limits. While I understand SNAP and other
nutrition programs are administered by the Food and Nutrition Service,
I am concerned that there is more focus on SNAP benefits and not enough
on who is receiving farm subsidies.

Can you tell me how much the average farmer earns per year?

What is the maximum amount that a farmer can make and still
be eligible for a Title I programs?

Can you tell me what share of the annual taxable income does
a direct payment constitute for the average farmer?

Is it accurate to say that larger, wealthier farmers tend to
receive larger benefits from Title I?

Just for the sake of comparison, the most a family of four can make
to be eligible to receive benefits under the SNAP program is $28,668.
The average SNAP benefit is $2,724 per household per year.
Next, I'd like to get a better sense of how your agency measures
the accuracy of the benefits that you are paying.
Over the course of the last few months, many of my colleagues who
serve on this Committee continue to falsely claim that fraud, waste and
abuse is rampant in the SNAP program. In fact, many of my colleagues
continue to misstate the level of overpayments to SNAP recipients. It's
important to correct the false statements and to state for the record
that SNAP is not only one of the most efficiently run programs at USDA,
is one of the most efficiently run programs in the federal government.
In fact, SNAP error rates are at historic lows and are at levels unseen
in both the public and private sectors.
For example, in terms of SNAP oversight and measuring the accuracy
of benefits paid, my understanding is that the states and federal
government sample approximately 50,000 SNAP cases each year in order to
develop a nationally and state-level representative sample of the
caseload. Each case is reviewed by a state staffer who reviews every
document in the case record, independent information about clients and
re-interviews the SNAP client. The Federal Government then re-reviews a
sample of the state sample in order to verify its accuracy. All states
are measured against the same standard making it possible to compare
states to each other and longitudinally. Errors are sorted into
different categories: client caused and household caused. FNS also
knows which aspect of the program was the source of the error, such as
inaccurately calculating income or a certain deduction. Of course, this
is just the quality control check at the end of a lengthy application
and eligibility review process that thoroughly scrutinizes each
household's eligibility.

Would you please provide more information about how FSA
measures the accuracy of Title I payments? I'd like to know how
many cases are sampled, what level of review they undergo,
whether there is a statistical audit of the accuracy, and where
that information is published.

What are the error rates in farm payments/subsides--i.e.,
how many payments go to deceased farmers?

What is the level of overpayments going to farmers?

As we continue moving towards a reauthorization of the farm bill,
it's important for Members and the public to know that there is a vast
monetary difference in the amount of money going to wealthy farmers
versus a poor family of four. It's critical that we not demagogue SNAP
simply because it's doing the job it was designed to do and, at the
same time, turn a blind eye to the way our farm payment system is
structured.
Thank you for taking the time to review my questions and I look
forward to working with you and the FSA over the next several months.

The Chairman. And with that, I now turn to our witness for
his opening statement. Bruce Nelson, Administrator for Farm
Service Agency, the floor is yours, sir.

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY,
U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED
BY JUAN M. GARCIA, ACTING DEPUTY ADMINISTRATOR FOR FARM
PROGRAMS, FSA, USDA

Mr. Nelson. Mr. Chairman, Ranking Member Boswell, and
Members of the Subcommittee, thank you for the opportunity to
discuss Title I and disaster assistance provisions associated
with the 2008 Farm Bill. My name is Bruce Nelson. I am the
Administrator of the Farm Service Agency. And I am joined here
today by FSA Acting Deputy Administrator for Farm Programs,
Juan Garcia. I would like to briefly address our efforts toward
efficient and accurate implementation of these important
programs.
America's farmers and ranchers are the best in the world,
providing food, fiber and fuel we depend on to grow our nation.
Farmers drive our national economy and they are the nation's
leading stewards of the environment. No matter where we live in
this country all of us have a stake in the livelihoods of
farmers.
A farmer faces many risks inherent to this work. Prices can
plummet or a natural disaster can destroy a farm. The farm
safety net exists to help offset this uncertainty and when
misfortune strikes to help a farmer get back on their feet.
The Title I and disaster programs authorized under the farm
bill, along with the farm loan programs I discussed in a recent
hearing before your colleagues, are the primary tools that we
use to help at FSA. FSA implements a wide variety of price
support programs authorized under the 2008 Farm Bill. I
included an update on these programs in my written testimony.
One program of note is the Average Crop Revenue Election
Program. We have worked hard to educate producers regarding
ACRE, which is not only new but requires producers to do a good
deal of background research. Those who have participated in a
direct payment program for many years had to make a complex
choice on ACRE, which was a major reason we saw modest sign-up
numbers.
These price support programs affect a very large number of
producers. Last year FSA made seven million separate payments
on Title I. That means one of our biggest responsibilities is
to be sure we make payments quickly and accurately, and I take
that responsibility very seriously.
FSA has a variety of mechanisms in place to prevent
improper or inaccurate payments. Even one improper payment is
one too many and when we identify a potential error we address
it.
The disaster programs have also proven to be a very
significant part of the safety net laid out in the 2008 Farm
Bill. I am pleased to report that over the past 2 years FSA has
fully implemented these disaster programs and delivered them in
the field largely due to the commitment of our field staff and
explaining and calculating complex new programs. Together with
the 2008 Recovery Act, these programs have delivered more than
$3 billion in assistance to more than 200,000 farmers and
ranchers.
Unlike the Title I programs and most other farm bill
provisions FSA has implemented, authorization for these five
major disaster programs is set to expire at the end of this
fiscal year.
Our biggest challenge in implementing both disaster and
price support programs has been our aging IT infrastructure. We
are very focused on the modernization and innovation of the
delivery of agricultural systems program, our effort to
streamline farm program delivery. We are complementing this
work with an initiative to reduce crop reporting for farmers.
Recently when I testified regarding farm loan programs I
had the opportunity to point out the successes we have had with
modernizing our farm loan delivery. Modernization of our farm
programs as you know is just as important; it gives us the
opportunity to serve farmers better and faster using new tools
to create a more efficient government agency. I am committed to
seeing these successes carried through on-farm perhaps as they
have been with farm loans.
Mr. Chairman, as we move forward toward development of the
next farm bill I believe it is important that we approach this
new legislation with an eye toward making a difference across
rural America, for letting the needs of the American farmer
drive our priorities.
I would like to echo Secretary Vilsack's sentiments
regarding our needs for the next farm bill. We stand ready to
innovate and adapt in implementing a farm bill that best
addresses current challenges in rural America and needs faced
by our agricultural producers. I would ask you and your
colleagues to identify priorities and let us know what those
priorities are in the next farm bill. And I would ask that you
give the USDA the flexibility and the resources to generate
results.
Finally, I ask that you work closely with FSA and with USDA
to make sure we are accountable for getting the job done. My
team and I at FSA look forward to working with you as this
process takes hold.
Mr. Chairman, this concludes my statement, and I would be
happy to try to provide answers to your questions now or any
time in the future. Thank you very much.
[The prepared statement of Mr. Nelson follows:]

Prepared Statement of Bruce Nelson, Administrator, Farm Service Agency,
U.S. Department of Agriculture, Washington, D.C.
Mr. Chairman, Ranking Member, and Members of the Subcommittee,
thank you for the opportunity to discuss Title I and disaster
assistance provisions associated with the Food, Conservation, and
Energy Act of 2008 (2008 Farm Bill). These programs, together with the
Federal crop insurance program, form the backbone of the farm safety
net. This hearing provides an opportunity to reflect on the performance
of these programs under the 2008 Farm Bill, while thinking ahead to the
upcoming 2012 debate.
Title I is very broad and covers not only our ``traditional''
commodity programs, but also the new Average Crop Revenue Election
(ACRE) program, as well as dairy, sugar, and many other provisions.
Disaster assistance programs are covered in Titles XII and XV and
complement the Title I provisions. After discussing our experience with
these programs, I would like to address our efforts to modernize and
ensure high-quality, cost-effective program delivery, which is
benefiting producers and streamlining our internal operations.
Direct and Counter-Cyclical Payment Program
The Farm Service Agency (FSA) operates the direct and
countercyclical payment program, which was first authorized by the 2002
Farm Bill. Direct payments are made to producers with program crop base
acres, and do not depend on the crop that is currently planted or on
current yields or prices. A producer's payment is based on the farm's
base acres associated with the crop, the farm's (fixed) program yield,
and a fixed national payment rate established in statute. In total, FSA
makes approximately $4.9 billion in direct payments annually,
accounting for about 80 percent of Title I outlays in Fiscal Year (FY)
2011.
Like direct payments, countercyclical payments depend on base
acres, but are made when market prices drop to levels that trigger
payments. With grain and oilseed market prices at record, or near-
record levels, countercyclical payments have been modest, and for FY
2010 and 2011, only producers with cotton and peanut base acres have
received benefit. FSA will issue about $131.8 million in
countercyclical payments in FY 2011. In comparison, countercyclical
payments totaled $4.4 billion in FY 2006 and $3.2 billion in FY 2007,
when market prices averaged significantly lower.
Average Crop Revenue Election (ACRE) Program
ACRE was first authorized by the 2008 Farm Bill, and is based on
revenue risk rather than price risk. It provides an alternative to
traditional farm programs and depends on both state- and farm-level
triggers. Both the state-level and farm-level triggers--which are in
turn based on historical average yields and national average market
prices--must be met before a producer receives a payment. Because it is
an alternative to traditional programs, an ACRE participant forgoes
countercyclical payments and incurs a 20 percent reduction in direct
payments and a 30 percent reduction in marketing assistance loan rates
for all commodities on the ACRE-enrolled farm. Once a farm is enrolled
in ACRE, that farm is required to stay enrolled in ACRE throughout the
duration of the 2008 Farm Bill (through 2012).
Overall, ACRE participation has been strongest for corn, soybeans
and wheat. In 2009, about 33 million acres of base acres were enrolled,
including 13 million acres (16 percent) of corn base (over half of that
total is in Illinois, Iowa, and Nebraska), and about 8 million acres
(15 percent) of soybean base (Illinois and Iowa were again top states).
Nearly 10 million acres of wheat base were enrolled in ACRE, about 13
percent of the total enrolled wheat base. For wheat, expected net
returns, combined with strong educational efforts, improved ACRE
participation for the crop, particularly in Oklahoma (2.5 million acres
enrolled) and North Dakota (1.6 million acres).
The bulk of enrollment occurred in 2009, the first year of the
program. An additional 1.2 million acres of base and 6,000 farms (not
in the program in 2009) were enrolled in ACRE in 2010. In 2011, about
2,600 more farms have enrolled in ACRE.
Several reasons likely explain the relatively modest interest in
this new program. ACRE requires producers to do a significant amount of
``homework'' to understand how it would work for their farms. Many
producers have been participating in some form of direct payment since
1996 with Production Flexibility Contract payments, and later the
direct payment program. This is further complicated by operators'
having to explain to landlords and, at times, bankers, how expected
ACRE net returns compare to net returns under the traditional programs.
According to statute, ACRE participation is locked in for a farm
throughout the remainder of the 2008 Farm Bill once that farm is
enrolled in ACRE. Because of market uncertainties and without a clear
understanding of this new program, most producers hesitated to commit
their farms to a multi-year ACRE agreement. Basically, producers found
themselves trading off the certainty of existing direct payments with
the uncertainty of ACRE payouts.
For the 2009 crop year, about $446.6 million in ACRE payments were
made. Wheat producers (who experienced both low prices and yield
losses) accounted for about $310 million of that total, with an
estimated $100 million paid for corn, $20 million for barley, $10
million for sunflower seed, and small amounts for several other crops.
Oklahoma, Washington, Illinois, South Dakota, North Dakota, and Idaho
received about 80 percent of the payments.
Because the magnitude of ACRE payments are determined by season
average prices in any given year, there is a significant time lag
between the start of a crop year and the issuance of payments. Further,
the 2008 Farm Bill mandates that payments cannot be made until after
October 1 of the calendar year following the calendar year of the
harvest. We expect 2010 crop year payments to total about $24 million
in FY 2012.
Marketing Assistance Loans
Marketing assistance loans provide producers with interim financing
at harvest time to meet cash flow needs without having to sell their
commodities. The harvested commodity is used as collateral for the
loan. The value of marketing assistance loans made totaled about $7
billion in FY 2011. Market loan repayment provisions specify, under
certain circumstances, that producers may repay loans at less than
principal plus accrued interest and other charges.
Alternatively, producers can apply for a loan deficiency payment in
lieu of securing a loan. Similar to the situation for countercyclical
payments, high market prices have greatly reduced marketing loan
benefits, which are expected to total less than $50 million in FY 2011.
Ensuring Compliance with Eligibility Requirements
Each year, FSA makes about seven million separate payments to
farmers and ranchers. The vast majority of payments are made quickly
and accurately. Over the past 2 years, FSA has taken a variety of
actions to help identify and further limit the occurrence of improper
payments.
The 2008 Farm Bill redefined eligibility requirements for DCP,
ACRE, and certain other programs by lowering the average gross income
(AGI) limit to $750,000 for on-farm income and to $500,000 for non-farm
income from the previous cap of $2.5 million for all income. To ensure
that only those participants who comply with AGI requirements receive
specified farm program benefits, FSA entered into an agreement with the
Internal Revenue Service (IRS). With the written consent of the program
participant, the IRS performs a series of calculations using tax return
data to determine a producer's average AGI values and compares those
values with the AGI limits. IRS then provides to FSA a report that
indicates whether or not the participant appears to meet or exceed each
of the average AGI limitations. AGI compliance reviews for FY 2009 and
2010 are still underway and we look forward to being able to soon
verify that producers are fully compliant with the law.
The 2008 Farm Bill also requires that FSA reconcile data with the
Social Security Administration (SSA) to address concerns regarding
payments to deceased persons. Before the 2008 Farm Bill was enacted,
FSA started a data-matching process that compares program payment
information to the SSA ``death master file,'' starting with payments
issued in FY 2007. Review of the data-match report and information on
file in FSA offices revealed that 121,527 payments in FY 2007, totaling
$108 million, were disbursed on behalf of deceased persons. However,
relatively few of these payments warranted further action. The vast
majority of the payments identified as issued to deceased producers
were in fact earned or requested prior to death. If a producer is
enrolled in a program and is due a payment and the producer passes away
during that year, the payment will be issued to the estate of the
deceased person. USDA issued a regulation in late 2010 making explicit
that payments will not be made on behalf of a deceased person unless
the payment was earned by that person while alive and was requested by
that person or their authorized representative before or after their
death.
Planting Flexibility, 10-Acre Base Provisions
We recently delivered two reports to Congress mandated by the 2008
Farm Bill--one on the impacts of the Planting Transferability Pilot
Program (PTPP) and the other on the effects of provisions eliminating
payments to FSA farms with 10 or fewer base acres. The Economic
Research Service provided substantial assistance with these reports,
which we greatly appreciate.
PTPP, first authorized in the 2008 Farm Bill, relaxes the planting
restrictions, in certain FSA programs, placed on vegetables destined
for processing, and is available in seven upper Midwestern States. PTPP
emerged in response to claims by Midwestern vegetable processors that
access to vegetables used for producing pickles, tomato paste, and
canned beans, among other foods, has been constrained by statutory
planting restrictions. These statutory fruit and vegetable planting
restrictions date back to 1990, and were put in place to address
concerns expressed by the produce sector that payments to farms with
base acres planted to fruits and vegetables could lead to a significant
decline in prices, which would be unfair to a sector that received
relatively modest government support. Prior to PTPP, fruit and
vegetables could be grown on base acreage if the farm has a history of
planting fruit and vegetables. In these cases, payments are reduced
acre-for-acre for each acre of fruit and vegetables planted. PTPP
places farms with no history of planting fruit and vegetables on the
same footing as those with a planting history for the select processing
vegetables. Without PTPP, participating farms with no planting history
would receive a far greater penalty.
FSA data for 2009 indicate that 10,215 acres were planted under
PTPP, about 14 percent of the 75,000 allowable acres in the statute and
a small share of total processing vegetable acreage. One hundred and
fifty-five farms participated, with Illinois, Indiana, and Minnesota
accounting for approximately 85 percent of the farms and acres. Several
reasons explain the relatively low participation. Stagnant market
demand and producers' flexibility to expand processing vegetable
production without PTPP are major reasons. For growers to expand
acreage, processors must offer attractive contract prices. Growers and
processors, though, are very well aware that long-run demand for
processing vegetables is stagnant or declining, and that net returns to
other crops are often more attractive. Even if markets were more
favorable, availability of non-base acres and a producer's prior
vegetable planting history on base acres often provide sufficient
acreage for expanded plantings.
Regarding the 10-acre base (base-10) analysis, the 2008 Farm Bill
eliminates DCP and ACRE payments to FSA farms with 10 or fewer base
acres. Farms classified as ``limited resource'' and ``socially
disadvantaged'' are exempt from this provision. About 371,000 FSA
farms, out of 2.2 million farms with base acres, became ineligible for
payments as a result of the provision. The dollar amount of payments
prohibited was $29.1 million, compared to approximately $5.9 billion
total DCP and ACRE payments in 2009, since the affected farms control
only 1.6 million, or 0.6 percent, of total base acres. However, the
actual savings was likely smaller, since not all operators of FSA farms
enroll in commodity programs in a given year. In 2008, prior to
implementation of the provision, just 40 percent of base-10 FSA farms
enrolled in the DCP program. Operators affected by the provision would
forgo an average of $79 per farm in 2009, compared with the average
DCP/ACRE payment across all FSA farms of $2,620. For farmers choosing
not to enroll, the transaction cost of enrolling may outweigh the
benefits.
Applying a 40 percent enrollment rate to 2009 data, there are an
estimated 148,400 farms who no longer receive $11.7 million in
payments. The administrative cost savings are another estimated $1.5
million, for a total savings of $13.2 million per year.
The base-10 provision had little impact in the Corn Belt and Great
Plains, where FSA farm sizes are relatively large. In contrast, regions
along or near the East Coast tend to have a high proportion of farms
with small base acre holdings and have been more affected. For example,
in the Eastern Upland and Southern Seaboard regions, 35 and 28 percent
of FSA farms, respectively, became ineligible under the base-10
provision in 2009.
Supplemental Revenue Assistance Payments (SURE) Program
Title XII of the 2008 Farm Bill contains the SURE program, which
provides assistance to crop producers for eligible losses in times of
natural disasters. To be eligible for SURE (or any other 2008 Farm Bill
disaster program except for the Livestock Indemnity Program), producers
must have Federal crop insurance or Noninsured Crop Disaster Assistance
Program (NAP) coverage on all their crops and be located in a county
included in the geographic area covered by a natural disaster
declaration issued by the USDA Secretary. The Secretarial disaster
designation is not required if a farmer can prove a whole farm loss of
more than 50 percent of normal, including farming operations across
county or state lines.
As of July 12, 2011, payments for 2008 and 2009 crop losses to date
total more than $2.6 billion. (Of this amount, about $0.8 billion can
be attributed to an increase in benefits mandated under the American
Recovery and Reinvestment Act.) Major recipient states include North
Dakota ($358 million), Texas ($349 million), and Iowa ($289 million),
which account for 40 percent of the total. Although these states have
been key beneficiaries, SURE payments have been critical to helping
producers in many other states. Twenty-seven states have received over
$10 million since the inception of SURE.
SURE differs from previous disaster programs in that SURE losses
and revenues are calculated based on all of a producer's land,
including multiple farms combined, compared to ad hoc disaster program
calculations made on a crop-by-crop basis. As a result of the whole-
farm focus, a county may receive a Secretarial disaster designation,
but few producers may be eligible for SURE payments. SURE's whole-farm
nature and the number of variables used in the calculations make the
program quite complex.
A significant lag exists between the timing of crop loss and
receipt of SURE payment to allow for the calculation of actual farm
revenue. Farm revenue depends on season average prices reported by
USDA's National Agricultural Statistics Service, which are usually
released 13 months after the start of the crop year. Actual farm
revenue also depends on other data which are not available until well
after a crop loss occurs, including marketing loan benefits, ACRE
payments, crop insurance indemnities, and other payments. Producers
have until July 29, 2011, to apply for assistance for 2009 crop losses
under SURE. To date, payments for 2009 losses are approximately $465
million; however, producers have until July 29, 2011, to apply for
assistance for 2009 crop losses under SURE.
Other Disaster Programs
The 2008 Farm Bill also authorizes disaster assistance programs for
livestock and trees. These programs include the Livestock Indemnity
Program (LIP), the Livestock Forage Disaster Program (LFP), the
Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish
Program (ELAP), and the Tree Assistance Program (TAP).
The Livestock Indemnity Program (LIP) provides assistance to
producers who lose livestock due to natural disaster. For 2008-10
losses, about $110 million has been paid out under LIP as of July 12,
2011. LIP payments are made for livestock losses (death) above normal
mortality rates at fixed payment rates per animal. Accordingly, LIP
payments can be issued soon after a qualifying loss occurs to help
producers rebuild herds and undertake other activities. These payments
were particularly helpful to ranchers whose livestock were lost during
major blizzards in the Northern Plains, as well as during extended heat
in many Midwestern states during the summer of 2009. Major LIP
recipient states include South Dakota ($30 million to date) and North
Dakota ($20 million to date).
The Livestock Forage Disaster Program (LFP) compensates livestock
producers for grazing losses due to drought. LFP has provided $380
million as of July 12, 2011 to ranchers affected by drought. LFP
payments can typically be made within a few weeks of a county
qualifying for assistance, which has been particularly helpful to
ranchers during severe drought events. The major LFP recipient states
are those that have suffered significant drought losses such as Texas
($155 million), North Dakota ($28 million), California ($26 million),
and Georgia ($18 million).
The Emergency Assistance for Livestock, Honeybees, and Farm-Raised
Fish Program (ELAP) provides funds for losses that are not covered by
other disaster programs. ELAP provides assistance for those livestock
losses that are not covered by LIP or LFP. Funding is limited by
statute to $50 million per calendar year. Of the $29 million disbursed
to date for 2008-10 losses, primary recipient states include South
Dakota (more than $4 million), Florida ($4 million), and California ($3
million). ELAP has provided substantial assistance to beekeepers whose
bees have suffered from Colony Collapse Disorder.
The Tree Assistance Program (TAP) provides assistance to replace or
rehabilitate trees, bushes and vines lost or damaged due to natural
disasters. To date, TAP payments for 2008-10 losses have totaled nearly
$9 million.
In addition, the Noninsured Crop Disaster Assistance Program (NAP)
provides financial assistance to producers of crops where crop
insurance is not available and when low yields, loss of inventory, or
prevented planting occur due to natural disasters. NAP payments for
2008-10 losses have totaled $210 million.
Per the 2008 Farm Bill, losses incurred under SURE, LIP, LFP, ELAP,
and TAP are not covered beyond September 30, 2011. Among the disaster
assistance programs, only NAP losses will be covered beyond September
30, 2011. In contrast, authority for Title I programs discussed in this
testimony extend through the 2012 crop year.
Sugar
The sugar program has supported grower returns from raising
sugarcane and sugarbeets at minimal Federal cost since it was
established in 1981. The sugar program has been a no cost program
during the tenure of the 2008 Farm bill due to program operation and a
tight sugar market in the United States and throughout the world. Cane
and beet growers are supported by several programs that first establish
a level of support, then provide USDA with supply controls tools to
maintain the support level. The Sugar Price Support Loan Program
establishes the support level by providing nonrecourse loans to
processors of domestically grown sugarcane and sugarbeets based on loan
rates mandated in farm bills. If market returns are lower than loan
proceeds at the time of loan maturity, sugarbeet and sugarcane
processors can fully satisfy their loan obligations by forfeiting sugar
loan collateral to the Commodity Credit Corporation (CCC). Since sugar
producers can always receive at least the loan proceeds from their
crop, the loan rate acts as a floor on the market price of domestic
sugar. The Price Support Loan Program also provides the beet and cane
mills the financing to pay beet and cane growers for their crops long
before they receive the revenue from the sale of their sugar.
To avoid Federal costs, the farm bill includes tools that permit
USDA to manage domestic supply so that domestic sugar prices are higher
than the support price, hence, eliminating forfeiture costs. Domestic
supply is limited through (1) the Flexible Marketing Allotments for
Sugar Program, which provides limits for the quantity of sugar that
domestic sugarbeet and sugarcane processors can market; (2) the
administration of Tariff Rate Quotas (TRQ) that limit foreign sugar
imports at the low tier tariff; and (3) a new program, the Feedstock
Flexibility Program for Bioenergy Producers (authorized under Title IX
of the 2008 Farm Bill), which requires USDA to purchase expected
surplus sugar in the marketplace and sell it to producers of bioenergy
to prevent loan forfeitures under the Price Support Loan Program.
The enactment of the 2008 Farm Bill coincided with full
implementation of the North American Free Trade Agreement (NAFTA),
which allows sweetener trade between the U.S. and Mexico without a
tariff. Before the 2008 Farm Bill, analysts expected that the U.S.
would increase shipments of High Fructose Corn Syrup (HFCS), a cheaper
sweetener than sugar, to Mexico. This situation was expected to
displace Mexican sugar, production of which was expected to expand in
response to U.S. sugar support prices that were raised in the 2008 Farm
Bill. Mexican sugar was expected to flow into the U.S., resulting in
U.S. prices falling below the Federal price support level, threatening
sugar forfeitures to the CCC and thereby requiring activation of CCC
purchases of surplus sugar for sale to bioenergy producers under the
Feedstock Flexibility Program.
Compared to these expectations, U.S. sugar demand has increased
significantly. In fact, greater Mexican imports did not saturate the
U.S. market, but instead helped maintain adequate U.S. sugar supplies
in response to the loss of refining capacity due to an explosion at the
Savannah sugar refinery and a temporary reduction in beet sugar
production. Even with increased Mexican imports, growing U.S. demand
prompted USDA to increase the sugar import tariff-rate quota twice in
both FY 2010 and FY 2011. Despite the almost doubling of sugar prices
since 2008, sugar is increasingly used in the U.S. to replace other
sweeteners in food products.
The sugar market outlook in the near term remains tighter than
expected in 2008 and USDA does not anticipate forfeitures of sugar to
the CCC and the activation of the Feedstock Flexibility Program under
the current Farm bill.
Farm Storage Facility Loan (FSFL) Program
The Farm Storage Facility Loan (FSFL) program ensures that eligible
producers have adequate capacity to store their harvested production
through low-interest financing that can be used to build a new storage
facility, upgrade existing storage, or purchase handling equipment. The
maximum amount that may be borrowed is $500,000 per structure under the
2008 Farm Bill (increased from $100,000 under the re-establishment of
FSFL in 2000 as authorized by the CCC Charter Act, and the repayment
terms are for 7, 10, or 12 years (depending on the size of the loan).
The 2008 Farm Bill also expanded eligibility for the FSFL program and,
in addition to grains, low-interest loans are now available for biomass
and hay facilities as well as cold storage for fruits and vegetables.
Interest in the FSFL program has increased in recent years;
applications have increased from 1,717 in FY 2005 to 3,961 in Fiscal
Year 2010. In FY 2006, the CCC made nearly $100 million in loans, while
in FY 2010, loans exceeded $296 million. Much of the increased interest
is on the part of corn producers who store the commodity for delivery
at a later date to a nearby ethanol plant. Fruit and vegetable growers'
interest in FSFLs for cold storage is relatively low at this time, and
moderate interest exists for hay FSFLs.
Reimbursement Transportation Cost Payment for Geographically
Disadvantaged Farmers and Ranchers (RTCP) Program
The RTCP program provides assistance to geographically
disadvantaged farmers and ranchers in Hawaii, Alaska, and insular areas
(Guam, American Samoa, Commonwealth of Puerto Rico, Commonwealth of the
Northern Mariana Islands, Federated States of Micronesia, Republic of
the Marshall Islands, Republic of Palau, and the Virgin Islands of the
United States). The program reimburses producers for a portion of the
transportation cost of their agricultural commodity, or of inputs used
to produce an agricultural commodity during a fiscal year. Under RTCP
transportation costs of inputs used to produce an agricultural
commodity include, but are not limited to, air freight, ocean freight,
and land freight of chemicals, feed, fertilizer, fuel, seeds, plants,
supplies, equipment parts, and other inputs as determined.
This program benefits farms and ranches in geographically
disadvantaged areas of the U.S. Signup for 2010 RTCP program began Aug.
2, 2010 and ended on Sept. 10, 2010. Distribution of payments for 2010
RTCP began on July 20, 2011. In FY 2010, 1,545 geographically
disadvantaged farmers and ranchers applied to participate in the
program, and more are expected with the FY 2011 RTCP signup beginning
July 25, 2011.
Acreage Crop Reporting Streamlining Initiative (ACRSI)
FSA requires that producers participating in any Title I program
report all the cropland acreage on their farm each year to their local
office. In field hearings, we repeatedly heard from producers that they
were dismayed by the necessity to report acreage and production data to
multiple agencies (not only FSA, but also the Risk Management Agency
and the National Agricultural Statistics Service). To address these
concerns, we have initiated the Acreage Crop Reporting Streamlining
Initiative (ACRSI), a system which allows producers to report their
acreage data only once to USDA.
We anticipate piloting this effort in four counties in Kansas in
fall 2011 for 2012 crop wheat plantings. Feedback from this pilot will
help us move this project forward to a nationwide scale. Over time, our
ACRSI project will be leveraged to support our ``Modernize and Innovate
the Delivery of Agricultural Systems'' (MIDAS) effort, which I will
turn to next.
MIDAS
FSA has relied on aging technology which was installed in the mid-
1980's, as well as segmented web-based IT systems that have created
inefficiencies and threatened the delivery of Title I benefits. To
address these issues, FSA has invested in the Modernize and Innovate
the Delivery of Agricultural Systems (MIDAS) program. MIDAS is an
integrated business solution based on enterprise resource planning
(ERP) technology. MIDAS will modernize Farm Programs delivery and will
provide comprehensive and robust processes and tools to simplify Title
I, Title II, and disaster program service delivery and improve customer
service for both agency employees and producers.
Currently, MIDAS is developing the ``to-be'' global requirements,
processes, and solution design. Over the longer term, MIDAS will be
integrated with other initiatives, such as Geospatial Information
Systems (GIS), the Department's Financial Management Modernization
Initiative (FMMI), and the Enterprise Data Management (EDM) program.
MIDAS has already improved service delivery by implementing
recommendations from the USDA ``Listening Sessions'' and the FSA MIDAS
Lean Six Sigma field office visits to improve processes. These efforts
focused on modifying program forms and addressing web time out issues
for web applications in high usage by field office employees, such as
reconstitutions. As a result service delivery has been improved and
opportunities for errors have been reduced.
Full implementation of MIDAS, which would occur in FY 2014 assuming
the program is fully funded, will result in improved business processes
and service delivery to our producers, ranchers and farmers, and USDA
employees that provide day-to-day service to our customers. Through
MIDAS, we will be able to adapt to and implement new programs more
rapidly, with the time between passage of new legislation and program
delivery to producers substantially reduced. Producer information will
be collected once, not multiple times for multiple programs or multiple
times for multiple agencies (through integration of MIDAS with ACRSI).
Benefits will also be realized internally within FSA. Systems
integration will result in improved performance and more reliable
reporting. In addition, the need for manual processes (such as data
entry) will be greatly reduced. This work is very similar in scope to
the modernization and streamlining of FSA's farm loan programs--through
which the agency has realized significantly shorter processing times
and more efficient service through online business processes.
The MIDAS Project Office recently conducted a series of
demonstrations for USDA management, FSA state and county offices, and
others on the functionality of the ERP software solution. Based on
initial feedback, the MIDAS demonstration was well received and state
and county offices have re-confirmed that the software will meet the
requirements of farm program delivery.
Working Toward the Next Farm Bill
Mr. Chairman, as we move forward toward development of the next
farm bill, it is important that we approach this new legislation with
an eye toward truly making a difference in the future of the lives of
millions of rural Americans, while at the same time using scarce
resources wisely. In the coming months, I look forward to providing
answers to your questions and helping better frame and move the debate
toward the topics and issues that are most important to our
constituents.
I am happy to respond to any questions. Thank you.

The Chairman. Thank you, Mr. Nelson. Mr. Garcia, do you
have an opening statement?
Mr. Garcia. Good morning, Mr. Chairman. I do not have an
additional statement at this time, just to thank you and the
Committee Members for having us here today.
The Chairman. All right, thank you very much, I appreciate
that. The chair would remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that Members
will be recognized in order of arrival. I appreciate my
colleagues' understanding in that regard.
Also we have been joined by Mr. Ribble from Wisconsin. I
ask unanimous consent that even though he is not a Member of
the Subcommittee that he be permitted to join in the
questioning of the witnesses. Without objection.
Mr. Nelson, we made some changes in the 2008 Farm Bill with
respect to AGI and how that impacts eligibility. You also have
some agreements with the IRS as to how that gets tracked. There
were some initial concerns about producers having to share too
much information with FSA locally and that there are some work-
arounds for that. Can you walk us through that? And also kind
of answer that question that gets distorted in the paper, in
the media a lot is that the bulk of these farm program support
payments go to large corporations that don't really need it.
And so if you could walk us through the AGI efforts and how you
have seen that play out.
Mr. Nelson. Well, I appreciate that question because as you
are suggesting, there is a lot of information out there that
isn't quite as accurate as it could be on this subject. The AGI
limits that were established under the 2008 Farm Bill are that
an individual producer can have up to $750,000 of on-farm
adjusted gross income and $500,000 of off-farm adjusted gross
income. USDA and FSA were tasked in the farm bill with deciding
how best to try to ensure compliance with those AGI provisions,
and basically it was a choice between having farmers bring
their tax returns into our county offices around the country
and have them do reviews, or the Department could work as we
did and as we have now been implementing with the Internal
Revenue Service on a data sharing process where producers
authorize the Internal Revenue Service to data match against
our USDA database. We basically get back an indication with a
red flag or green flag whether the individual producer is in
compliance or not. And I actually believe as a farmer, and my
family has been on our place for about 100 years since my
grandparents homesteaded, that it is a much preferable way to
utilizing the Internal Revenue Service's capacity to assist us
with this than to have farms and ranchers bring their tax
returns down to local offices. And talking to our folks at
least in Montana about this who work there, I think they are
glad that it is being done this way as well.
Now, I understand there are some things that--some glitches
along the way. For example, one of the things that I ran into
out in Montana is that producers had to put the address that
was on their tax return on the form that was sent into the IRS
or it might come back to them. And so it took some time and it
is still taking some time to make sure that producers
understand what it is that is required for the IRS to accept
those forms.
The Chairman. Mr. Nelson, does the IRS communicate directly
with you or do they send the clearance to the producer and the
producer brings in something from the IRS that says they are
good to go?
Mr. Nelson. As I understand it, Mr. Chairman, we get the
indication back from the Internal Revenue Service. The good
news is that after October 1 we are going to eliminate that
form that producers have had to send in to the Internal Revenue
Service and we are going to do that authorization as a part of
their other sign-up papers. We think will be a lot better for
the producers and ultimately a lot easier on our employees out
there too. Some offices had had to deal with producers coming
in saying, ``I don't know why the IRS didn't accept this.'' So
moving to one form we think will be much better for everybody
involved.
The Chairman. Is the turn-around time with the IRS quick
enough to be able to not delay payments to producers?
Mr. Nelson. Mr. Garcia, I am going to let you talk about
payments.
The Chairman. Mr. Garcia, what is your experience in Texas
on this style of doing it?
Mr. Garcia. Well, of course, Mr. Chairman, the individual
producers that certified to their AGI we will not delay
payments because it is a certification. After that we will
review that with the IRS, we will get information on those
producers that appear questionable. It is very important to
note that we do not receive any particular income tax
information from any producer. If a producer that we obtain on
that list does appear questionable, we will notify the producer
and ask him to provide to the national office any particular
information that he has, either IRS records or his statement
from his Certified Public Accountant, to clear that.
We want to provide the producer the best opportunity to
prove to us that he is eligible based on those AGI provisions.
The Chairman. All right. Thank you.
Mr. Boswell, for 5 minutes, you are now recognized.
Mr. Boswell. Thank you, Mr. Chairman. I would be happy to
defer to Chairman Lucas if he would like to, at this time.
Mr. Lucas. I appreciate that courtesy, Ranking Member
Boswell. Thank you very much.
Mr. Boswell. I will follow behind you.
Mr. Lucas. Absolutely. Gentlemen, I have several questions.
As the Chairman alluded to discussing the AGI issues, how many
farmers have been flagged by the IRS as part of this process as
having too high of an AGI to qualify?
Mr. Garcia. Mr. Chairman, at the present time we do have a
list in producers that we are looking at right now. We have
sent some initial letters here a couple of months ago. We are
in the process of sending some additional letters to producers
to submit their information to us. We have quite a few
producers that have not yet filed that form--I should not say
that--they may have filed a form and there could have been some
errors in filling out the form that are still questionable. We
just obtained another report this month that we have forwarded
to our county offices to check with those producers to ensure
that they did receive a payment. Of course we also obtained
those AGI forms producers that are getting payment with NRCS to
the EQIP Program. So we are checking with NRCS to ensure that
those producers did actually receive a payment. We are working
on that particular listing and trying to resolve it as soon as
possible.
Mr. Lucas. So it is still a while before you can say how
many farmers have been flagged by this procedure.
Mr. Garcia. That is right.
Mr. Lucas. Let's turn to the SURE Program for a moment, one
of those things that does not have a baseline in the existing
farm bill, and in a very tight budget as we all looked at these
things. There have been comments out in the countryside about
the complexities of signing up and, once you sign up, the
length of time to receive a benefit when you qualify.
Gentlemen, would you care to comment on the complexities of
implementing SURE and what the time or period between
qualifying and actual payments have been issued, those kind of
underlying issues?
Mr. Nelson. Yes, Mr. Chairman, that is a good question
because I have heard from a lot of folks out in Montana about
this over the last couple of years. The principal concern is
with the timeliness of the payments, but it is also a matter of
the complexity of the calculations that are hard for the folks
in our county offices. As you know, there are factors within
the SURE Program that basically dictate that we are not going
to be able to make the payments until at least a year after the
disaster occurred. And so this is something that we really look
forward to working with you on because if we are going to have
a good food safety net as you suggest out there, I think that
we need to work on streamlining these provisions and we look
forward to working with you on those.
Again, I also think the complexity of the calculations are
part of the factor here that we need to look at as well to try
to make it not only easier for folks in our county offices but
for producers to understand. I talked to farmers in Montana who
have no idea that they might be eligible for a SURE payment,
but we got them to go in and apply and sure enough they got a
SURE payment.
Mr. Lucas. This is particularly important in Mr. Garcia and
my part of the world because we are in the most wicked of
droughts in the Southwest. And literally while there was some
wheat cut in the northern part of the southern plains there
will be no row crops this summer. If the weather patterns don't
change it will be extremely difficult to think that you can put
a wheat crop in the ground this fall. So this issue is going to
receive incredible attention in our home region. So if there
are ways to address that and accelerate it, certainly the
Committee wants to know. And as we--whether it is a late farm
bill this year or under regular order my preference is next
summer in writing the next farm bill, we are going to be left
working so hard for every penny of baseline money that we have
to maximize it. So I just ask you to focus on that and I would
look forward to comments later on in the coming weeks and
months on this topic.
With that, I yield back my time and thank the Ranking
Member for his courtesy.
The Chairman. Mr. Boswell now for 5 minutes.
Mr. Boswell. Thank you. I appreciate that discussion, even
though my operation in southern Iowa we get some of those
Chinook winds up there and I know something about droughts,
Chairman Lucas, and I realize you are facing a real tough
situation. So it will be interesting how this works.
I would like for you, if you could, just give us some
update on--you have the personnel to do what you need to do. We
went through different cycles of that and software, your IT
staff, where are you at in that part of it in trying to run an
efficient operation in all the different areas across the
country. Could you comment on that a little bit?
Mr. Nelson. Well, thank you for that question because it
gives me an opportunity to give a pat on the back, especially
to the people out in our county offices who work very hard
around the country doing the real work of this agency with
farmers and ranchers every day, and they do a great job. And in
2011 with the budget that we have for this fiscal year we are
able to sustain our staffing levels, as well as our field
operations. But with the Congressional appropriations process
for the next fiscal year still incomplete, one thing is pretty
clear and that is that we will likely have fewer dollars for
operations in Fiscal Year 2012 than we did this year.
Again, thanks to the belt tightening folks around the
country in FSA, we have been able to continue to provide
quality service to farmers and ranchers within this year's
constrained overall funding level. In anticipation of what we
might be facing for next year, I formed a state executive
director workforce planning task force. And they are looking at
ideas about how we tackle next year's budget. Our planning is
also considering the potential for further offering of
voluntary early retirements within the agency. The Department
has authorized those for this fiscal year for all agencies,
including the Farm Service Agency, and we did have a number of
employees take us up on that offer when it was put out in the
last month. And I believe the fact that a lot of folks in our
county offices signed up for the early out is a sign of the
stress out there in the county offices due to, among other
things, the budget situation that we are facing in the future.
So I give our folks terrific high marks for what they have
been doing. We are looking ahead to the budget for next year,
trying to plan ahead. And when we get the final numbers we will
cross that bridge when we get there.
Mr. Boswell. Just a little follow-up there. I know we had a
lot of concern in days past about modernizing your computer
system, the ACRSI we are operating while trying to move
forward. How is that going? And where do we stand on the
Modernize and Innovate the Delivery of Agriculture--the MIDAS
program I guess we call it. Where do we stand on that?
Mr. Nelson. Congressman, I appreciate the chance to talk
about this. I will turn it over to my colleague, Mr. Garcia, in
a minute here. I sat across the desk from virtually every
county office employee in Montana, and I have seen how hard
this transition from 1985 computer technology to the modern era
is. I was privileged several weeks ago to be part of a
demonstration of this MIDAS project up here. It is important to
remember that the MIDAS project isn't just about hardware and
software, that is a big part of it. But a big part of it as
well is that we are looking at how we do business with FSA in
order to try to figure out a way to streamline and operate more
efficiency. We have a Lean Six Sigma business re-engineering
process that is a key part of MIDAS.
So look, this is really important for us to get done, as I
said in my opening statement, because we need to have the same
kind of efficiencies in our IT systems on the farm program side
that we have in the farm loan program side. I take the GAO
report that just came out very seriously, and I am working hard
and I have already brought the FSA and USDA management teams
together on this to make sure that we get this project done on
time and on budget. It is too important for our employees and
our county employees and farmers and ranchers.
Mr. Boswell. So you think you are kind of on track?
Mr. Nelson. We are on track and I am going to push hard if
we are not on track to get on track.
Mr. Boswell. Okay, my time is up. Thank you very much,
thank you.
The Chairman. I thank the gentleman. Austin Scott, for 5
minutes.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
Gentlemen, I want to commend the people who worked at the local
county offices in my State of Georgia, especially those in
Turner County and Tift County that I know well. They are
excellent people from the standpoint of their caliber of
character and they are excellent employees for you and doing
their job.
I don't have a specific question as much as a comment that
I would kind of like to get your input on. For any business and
as we work to get this economy to recover it is access to
capital and regulatory certainty that those businesses need to
have the comfort to go out and invest and grow those
businesses. When you add in commodity prices and the volatility
that we see with commodity prices and the input prices for
farming, where do you see us today with regard to the risk
spectrum of investing in agriculture from the farmer's
standpoint over the years?
Mr. Nelson. Well, I think that you have brought up a great
point because historically the principal risks in agriculture
have been natural disasters and low prices. But you have
brought up great points here that I think added substantially
to that risk and put our producers in an increasingly
vulnerable position out there. And that is the high cost of
production. In 1975, you could plant and raise an acre of corn
for $81. That cost today is $286 an acre. And those costs of
production or trends of corn have been the same for wheat and
soybeans and the other commodities. The capital investment
required to get involved in agriculture just between 2002 and
2008 for the crop production sector went up 77 percent. And in
the first 9 months of this fiscal year alone the capital
requirements in the crop production sector have gone up 9.5
percent. So we created this safety net back in the thirties to
try to make sure that we didn't ever jeopardize our food
security in this country. It has been updated in every farm
bill since. And we look forward to working with you to update
it this time within what we know are going to be some pretty
severe budget restraints.
Mr. Austin Scott of Georgia. Any other comments, Mr.
Garcia?
Mr. Garcia. If I can add, Congressman, farm bill programs
do provide risk management for our producers out there. If the
prices fluctuate we do have a commodity loan program where they
can place their commodity into the loan for a period of 9
months. As prices go up they can repay the loan. Of course
through crop insurance provisions, and then we have the SURE
Program that complements crop insurance. The ACRE Program is
another program where there is some risk management involved
for those fluctuating prices. We do have those programs
available that have helped our producers manage that risk.
Mr. Austin Scott of Georgia. You have ongoing dialogue with
the Environmental Protection Agency about the uncertainty that
they create for the farmer and the agricultural community?
Mr. Nelson. Well, I just would like to say that when I was
here a few weeks ago talking along with my colleague Dave White
from NRCS, we both emphasized that achieving environmental
benefits, environmental protection through voluntary
conservation programs at USDA is in our minds much preferable
to the regulatory approach of other government agencies. And so
I think that is an important thing to keep in mind as you
approach the farm bill, that those investments in those
conservation practices that help farmers comply with
regulations from other government agencies, that they do so
voluntarily and in a partnership with the government is a great
way to go.
Mr. Austin Scott of Georgia. I thank the gentleman. I
apologize that I will be leaving before the end of the hearing,
but I appreciate your time and your testimony.
The Chairman. I thank the gentleman. Mr. Scott from
Georgia.
Mr. David Scott of Georgia. Thank you very much, Chairman
Conaway. And I appreciate the hearing and welcome Mr. Nelson
and Mr. Garcia to the Committee.
I think it is no secret that farm incomes are historically
volatile, they fluctuate widely and often unpredictable and
quite frankly are as fickle as the weather. And yes, farm
incomes are relatively high now, but they may not be tomorrow.
It is the role of the farm bill's Title I programs to provide a
buffer against these lean times.
I mention that, Mr. Chairman, because cuts or drastic
changes to eligibility requirements for these programs are not
felt equally across all commodities. Different commodities have
different economies of scale and input or operating costs. And
so slapping a stringent one-size-fits-all income tax or
slashing commodity support across the board just makes very
little economic sense to me.
We have to remember income does not always equal profit and
this distinction is especially vital when your income has to be
reinvested in your operations to keep it up and running.
So Mr. Nelson, I want to ask you just a simple question
here and I will forgive you in advance if you say you don't
know the answer, but I want to get this out here. Mr. Nelson,
do you know what is the average cost of a new cotton harvester?
Mr. Nelson. One of the things that I am looking forward to
in this position is learning about cotton and crops from other
parts of the country, Congressman. And my friend Juan Garcia is
going to take me down to Texas in a couple weeks and teach me.
So I don't know. I am looking forward to finding out. I know
what a combine costs for our farm back in Montana, about
$350,000, as much as a really, really, really nice house in
Montana.
Mr. David Scott of Georgia. Well, last night in
anticipation of this hearing I looked up the nearest I could
find as to what a cotton harvester would cost a farmer. And it
would cost roughly $600,000 to buy a new cotton harvester from
John Deere. Not to toot my own horn or anything, but I have an
MBA from the Wharton School of Finance, I have studied
economics, I love economics, I try to get into it, but what I
am not is a banker. So I may be missing something here, but let
me ask you how on Earth is a farmer going to be able to
convince a bank to finance the purchase of a machine like the
cotton harvester which costs over a half million dollars so
that they can sustain or expand their business when they cannot
demonstrate a significant stable source of income? Can you
explain that to me, Mr. Nelson? Do you have any thoughts on
that?
Mr. Nelson. What I can say is from my own experience with
the bankers is that the first question that I always got asked
when I went in to get our line of credit for our farm of the
year is have you been to FSA and signed up for the programs?
And do you have a crop insurance policy? So I think part of the
answer is that it is the safety net that is created by
Congress, working together with USDA, that can help give the
bankers some confidence in making those loans. It is part of
the answer, it is not the whole answer, because you have a cash
flow, I found that out, but that is part of the answer. If
there is a strong safety net there, then the lending
institutions out there, whether it is commercial private
lenders or FSA itself, have some basis for thinking farmers are
going to make it when the tough years that inevitably will come
along come along.
Mr. Garcia?
Mr. David Scott of Georgia. Very good answer.
Mr. Garcia. Congressman, of course it is very difficult for
a farmer to purchase a $600,000 cotton harvester out there and
be able to cash flow. They have to farm quite a few acres in
order to make that work. I tell the story often with cotton
prices the way they have been that if you go to the department
store and pay $50 or $60 for a part of blue jeans, the farmers
is only getting $0.90 out those $50 or $60 for that pair of
blue jeans. So what we are seeing and what we have seen in the
past because of the high cost of equipment, as you mentioned,
is that many of our producers do not have the harvesting
equipment and they rely on custom services in order to harvest
their cotton. So it is very difficult with commercial lending
the way it is right now. Thank you.
Mr. David Scott of Georgia. I appreciate that, Mr.
Chairman. I just wanted to conclude if I may in 10 seconds, and
I know that America's farmers know we are having a hard time in
Washington. I do want to make the statement we need to be
sensitive as we look at these cuts we are engaged in a
monumental debate how to straighten out our own economy and our
spending, and I agree and the farmers agree with us that it
must be done.
I just want to make this concluding statement. If we as a
nation want to remain the leader of the world in producing high
quality, high volume food and fiber at stable prices, then we
must not balance the budget on the backs of those farmers and
producers who are engaged in that enterprise. The world's
population is growing rapidly and soon we will have to feed and
clothe billions more people, and so we need to be very
sensitive to the needs of our farmers and cutting these Title I
programs is just something we have to be careful with.
Thank you for the time, Mr. Chairman.
The Chairman. Yes, the gentleman's time has expired. Mr.
Ribble, from Wisconsin for 5 minutes.
Mr. Ribble. Thank you very much, Mr. Chairman. And I
appreciate you allowing me to come this morning to this
Subcommittee. I do have a couple comments I wanted to make, and
Mr. Nelson and Mr. Garcia, thank you very much for being here.
Mr. Nelson, it is good to see you.
As you know, Title I of the farm bill has a general
prohibition of growing fruits and vegetables on program acres.
I understand that this is to ensure that the fresh produce
industry is not hurt by produce production on subsidized farm
program acres.
The 2008 Farm Bill included a Planting Flexibility Pilot
Program to allow crop producers in Midwestern states like
Wisconsin to grow fruits and vegetables for processing on some
of their acres. The USDA Economic Research Service report on
the pilot concluded that it did not harm the fresh fruit, fresh
produce industry.
In your view, is this due to the requirement that fruits
and vegetables could only be grown for processing?
Mr. Nelson. Congressman, I don't know that I have an answer
to your question as to the why, and so that is something that I
would like a chance to look into.
Mr. Ribble. Certainly.
Mr. Nelson.----and get back to you on. I can report that
there were a little over, as I recall, about--Mr. Garcia, how
many acres, up to 75,000 acres that was allotted under that
pilot.
Mr. Garcia. Yes, we had the--Planting Flexibility Pilot
Program that was initiated with the farm bill for seven
Midwestern states, including Illinois, Iowa, Illinois and
Minnesota, in which we offered that program to assist producers
that did not have a planting history of fruits and vegetables.
The way the farm bill program works is that in order for a
producer to be able to plant fruits and vegetables on what we
call base acres of a commodity they must either have a planting
history or be able to double crop that vegetable with that
other regular commodity.
So we have had some success in that program, Congressman.
We had around 150 farms that had participated on that. There is
some consideration there as far as participation because of the
demands in the prices of vegetables, but it is a program that
is available and has produced some participation and we will
look into it further to see if we can increase that.
Mr. Ribble. I would appreciate that. I am curious if you
think that additional planting flexibility allowed for fruits
and vegetables under contract for processing, would you expect
that to have an adverse affect on the fresh produce industry?
Mr. Nelson. We would be happy to look into that. One other
point that I want to make on that is that it appears that there
were a number of producers who were able to use non-base acres
to expand their vegetables production. So that in addition to
the low demand out there for those particular vegetables are
what we attributed to the relatively low participation rates at
this point.
But again, we will look into your question and get back to
you.
Mr. Ribble. I appreciate that.
And just another kind of different direction here, we are
expecting it is possible direct payments could be reduced from
some of the budget pressures that the country is facing.
Farmers who receive direct payments under current law are
expected to comply with certain conservation practices. If
direct payments are reduced or altogether eliminated, do you
anticipate that producers would continue with various
conservation practices, and would USDA recommend putting
centers in place to ensure farmers keep their land production
for future generations?
Mr. Nelson. Well, we would look to work with you on
provisions here, but I think it is important to note that all
of the other FSA programs that producers might want to
participate in, as well as the NRCS programs, require
conservation compliance. So it will be up to individual
producers whether they weigh the cost, the conservation
compliance against the benefits. But again we would look
forward to working with you on that issue as you discuss and
debate that provision of the farm bill.
Mr. Ribble. Thank you very much, and thank you, Mr.
Chairman. I appreciate you letting me be here.
The Chairman. The gentleman yields back. Ms. Sewell, from
Alabama, for 5 minutes.
Ms. Sewell. Thank you, Mr. Chairman, and I thank our
witnesses for being here today.
As you may all know, Alabama forest landowners suffered
tremendous losses during the April tornados that caused such
great devastation across my district. It has recently come to
my attention that Alabama's nonindustrial private forest
landowners will receive a little over $3 million from FSA's
Emergency Forest Restoration Fund. As it currently stands, the
funding is totally inadequate to meet our needs and the
requirements of our state.
What can be done to aid in the restoration of our forest,
and in case of inadequate directed funding, and are there any
FSA accounts that currently have a balance that those funds can
be shifted to.
Mr. Nelson. Congresswoman, as I recall the figures--and I
don't have them with me today--but we are very close to the
limit on the amount of funds that are available in that
program, and I would be happy to have Mr. Garcia add to this to
see if there are any other programs that can assist those
producers. If those counties do have Secretarial natural
disaster designations or Presidential designations, then they
are eligible for emergency loan assistance under our farm loan
program and there is a provision in there for physical losses
as well that we need to look at and see whether that might
apply in this particular situation.
Mr. Garcia.
Mr. Garcia. Congresswoman, as you mentioned, we have had
several disasters throughout the United States. The Emergency
Forest Restoration Program is a very important program that
assists producers in rehabilitating their forests. Presently,
the funding for that program is very challenging. We have
obligated all our funding. We have several requests from some
states because of all the disaster situations that have
occurred. Presently, we do not have any other funding source to
switch money around.
The other program that also--that we face a challenge with
right now is the Emergency Conservation Program, which also
assists producers in rehabilitating conservation practices, and
we offer cost-share and assistance for that, also.
So with all the disasters that we had, the wildfires, the
tornadoes, the flooding along the Mississippi and Missouri, it
has posed a great challenge for us, and what we do as far as an
agency, we allocate funding to certain counties, and as those
funds are released back to us, for example, they are not used,
then we can go ahead and approve other requests as they come
in.
Ms. Sewell. So right now there is not really any other
source other than the emergency loan assistance that could aid
farmers in restoring their forests?
Mr. Nelson. Congresswoman, we will look into that and get
back to you, but I believe that is unfortunately right now
where we stand, but we will get back to you.
Ms. Sewell. Thank you.
Now, in these difficult budgetary times, it is very
important that we analyze the effectiveness of our safety net
programs, and I would really like to know your opinion as to
what safety net programs under Title I have been the most
effective and which ones you think could be better improved.
Mr. Nelson. Well, I think rather than talk about individual
programs, what I would like to talk about is an approach for
your consideration as we look ahead to discussion about that
title of the farm bill. Again, as I said, in every farm bill
since the 1930s, the safety net has been updated, and we need
to do that again. And what I would suggest is that the goal
here and the priority ought to be that we cover both the crop
and the livestock sector with our safety net; that we have
effective safety net programs for all crops around the country;
and that we treat all regions of the country equitably. Because
as one of the Members pointed out earlier, there are a lot of
differences in agriculture around the country, and one size
doesn't fit all. And so we need to try to make sure when we put
a safety net package together that it does take into
consideration that things are very different in Mr. Garcia's
State of Texas, in your home State of Alabama, and my home in
Montana, and we have to have the flexibility in the
administration of these programs to make them work every place.
Ms. Sewell. Thank you.
The Chairman. Thank you very much. Mrs. Schmidt for 5
minutes.
Mrs. Schmidt. Thank you, Mr. Chairman, and if these have
already been asked, I apologize. I want to focus a little bit
on the marketing assistance loans and the loan deficiency
payments, if I might, and I understand if you don't know all
these answers, that is okay. You can get back with us.
But are there scenarios where producers make the use of
marketing loans, even when the average marketing year price
ends up exceeding those loan rates?
Mr. Nelson. Congresswoman, from having taken marketing
assistance loans on our farm, and my family has done it for
years, the answer is yes. In anticipation of higher prices, if
you need cash at harvest time and you have some grain in the
bin and you can take a loan as that is not normally the optimal
time in order to market your crop. The marketing assistance
loans, the bulk of the volume of those are in December and in
January, and that is clearly because producers are able to use
the flexibility of that program to take income either at the
end of a year for tax purposes or the beginning of a year for
tax purposes.
So the answer to your question is yes, but it is because it
buys producers time, in particular if they believe that the
market is trending up but they need cash at that point.
Mrs. Schmidt. Thank you. Has the Marketing Assistance Loan
Program created any unusual market distortions between crops or
among various classes of a particular commodity? For example,
USDA has issued loan rates for durum wheat at levels
significantly higher than other wheat classes, and has that
affected outlays?
Mr. Nelson. We would like to look into that a little bit,
the issue of market distortions, and get back to you, if we
could for the record, Congresswoman.
Mrs. Schmidt. Thank you. After the 2008 Farm Bill, the USDA
began issuing a 30 day posted county price and an alternate
price. Has that made a difference in the operation of the
program, and would there be changes you might consider for the
future or recommend to Congress?
Now is your chance to give us some recommendations.
Mr. Garcia. Well, I am trying to think of how to answer
this. The 30 day posted county price is still in effect, and
those are the prices, of course, that producers use to
determine (if they do have their commodity in the loan) when
they want to take it out of loan. Of course, if you have a
producer that has a commodity loan, whether it be warehouse
stored or farm stored, they have to have the market for it.
They have to have a buyer. So those posted county prices are
used both by the producer and, of course, the buyers of the
commodity, and we do have those posted on our website so
producers are able to look at those particular prices on a
daily basis. If they are also dealing with their elevator, the
elevators could look at those on a daily basis and could
determine that, especially, when to market that commodity and
get the best price available.
Mrs. Schmidt. Okay. And is there anything you would like to
change with the program or improve with the program?
Mr. Garcia. It is probably something that we will have to
look at.
Mrs. Schmidt. You will get back to us?
Mr. Garcia. I am sorry, it is something we will have to
look at as we look at the farm bill negotiations for this
upcoming farm bill.
Mrs. Schmidt. All right. And ACRE was a new program that
was brought out in the 2008 Farm Bill and the sign-up generally
for ACRE programs was considerably lower than anticipated. To
what do you attribute that response? And you have indicated
there are regional disparities in the sign-up. But we have also
heard of some of the counties being particularly well
represented with ACRE participants due to activity from the
FSA, and do you think that has enabled the bump-up in it, and
do you see any changes or improvements to that?
Mr. Nelson. Congresswoman, I had, right before I came back
to work for FSA in the summer of 2009, a chance to go back to
my hometown of Fort Benton, Montana, to an FSA meeting about
the ACRE program. Chouteau County is the largest wheat
producing county in the state. There are about 115 producers
there, most of whom I grew up with and farmed with over the
years. And the principal reasons that I got out of that and I
have gotten since for the ACRE sign-up numbers being lower than
anticipated were, first of all, it was an unknown. For about 13
years at that point with the production flexibility payments
and then direct contract payments, producers had been able to
count on a fixed amount of money, and this was something where
there was risk as to whether they would make as much as they
had historically made or not.
Second thing was, is summertime is a bad time for farmers
to have to make decisions like this. I mean----
Mrs. Schmidt. Good point.
Mr. Nelson. Yes, it is the last thing that producers want
to be doing is be in our offices or having to make major
financial decisions about their farming operation when they
know they ought to be out on a tractor or combine or swather or
fixing fence.
And the third thing is at that meeting is a lot of us
remember the late nineties when prices went down precipitously
and we all had a lot of LDP payments for the next few years,
and so there was some concern about the 30 percent reduction in
the market loan rate as well. I have heard those kind of
concerns echoed from other producers since, and I would
attribute that largely, at least in our part of the country, to
why the sign-up wasn't higher.
The Chairman. Thank you. The Ranking Member of the full
Committee, Mr. Peterson, for 5 minutes.
Mr. Peterson. Thank you, Mr. Chairman. Mr. Nelson, I wanted
to try to figure out where we are at on this permanent disaster
program. It is like 2 years after it happened before you can
actually figure out how much it is, right? I mean, it is--the
way it is set up, it takes you a long time to figure out the
actual loss. So at this point you don't even know what you have
spent for 2010, right?
Mr. Nelson. Congressman, that is correct because the sign-
up for the 2010 SURE program actually ends this Friday July 29,
2010?
Mr. Peterson. Yes.
Mr. Nelson. I am sorry, 2009. I was wrong, and so because
of features within the program, we are looking forward to
working with you to addressing because the timeliness of
payments under this program are something that really need to
be looked at.
Mr. Peterson. Well, we were trying to deal with CBO and so
forth and that was part of the problem, but so what I am
wondering about, is there a limitation of $4 billion or was
that just the estimate of the baseline? Is there any limitation
on the program other than it was only 4 years, so it runs out
this September? So, these folks that have losses this year are
going to be able to sign up at some point. Is there any kind of
problem in terms of how much money that costs or was the only
limitation we put on this just the 4 years and not any
limitation on the amount that is spent?
Mr. Nelson. Congressman, as I understand it, and I want to
have the opportunity to clarify the answer here, it is my
understanding that these disaster programs, SURE, LFP, TAP and
LIP were only funded for the period 2008 through September 30
of this year. There was an estimate on the baseline. You could
spend whatever needed to be spent out of CCC to meet the
obligations for the program for that period of time. The
Emergency Livestock Assistance Program was the only one of the
five that had a cap on it of $50 million a year.
So I guess the upshot of my answer is that they are CCC
funded through September 30 of this year but they are not part
of the baseline.
Mr. Peterson. Well, so if I understand how all this works,
whatever it ends up costing will be the new baseline or I guess
the baseline expires on this, that is right? This is not an
ongoing baseline because it was only 4 years so it doesn't make
any difference. So anyway, the money will be there for anybody
that has losses through this September 30?
Mr. Nelson. Correct.
Mr. Peterson. With the exception of livestock, which may
get capped or something?
Mr. Nelson. The Emergency Livestock Assistance Program is
the only one of the five that has a spending cap. We do have
the authority to fund all approved applications for the other
programs through September 30.
Mr. Peterson. Right. Have you had requests or people
talking to you about trying to do some kind of ad hoc disaster
in addition to this?
Mr. Nelson. I haven't had anybody talk to me about it, but
I might not necessarily be the one that they would approach,
Congressman.
Mr. Peterson. You haven't heard any talk about it? Okay.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. Mrs. Ellmers, from
North Carolina, for 5 minutes.
Mrs. Ellmers. Thank you, Mr. Chairman.
Along the lines of getting just a baseline of where we are
at, when you are talking with the farmers what are the programs
that they say that they need the most? What is it that seems to
be the biggest concern and the biggest focus?
Mr. Nelson. Well, I can speak best from the part of the
country that I know which may or may not represent the rest of
the country, but the principal concern of producers back in
Montana and our part of the Northern Great Plains are the
safety net programs. We are a disaster prone region of the
country. We are heavily participatory in Federal crop
insurance, as well as FSA programs, and so I would say, again
from the perspective of Montana and other Northern Great Plains
States, that the safety net programs are the ones that the
producers are the most concerned about.
Mr. Garcia?
Mr. Garcia. Well, Congresswoman, as far as the Southwest
area and really throughout the nation, as Administrator Nelson
mentioned, safety net programs are very important. We have many
producers that do participate in the commodity loan program. As
we talked earlier, that is an important program for them, and
then also the permanent disaster programs, as Ranking Member
Peterson was talking about, especially in this year where we
have had so many disasters throughout the nation.
The Livestock Forage Program has been very beneficial, in
which we have been issuing payments this year for producers in
the Sunbelt area, Texas, Oklahoma, Kansas, and now the drought
is moving back east towards Missouri, Mississippi, Alabama, and
that area. So those programs have been very important to our
producers.
Mrs. Ellmers. Along the lines of the commodity programs,
given that most of the crops are experiencing high prices right
now, how does that compare to previous years' prices?
Mr. Nelson. Well, the programs that are--DCP is a fixed
cost program, and that is our biggest program. The
countercyclical payments have gone down substantially. We were
making over $4 billion of payments just about 3, 4 years ago.
Now we are down to a little over $140 million of
countercyclical payments this year for just a couple of
commodities. And so the high prices have helped there, but on
the other hand, as Mr. Garcia is pointing out, we are looking
at a big part of the country this year with tornados, floods, a
drought that just keeps expanding, and an increasing impact on
producers out there. And so I anticipate that we are going to
see substantially higher participation in the safety net
disaster programs this year than we have seen in the last
couple of years.
Mrs. Ellmers. And you mentioned the DCP programs as the
biggest program that you have. Which of those programs are
currently making payments to producers right now? I mean, is
there one that seems to be the----
Mr. Nelson. I think there are a couple of disaster programs
that work particularly well. The Livestock Forage Program, for
example, and the reason that that works well, I believe, is
there is an automatic trigger tied to the national drought
monitors. So when a county hits a certain ranking on the
national drought monitor for X period of time they become
eligible. The producers can come in and sign up, and again,
because it is CCC funded, the producer doesn't have to wait for
the payments like they do on other programs where there is
limited funding like the Emergency Livestock Assistance
Program. So that is one of the programs that I think is working
well for producers right now.
Livestock Indemnity Program is another one of the safety
net programs because that is essentially triggered by a natural
disaster that causes livestock losses. That is the trigger.
Again, it is CCC funded, so the funds are available for
producers.
Mrs. Ellmers. Great. Thank you so much. I yield back the
remainder of my time.
The Chairman. The gentlelady yields back. Mrs. Hartzler
from Missouri.
Mrs. Hartzler. Thank you, Mr. Chairman. Hello.
I just was wondering, we talked about direct payments a
little bit. They are in the news once in a while here lately,
and just wondered if you could give me sort of an idea of what
percentage of farmers participate in the direct payments
program right now.
Mr. Garcia. Thank you for your question. If I can give you
some figures on acres, if that might suffice, there is close to
272 million acres of crop acreage bases in the United States
that we have for particular commodity crops, cotton, grains,
sorghum, soybeans, and so forth. Out of that, 222 million are
enrolled in DCP. Now, I am giving you 2010 figures, Mrs.
Hartzler.
Mrs. Hartzler. Okay.
Mr. Garcia. So and there are 35 million acres that are
enrolled in the ACRE program in 2010. So we have around 14
million acres of base that are not currently--that were not
enrolled in 2010 for either DCP or the ACRE program. So a large
percentage of the farms do participate in the direct and
countercyclical program throughout the states.
Mrs. Hartzler. In your opinion, what would be the impact on
farmers if direct payments were to be done away with?
Mr. Nelson. Congresswoman, we would like the opportunity to
work with you on that during your discussion of the provisions
of the farm bill.
Mrs. Hartzler. I am not saying I am proposing it, by the
way. I just want to clarify that. I just want some information.
Mr. Nelson. What I would like to do is that there has been
analysis done by USDA on who gets the payments and of different
scenarios for the program, and we would be happy to provide
those analyses to you for your consideration as you look at
this program during the discussion of that provision of the
farm bill.
Mrs. Hartzler. I have read the FAPRI analysis of it and
just interested in your hearing your perspective on that. Do
you also have figures showing if cuts were made at different
levels, the impacts of totally eliminating--I mean various cuts
at different levels?
Mr. Nelson. Congresswoman, I can't say for sure that all of
that is covered in the analysis, but we will get you what we do
have and we would be happy to follow up with you to see if we
could get some more information for you.
Mrs. Hartzler. Okay. Just some other sort of related
questions. What are farmers' biggest concerns with respect to
just program delivery right now, given your connection to
producers in the field?
Mr. Nelson. Well, again, I am only in a position really to
speak for the part of the country that I come from at this
point. Again, I think it is timeliness of payments of some of
these programs because of the factors within the ACRE and SURE
program, for example, that mean that it is at least a year
later before we can begin making payments to producers under
those provisions. I think that is especially of concern in
disaster or emergency-related programs that we need to have a
more timely mechanism for making payments, again, for those
programs in particular.
Mrs. Hartzler. Do you have some analysis of over say the
past 10 years the impact that direct payments have had on the
percentage of net farm income that they have had? Of course, it
depends on the price. It depends on how your crops are doing.
But I am just curious, some years, bad years, I would assume
the direct payments make a large percentage of the income that
would come in that year. Other years obviously not. So do you
have a graph or something showing over time----
Mr. Nelson. Congresswoman, yes, we do, and so--and again,
we would be happy to provide that.
Mrs. Hartzler. Okay. Great. Thank you very much. I yield
back my time.
The Chairman. The gentlelady yields back. Mr. Huelskamp, I
apologize. I took you out of order but you are recognized for 5
minutes. Sorry about that.
Mr. Huelskamp. No problem, Mr. Chairman. Thank you. Good to
be here. I have a few questions to follow up on Representative
Hartzler's question about key programs in your mind.
If Members of the Committee had to select one particular
program as top priority, what would your recommendation be?
Mr. Nelson. Again, Congressman, I am going to go back to my
answer that we believe the safety net is critical and rather
than comment on individual programs, again, I would like to
talk about that as we work with you to craft the safety net and
update the safety net that we look at making sure that we have
both the livestock and the crop sectors covered, that we have
all crops covered effectively, and that we treat all regions of
the country equitably. If we keep those goals in mind within
the budget constraints that we know we are all going to face,
we look forward to again crafting a safety net that works for
producers today.
Mr. Huelskamp. And I appreciate that. That is difficult.
The answer to the question for my producers is on the crop
side. It is very clear it is about crop insurance, number one,
without a doubt. I don't know if that varied or how much it
varied across the country. One thing I would request is simply
a list of the safety net programs, those you are considering
safety net programs, and then everything else. That word gets
thrown around a lot. I am new to Washington, and I want to know
exactly what is in that category.
Speaking of crop insurance, though, I was looking at farm
prices in my home area of Dodge City this morning. Very nice if
you had some to sell. Whole crop of wheat is selling at $1.40;
corn, $7.25; soybeans, $13.16. My concern about a crop
insurance program is it only deals with--it does not deal with
the input costs, which are not on the board, and those are
particularly higher and going higher. Is there any particular
changes in the crop insurance program that you would suggest to
deal with that aspect of the cost side versus the revenue?
Mr. Nelson. Congressman, the crop insurance program is a
little bit outside of our Farm Service Agency area, but what I
would suggest is important on our side with respect to crop
insurance is that we make sure that the SURE program, if it
continues, is crafted to fit together with crop insurance to
help fill the kind of gaps that you are talking about that crop
insurance doesn't cover. That is what they are designed to do,
is to work together, not be duplicative but to actually
supplement and complement each other. I think with any
dimension of the safety net but particularly the SURE program
in particular, which is the biggest one relating to crops, that
it is very important that consideration of any future version
of it again be crafted to fit very closely together to cover
the gaps that crop insurance doesn't cover.
Mr. Huelskamp. And is crop insurance in your category of
safety net programs?
Mr. Nelson. As a farmer, it would be in my category.
Mr. Huelskamp. Well, I am not worried about the farmer. I
am worried about the agency.
Mr. Nelson. I would have to say yes. It is a critical part
of the safety net, but it is not the whole safety net.
Mr. Huelskamp. Understood. The other question would be,
again, on the revenue side, outside of government, do you have
any analyses of the potential impact of the proposed free trade
agreements and its impact on the actual cost to programs and
the return to farmers?
Mr. Nelson. You know, Congressman, what I would like to
suggest on that is that we have our trade team at USDA come up
and brief you on those issues. We would really look forward to
that opportunity to do so for you and any other Members and
staff that would like to get together on that. So that offer is
on the table.
Mr. Huelskamp. Thank you. I would love to take you up on
that. I would also request as well, though, that certain other
members of the Administration and Members of Congress certainly
need to hear that briefing, and we can sit and talk about
programs all day. But, if we can just sell more stuff and we
got folks out there--we are losing markets every day by
Washington, whoever's to blame, sitting around and letting
those markets be taken over by our competitors, and we are
losing not just today but in the future as well by our failure
to move. And I am very frustrated by that. Whatever you can do
and whatever the USDA can do to get that done, I mean, that
makes this discussion a lot easier when we are able to solve
that step.
But I appreciate the responses and look forward to and
would love to have you in my office to visit about that
directly.
Mr. Nelson. Thank you very much.
The Chairman. The gentleman's time has expired. The
gentleman from New York, Mr. Gibson, for 5 minutes.
Mr. Gibson. Thank you very much, Mr. Chairman. I appreciate
the panelists being here today.
I represent a district in upstate New York. We have about a
thousand farms, about half of them dairy, and this is a good
time for the hundredweight price of milk, but there are
challenges with input. I am curious if you have any analysis,
if ethanol subsidies were reduced or eliminated, how would that
impact the price per bushel?
Mr. Nelson. Congressman, we are going to need to get back
to you on that and I just want to make sure that I understand
what you are talking about is whether or not ethanol subsidies
and their effect on feed grain prices, the impact that they
have had on the livestock sector?
Mr. Gibson. That is correct. I am curious to know what
analysis that you may have on the elasticity of price if
these--if we reform the subsidies, various unspectrum
degradation in terms of stepping them back, also an estimate on
impact on the market if they were eliminated. And I look
forward to a response for the record on that.
Mr. Gibson. The other piece I just want to follow up, I am
curious to know what your analysts or your subject matter
experts, what ideas that you may have with regard to crop
insurance reform. This is a topic that often comes up with my
farmers, and I would like to be able to share with them the
latest insight from your experts.
Mr. Nelson. I am going to turn this over to Mr. Garcia
because he is actually involved with a project that we are
working on on crop reporting jointly with crop insurance, and
let him take this one.
Mr. Gibson. Thank you.
Mr. Garcia. Congressman, of course, when we are talking
about crop insurance reform, as the Administrator mentioned,
the Farm Service Agency does collaborate with the Risk
Management Agency, who is in charge of the crop insurance
provision and we work with them very closely. And what we have
been working with them on especially after this 2008 Farm Bill
when the SURE program was approved, we have been working with
Risk Management Agency to fully understand all the different
types of policies that are available, whether it is a
production policy or a revenue policy. We had to spend quite a
bit of time learning those particular different policies to
write our regulations for the SURE program.
So it is very important that the Risk Management Agency and
the producers talk to their insurance agencies. I do know that
the crop insurance organizations do constantly have meetings
throughout the year with their private insurance agents and ask
for recommendations on how the particular policies should be
changed.
Now, the one thing that we are very excited about that we
are working with the Risk Management Agency right now that will
help our farmers tremendously, is that our producers will only
file one acreage report. Right now the farmers have to file an
acreage report with their private insurance agency and then
another acreage report with the Farm Service Agency. So we are
working on a project right now where producers would just file
one time and we will use that acreage for both agencies.
Mr. Gibson. Thank you. And I guess the last point, assess
the EQIP program and your thoughts on perhaps the way forward
there.
Mr. Nelson. Well, the EQIP program is an NRCS program, and
it is the premier conservation program in our CS office, and I
think there has been a tremendous amount of good work done with
that program over the years. This is more from an individual
producer point of view than an FSA Administrator point of view.
Originally, the program was set up so that it was only long-
term contracts, and that was beneficial for producers that
could afford to make the financial commitment to a long-term
cost-share agreement under EQIP. I think they greatly improved
the program a few years ago when they started offering annual
practices, which I believe allows a lot more producers, again
who aren't in a position to make long-term financial
commitments to cost-share practices, to participate in that
program. So I think that was a substantial improvement.
We don't jointly administer the program within NRCS, but we
do work closely with them on any number of other programs.
Mr. Gibson. Thank you very much, and let me just say, Mr.
Chairman, and I will turn it back, that it is actually one of
the more popular programs back home. There are some folks who
have a decided point of view that FSA perhaps could play a more
active role in it going forward. Maybe we can collaborate on
that going forward.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. The gentleman yields
back.
Mr. Nelson, we want to thank you for being here today. I
want to thank whoever your team put together the answers to our
audit questionnaire. I am sure both of you slaved over it
mightily, but somewhere in your system you put this together
and thank you very much. It is very helpful to what we are
trying to do here.
Couple of quick this and that. In some of the responses,
you talked about improper payment rates on the various
programs. They appear to be really good, but what is the
recovery experience with respect to going after those improper
payments? Can you give us some sort of thought on how quickly
the--or what your experience of getting money back had there
been an improper payment?
Mr. Nelson. Congressman, I am glad that we do have a chance
to talk about that because it gives me the opportunity to say
that FSA last year made seven million correct payments, and I
think that that is important for the record, but we know with
that many correct payments, as I said in my opening remarks,
even one improper payment is one too many, and we find out when
one may have been improper, we review it and we go back and
determine whether or not it actually was improper. We have
implemented a couple of things. We talked about the AGI checks
with the Internal Revenue Service earlier, but in addition to
that, four times a year, twice that required by Congress, we do
check the death master file at the Social Security
Administration to determine whether or not we are making
improper payments to producers who have passed away. And again,
that has been an important step forward, but I think it is
important to note for the record as well that sometimes a
payment to a producer who has passed away is a proper payment
because we had a contract with that producer when they passed
away and just like any other contract in this country, when
somebody passes away, we make that payment to the estate.
The Chairman. But you are actually experiencing
recovering--the very few payments that are made improperly, you
are experiencing recovery of those dollars?
Mr. Nelson. I am sorry if I missed your point a little bit.
We have pretty good experience with that, but it does involve
getting in touch with the producer, and they do have appeal
rights and so they have the opportunity to say, in front of
first the agency and then the National Appeals Division, hey,
that payment was proper. We also have the 90 day rule that has
been in the statutes for quite some time that in some cases
prevents us from going back and getting the money back from
producers even if it is established----
The Chairman. If you don't catch the improper payment
within 90 days then----
Mr. Nelson. In certain cases, sir.
The Chairman. Let me ask you one other real quick one, Mr.
Nelson. You talked earlier to one of the Members about capital
cost increases from a certain period through today, 90 percent
just in this year. What impact does land cost, and can you
break out those increases by what land--increase in land prices
have had in your numbers?
Mr. Nelson. Congressman, I don't have that with me, but we
would certainly be happy to try to provide that.
The Chairman. Okay. All right. Mr. Scott, any final
comments? All right.
Well, again, gentlemen, thank you both for being here. Look
forward to working with you in your new roles as leadership at
FSA.
Under the rules of the Committee, today's record of the
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Subcommittee on General Farm
Commodities and Risk Management is adjourned.
[Whereupon, at 11:36 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Submitted Questions
Response from Bruce Nelson, Administrator, Farm Service Agency, U.S.
Department of Agriculture *
---------------------------------------------------------------------------
* There was no response from the witness by the time this hearing
went to press.
---------------------------------------------------------------------------
Questions Submitted By Hon. Eric A. ``Rick'' Crawford, a Representative
in Congress from Arkansas
Question 1. Given the current make up of farm safety net programs,
including the marketing loan, direct and countercyclical program, and
ACRE do you think it is important for Congress to look at streamlining
programs in the next farm bill? What would be the impact on your
agency, the Farm Service Agency, If you were only implementing and
administering streamlined programs? Would this improve your service and
support to farmers, and if so how?
Question 2. What has been the current enrollment level in ACRE
across all crops and for rice specifically? What is your impression of
why such a low enrollment level?
Question 3. Of all the current safety net programs, can you rank
them by degree of complexity and level of cost/resources to implement
and administer?
______

House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
Direct and Countercyclical Program (DCP).
2. Subprograms/Department Initiatives
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
reauthorizes direct and countercyclical payments, with some changes,
that were previously authorized under the Farm Security and Rural
Investment Act of 2002 (2002 Farm Bill). FSA enters into annual
contracts with agricultural producers to maintain base acres on
participating farms. During the contract period, eligible land on the
participating farm, may be planted to any commodity except fruits,
vegetables (other than mung beans and pulse crops), and wild rice.
FSA is responsible for overall implementation of DCP. Producers
enroll and payments are initiated at the FSA County Office
administratively designated for the farm.

DCP Direct Payments:

Direct payments are paid annually and are not based on producers'
current production choices, but instead are tied to base acres and
program yields. Direct payments do not provide an incentive to increase
production of any particular crop and the payments support farm income
without affecting producers' current production decisions.
The 2008 Farm Bill continues the direct payments that began under
the 2002 Farm Bill. Direct payment rates for the eligible DCP
commodities are statutory and as follows:

Wheat: $0.52 per bushel

Corn: $0.28 per bushel

Grain sorghum: $0.35 per bushel

Barley: $0.24 per bushel

Oats: $0.024 per bushel

Upland cotton: $0.0667 per pound

Rice, long grain: $2.35 per hundredweight

Rice, medium/short grain: $2.35 per hundredweight

Soybeans: $0.44 per bushel

Other oilseeds: $0.80 per hundredweight

Peanuts; $36 per ton

For each commodity, the total direct payment for producers on a
farm is determined by multiplying 83.3 percent for 2009 through 2011
and 85 percent in 2008 and 2012 of the farm's base acreage times the
farm's direct payment yield times the direct payment rate.

Countercyclical Payments:

Countercyclical payments provide support counter to the cycle of
movement of market prices as part of a ``safety net'' in the event of
low crop prices. Countercyclical payments for a commodity are only
issued if in a given year, the effective price for a commodity is below
the target price for the commodity. The countercyclical payment rate is
the amount by which the target price of each commodity exceeds its
effective price. The effective price for each commodity equals the
direct payment rate plus the higher of:

the national average market price received by producers
during the marketing year as determined by the USDA Secretary,

or the national loan rate for the commodity.

Target prices, as provided by the 2008 Farm Bill, for each
commodity are as follows:

------------------------------------------------------------------------
Crop 2008 2009 2010-12
------------------------------------------------------------------------
Wheat $3.92/bu $3.92/bu $4.17/bu
Corn $2.63/bu $2.63/bu $2.63/bu
Grain sorghum $2.57/bu $2.57/bu $2.63/bu
Barley $2.24/bu $2.24/bu $2.63/bu
Oats $1.44/bu $1.44/bu $1.79/bu
Upland cotton $0.7125/lb $0.7125/lb $0.7125/lb
Rice, long grain $10.50/cwt $10.50/cwt $10.50/cwt
Rice, medium/short grain $10.50/cwt $10.50/cwt $10.50/cwt
Soybeans $5.80/bu $5.80/bu $6.00/bu
Other oilseeds $10.10/cwt $10.10/cwt $12.68/cwt
Dry peas (*) $8.32/cwt $8.32/cwt
Lentils (*) $12.81/cwt $12.81/cwt
Chickpeas, small (Garbanzo bean, (*) $10.36/cwt $10.36/cwt
Desi)
Chickpeas, large (Garbanzo bean, (*) $12.81/cwt $12.81/cwt
Kabuli)
Peanuts $495/ton $495/ton $495/ton
------------------------------------------------------------------------
* Not available.

3. Brief History
For crop years 2002 through 2007, pursuant to the 2002 Farm Bill
(P.L. 107-171), wheat, corn, barley, grain sorghum, oats, upland cotton
and rice, (the same crops that were previously eligible for fixed
annual Production Flexibility Contract (PFC) payments for producers
under the 1996 Farm Bill) oilseed crops, including soybeans, sunflower
seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe,
sesame seed, and peanuts were crops eligible for a fixed direct
payment. (PFC payments were based on historical yields and acreage.
Direct payments were received whether or not a crop was planted, and
did not depend on what crop was planted, (except for fruit and
vegetable restrictions)). The 2008 Farm Bill further authorizes these
types of direct payments for the 2008 through 2012 crop years, with
some changes, and adds pulse crops beginning with the 2009 crop year.
Countercyclical payments (countercyclical payments are similar to
the deficiency payments authorized under the earlier Acreage Reduction
Program (ARP), which mandated strict acreage limitations and mandatory
acreage idling or set-aside requirements) were authorized for the 2002
through 2007 crop years pursuant to the 2002 Farm Bill for these same
crops.
Under the 2008 Farm Bill, peanuts continue to be eligible for
direct and countercyclical payments, and continue to have slightly
different statutory requirements than for other crops.
The 2008 Farm Bill provides that the base acres and program yields
established by the 2002 Farm Bill that were effective September 30,
2007, will constitute the base acres and yields for the 2008 through
2012 crop years. The 2008 Farm Bill, however, requires adjustments to
base acres for various reasons including, but not limited to, land no
longer being devoted to agricultural uses.
4. Purpose/Goals
The Direct and Counter-Cyclical Program (DCP) provides annual
payments to eligible producers on farms enrolled for the 2008 through
2012 crop years. Both direct and countercyclical payments are computed
using the base acres and payment yields established for each farm.
The intent of DCP is to provide a safety net for farmers, while
allowing farmers planting flexibility. The program protects farmers
from low market prices of program commodities, and helps ensure
farmer's cash flow needs are met. Roughly 80 percent of all farms with
base acres are enrolled in DCP.
5. Success in Meeting Programmatic Purpose/Goals
DCP has successfully met its programmatic goals.

6. Annual Budget Authority (FY 2002-FY 2011)
FY 2002 Through FY 2011 Budget Authority
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Payments $0 $4,151,272 $5,288,646 $5,234,599 $4,962,372 $3,957,175 $4,821,206 $5,222,325 $4,898,085 $4,950,510
Countercyclical Payments 0 1,742,999 809,381 2,771,503 4,355,612 3,158,554 359,064 730,918 902,584 131,848
--------------------------------------------------------------------------------------------------------------------------------------------------------
This program is funded by Commodity Credit Corporation (CCC). Budget authority for this CCC program is based on actual outlays.
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Annual Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Payments $0 $4,151,272 $5,288,646 $5,234,599 $4,962,372 $3,957,175 $4,821,206 $5,222,325 $4,898,085 $4,950,510
Countercyclical Payments 0 1,742,999 809,381 2,771,503 4,355,612 3,158,554 359,064 730,918 902,584 131,848
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

Income Support and Disaster
Assistance
Price Support and Marketing 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604
Assistance Loans
Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565
Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410
Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848
ACRE Payments 0 0 0 0 446,633
Milk Income Loss Contract 157,850 2,153 769,900 181,527 173,000
Payments
Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000
Other Direct Payments 25,695 29,768 84,375 103,432 80,504
NAP Payments 126,951 73,989 40,700 98,745 116,873
Crop Disaster Assistance 58,591 1,281 114,828 ^109 0
Livestock Indemnity Program 198 2 1,716 91,825 77,000
Emergency Livestock Assistance 664 25 1,926 ^403 0
Emergency Conservation Program 149,727 128,456 0 92,459 39,719
Biomass Crop Assistance 0 0 248,202 199,000
Emergency Forest Restoration 0 0 0 18,000
Program
Tree Assistance Program 1,973 1,010 68 90 0
CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635
Dairy Indemnity Program 181 144 651 162 200
Emergency Forestry 6,302 12,717 7,854 8,297 9,291
Conservation Program
USDA Supplemental Assistance, 0 0 83,814 295,600 295,600
appropriated
FSA Disaster Assistance, 0 2,541,733 0 0 0
appropriated
Reforestation Pilot Program 0 794 794 800 800
Agricultural Disaster Relief 0 0 6,000 1,573,278 1,926,134
Trust Fund
Aquaculture Grants (123317) 0 0 48,500 39,942 0
Farm Storage Facility Loans 548 0 12,500 0 0
Administrative costs 776,465 683,795 694,980 744,303 753,934
(direct)
Indirect costs 47,548 234,633 226,905 242,967 246,299
-------------------------------------------------------------------------------
Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049
FTEs 8,905 8,620 9,529 8,355 8,140

9. Eligibility Criteria
Any farm with base acres is eligible to participate in DCP. A
producer on a farm with base acres is eligible to receive payment if
the following criteria are met:

Actively Engaged in Farming provisions.

Highly Erodible Land and Wetland provisions.

Average Adjusted Gross Income provisions.

Conservation Compliance provisions.

Controlled substance provisions.

Federal Crop Insurance Corporation fraud provisions.

Additionally, farms that contain fewer than 10 base acres do not
earn a payment unless that farm is at least 50 percent owned by a
socially disadvantaged or limited resource farmer or rancher.
10. Utilization (Participation) Data
Under the 2008 DCP, 1.1 million producers enrolled 1.8 million
farms with 260.9 million base acres. Under the 2009 DCP, 940,000
producers' enrolled 1.5 million farms with 226.4 million base acres
(Note that for 2009, 90,000 producers' enrolled 131,000 farms with 33.9
million base acres in ACRE program). Preliminary 2010 DCP enrollment
numbers show that 903,300 producers' enrolled 1.6 million farms with
222.3 million base acres (Note that for 2010, 94,000 producers'
enrolled 137 thousand farms with 35.1 million base acres in the ACRE
program). Preliminary reports for the 2011 DCP indicate that the number
of producers, farms, and base acres will decrease marginally due to a
slight increase (about 1,000 farms) in ACRE participation.
11. Duplication or Overlap with Other Programs
Beginning with the 2009 crop, ACRE payments provide a revenue-based
safety net that is an alternative to price based countercyclical
payments. To enroll a farm in ACRE, producers agree to forgo
countercyclical payments, take a 20 percent reduction in direct
payments, and a 30 percent reduction in the marketing assistance loan
rates.
12. Waste, Fraud and Abuse
Improper Payments Information Act review was conducted on DCP in
accordance with Appendix C to OMB Circular A-123. Based on random
sampling, a 1.77 percent error rate was recorded for 2010 DCP.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Marketing Assistance Loans (MAL) and Loan Deficiency Payments (LDP)
Program.
2. Subprograms/Department Initiatives
Subprograms:

MAL and LDP:

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
reauthorizes non-recourse marketing assistance loans (MAL) and loan
deficiency payments (LDP) and makes them available for the 2008-2012
crops of wheat, corn, grain sorghum, barley, oats, upland cotton,
extra-long staple cotton, long grain rice, medium grain rice, soybeans,
other oilseeds (including sunflower seed, rapeseed, canola, safflower,
flaxseed, mustard seed, crambe and sesame seed), dry peas, lentils,
small chickpeas, large chickpeas, graded wool, non-graded wool, honey
and peanuts.
MALs and LDPs are marketing tools available to producers beginning
upon harvest or shearing. The MAL provides cash when market prices are
typically at harvest-time lows, which allows the producer to delay the
sale of the commodity until more favorable market conditions emerge.
Allowing producers to store production at harvest or shearing provides
for a more orderly marketing of commodities throughout the year.
MALs for commodities are considered nonrecourse when the MAL can
either be redeemed by the repayment of the MAL or by delivering the
pledged collateral to the Commodity Credit Corporation (CCC) as full
payment for the MAL at maturity. MAL repayment provisions specify,
under certain circumstances, that producers may repay MALs at less than
loan rate (principal) plus accrued interest and other charges.
Alternatively, loan deficiency payment (LDP) provisions specify that,
in lieu of securing a MAL, producers may elect to receive an LDP.
LDPs are payments made to a producer who, although eligible to
obtain a MAL, agrees to forgo the loan in return for a payment on the
eligible commodity. The LDP payment is the difference between the
county loan rate and CCC determined value for the applicable commodity
or class of commodity multiplied by the eligible quantity. LDPs are
only applicable when the market price or CCC determined value is less
than the county loan rate.
MAL repayment and LDP provisions are intended to minimize potential
delivery of loan collateral to CCC, accumulation of CCC-owned stocks,
storage costs, discrepancies in marketing loan benefits across state
and county boundaries, and allow U.S. produced-commodities to be
marketed freely and competitively. Accumulating CCC-owned stocks tends
to make U.S.-produced commodities less competitive in world markets and
can result in substantial storage costs to taxpayers.

Recourse Loans:

Recourse loans are commodity loans for which the commodity offered
as collateral does not meet the specified quality eligibility
requirements and may not be delivered or forfeited to CCC in
satisfaction of the loan indebtedness. Recourse loans must be repaid in
full on or before the loan maturity date at principal plus interest.
The following are considered recourse loans: high moisture corn and
grain sorghum, and seed cotton; acquired grain for high moisture corn
or grain sorghum loans; distress loans on any commodity that is not
stored in eligible storage; and any commodity otherwise eligible for
nonrecourse loan but not meeting the quality eligibility requirements
according to U.S. grading standards.

Graze-Out Payments:

Graze-out payments are payments made to eligible producers who
although eligible to obtain a loan elect to use acreage planted to
barley, oats, triticale, or wheat for livestock grazing and agree to
forgo any other harvesting of the commodity on this acreage during the
applicable crop year. The payment rate is determined by the amount the
applicable commodity loan rate exceeds the CCC-determined value of the
commodity for the county where the farm is located. Graze-out payments
are only applicable when the market price or CCC determined value is
less than the county loan rate.

Department Initiatives:

None.
3. Brief History
The Commodity Credit Corporation (CCC) was created on October 17,
1933, by the CCC Charter Act, and established for the purpose of
stabilizing, supporting, and protecting farm income and prices. The CCC
Charter Act gave CCC the authority to carry out price and income
support activities, and initially made commodity loans available to
cotton and corn producers.
The Agricultural Adjustment Act of 1938 (1938 Act) is considered a
permanent part of agricultural legislation. In the original law.
Congress enacted the first comprehensive legislation dealing with price
support, and provided price support loans for wheat, corn, and cotton.
Price support for peanuts and wool were subsequently added. Currently,
when current legislation is not renewed, the law reverts back to the
permanent provisions of the 1938 Act, along with the Agricultural Act
of 1949 (1949 Act).
The 1949 Act is permanent legislation of U.S. agricultural policy
and has been amended by every subsequent farm bill. The 1949 Act made
commodity loans available to producers of approved commodities at a
rate established in the legislation, or subsequent amendments. The
commodities included wheat, corn, cotton, peanuts, rice, honey, honey,
grain sorghum, barley, oats, rye and soybeans.
The Food Security Act of 1985 (1985 Farm Bill) authorized producers
to repay their commodity loans at a level that is the lesser of
principal plus interest, or at the prevailing market price as
determined by the Secretary, thus the applicable commodity loans became
known as Marketing Assistance Loans (MAL). From 1985 until 1990,
repayments at the prevailing market price were required to be made by a
negotiable certificate issued by CCC as an in-kind payment.
The 1985 Farm Bill also introduced the Loan Deficiency Payment
(LDP) which enabled eligible producers of rice and cotton to forgo
obtaining a commodity loan and instead receive a payment based on the
difference between the county loan rate and CCC determined value for
the applicable commodity or class of commodity times the eligible
quantity
The Food Agriculture, Conservation and Trade Act of 1990 (1990 Farm
Bill) continued MAL and LDP provisions but allowed MAL repayments with
cash. The 1990 Farm Bill added wheat, feed grains and oilseeds as
commodities eligible for LDP and also allowed recourse loans for silage
and high moisture feed grains.
4. Purpose/Goals
MALs and LDPs are marketing tools available to producers of
eligible commodities. The MAL program supports America's farmers and
ranchers by providing producers with short term interim financing after
harvest and during the shearing season for wool, and providing
significant income support for eligible commodities when market prices
are below statutory loan rates. MALs also facilitate the orderly
marketing and distribution of all commodities throughout the year,
giving producers flexibility on when to sell their commodities.
Producers can settle their loan by either repaying the loan or by
forfeiting the commodity to CCC as full payment for the MAL at
maturity. MAL repayment provisions specify, under certain
circumstances, that producers may repay at less than the loan rate
(principal) plus accrued interest.
The LDP program is an alternative to the MAL program. If a producer
agrees to forgo receiving a MAL and provided there is a rate in effect,
the producer may obtain an LDP on their harvested commodity. An LDP
rate is in effect when the alternative repayment rate is below the
applicable crop year commodity loan rate. Like MALs, LDPs support
America's farmers by providing price income support to producers and
giving producers flexibility on when to sell their commodities.
The intent of MAL repayments and LDP's was to minimize the
potential delivery of loan collateral to CCC, limit the accumulation of
CCC-owned stocks, minimize storage costs, stabilize the discrepancies
in marketing loan benefits across state and county boundaries, and
allow U.S. produced commodities to be marketed freely and
competitively. Accumulating CCC-owned stocks tends to make U.S.
produced commodities less competitive in world markets and can result
in substantial storage costs to taxpayers.
When market prices are low, LDP participation tends to increase.
Likewise when market prices are high, LDPs are not authorized which
leaves only the MAL option open to producers for providing them the
influx of cash at harvest.

5. Success in Meeting Programmatic Purpose/Goals
Total Number of MALs and LDPs by Crop Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Crop Years
Program ---------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Marketing Assistance Loans 193,132 132,276 209,997 185,132 158,154 99,828 101,551 74,662 66,507
Loan Deficiency Payments 221,545 300,936 1,843,984 1,500,137 180,640 18,864 35,734 33,903 25,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
MALs are used by producers of loan commodities who at harvest take advantage of the low interest CCC loans on the commodities they produce to pay
their crop expenses, and market these commodities later in the year when prices are usually higher. LDPs are only applicable when the current market
price is below the established commodity loan rate.
--------------------------------------------------------------------------------------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)
FY 2002 Through FY 2011 Budget Authority
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Marketing Assistance $10,130,603 $10,718,057 $9,149,591 $12,619,239 $12,013,778 $11,286,100 $9,509,047 $8,290,909 $7,189,585 $7,014,700
Loans
Loan Deficiency 5,344,682 693,390 461,177 3,855,624 4,629,556 173,736 6,036 145,497 191,647 36,565
Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority for CCC programs is based on obligations. Funds obligated in one fiscal year may not be disbursed until a succeeding fiscal year or
fiscal years. In the case of these two programs, obligations, budget authority and outlays are incurred at the same time period.
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Annual Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Marketing Assistance $10,130,603 $10,718,057 $9,149,591 $12,619,239 $12,013,778 $11,286,100 $9,509,047 $8,290,909 $7,189,585 $7,014,700
Loans
Loan Deficiency 5,344,682 693,390 461,177 3,855,624 4,629,556 173,736 6,036 145,497 191,647 36,565
Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
To be eligible for MAL or LDP, the producer must comply with
conservation and wetland protection requirements, submit an acreage
report to account for all cropland on the farm, have and retain
beneficial interest in the commodity until the MAL is repaid or CCC
takes title to the commodity, and meet the applicable adjusted gross
income limitations.
Several commodities have been added to the list as eligible for MAL
and LDP through previous farm bills. Current commodities eligible for
MAL and LDP include wheat, barley, oats, corn, grain sorghum, soybeans,
long and medium rice, peanuts, cotton, sunflower seed, rapeseed,
canola, safflower, flaxseed, mustard seed, crambe, sesame seed, graded
and nongraded wool, mohair, honey, dry peas, lentils, small chickpeas,
and beginning with the 2009 crop year, large chickpeas. Hay, silage,
and unshorn pelts are eligible for LDP only. Mohair was recently
removed from the list of eligible commodities for both MAL and LDP
through the remainder of Fiscal Year 2011.
A person or legal entity with an average adjusted gross non-farm
income that exceeds $500,000 is not eligible for an LDP or market loan
gain (MLG). These producers may request an MAL but must repay the MAL
at principal plus interest. The MLG rate equals the amount by which the
applicable loan rate exceeds the MAL repayment rate.
10. Utilization (Participation) Data
Producer participation in the MAL or LDP program includes producers
from all fifty states, some to a much larger extent than others.
Depending on the predominate commodities produced in the state and the
current market price of these commodities, some years a particular
state has many MAL and just a few LDPs, and other years both MAL and
LDP numbers are high.
11. Duplication or Overlap with Other Programs
MALs and LDPs are not a duplication of other USDA programs.
12. Waste, Fraud and Abuse
To comply with the Improper Payments Information Act of 2002, FSA
conducts internal investigations through the County Office Review
Program of high risk programs. MALs and LDPs have been reviewed
numerous times in the last few years. The error rate for improper
payments for MALs was 0.52 percent in 2011. For LDPs, the error rate
for improper payments was 0.44 percent in 2010.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Average Crop Revenue Election (ACRE) Program.
2. Subprograms/Department Initiatives
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
authorizes annual direct and countercyclical payments, with some
changes, similar to the direct and countercyclical payments (DCP)
previously authorized under the Farm Security and Rural Investment Act
of 2002 (2002 Farm Bill). In addition, the 2008 Farm Bill authorized
the optional ACRE program as an alternative to the traditional
countercyclical program. ACRE consists of two payment types, direct
payments (ACRE direct) and revenue-based countercyclical payments
(ACRE). Similar to DCP, FSA enters into annual contracts with
agricultural producers to maintain base acres on participating farms
and makes direct payments on these base acres (see previous response
for DCP). In contrast, ACRE's revenue based countercyclical payments
are made on crops planted on the farm during the current contract year
as opposed to the historical plantings of DCP. During the contract
period, eligible land on the participating farm, may be planted to any
commodity except fruits, vegetables (other than mung beans and pulse
crops), and wild rice.
FSA is responsible for overall implementation of ACRE. Producers
enroll and payments are initiated at the FSA County Office
administratively designated for the farm.

ACRE Direct Payments:

ACRE direct payments are not based on producers' current production
choices, but instead are tied to base acres and yields. Direct payments
do not provide an incentive to increase production of any particular
crop and the payments support farm income without affecting producers'
current production decisions.
The 2008 Farm Bill continues the direct payments that began under
the Farm Security and Rural Investment Act of 2002. Direct payments
under the ACRE program are identical to those available under DCP
except that the ACRE direct payment rate is 80 percent of the DCP
direct payment rate. ACRE direct payment rates for the eligible ACRE
commodities are as follows:

Wheat: $0.416 per bushel

Corn: $0.224 per bushel

Grain sorghum: $0.28 per bushel

Barley: $0.192 per bushel

Oats: $0.0192 per bushel

Upland cotton: $0.05336 per pound

Rice, long grain: $1.88 per hundredweight

Rice, medium/short grain: $1.88 per hundredweight

Soybeans: $0.352 per bushel

Other oilseeds: $0.64 per hundredweight

Peanuts: $28.80 per ton

ACRE Payments:

ACRE payments are issued when two conditions are met for a
commodity. Actual State Revenue falls below the State ACRE Guarantee
and Actual Farm Revenue falls below the Farm ACRE Guarantee.
Once it has been determined that both conditions have been met for
the farm to earn an ACRE payment, the payment is computed for a year by
multiplying:

83.3 percent (85 percent in 2012) of the planted and
considered planted acres on the farm not to exceed the total
base acres on the farm by

the farm productivity index by

the lesser of:

state ACRE guarantee minus actual state revenue

state ACRE guarantee times 25 percent

Note: Similar to DCP, Federal crop insurance or NAP is not required
for participation in ACRE.
3. Brief History
Background:

The optional ACRE Program is an alternative revenue-based safety
net to the price-based safety net provided by countercyclical payments
in DCP for crop years 2009 through 2012. Producers must elect to
participate in ACRE rather than in the traditional DCP. Producers are
required to sign-up for ACRE (or DCP) annually. ACRE provides producers
an option to protect against declines in market revenue. ACRE involves
state and farm revenue changes from guarantee revenue levels that are
based on national prices, state planted yields, and farm planted
yields.
A decision to participate in ACRE may be made in any of the crop
years 2009-2012; however, the ACRE election is irrevocable and cannot
be changed from the time of election through the 2012 crop year.
Producers may elect the ACRE alternative on a farm-by-farm basis.

ACRE Tradeoffs:

Producers who elect and enroll a farm in ACRE agree to: (1) forgo
DCP countercyclical payments, (2) a 20 percent reduction in their
direct payments, and (3) a 30 percent reduction in the marketing
assistance loan rates for all commodities produced on the farm which
are eligible for ACRE payments.
4. Purpose/Goals
The purpose of ACRE is to offer producers an alternative approach
to managing risk. ACRE provides, payments to producers when farm
revenues fall below a set threshold. This contrasts with the price
based protection offered by countercyclical payments. The ACRE program
provides payments to eligible producers on farms enrolled for the 2009
through 2012 crop years to partially offset annual reductions in market
revenue.
5. Success in Meeting Programmatic Purpose/Goals
The ACRE program has successfully met its programmatic goals to
provide a revenue-based countercyclical safety net to producers.
However, enrollment in ACRE has been lower than expected.

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
Any farm with base acres is eligible to participate in ACRE;
however, to receive an ACRE payment, producers on the farm must plant a
covered commodity (wheat, corn, grain sorghum, barley, oats, upland
cotton, rice, soybeans, other oilseeds, dry peas, lentils, small
chickpeas, and large chickpeas) or peanuts.
A producer on a farm with base acres is eligible to receive payment
if the following criteria are met:

Actively engaged in farming provisions

Highly Erodible Land and Wetland provisions

Average (3 year) Adjusted Gross Income not to exceed
$750,000 for farm income and $500,000 for non-farm income

Conservation Compliance provisions

Controlled substance provisions

Federal Crop Insurance Corporation fraud provisions

Additionally, farms that contain fewer than 10 base acres do not
earn a payment unless that farm is at least 50 percent owned by a
socially disadvantaged or limited resource farmer or rancher.
10. Utilization (Participation) Data
Under the 2009 ACRE Program, 90,000 producers enrolled 131,000
farms with 33.9 million base acres. Preliminary 2010 ACRE enrollment
numbers, show that, 94,000 producers enrolled 137,000 farms with 35.1
million base acres. Preliminary reports for the 2011 ACRE Program
indicate that enrollment will increase by about 1,000 farms.
11. Duplication or Overlap with Other Programs
ACRE payments provide a revenue-based safety net that is an
alternative to price based traditional countercyclical payments. To
enroll a farm in ACRE, producers agree to forgo traditional
countercyclical payments, take a 20 percent reduction in direct
payments, and a 30 percent reduction in the marketing assistance loan
rates.
12. Waste, Fraud and Abuse
No such instances have to date been identified. FSA minimizes the
risk of improper ACRE payments by working in partnership with the
Internal Revenue Service to determine whether or not the participant
appears to meet or exceed AGI limitations.
13. Effect of Administrative PAYGO
See Exhibit 1.*
---------------------------------------------------------------------------
* Editor's note: Exhibit 1 is printed at the end of the
questionnaire.
---------------------------------------------------------------------------
______

1. Program Name
Supplemental Revenue Assistance Payments (SURE) Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
SURE is a nationwide crop disaster program authorized by the Food,
Conservation, and Energy Act of 2008 (2008 Farm Bill) to provide
assistance to producers suffering production, quality and/or revenue
losses due to natural disasters. Unlike prior ad hoc disaster programs,
the 2008 Farm Bill created a Trust Fund during FY 2008-11 to provide
funding for assistance to producers incurring 2008 through September
30, 2011 disaster-related losses.
SURE is based on a producer's entire farming operation in all
counties (and states) rather than on individual crop losses. Payments
are calculated in an amount equal to 60 percent of the difference
between the SURE guarantee and the calculated SURE total farm revenue.
The SURE guarantee cannot exceed 90 percent of the expected revenue for
the producer's farming operation.
The American Recovery and Reinvestment Act of 2009 (ARRA) increased
2008 SURE program benefits for participants by increasing the guarantee
calculation for both insurable and noninsurable (NAP) crops.
SURE is one of five complementary disaster programs authorized by
the 2008 Farm Bill. The others are Emergency Assistance for Livestock,
Honey Bees, and Farm-Raised Fish Program (ELAP), Livestock Indemnity
Program (LIP), the Livestock Forage Program (LFP), and the Tree
Assistance Program (TAP).
4. Purpose/Goals
SURE helps mitigate the impacts of natural disasters on producers
such as prevented planting, loss of production, loss due to quality,
and decreases in market prices received. SURE provides a revenue
guarantee (SURE guarantee) for a producer's total farming interest.
SURE is a supplement to Federal crop insurance and the Noninsured Crop
Disaster Assistance Program (NAP) to reduce producers' financial losses
and cover shallow losses not covered by crop insurance or NAP.
5. Success in Meeting Programmatic Purpose/Goals
SURE successfully provides financial assistance to producers who
suffer qualifying losses due to natural disasters. As of July 19, 2011,
103,709 producers received approximately $2.1 billion for 2008 crop
year losses, and to date, 32,273 producers have qualified for
approximately $485 million for 2009 crop year losses. Crop year 2009
SURE sign up is scheduled to end on July 29, 2011.

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Annual Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
SURE $0 $0 $0 $0 $0 $0 $0 $0 $973,434 $1,287,000
SURE Recovery Act 0 0 0 0 0 0 0 0 $578,327 $255,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
To be eligible for SURE benefits, producers and entities must:

(1) Obtain crop insurance and/or NAP on all crops of economic
significance (a crop contributing at least five percent to the
total farm's expected revenue), unless they qualify as a
Limited Resource, Socially Disadvantaged, or Beginning Farmer
or Rancher.

(2) Have at least one crop of economic significance suffer at least
a 10% production loss, adjusted for quality, due to a natural
disaster.

(3) Have a risk and ownership share in a qualified crop, in a
Secretarial declared disaster county or contiguous county, or
if not located in a qualified county, have a 50 percent or
greater actual production loss for the farm compared with
normal production for the farm.

(4) For the 2008 program year, no person as defined and determined
under provisions in 7 CFR Part 1400 in effect for 2008, may
receive more than $100,000 total in payments under SURE, ELAP,
LIP, and LFP combined. For 2009 and subsequent years, no person
or legal entity, excluding joint venture or general
partnership, may receive directly or indirectly, more than
$100,000 total in payments under SURE, ELAP, LIP, and LFP,
combined.

(5) Also, in applying the limitation on average adjusted gross
income (AGI) for 2008, an individual or entity is ineligible
for payment under SURE if the individual's or entity's average
adjusted gross income exceeds $2.5 million for 2007, 2006, and
2005 under the provisions in 7 CFR Part 1400 in effect for 2008
unless 75 percent or more of their income was from farming,
ranching or forestry. For 2009 through 2011, the average AGI
limitation relating to limits on payments for persons or legal
entities, excluding joint ventures and general partnerships,
with certain levels of average adjusted gross income will
apply. Specifically, for 2009 through 2011, a person or legal
entity with an average adjusted gross non-farm income, as
defined in 7 CFR Part 1404.3 that exceeds $500,000 will not be
eligible to receive SURE payments. Direct attribution
provisions also apply to SURE for 2009 and subsequent years.
Under direct attribution, any payment to a legal entity--also
will be considered for payment limitation purposes to be a
payment to a persons or legal entity with an interest in the
legal entity or in a sub-entity.

10. Utilization (Participation) Data
----------------------------------------------------------------------------------------------------------------
2008 Crop Year 2009 Crop Year (to date)
----------------------------------------------------------------------------------------------------------------
Non-stimulus Stimulus
---------------------------------------------------------------------------- Total
Total Participants Total Dollars
Total Participants Total Dollars Participants * Total Dollars
----------------------------------------------------------------------------------------------------------------
89,831 $1,294,950,257 103,709 $815,381,190 32,273 $485,287,214
----------------------------------------------------------------------------------------------------------------

The 2008 crop year included Stimulus funds. Not everyone qualified
for Stimulus funds. Producers with high levels of Federal crop
insurance coverage may not have been able to fully take advantage of
Stimulus funds because SURE payments are capped at 90 percent of a
producer's expected revenue.
The last day to sign-up for 2009 benefits is July 29, 2011. A large
percentage of 2009 data has not been reported as of this date.
Acreage data is not available because the SURE application process
is completed manually, therefore acreage data is not compiled in an
automated format.
11. Duplication or Overlap with Other Programs
SURE assists producers with crop losses and is a supplement to crop
insurance and NAP. In many instances the producer or entity has already
received crop insurance indemnities and/or NAP payments and these
payments are included in determining the total farm revenue to count
against the SURE guarantee. For the 2009 crop year, counties receiving
a Secretarial disaster designation due to excessive moisture may have
had producers qualify for assistance under the Crop Assistance Program
(CAP) on some crops. However, any Federal Government assistance
received for crop losses that are covered under SURE during a program
year are counted as revenue for the farm, thus reducing the total SURE
payment by the amount of payment received for that loss.
12. Waste, Fraud and Abuse
Compliance reviews for SURE are required to ensure accuracy of the
information provided by producers. If a producer is selected, the
information is recorded in the National Compliance Review database.
Additional selections may be required when County Committees, District
Directors or State Committees have reason to believe inaccurate data or
certifications were provided. Those found with inaccurate data may have
to refund the SURE payment or part of the payment.
When RMA and FSA data does not match or falls outside of acreage
tolerance rules, FSA notifies RMA of the discrepancy and the two
agencies work to correct inaccuracies. For instance, FSA may deny RMA
prevented planting acreage if documented evidence exists that supports
the lack of prevented planting conditions.
Currently SURE is in the early stages of being audited by the
Office of Inspector General. At this time, we do not have any
indication of on-going systemic waste, fraud, and abuse.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Livestock Forage Disaster Program (LFP).
2. Subprograms/Department Initiatives
None.
3. Brief History
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
authorized the Livestock Forage Disaster Program (LFP) to provide
compensation to eligible livestock producers that have suffered grazing
losses for covered livestock on land that is native or improved
pastureland with permanent vegetative cover or that is planted
specifically for grazing. The grazing losses must be due to a
qualifying drought condition during the normal grazing period for the
county. LFP also provides compensation to eligible livestock producers
that have suffered grazing losses on rangeland managed by a Federal
agency (public lands) if the eligible livestock producer is prohibited
by the Federal agency from grazing the normal permitted livestock on
the public lands due to a qualifying fire.
The grazing losses must have occurred on or after January 1, 2008,
and before October 1, 2011.
LFP is one of five complementary disaster programs authorized by
the 2008 Farm Bill. The others are Emergency Assistance for Livestock,
Honey Bees, and Farm-Raised Fish Program (ELAP), Livestock Indemnity
Program (LIP), the Supplemental Revenue Assistance Payments (SURE)
Program, and the Tree Assistance Program (TAP).
4. Purpose/Goals
Provide compensation to livestock producers that have suffered
grazing losses for livestock. The grazing losses must be due to a
drought condition during the normal grazing period for the county or
the eligible livestock producer must be prohibited by a Federal agency
from grazing the normal permitted livestock on public lands due to a
qualifying fire.
5. Success in Meeting Programmatic Purpose/Goals
LFP successfully provides immediate financial assistance to
livestock producers who suffer qualifying grazing losses due to drought
(on private and public lands) or fire (on public lands). Livestock
producers received compensation for grazing losses totaling
approximately $163.9 million for 2008 calendar year losses, $98.1
million for 2009 calendar year losses, and $32 million for 2010
calendar year losses. As of July 12, 2011, livestock producers have
received compensation in the amount of approximately $86.4 million for
2011 calendar year losses.

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
LFP provides compensation to eligible livestock producers that have
suffered grazing losses for covered livestock on land that is native or
improved pastureland with permanent vegetative cover or that is planted
specifically for grazing. The grazing losses must be due to a
qualifying drought condition during the normal grazing period for the
county. LFP also provides compensation to eligible livestock producers
that have suffered grazing losses on rangeland managed by a Federal
agency if the eligible livestock producer is prohibited by the Federal
agency from gazing the normal permitted livestock on the managed
rangeland due to a qualifying fire.
The grazing losses must have occurred on or after January 1, 2008,
and before October 1, 2011.
An eligible livestock producer that owns or leases grazing land or
pastureland physically located in a county rated by the U.S. Drought
Monitor as having a:

D2 (severe drought) intensity in any area of the county for
at least 8 weeks during the normal grazing period is eligible
to receive assistance in an amount equal to one monthly
payment;

D3 (extreme drought) intensity in any area of the county at
any time during the normal grazing period is eligible to
receive assistance in an amount equal to two monthly payments;
or

D3 (extreme drought) intensity in any area of the county for
at least 4 weeks during the normal grazing period or is rated a
D4 (exceptional drought) at any time during the normal grazing
period is eligible to receive assistance in an amount equal to
three monthly payments.

Eligible livestock are livestock (alpacas, beef cattle, beefalo,
beefalo, dairy cattle, deer, elk, emus, equine, goats, llamas, poultry,
reindeer, sheep or swine) that have been or would have been grazing the
eligible grazing land or pastureland:

during the normal grazing period for the specific type of
grazing land or pastureland for the county suffering from
drought, or

when the Federal agency excluded the livestock producer from
grazing the normally permitted livestock on the managed
rangeland due to fire.

To be eligible for LFP for the grazing land incurring losses
because of a qualifying drought or fire for which assistance is to be
requested, producers must:

obtain a policy or plan of insurance for the grazed forage
crop under the Federal Crop Insurance Act (FICA); or

file the required paperwork and pay the administrative fee
by the applicable state application closing date for the
Noninsured Crop Disaster Assistance Program (NAP).

Note: Eligible farmers and ranchers who meet the definition of
``Socially Disadvantaged,'' ``Limited Resource,'' or ``Beginning Farmer
or Rancher'' does not have to meet this requirement.
For the 2008 program year, no person as defined and determined
under provisions in 7 CFR Part 1400 in effect for 2008, may receive
more than $100,000 total in payments under LFP, the Emergency
Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program
(ELAP), Livestock Indemnity Program (LIP) and the Supplemental Revenue
Assistance Payments (SURE) Program, combined. For 2009 and subsequent
years, no person or legal entity, excluding joint venture or general
partnership, may receive directly or indirectly, more than $100,000
total in payments under LFP, ELAP, LIP, and SURE, combined.
Also, in applying the limitation on average adjusted gross income
(AGI) for 2008, an individual or entity is ineligible for payment under
LFP if the individual's or entity's average adjusted gross income
exceeds $2.5 million for 2007, 2006, and 2005 under the provisions in 7
CFR Part 1400 in effect for 2008 unless 75 percent or more of their
income was from farming, ranching or forestry. For 2009 through 2011,
the average AGI limitation relating to limits on payments for persons
or legal entities, excluding joint ventures and general partnerships,
with certain levels of average adjusted gross income will apply.
Specifically, for 2009 through 2011, a person or legal entity with an
average adjusted gross non-farm income, as defined in 7 CFR Part 1404.3
that exceeds $500,000 will not be eligible to receive LFP payments.
Direct attribution provisions also apply to LFP for 2009 and subsequent
years. Under direct attribution, any payment to a legal entity also
will be considered for payment limitation purposes to be a payment to a
persons or legal entity with an interest in the legal entity or in a
sub-entity.
Producers must provide a completed application for payment and
supporting documentation to their administrative FSA county office
within 30 calendar days after the end of the calendar year in which the
grazing loss occurred.
10. Utilization (Participation) Data
72,705 livestock producers have received compensation under LFP
totaling $380,384,965 for grazing losses due to drought (on private and
public lands) or fire (on public lands) due to fire that have occurred
on or after January 1, 2008, and before October 1, 2011.

Livestock Forage Disaster Program Payments as of July 12, 2011
----------------------------------------------------------------------------------------------------------------
2008 LFP 2009 LFP 2010 LFP 2011 LFP Total LFP
State Payments Payments Payments Payments Payments
Disbursed Disbursed Disbursed Disbursed Disbursed
----------------------------------------------------------------------------------------------------------------
AL $8,970,452 $3,436,639 $1,018,350 $13,425,441
AK $0
AZ $112,019 $2,881,334 $1,924,860 $1,788,812 $6,707,025
AR $223,938 $1,822,648 $2,046,586
CA $10,465,247 $14,349,563 $1,430,587 $26,245,397
CO $4,274,245 $36,612 $20,314 $1,414,975 $5,746,146
CT $0
DE $0
FL $2,653,553 $6,079,415 $23,166 $5,722,708 $14,478,842
GA $13,676,692 $2,683,255 $1,970,068 $18,330,015
HI $2,770,495 $3,246,585 $4,031,805 $2,180,142 $12,229,027
ID $0
IL $0
IN $527,276 $527,276
IA $0
KS $1,280,842 $318,273 $1,599,115
KY $6,550,532 $275,589 $6,826,121
LA $2,164,080 $2,392,366 $4,556,446
ME $0
MD $0
MA $0
MI $61,486 $265,612 $327,098
MN $1,703 $813 $2,516
MS $1,134,122 $1,134,122
MO $803,802 $803,802
MT $6,310,926 $593,988 $6,904,914
NE $0
NV $1,222,059 $889,741 $4,290 $2,116,090
NH $0
NJ $0
NM $6,674,520 $2,139,308 $4,606 $9,718,946 $18,537,380
NY $0
NC $7,379,022 $72,426 $7,451,448
ND $28,315,713 $28,315,713
OH $0
OK $2,105,355 $3,773,266 $14,801,107 $20,679,728
OR $761,349 $222,072 $1,134,019 $2,117,440
PA $1,567 $1,567
PR $0
RI $0
SC $4,848,645 $1,127,386 $24,820 $6,000,851
SD $50,278 $50,278
TN $12,791,638 $12,791,638
TX $40,073,665 $58,975,944 $12,486,955 $43,263,996 $154,800,560
UT $505,429 $223,403 $288,312 $1,017,144
VT $0
VA $1,217,885 $380,936 $1,598,821
WA $468,451 $468,451
WV $617,919 $617,919
WI $295,234 $50,160 $345,394
WY $918,932 $665,722 $1,584,654
----------------------------------------------------------------------------------------
Total dollars........ $163,929,493 $98,048,746 $31,969,515 $86,437,211 $380,384,965
Total Applica-....... 37,340 16,495 6,852 12,018 72,705
tions..............
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
LFP provides compensation for grazing losses for covered livestock
due to drought (on private and public lands) or fire (on public lands).
ELAP covers eligible grazing losses due to other eligible adverse
weather events and loss conditions not due to drought or fire on
federally managed lands, as determined by the Secretary. The amount of
any payment for which a livestock producer may be eligible under LFP
may be reduced by any amount received by the livestock producer for the
same or any similar loss from any Federal disaster assistance program.
12. Waste, Fraud and Abuse
There has been no Office of Inspector (OIG) or Government
Accountability Office (GAO) audit of LFP. However, FSA conducts its own
internal investigations through its county office review process and
through its internal review audit process. These reviews have not
raised any significant issues of waste, fraud, and abuse.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Livestock Indemnity Program (LIP).
2. Subprograms/Department Initiatives
None.
3. Brief History
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
authorized the Livestock Indemnity Program (LIP) which provides
disaster assistance to livestock owners and contract growers who
suffered livestock death losses in excess of normal mortality due to
adverse weather during the calendar year, including losses due to
hurricanes, floods, blizzards, disease, wildfires, extreme heat, and
extreme cold.
Eligible LIP losses must have occurred on or after January 1, 2008,
and before October 1, 2011.
LIP is one of five complementary disaster programs authorized by
the 2008 Farm Bill. The others are Emergency Assistance for Livestock,
Honey Bees, and Farm-Raised Fish Program (ELAP), Livestock Forage
Program (LFP), the Supplemental Revenue Assistance Payments (SURE)
Program, and the Tree Assistance Program (TAP).
4. Purpose/Goals
Provide compensation to eligible livestock owners and contract
growers for eligible livestock deaths in excess of normal mortality as
a result of an eligible adverse weather event.
5. Success in Meeting Programmatic Purpose/Goals
LIP successfully provides financial assistance to livestock
producers who suffer livestock death losses in excess of normal
mortality because of eligible adverse weather events. Livestock
producers received compensation for livestock death losses totaling
approximately $25.5 million for 2008 calendar year losses, $62.5
million for 2009 calendar year losses, and $16.3 million for 2010
calendar year losses. As of July 12, 2011, livestock producers have
received compensation in the amount of approximately $6.3 million for
2011 calendar year losses.

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
LIP provides compensation to livestock owners and contract growers
who suffer livestock deaths in excess of normal mortality caused by
eligible adverse weather events during the calendar year, including
losses because of hurricanes, floods, blizzards, disease, wildfires,
extreme heat, and extreme cold. The livestock death losses must have
occurred on or after January 1, 2008, and before October 1, 2011. The
livestock death losses must have also occurred in the calendar year for
which benefits are being requested.
Eligible livestock owners must have legally owned the livestock on
the day the livestock died. Eligible contract growers may receive
payments for poultry or swine only and must have, on the day the
livestock died:

had possession and control of the eligible livestock; and

a written agreement setting specific terms, conditions and
obligations of the parties involved regarding production of
livestock.

To be eligible for LIP, the owner or contract grower's livestock
must:

have died as a direct result of an eligible adverse weather
event:

that occurred on or after January 1, 2008, but before
October 1, 2011;

no later than 60 calendar days from the ending date of
the applicable adverse weather event(s); and

in the calendar year for which benefits are being
requested.

have been maintained for commercial use as part of a farming
operation on the day they died; and

not have been produced for reasons other than for commercial
use as part of a farming operation which includes wild free
roaming animals, pets, or animals used for recreational
purposes, such as hunting or show.

For the 2008 program year, no person as defined and determined
under provisions in 7 CFR Part 1400 in effect for 2008, may receive
more than $100,000 total in payments under LIP, the Emergency
Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program
(ELAP), Livestock Forage Disaster Program (LFP) and the Supplemental
Revenue Assistance Payments (SURE) Program, combined. For 2009 and
subsequent years, no person or legal entity, excluding joint venture or
general partnership, may receive directly or indirectly, more than
$100,000 total in payments under LIP, ELAP, LFP, and SURE, combined.
Also, in applying the limitation on average adjusted gross income
(AGI) for 2008, an individual or entity is ineligible for payment under
LIP if the individual's or entity's average adjusted gross income
exceeds $2.5 million for 2007, 2006, and 2005 under the provisions in 7
CFR Part 1400 in effect for 2008 unless 75 percent or more of their
income was from farming, ranching or forestry. For 2009 through 2011,
the average AGI limitation relating to limits on payments for persons
or legal entities, excluding joint ventures and general partnerships,
with certain levels of average adjusted gross income will apply.
Specifically, for 2009 through 2011, a person or legal entity with an
average adjusted gross non-farm income, as defined in 7 CFR Part 1404.3
that exceeds $500,000 will not be eligible to receive LIP payments.
Direct attribution provisions also apply to LIP for 2009 and subsequent
years. Under direct attribution, any payment to a legal entity also
will be considered for payment limitation purposes to be a payment to a
persons or legal entity with an interest in the legal entity or in a
sub-entity.
Producers who suffer livestock death losses must submit a notice of
loss and an application for payment to the local FSA service center
that maintains their farm records within prescribed deadlines along
with adequate proof that the eligible livestock death occurred as a
direct result of an eligible adverse weather event.
10. Utilization (Participation) Data
As of July 15, 2011, 15,953 livestock producers have received
compensation under LIP totaling $110,670,892 for livestock deaths that
have occurred on or after January 1, 2008, and before October 1, 2011,
in excess of normal mortality due to eligible adverse weather events.

Livestock Indemnity Program Payments as of July 12, 2011
----------------------------------------------------------------------------------------------------------------
2008 LIP 2009 LIP 2010 LIP 2011 LIP Total LIP
State Payments Payments Payments Payments Payments
Disbursed Disbursed Disbursed Disbursed Disbursed
----------------------------------------------------------------------------------------------------------------
AL $37,794 $132,220 $270,584 $1,098,581 $1,539,179
AK $0
AZ $3,197 $3,197
AR $412,372 $326,652 $441,513 $107,715 $1,288,252
CA $87,965 $38,347 $2,353 $8,083 $136,748
CO $1,803,635 $196,740 $359,359 $2,359,734
CT $9,800 $26,956 $36,756
DE $39,956 $39,956
FL $63,514 $28,388 $48,592 $24,851 $165,345
GA $41,312 $173,644 $66,297 $69,751 $351,004
HI $169,000 $29,318 $198,318
ID $286,351 $368,886 $270,613 $1,008 $926,858
IL $56,063 $2,861 $3,505 $17,773 $80,202
IN $30,081 $121,031 $10,283 $30,290 $191,685
IA $604,067 $1,160,283 $837,663 $94,457 $2,696,470
KS $74,910 $1,388,046 $1,538,042 $498,362 $3,499,360
KY $2,071,058 $1,954,936 $2,771,729 $433,584 $7,231,307
LA $1,297,023 $40,110 $34,287 $1,371,420
ME $16,199 $10,841 $27,040
MD $13,758 $90,209 $103,967
MA $3,999 $3,999
MI $27,239 $29,947 $8,879 $66,065
MN $319,643 $550,448 $329,553 $92,718 $1,292,362
MS $90,670 $83,258 $59,064 $39,708 $272,700
MO $209,337 $471,998 $606,558 $836,328 $2,124,221
MT $430,213 $3,435,950 $574,825 $298,588 $4,739,576
NE $308,986 $2,856,961 $1,115,303 $12,078 $4,293,328
NV $8,596 $120,063 $32,229 $160,888
NH $6,900 $6,900
NJ $4,759 $61,550 $66,309
NM $1,365,695 $1,100,770 $378,267 $579,931 $3,424,663
NY $120,086 $38,405 $30,793 $59,642 $248,926
NC $85,748 $153,267 $397,428 $67,256 $703,699
ND $1,363,691 $17,893,403 $319,104 $293,919 $19,870,117
OH $27,600 $48,167 $62,659 $6,748 $145,174
OK $337,903 $835,202 $418,424 $795,186 $2,386,715
OR $106,169 $122,220 $78,630 $307,019
PA $1,202 $116,754 $3,435 $121,391
PR $582,249 $16,108 $1,558 $599,915
RI $4,590 $4,590
SC $33,206 $20,380 $3,950 $6,650 $64,186
SD $5,102,720 $23,376,238 $1,134,243 $194,328 $29,807,529
TN $66,019 $29,239 $263,840 $36,593 $395,691
TX $6,359,396 $2,527,482 $152,612 $229,014 $9,268,504
UT $725,779 $160,229 $928,773 $1,250 $1,816,031
VT $23,407 $23,407
VA $6,900 $96,007 $1,300,888 $119,435 $1,523,230
WA $62,141 $118,543 $210 $180,894
WV $14,799 $1,007,678 $17,325 $1,039,802
WI $110,654 $160,289 $150,796 $24,691 $446,430
WY $561,493 $2,268,998 $175,901 $13,441 $3,019,833
----------------------------------------------------------------------------------------
Total dollars........ $25,470,377 $62,533,390 $16,407,945 $6,259,180 $110,670,892
Total Applica-....... 2,073 7,310 4,567 2,003 15,953
tions............
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
LIP is not a duplication of other USDA disaster programs. LIP
covers livestock death losses in excess of normal mortality due to
eligible adverse weather events. ELAP covers eligible livestock death
losses, as determined by the Secretary, that are not covered under LIP.
The amount of any payment for which a livestock producer may be
eligible under LIP may be reduced by any amount received by the
livestock producer for the same or any similar loss from any Federal
disaster assistance program.
12. Waste, Fraud and Abuse
There has been no Office of Inspector General (OIG) or Government
Accountability Office (GAO) audit of the program during the last 4
years. However, OIG has conducted financial audits of the program which
have not identified any significant issues. Likewise, internal audits
conducted by FSA through its county office review process have found no
significant instances of waste, fraud, and abuse.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Tree Assistance Program (TAP).
2. Subprograms/Department Initiatives
N/A.
3. Brief History
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
authorized the Tree Assistance Program (TAP) to provide disaster
assistance to eligible orchardists and nursery tree growers to replant
or rehabilitate trees, bushes, and vines that were lost or damaged
because of an eligible natural disaster. TAP is available to
orchardists and nursery tree growers who commercially raise perennial
trees for production of an annual crop and for those nursery tree
growers who produce nursery, ornamental, fruit, nut, or Christmas trees
for commercial sale.
Eligible losses must have occurred on or after January 1, 2008, and
before October 1, 2011.
TAP is one of five complementary disaster programs authorized by
the 2008 Farm Bill. The others are Emergency Assistance for Livestock,
Honey Bees, and Farm-Raised Fish Program (ELAP), Livestock Indemnity
Program (LIP), the Supplemental Revenue Assistance Payments (SURE)
Program, and the Livestock Forage Program (LFP).
4. Purpose/Goals
Provide compensation to eligible orchardists and nursery tree
growers to replant or rehabilitate trees, bushes, and vines that were
lost or damaged because of an eligible natural disaster. TAP provides
cost-share on various replanting and rehabilitation practices to assist
producers in reestablishing a viable orchard or nursery stand.
5. Success in Meeting Programmatic Purpose/Goals
TAP successfully provides cost-share assistance to orchardists and
nursery tree growers who suffer tree, bush, or vine losses or damage
due an eligible natural disaster. Orchardists and nursery tree growers
received cost-share amounts totaling $156,736 for 2008, approximately
$2 million for 2009, and $2.3 million for 2010 calendar year losses.

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
To be eligible for TAP payments, the eligible orchardist or nursery
tree grower must have:

planted, or be considered to have planted (by purchasing the
orchard or nursery prior to the loss of the existing stand)
trees, bushes, or vines for commercial purposes, or

a production history on planted or existing trees, for
commercial purposes.

suffered loss due to an eligible natural disaster in excess
of 15 percent mortality or damage, adjusted for normal
mortality.

obtained coverage under the Federal Crop Insurance Act or
Noninsured Crop Disaster Assistance Program (NAP). ``Socially
Disadvantaged,'' ``Limited Resource,'' and ``Beginning Farmers
or Ranchers'' do not have to meet this requirement.

Producers who planted, or are considered to have planted trees they
are eligible for assistance in the form of:

replanting and the cost of seedlings or cuttings, for tree,
bush, or vine replacement the lessor of either of the
following:

70 percent of the actual cost of the practice

total amount calculated using the national rates
established for that practice.

rehabilitation and the cost of pruning, removal, and other
costs incurred for salvaging existing trees, bushes, or vines,
or in the case of mortality, to prepare the land to replant
trees, bushes, or vines, the lesser of the following:

50 percent of the actual cost of the practice

amount calculated using the national rates established
for that practice.

Producers who had a production history on planted or existing trees
they are eligible for assistance for the cost of pruning, removing
debris, and other costs incurred for salvaging existing trees or, for
tree mortality, to prepare the land to replant trees the lessor of the
following:

50 percent of the actual total cost of the practice

total amount calculated using national rates established
for the practice.

Eligible applicants qualify for TAP only if the tree, bush, or vine
mortality in each stand, for each eligible natural disaster, exceeds
the 15 percent loss threshold, plus normal mortality. The 15 percent
mortality, adjusted for normal mortality, must be met before damaged
trees are eligible for payment.
Eligible losses must have occurred on or after January 1, 2008, and
before October 1, 2011.
The cumulative total quantity of acres planted to trees, bushes, or
vines, where a producer may receive TAP, cannot exceed 500 acres for
all years, 2008 through 2011.
For the 2008 program year, no person as defined and determined
under provisions in 7 CFR Part 1400 in effect for 2008, may receive
more than $100,000 total in payments under TAP. For 2009 and subsequent
years, no person or legal entity, excluding joint venture or general
partnership, may receive directly or indirectly, more than $100,000
total in payments.
For the 2009 and subsequent program years, producers or legal
entities whose average non-farm Adjusted Gross Income (AGI) exceeds
$500,000 are not eligible. For the 2008 program year, producers are not
eligible if their average AGI is $2.5 million or greater, unless 75
percent or more of their AGI is from agriculture. Direct attribution
provisions also apply to TAP for 2009 and subsequent years. Under
direct attribution, any payment to a legal entity also will be
considered for payment limitation purposes to be a payment to a persons
or legal entity with an interest in the legal entity or in a sub-
entity.
TAP applicants who suffer eligible losses must file a Tree
Assistance Program Application within 90 calendar days from the
occurrence of the disaster event or the date when the loss become
apparent to the producer. Upon completion of the practices the producer
must provide copies of all sales receipts, invoices, canceled checks or
other documentation necessary to determine cost. Practices must be
completed within 12 months of an approved application.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Number of producers receiving
Number of producers applying for TAP payment
------------------------------------------------------------------------
2008--289 161
2009--194 87
2010--366 74
2011--110 * 6
------------------------------------------------------------------------
* As of July 19.

11. Duplication or Overlap with Other Programs
TAP does not duplicate benefits delivered by other USDA disaster
assistance programs. It is the only program that provides compensation
to replant or rehabilitate trees, bushes, or vines that were lost or
damaged as the result of a natural disaster. The Noninsured Crop
Disaster Assistance Program (NAP) complements TAP by covering the
actual loss of fruit or nut production. There is no overlap between
those programs. Regarding nursery, again TAP pays for the cost of re-
establishing (seedling or grafts) or rehabilitating the nursery while
NAP covers the loss of value of the crop at the time the disaster
occurs.
12. Waste, Fraud and Abuse
There has been no extensive Office of Inspector General (OIG) or
Government Accountability Office (GAO) audit of the program during the
last 4 years. Currently, we do not have a current audit that indicates
on-going systemic waste, fraud, or abuse. FSA conducts its own internal
investigation through its county office review process and through its
internal review audit process.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish
Program (ELAP).
2. Subprograms/Department Initiatives
None.
3. Brief History
The Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill)
established five disaster assistance programs: ELAP, Livestock Forage
Disaster Program (LFP), Livestock Indemnity Program (LIP), Supplemental
Revenue Assistance Payments Program (SURE) and the Tree Assistance
Program (TAP). Sections 12033 and 15101 of the 2008 Farm Bill
authorized the Secretary to use up to $50 million per year from the
Agricultural Disaster Relief Trust Fund to provide emergency relief to
eligible producers under ELAP.
4. Purpose/Goals
ELAP provides emergency assistance to eligible producers of
livestock, honeybees and farm-raised fish that have losses due to
disease, adverse weather or other conditions, including losses due to
blizzards and wildfires. ELAP covers losses occurring on or after
January 1, 2008, and before October 1, 2011 that are not covered under
any of the other disaster assistance programs established by the 2008
Farm Bill.
5. Success in Meeting Programmatic Purpose/Goals
To date, ELAP has successfully provided over $29 million in
benefits to eligible livestock, honeybee, and farm-raised fish
producers for 2008 through 2010 calendar year losses nationwide. The
following table provides the total benefits disbursed nationwide to
eligible livestock, honeybee and farm-raised fish producers for the
calendar year in which the losses occurred.

------------------------------------------------------------------------
Calendar Year of Loss ELAP Payments Disbursed
------------------------------------------------------------------------
2008 $10,779,914
2009 $11,824,366
2010 $6,572,795
-----------------------------------
Total............................. $29,177,076
------------------------------------------------------------------------

ELAP has been particularly beneficial to beekeepers whose bees
suffered from Colony Collapse Disorder (CCD). The following table
provides approximate benefits disbursed nationwide to eligible honeybee
producers due to CCD.

------------------------------------------------------------------------
Calendar Year of Loss ELAP Honeybee Payments
------------------------------------------------------------------------
2008 Over $6 million
2009 Over $7 million
2010 Over $5 million
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria

General Producer Eligibility:

To be considered an eligible producer for ELAP, producers must:

file a notice of loss, no later than 30 calendar days of when the loss is apparent to the producer and file an application for payment by
the applicable signup deadline.

have suffered eligible losses of livestock, honeybees, and farm-raised fish because of an eligible adverse weather event or loss condition
that occurred on or after January 1, 2008 and before October 1, 2011 and in the calendar year for which assistance is being requested.

have suffered losses that are physically located in the county where the eligible adverse weather or eligible loss condition occurred.

for every commodity in which the producer has an interest for the relevant program year:

in the case of an insurable commodity, obtain catastrophic coverage or better under a policy or plan of insurance administered
under the Federal Crop Insurance Act except this obligation will not include forage crops intended for grazing.

in the case of a noninsurable commodity, obtain Noninsured Crop Disaster Assistance Program coverage by filing the required pa-
perwork and paying the administrative fee by the applicable state application closing date, except that this requirement will not in-
clude forage on grazing land

There is a $100,000 limitation per crop year that applies to payments received under ELAP, LFP, LIP or SURE. Individuals or entities are ineligible
for a payment under ELAP for 2008 if their average Adjusted Gross Income for 2005, 2006 and 2007 exceeds $2.5 million. For 2009 through 2011, an
average adjusted gross non-farm income limitation of $500,000 applies.

Eligible Losses:

An eligible loss under ELAP is a loss that an eligible producer or contract grower of livestock, honeybees, or farm-raised fish incurs because of an
eligible adverse weather event or loss condition including, but not limited to, blizzards and wildfires. To be considered an eligible loss, the loss
must have occurred:

during the calendar year for which payment is being requested.

on or after January 1, 2008, and before October 1, 2011.

in the county where the eligible adverse weather event or loss condition occurred.

Eligible livestock losses include livestock death losses and livestock feed and grazing losses that are not due to drought or wildfires on federally
managed lands, caused by an eligible adverse weather event or loss condition.
Eligible honeybee losses include the loss of honeybee colonies in excess of normal mortality, honeybee hives, and purchase or produced honeybee feed
losses caused by an eligible adverse weather event or loss condition.
Eligible farm-raised fish losses include death losses of eligible bait fish or game fish and purchased or produced farm-raised fish feed losses
caused by an eligible adverse weather event or loss condition.

10. Utilization (Participation) Data

The following table provides the number and amount of ELAP payments disbursed by state for the 2008 through 2010 calendar years.

----------------------------------------------------------------------------------------------------------------
Total ELAP
State 2008 No. of 2008 ELAP 2009 No. of 2009 ELAP 2010 No. of 2010 ELAP Payments
Payments Payments Payments Disbursed
----------------------------------------------------------------------------------------------------------------
AL 11 $80,808 17 $78,610 5 $34,515 $193,933
AK 5 $6,084 $6,684
AZ 1 $106,000 13 $234,123 5 $162,892 $497,015
AR 1 $10,008 3 $157,780 4 $127,667 $295,455
CA 54 $1,206,084 59 $1,380,580 29 $593,593 $3,180,257
CO 2 $83,522 5 $49,261 8 $60,248 $193,031
CT 1 $3,044 $3,044
FL 187 $2,918,121 14 $272,028 109 $803,963 $3,994,112
GA 15 $225,720 17 $141,021 9 $55,447 $422,188
ID 17 $367,022 18 $360,546 15 $384,246 $1,111,814
IL 5 $21,168 5 $15,876 1 $4,608 $41,652
IN 2 $30,405 7 $73,409 1 $3,744 $107,558
IA 15 $210,922 15 $376,150 11 $133,741 $720,813
KS 8 $82,912 8 $34,801 4 $41,168 $158,881
KY 5 $2,016 8 $2,916 11 $118,657 $123,589
LA 136 $775,927 23 $98,768 $874,695
MD 4 $11,196 1 $19,008 $30,204
MA 2 $100,000 4 $102,124 4 $200,504 $402,628
MI 12 $334,758.29 11 $153,259 6 $67,266 $555,283
MN 12 $276,836 17 $423,641.64 11 $277,328 $977,806
MS 3 $9,899 11 $52,258 108 $235,871 $298,028
MO 10 $36,703 3 $9,285 4 $39,015 $85,003
MT 21 $329,634 190 $1,132,114 10 $209,485 $1,671,233
NE 16 $136,990 3 $43,956 23 $97,711 $278,657
NM 4 $7,602 3 $34,735 93 $305,619 $347,956
NY 9 $180,562 10 $178,997 15 $203,191 $562,750
NC 22 $124,397 26 $38,302 14 $71,736 $234,435
ND 17 $605,980 64 $895,631 8 $283,596 $1,785,207
OH 6 $24,171 11 $49,392 5 $19,109 $92,672
OK 1 $7,803 33 $213,427 1 $600 $221,830
OR 11 $117,754 16 $303,612 7 $114,070 $534,836
PA 9 $73,962 18 $158,271 9 $173,359 $405,592
SC 2 $2,196 3 $7,363 $9,559
SD 50 $1,082,515 207 $2,122,966 134 $1,170,655 $4,376,076
TN 1 $1,584 2 $2,088 3 $5,381 $9,053
TX 15 $658,553 17 $532,950.19 6 $121,839 $1,313,342
UT 8 $137,903 5 $61,128 10 $74,540 $273,571
VA 5 $18,820 7 $5,952 10 $24,946 $49,718
WA 6 $248,123 16 $482,416 3 $164,628 $895,161
WV 1 $1,084 $1,084
WI 11 $102,645 10 $70,713 9 $66,727 $240,085
WY 4 $39,805 162 $1,460,342.60 11 $101,038 $1,601,186
--------------------------------------------------------------------------------------------------
Totals..... 721 $10,779,914 1,066 $11,824,366 718 $6,572,795 $29,177,076
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
There is no overlap or duplication. ELAP is specifically authorized
to provide assistance for losses not covered under any other disaster
assistance program established by the 2008 Farm Bill.
12. Waste, Fraud and Abuse
There has been no Office of Inspector (OIG) or Government
Accountability Office (GAO) audit of ELAP. FSA conducts its own
internal investigations through its county office review process and
through its internal review audit process. These reviews have not
raised any significant issues of waste, fraud, and abuse.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Noninsured Crop Disaster Assistance Program (NAP).
2. Subprograms/Department Initiatives
N/A.
3. Brief History
NAP was initially authorized under the Federal Crop Insurance
Reform and Department of Agriculture Reorganization Act of 1994 (P.L.
103-354). NAP was reauthorized under Section 196 of the Federal
Agriculture Improvement and Reform Act of 1996 (P.L. 104-127) which
also terminated the prior authorities. NAP provides financial
assistance to producers of noninsurable crops when natural disasters
occur. The regulations governing NAP are found at 7 CFR Part 1437.
NAP is a permanent program designed to reduce financial losses that
occur when natural disasters cause a catastrophic loss of production or
prevented planting for noninsurable crops by providing coverage
equivalent to the catastrophic risk protection (CAT) level of crop
insurance.
4. Purpose/Goals
NAP provides financial assistance to producers of noninsurable
crops when low yields, loss of inventory, or prevented planting occur
due to natural disasters. NAP is a standing risk tool producers can use
to mitigate noninsured crop losses similar to crop insurance.
5. Success in Meeting Programmatic Purpose/Goals
During 2009, NAP producer enrollment increased by 19.73 percent
over 2008, in part, because the 2008 Farm Bill requires total farm
participation in NAP and/or purchase of crop insurance for eligibility
for other disaster programs (specifically, SURE, TAP, and ELAP).
Although participation increased, dollars paid out in crop year 2010
decreased from approximately $89 million for crop year 2009 to $52
million in 2010. It is important to note that dollars paid are directly
related to the severity and number of disasters that occur in any given
crop year.
NAP continues to provide coverage equivalent to catastrophic (CAT)
insurance for each commercial crop or agricultural commodity, except
livestock, for which CAT is not available.

6. Annual Budget Authority (FY 2002-FY 2011)
FY 2002 Through FY 2011 Budget Authority
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Insured Assistance $182,199 $237,149 $124,108 $109,619 $66,268 $126,951 $73,989 $62,064 $98,745 $116,873
Payments
NAP Fees ^16,319 ^8,359 ^12,550 ^9,879 ^9,155 ^7,760 ^11,529 ^23,621 ^19,396 ^29,086
---------------------------------------------------------------------------------------------------------------------------------
Net Budget Authority 165,880 228,790 111,558 99,740 57,113 119,191 62,460 38,443 79,349 87,787
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority for CCC programs is based on obligations. Funds obligated in one fiscal year may not be disbursed until a succeeding fiscal year or
fiscal years. In the case of these two programs, obligations, budget authority and outlays are incurred at the same time period.
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Annual Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Insured Assistance $182,199 $237,149 $124,108 $109,619 $66,268 $126,951 $73,989 $62,064 $98,745 $116,873
Payments
NAP Fees ^16,319 ^8,359 ^12,550 ^9,879 ^9,155 ^7,760 ^11,529 ^23,621 ^19,396 ^29,086
---------------------------------------------------------------------------------------------------------------------------------
Net Outlays 165,880 228,790 111,558 99,740 57,113 119,191 62,460 38,443 79,349 87,787
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
An eligible producer is a landowner, tenant or sharecropper who has
an ownership share and shares in the risk of producing an eligible
crop. Crops must be noninsurable crops and agricultural commodities for
which the CAT level of crop insurance is not available, and must be any
of the following commercially produced crops:

crops grown for food;

crops planted and grown for livestock consumption,
including, but not limited to grain and forage crops, including
native forage;

crops grown for fiber, such as cotton and flax (except for
trees);

crops grown under a controlled environment such as mushrooms
and floriculture;

specialty crops, such as honey and maple sap;

value loss crops, such as aquaculture, Christmas trees,
ginseng, ornamental nursery and turfgrass sod;

sea oats and sea grass; and

seed crops where the propagation stock is produced for sale
as seed stock for other eligible NAP crop production.

Producers must apply for NAP coverage and pay the applicable
service fee at their local Farm Service Agency (FSA) office 30 calendar
days prior to the beginning of the coverage period. The application and
service fees must be filed by the application closing date as
established. The service; fee is $250 per crop or $750 per producer per
administrative county, not to exceed a total of $1,875 per producer
with farming interests in multiple counties. Limited resource producers
may request a waiver of the NAP service fees.
Producers are required to provide acreage and production reports in
a timely manner, and in the event a loss occurs, file a notice of loss
within the earlier of 15 days of the disaster event or when the damage
becomes apparent to the producer. To finalize a claim producers have
until the subsequent year's acreage reporting date to submit an
application for payment
For 2009 and subsequent years, no person or legal entity, excluding
joint venture or general partnership, may receive directly or
indirectly, more than $100,000 total in payments under NAP.
For 2009 and subsequent years, the average AGI limitation relating
to limits on payments for persons or legal entities, excluding joint
ventures and general partnerships, with certain levels of average
adjusted gross income will apply. Specifically, for 2009 and subsequent
years, a person or legal entity with an average adjusted gross non-farm
income, as defined in 7 CFR Part 1404.3 that exceeds $500,000 will not
be eligible to receive NAP payments. Direct attribution provisions also
apply to NAP for 2009 and subsequent years. Under direct attribution,
any payment to a legal entity also will be considered for payment
limitation purposes to be a payment to a persons or legal entity with
an interest in the legal entity or in a sub-entity.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Number of producers obtaining NAP Number of producers receiving
coverage payment
------------------------------------------------------------------------
2008--53,222 * 16,509
2009--63,724 * 16,958
2010--52,572 * 9,194
2011--52,058 * Not yet available
------------------------------------------------------------------------
* If a producer is operating in two counties, the producer would be
counted twice.

11. Duplication or Overlap with Other Programs
By statute, NAP is prohibited from paying multiple benefits for the
same loss. If the producer is eligible to receive NAP payments and
benefits under any other program administered by the Secretary for the
same crop loss, the producer must choose whether to receive NAP
payments or benefits from any other program. Exceptions to this rule
include past ad hoc Crop Disaster Programs and recently the
Supplemental Revenue Assistance Payments (SURE) Program. SURE is a
supplemental program to crop insurance and NAP coverage and only pays
on shallow losses. NAP payments are included in total farm revenue when
SURE payments are calculated.
NAP works in concert with the Tree Assistance Program (TAP). TAP
compensates eligible producers of commercial fruit, nut, and nursery
crops to cover the cost of reestablishing or rehabilitating lost or
damaged trees, bushes, or vines while NAP covers the actual loss of
fruit or nut production. Similarly, for nursery losses, TAP pays for
the cost of re-establishing (seedling or graft) or rehabilitating the
nursery where NAP covers the loss of value of the crop at the time the
disaster occurs.
12. Waste, Fraud and Abuse
The Department is not aware of any national problems of fraud,
waste, and abuse. To comply with the Improper Payments Information Act
of 2002, FSA conducts internal investigations through the County Office
Review Program of high risk programs. NAP overpayments have decreased
from 22.94 percent in Fiscal Year 2006 to 11.65 percent in Fiscal Year
2010. Many of the improper payments are due to complexities of the
program associated to calculating an approved yield. The National
Office has developed and enhanced corrective actions each year to
address IPIA findings and NAP Compliance Overview findings.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Sugar Program.
2. Subprograms/Department Initiatives
The sugar program is a collection of Federal programs designed to
support, at minimal Federal cost, producer returns from growing
sugarcane and sugarbeets. The programs collectively referred to as the
Sugar Program include: the Price Support Loan Program, the Flexible
Marketing Allotments for Sugar Program, the Tariff Rate Quota Program,
and the Feedstock Flexibility Program for Bioenergy Producers.
The Price Support Loan Program establishes the support level by
providing non-recourse loans to processors of domestically grown
sugarcane and sugarbeets based on loan rates mandated in farm bills. If
market returns are lower than loan proceeds at the time of loan
maturity, sugarbeet and sugarcane processors can fully satisfy their
loan obligations by forfeiting sugar loan collateral to the Commodity
Credit Corporation (CCC). Since sugar producers can always receive at
least the loan proceeds from their crop, the loan rate acts as a floor
on the market price of domestic sugar.
The remaining programs work to limit the domestic sugar supply to
result in higher domestic prices than the support price imposed by the
sugar loan program, and hence, minimize or eliminate forfeiture costs.
The Department limits domestic supply through (1) the Flexible
Marketing Allotments for Sugar Program, which provides limits for the
quantity of sugar that domestic sugarbeet and sugarcane processors can
market; (2) an imported sugar supply control strategy that includes a
prohibitively high tariff rate for unrestricted imports and adjustable
Tariff Rate Quotas (TRQ) that limit foreign sugar imports at the low
tier tariff; and (3) the Feedstock Flexibility Program for Bioenergy
Producers, which authorizes USDA to purchase surplus sugar in the
marketplace and sell it to producers of bio-energy to prevent loan
forfeitures under the Price Support Loan Program. The Feedstock
Flexibility Program is authorized under Title IX of the Food,
Conservation, and Energy Act of 2008 (2008 Farm Bill). To date, the
Feedstock Flexibility Program has not been needed due to high domestic
sugar prices. Regulations implementing the Feedstock Flexibility
Program are currently under development.
3. Brief History
Domestic sugar production has been supported by tariffs on imported
sugar since 1789. The early tariffs were established primarily to
provide government revenue. However, since 1894, the tariffs were
created primarily to support the domestic sugar industry. Extensive
government regulation of the sugar industry began with the Sugar Act of
1934, which established the domestic sugar market supply control
strategy still used today. Market shares were assigned for domestic
beet sugar, domestic raw cane sugar, and imported sugar. The Sugar Act
was allowed to lapse during the 1974 sugar price spike.
Sugar loan provisions were first included in the Food and
Agriculture Act of 1977, and modified to the current non-recourse loan
program under the Food and Agriculture Act of 1981. By 1984,
overproduction in the U.S. led to forfeitures costing the U.S. Treasury
$105 million. In response. Congress inserted the no-cost provision
requiring program administrators to strongly avoid forfeitures in the
1985 Farm bill. Tariff-rate quotas (TRQs), which allow a set amount of
imports with almost no tariff and an unrestricted high tier tariff on
additional imports, replaced strict import quotas in the late 1980s.
TRQs are based on each country's share of the U.S. market during 1975-
81 when imports were relatively unrestricted. The 1990 Farm bill
reinstated domestic supply controls as the marketing allotment program.
The 2008 Farm Bill also mandated the Feedstock Flexibility Program.
4. Purpose/Goals
The purpose of the sugar program is to support producer returns
from raising sugarcane and sugarbeets, to the extent practicable, at no
cost to the Federal budget.
5. Success in Meeting Programmatic Purpose/Goals
CCC has been fairly successful in achieving the goals of the sugar
program. The market value of production of sugarbeets and sugarcane
increased 14 percent and 40 percent, respectively, between FY 2005 and
FY 2010. Beet processors forfeited 40,000 tons of 2004-crop beet sugar
with a loan value of 22.7 cents per pound. CCC sold the sugar inventory
back to the market for 21.8 cents per pound, for a net realized loss of
$742,000. Since 2005, the domestic market has tightened and the primary
sugar program issue has been focused on maintaining adequate supplies.

6. Annual Budget Authority (FY 2002-FY 2011)
FY 2002 Through FY 2011 Budget Authority
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Outlays $736,807 $879,856 $871,130 $824,168 $794,209 $1,051,171 $1,237,787 $1,118,371 $875,200 $891,402
Total Receipts 866,883 964,016 809,865 910,135 783,815 l,026,436 1,272,821 1,118,369 875,200 891,402
---------------------------------------------------------------------------------------------------------------------------------
Net Expenditures ^130,076 ^84,161 61,265 ^85,966 10,394 24,735 ^35,034 2 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
These programs are funded by Commodity Credit Corporation (CCC). Budget authority for these CCC programs is based on actual outlays.
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Annual Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Outlays $736,807 $879,856 $871,130 $824,168 $794,209 $1,051,171 $1,237,787 $1,118,371 $875,200 $891,402
Total Receipts 866,883 964,016 809,865 910,135 783,815 1,026,436 1,272,821 1,118,369 875,200 891,402
---------------------------------------------------------------------------------------------------------------------------------
Net Expenditures ^130,076 ^S4,161 61,265 ^85,966 10,394 24,735 ^35,034 2 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
To be eligible for loans, a sugarbeet or sugarcane processor must:
agree to all the terms and conditions in the loan application, and
execute a note, security agreement, and storage agreement with CCC.
Sugar pledged as collateral during the crop year must be processed and
owned by the eligible processor and stored in a CCC-approved warehouse.
The loan collateral must have been processed in the United States.
In order to be pledged as loan collateral, sugar and in-process
sugar must be dry and free flowing; free of excessive sediment; and
free of any objectionable color, flavor, odor, or other characteristic
that would impair its merchantability or that would impair or prevent
its use for normal commercial purposes.
10. Utilization (Participation) Data
Since FY 2000, loan participation has been steady with, on average,
about 21 percent of the sugarcane crop's annual production placed under
loan with the CCC. Around 26 percent of the annual sugarbeet crop is
normally placed under loan. Loans, which are generally placed early in
the fiscal year once harvest begins, help the processor make advance
payments to growers upon delivery of their beets to the processor. This
permits growers to be paid for their beet or cane crop up to 10 months
earlier than the processor (usually owned by the growers) receives
revenues from the sale of the sugar made from the crop.
11. Duplication or Overlap with Other Programs
The Sugar Program is not duplicative of other commodity programs,
as it offers unique benefits to the sugar market and its participants.
However, there is some beneficial overlap with other programs. For
instance, growers of sugarcane and sugarbeets must be in compliance
with highly erodible and wetlands regulations in order to protect
processor eligibility. Likewise, these growers must meet all certified
acreage reporting requirements.
12. Waste, Fraud and Abuse
There has been no extensive Office of Inspector (OIG) or Government
Accountability Office (GAO) audit of the program during the past 5
years. Although on rare occasion accusations of misconduct have arisen,
internal FSA review indicated no waste, fraud or abuse. Furthermore,
the sugar regulation authorizes CCC to require sugarbeet processors,
sugarcane processors, sugarcane refiners and importers of sugar, as
selected by CCC, to submit a report prepared by an independent
Certified Public Accountant that reviews information submitted to CCC
during the previous crop year. These reports have yet to indicate
waste, fraud or other abuses.
13. Effect of Administrative PAYGO
Exhibit 1 shows the costs and savings related to USDA's
Administrative PAYGO Scorecard.
______

1. Program Name
Farm Storage Facility Loan (FSFL) Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
The FSFL Program was originally authorized by the Commodity Credit
Corporation (CCC) Charter Act of 1933. Specifically, the CCC Charter
Act provides that the Corporation may make loans to grain producers
needing storage facilities and that loans shall be made in areas in
which the Secretary determines that there is a deficiency of such
storage.
The CCC had made loans for storage facilities intermittently since
1948 and stopped issuing storage facility loans in 1982 based on
studies that revealed that producers had sufficient storage for their
crops. However, demand for storage has increased dramatically since
1995 and storage shortages currently exist in some areas. The net
decrease in storage capacity from 1996 to 1998 has been about 79.5
million bushels, or nearly one percent of total capacity. During this
same period, grain production increased by nearly eight percent, from
14 billion bushels in 1996 to 15 billion bushels in 1998. As a result,
it was determined there was insufficient capacity to allow farmers to
store their grain, forcing farmers to sell at harvest when prices are
usually at their lowest. Therefore, on February 2, 2000, the Secretary
announced the availability of financing for on-farm storage and
handling facilities.
Section 1614 of the Food, Conservation, and Energy Act of 2008
(2008 Farm Bill), authorized the Secretary to establish a storage
facility loan program to producers of grains, oilseeds, pulse crops,
hay, renewable biomass, and other storable commodities (other than
sugar), as determined by the Secretary. Accordingly, regulations
implementing the 2008 Farm Bill added fruits and vegetables as eligible
commodities for on-farm storage. The maximum loan amount is $500,000
per structure and depending on the loan amount, the FSFL borrower has
the option of selecting 7, 10, or 12 year repayment terms for the FSFL.
4. Purpose/Goals
The purpose of the FSFL Program is to assist producers with low-
interest financing for adequate capacity to store their harvested
production until they sell it on the open market. The FSFL Program adds
additional storage capacity in deficit areas and producers also benefit
from the potential for higher market returns on their crops.
5. Success in Meeting Programmatic Purpose/Goals
The FSFL Program has been very successful with meeting program
goals to provide low interest financing for on-farm storage. Since FSFL
was reestablished in FY 2000, over 27,900 FSFL's have been disbursed
providing on-farm storage for over 785 million bushels of eligible
commodities. The FSFL Program has seen increased interest in the past
several years mainly due to the construction of ethanol plants in the
Midwest and South. The vast majority of FSFL borrowers make their
annual installment payments on time as the program has a delinquency
rate of less than 0.005 percent.

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Annual Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Farm Storage Facility $1,654 $820 $1,502 $989 $290 $502 $1,135 $4,796 $7,446 $0
Loans--Subsidy
--------------------------------------------------------------------------------------------------------------------------------------------------------
The FSFL Program is a credit reform program. Budget Authority and outlays reflect estimated subsidy costs of disbursing the direct loans in each fiscal
year.

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
Producers requesting a FSFL must provide information to the FSA
County Office to support the need for on-farm storage. Specific
eligibility requirements for applicants are as follows:

producer of an eligible commodity

engaged in farming

has a satisfactory credit rating as determined by CCC

demonstrates the ability to pay the down payment and repay
the debt resulting from FSFL

has no delinquent Federal debt as defined by the Debt
Collection Improvement Act of 1996

has not been convicted under Federal or state law of a
controlled substance violation

provide proof of insurance requirements, such as:

multi-peril crop insurance

all-peril structural insurance

flood insurance, if applicable

demonstrates compliance with USDA provisions for highly
erodible land and wetland provisions

demonstrates compliance with National Environmental Policy
Act

demonstrates compliance with any applicable local zoning,
land use and building codes for the applicable farm storage
facility structure.
10. Utilization (Participation) Data
The FSFL Program has provided financing for on-farm storage for
over 785 million bushels of eligible commodities since FY 2000. FSFL
applications have increased from 1,717 in FY 2005 to 3,961 in FY 2010.
In FY 2006, the Commodity Credit Corporation (CCC) made nearly $100
million in FSFLs, while in FY 2010 the loan amount of FSFLs exceeded
$296 million. To date, in FY 2010, 3,926 FSFLs have been obligated and
disbursed totaling $291 million. Currently, in FY 2011, 2,110 FSFLs
have been obligated and disbursed totaling $175 million. Also, in FY
2011, applications for 93 hay storage structures were received and 55
have been disbursed, and eight fruit and vegetable applications were
received and one has been disbursed.
11. Duplication or Overlap with Other Programs
The USDA's Rural Development (RD) Mission Area has grants and loans
for certain energy efficiency improvements under the Rural Energy for
America Program (REAP). Producers are eligible for certain grants and
loans to purchase or replace energy efficient equipment in commodity
storage structures.
CCC is currently collaborating with RD to identify any cases where
duplication or overlap of FSFL disbursements may have occurred with the
grant and loan program offered by RD. If duplication of benefits have
occurred, CCC is reducing the outstanding FSFL principal by the amount
of the RD grant or loan. To prevent this from continuing, CCC
implemented a form that producers sign before their final FSFL
disbursement. This form provides producer certification that they have
not applied, been approved for, or received government grants or loans
on the same structure requested for FSFL. Having this certification
before the FSFL disbursement will ensure that there is no duplication
or overlap of benefits under FSFL.
12. Waste, Fraud and Abuse
The FSFL Program has been reviewed frequently by County Office
Reviewers and it has been determined that the program findings are
insignificant. Additionally, because second party reviews are performed
by FSA staff and final cost documents are submitted by producers to
support the cost of the storage structure before all FSFL closings,
waste, fraud, and abuse would be considered minimal.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Durum Wheat Quality Program (DWQP).
2. Subprograms/Department Initiatives
None.
3. Brief History
Section 1613 of the Food, Conservation, and Energy Act of 2008 (the
2008 Farm Bill) authorized up to $10 million to be appropriated for
each of the 2009 through 2012 Fiscal Years (FY) to compensate producers
of durum wheat for up to 50 percent of the actual cost of fungicide
applied to control Fusarium head blight, a fungal disease commonly
known as ``wheat scab.''
The Agriculture, Rural Development, Food and Drug Administration,
and Related Agencies Appropriations Act, 2010 provided $3 million for
this program in FY 2010. No funding was appropriated for this program
in FY 2009 or 2011. To date, no funding has been appropriated for this
program for FY 2012.
If applications for assistance exceed the funding availability for
a particular crop year, payment amounts are reduced by a 'national
payment factor' so that each applicant receives a pro-rata share of the
available funding. In FY 2010, payments were reduced by a national
payment factor of 0.9663.
4. Purpose/Goals
The purpose of this program is to provide cost-share assistance to
durum wheat producers for the purchase and application of an eligible
fungicide used on acres planted to durum wheat to control wheat scab.
5. Success in Meeting Programmatic Purpose/Goals
DWQP successfully provided cost-share assistance to durum wheat
producers for their share of the purchase price of an eligible
fungicide and the cost of applying the eligible fungicide to durum
wheat acres. In FY 2011, over $2.8 million was allocated to durum wheat
producers in Idaho, Minnesota, Montana, North Dakota and South Dakota.

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Annual Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Durum Wheat Quality $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,850
Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Of the $3 million appropriated for this program in FY 2010, $150,000 is being held in reserve for possible future appeal cases.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
The program has only been available during FY 2010, the portion of
Agency overhead expenditures allocated to the program during the fiscal
year have not been captured but are believed to be minimal.
9. Eligibility Criteria
Producer Eligibility:

To be considered an eligible producer, the producer must have a
share in the treated durum wheat crop planted on eligible acres and in
the cost of either or both of the following:

purchasing an eligible fungicide

applying an eligible fungicide to eligible acres.

Eligible Fungicide:

To be considered an eligible fungicide for DWQP, the fungicide must
be:

registered with the Environmental Protection Agency (EPA),
as required under the Federal Insecticide, Fungicide, and
Rodenticide Act (FIFRA), unless exempt from FIFRA requirements

compliant with pesticide regulations in the state in which
benefits are being requested

used specifically for one fungicide treatment in the
applicable crop year, to control Fusarium head blight on
eligible acres.

Eligible Acres:

To be considered eligible acres for DWQP, the acres must be planted
to durum wheat and treated with an eligible fungicide to specifically
control Fusarium head blight and applied during the flowering stage.
10. Utilization (Participation) Data
In FY 2011, over $2.8 million was allocated to 1,020 durum wheat
producers in Idaho, Minnesota, Montana, North Dakota and South Dakota.
DWQP provided cost-share assistance to durum wheat producers for
551,984 acres in the following five states.

------------------------------------------------------------------------
State Acres
------------------------------------------------------------------------
Idaho 150
Minnesota 4,713
Montana 17,362
North Dakota 528,257
South Dakota 1,501
-----------------------------------
Total............................. 551,984
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
DWQP does not duplicate or overlap any other USDA program.
12. Waste, Fraud and Abuse
There has been no Office of Inspector (OIG) or Government
Accountability Office (GAO) audit of DWQP. FSA conducts its own
internal investigation through its county office review process and
through its internal review audit process. The potential for fraud and
abuse is minimal since producers are required to show proof of purchase
and treatment with an EPA approved fungicide.
13. Effect of Administrative PAYGO
DWQP is funded through the discretionary appropriations process;
accordingly, it is not subject to Administrative PAYGO procedures
______

1. Program Name
Reimbursement Transportation Cost Payment (RTCP) Program for
Geographically Disadvantaged Farmers and Ranchers.
2. Subprograms/Department Initiatives
Subprograms--None.

Department Initiatives--None.
3. Brief History
The 2008 Farm Bill authorized the RTCP program to provide
assistance to geographically disadvantaged farmers and ranchers in
Hawaii, Alaska, and insular areas (Guam, American Samoa, Commonwealth
of Puerto Rico, Commonwealth of the Northern Mariana Islands, Federated
States of Micronesia, Republic of the Marshall Islands, Republic of
Palau, and the Virgin Islands of the United States). The program
reimburses producers for a portion of the transportation cost of their
agricultural commodity, or inputs used to produce an agricultural
commodity during a fiscal year. Under RTCP transportation costs of
inputs used to produce an agricultural commodity include, but are not
limited to, air freight, ocean freight, and land freight of chemicals,
feed, fertilizer, fuel, seeds, plants, supplies, equipment parts, and
other inputs as determined. RTCP is subject to appropriated funding.
The 2010 Agriculture Appropriations Bill authorized $2.6 million and
the 2011 Defense and Full-Year Continuing Appropriations Act of 2011
authorized $1.996 million to assist geographically disadvantaged
farmers and ranchers in accordance with Section 1621 of the 2008 Farm
Bill.
4. Purpose/Goals
The purpose of the RTCP is to assist geographically isolated
farmers and ranchers to access inputs needed for production (seed,
fertilizer, pesticides, etc.) and get their product to market. The goal
of the program is to provide payments to these targeted producers to
offset a portion of their transportation costs.
5. Success in Meeting Programmatic Purpose/Goals
This program benefits farms and ranches in geographically
disadvantaged areas of the U.S. Signup for 2010 RTCP program began Aug.
2, 2010 and ended on Sept. 10, 2010. Distribution of payments for 2010
RTCP began on July 20, 2011. In FY 2010, 1,545 geographically
disadvantaged farmers and ranchers applied to participate in the
program, and more are expected with the FY 2011 RTCP signup beginning
July 25, 2011.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
The program first received funding in FY 2010, the portion of
Agency overhead expenditures allocated to the program during the fiscal
year have not been captured but are believed to be minimal.
9. Eligibility Criteria
To be eligible for RTCP program benefits, producers must:

Be a geographically disadvantaged farmer or rancher
producing and marketing, including the transportation of an
agricultural commodity in an approved area;

Submit an application during the specified period applicable
for each fiscal year;

Provide proof of the amount of costs incurred for the
transportation of the agricultural commodity or input used to
produce an agricultural commodity;

Comply with conservation and wetland protection requirements
on all their land;

Have an average non-farm income that does not exceed
$500,000; and

Be a citizen or a legal resident alien of the United States
in accordance with 7 CFR Part 1400 for foreign persons.
10. Utilization (Participation) Data
A total of 1,545 applicants applied to receive benefits
under RTCP for FY 2010.

Signup for FY 2011 RTCP began on July 25, 2011, and will end
on September 9, 2011.
11. Duplication or Overlap with Other Programs
No duplication or overlap with other programs.
12. Waste, Fraud and Abuse
Minimal to no waste, fraud, or abuse in the RTCP program because
verifiable evidence of costs incurred are required to qualify for
program benefits.
13. Effect of Administrative PAYGO
RTCP is funded through the discretionary appropriations process;
accordingly, it is not subject to Administrative PAYGO procedures.

Exhibit 1
Administrative PAYGO Scorecard
(In Millions of Dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Savings
GSM-102 implementation of risk based (139.0) (139.0) (139.0) (139.0) (139.0)
approach (FAS/GSM)
RMA Terminations not previously counted (4.6) (23.0) (23.4) (23.7) (24.1)
(RMA/Crop Ins.)
Forest Service Increase Timber and (51.0)
Payment to State Receipts (FS/KV)
2008 $2 CRP Maintenance Reduction-- (0.1) (0.6) (24.6) (28.7) (31.6)
present & future (FSA/CRP)
2009 Reduction in CRP maintenance (43.6) (1.5)
payments (FSA/CRP)
2010 CRP Modification (Duck, Quail, SAFE/ 0.0 0.0 0.0 0.0 0.0 (2.9)
Reduction in bottomland hardwood) (FSA/
CRP)
Crop Insurance Standard Risk Agreement (2,000.0)
(RMA/Crop Ins.)
Costs
Title XIX Treatment Facilities (FNS/ 3.0 4.0 6.0 6.0 6.0
SNAP)
Forest Service Change in K-V Trust Fund 51 18
Spending (FS/KV)
Factor Removal (RMA/Crop Ins.) 0.4 2.7 8.3
RMA Crop Expansions (RMA/Crop Ins.) 0.6 12.8
CCC Section 4 Limit (FSA/CCC) 7.5 10.8 6.9 5.3
Food Aid Commodity Swaps (FSA/CCC) 77.0 60.0 111.0 67.0
Federal Base Acre reinstatement (FSA/ 5.0
Direct and Counter-cyclical)
Wetland Incentives (FSA/CRP) 7.8 14.6 17.3 19.2 20.8
CREP Incentives (FSA/CRP) 0.7 2.3 7.3 9.5 10.8
ACRE sign-up extension (FSA/ACRE) 30.0
2009 CRP extensions (FSA/CRP) 19.0
July 2009 Increase in minimum dairy 7.0
prices (CCC/Dairy Product Price
Support)
RMA--PRF-RI in MT (Board Approved) (RMA/ 4.6 23.0 23.4 23.7 24.1
Crop Ins.)
CRP Initiatives (FSA/CRP) 500.0
Crop Insurance Initiatives (RMA/Crop 1,500.0
Ins.)
-------------------------------------------------------------------------------------------------------------
Available Savings (128.5) (29.2) (65.7) (17.6) (0.0) 0.0 0.0 (0.0) 0.0 (2.9)
--------------------------------------------------------------------------------------------------------------------------------------------------------

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF USDA RESEARCH PROGRAMS)

----------

THURSDAY, JULY 28, 2011

Subcommittee on Rural Development,
Research, Biotechnology, and Foreign
Agriculture,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:05 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Timothy
V. Johnson [Chairman of the Subcommittee] presiding.
Members present: Representatives Johnson, Thompson, Scott,
Costa, and Kissell.
Staff present: Mike Dunlap, John Goldberg, Tamara Hinton,
DaNita Murray, Debbie Smith, Lauren Sturgeon, Suzanne Watson,
Andy Baker, Nona S. Darrell, Liz Friedlander, Anne Simmons,
John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE
IN CONGRESS FROM ILLINOIS

The Chairman. This is a hearing of the Subcommittee on
Rural Development, Research, Biotechnology, and Foreign
Agriculture entitled, Agriculture Program Audit: Examination of
USDA Research Programs, will come to order.
I have an opening statement to make and I think the Ranking
Member will and then we will proceed.
Good morning. This hearing is the ninth in a series of
audits of USDA farm programs. Through these discussions we hope
to gain a better understanding of how each program is operating
and what we might do to improve farm policy moving forward.
As we move forward to write the next farm bill, we have to
be mindful of current challenges and also anticipate future
issues. A few perennial challenges for agriculture are that
farmers and ranchers share all the obstacles that any small
business faces such as access to credit, market demand, and
variable input costs. Farmers and ranchers must also rely on
weather to grow and harvest their crops and in spite of these
challenges, our farmers and ranchers work hard every day to
supply our country and consumers around the world with a safe
and affordable supply of food and fiber.
In addition to these challenges, we will soon face the
issues of a dramatically growing population. The United Nations
predicts that our population will grow \1/3\ by 2050 and
feeding over nine billion people on the planet would require a
70 percent increase in ag products. The only way to meet that
growing demand will be through technological advances. In fact,
research on new crop varieties, best practices, and
biotechnology has been one of the most successful methods of
increasing production to keep pace with demand.
Continued investment in research can provide the necessary
foundation to our farmers to remain competitive. The research
projects conducted through public and private institutions
touch every area of our lives. From research in food science
and biotechnology, to integrated pest management, to
agriculture extension and services, this Committee feels it is
important to continue finding more efficient methods of
production. It also includes educating rural and urban
communities through agricultural extension services and youth
programs.
The USDA research mission is divided among four distinct
agencies, and this morning we will be hearing from the
administrators of each one. One of the many ways USDA works to
fulfill the core mission of research, education, and extension
is through land-grant colleges and universities throughout the
United States. I might say parenthetically, my own University
of Illinois being one of the preeminent institutions in the
country in a lot of regards and specifically in this regard.
USDA also conducts research in extension through Federal
research stations located throughout the country and around the
world. Through the gathering of market and production data, the
Department of Agriculture also provides statistical information
on the rural economy and the agriculture industry at large.
This information is extremely valuable as policy makers work to
craft agricultural and economic policies for rural America. As
we consider the next farm bill, we are faced with scarce
resources, so this Subcommittee has the responsibility to
improve the administration of research programs to make the
most efficient and effective use of funds available.
Some of the areas we would like to address this morning are
the duplication of programs, research priorities, USDA
leveraging of Federal resources and the cost of administration
and research mission area. In each area we are looking for
opportunities to streamline. And I thank all the witnesses for
appearing before the Subcommittee and look forward to our
discussion.
[The prepared statement of Mr. Johnson follows:]

Prepared Statement of Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Good morning. This hearing is the ninth in a series of audits of
USDA farm programs. Through these discussions we will gain a better
understanding of how each program is operating and what we might do to
improve farm policy moving forward.
As we write the next farm bill, we must not only be mindful of
current challenges, but anticipate future issues as well.
There are a few perennial challenges for agriculture. Our farmers
and ranchers share all of the obstacles that any small business faces,
such as access to credit, market demand, and variable input costs. But
farmers and ranchers also must rely on the weather to grow and harvest
their crops. In spite of these challenges, our farmers and ranchers
work hard every day to supply our country and consumers around the
world with a safe, reliable, and affordable supply of food and fiber.
In addition to these challenges, however, our farmers and ranchers
will soon bear the burden of supporting a dramatically larger
population. The UN is predicting that our population will grow by \1/3\
by 2050. Feeding the 9.1 billion people on the planet would require a
70% increase in agricultural production.
The only way to meet that growing demand for food will be through
technological advances. In fact, research on new crop varieties, best
practices, and biotechnology has been one of the most successful
methods of increasing food production to keep pace with demand. Since
1862, USDA supported research has provided a critical foundation for
increased production and yields.
Continued investments in research can provide the necessary
foundation for our farmers to remain competitive in the global market.
The research projects conducted through public and private institutions
touch every area of our lives. From research in food science and
biotechnology, to integrated pest management, to agricultural extension
services, this Committee feels it is important to continue finding more
efficient methods of production.
This effort also includes educating rural and urban communities
through agricultural extension services and youth programs. These
efforts can yield tremendous returns through building and maintaining
knowledge of agricultural production systems and encouraging our next
generation to engage in the agricultural industry.
The USDA research mission is divided among four distinct agencies,
and this morning we will be hearing from the administrators of each of
those. One of the many ways USDA works to fulfill the core mission of
research, education, and extension is through our land-grant colleges
and universities throughout the United States. USDA also conducts
research and extension through Federal research stations located across
the country and around the world. Through the gathering of market and
production data, USDA also provides statistical information on the
rural economy and the agricultural industry at large. This information
is invaluable as policy makers work to craft agricultural and economic
policies for rural America.
As we consider the next farm bill, we are faced with scarce
resources, so this Subcommittee has a responsibility to improve the
administration of research programs to make the most efficient and
effective use of the funds available. Part of that process this morning
will be to hear from USDA and take a close look at how research funding
is currently being allocated within the agencies.
Some of the areas we would like to focus on this morning include
the duplication of programs, research priorities, how USDA is
leveraging Federal resources, and the cost of administering the
research mission area. In each area of government we are looking for
opportunities to streamline processes and ensure that programs are
delivered as efficiently as possible.
I thank all of our witness for appearing before the Subcommittee
today, and I look forward to our discussion.

The Chairman. And with that, I recognize Mr. Costa, the
Ranking Member, for his opening statement.

OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA

Mr. Costa. Thank you very much, Mr. Chairman, for once
again focusing on our efforts as it relates to the
reauthorization of the 2008 Farm Bill and the programs that
provide valuable support for America's agricultural efforts.
This audit hearing is important for not only Members of the
Subcommittee but for our new Members who will be for the first
time looking at the reauthorization of the farm bill.
Today, we look at the United States Department of
Agriculture's research, education, and economics program
authorized under Title XII of the farm bill. Research, for
those of us who have been involved with the United States
Department of Agriculture, the USDA, has been part and parcel
of the Department's efforts really for over 150 years since the
Department was created. Particularly, through our land-grant
institutions as the Chairman noted not only at the land-grant
university in Illinois but throughout the country have really
been at the bedrock of so much of what is so good about our
ability to produce food and fiber, not only for the entire
nation but many in instances throughout the world.
The research that takes place here is a partnership between
the USDA and the land-grant institutions. It helps ensure safe,
abundant, and affordable food and fiber that has allowed
American farmers and ranchers and dairymen and women to thrive.
I think it is really unique when you look around the world the
relationship that we have had with the land-grant universities
and our agricultural producers. I think it is one of the
reasons that consumers in America have more faith and
confidence in our ability to ensure that when we talk about
risk management and risk assessment in food safety that we are
doing the very best to ensure the food safety for all American
consumers. There is this history with our land-grant
universities, our educational institutions, the research that
also supports the Food and Drug Administration and other
regulatory agencies to ensure that we not only produce the
highest quality food, the highest nutritional food, but also as
safely as possible.
But I must also point out that not only land-grant
universities but other agricultural schools such as my alma
mater, Fresno State University, and other universities
throughout the country that have done a great deal in terms of
agriculture research as well. So I look forward to the efforts,
as we talked about, the reauthorization of the farm bill, and
to hear the witnesses here today talk about how we can ensure
that we get more bang for our buck in terms of competitive
research dollars; how we can leverage those dollars with
institutions as well as in the public-private partnerships with
many of our industries that are directly focused on
agricultural research as it relates to seed development,
tolerance, resistance to pesticide, drought. This partnership
ensures that we can do a better job as we look at the issues of
risk management and risk assessment.
The four agencies that we will be listening to this
morning, Mr. Chairman, comprise the heart and soul of the
USDA's Research, Education, and Economics mission. I look
forward to hearing from our witnesses about how we can
reauthorize the farm bill, realizing that the funding is going
to be less next year than it was in the 2008 authorization.
That is just the facts of the fiscal challenges we are dealing
with here in Washington today.
But I think that it does not make sense in my opinion as we
look at how we are going to do more with less that we go into
the bone marrow of what is so essential in terms of research,
vital research that the USDA provides, particularly as we look
at challenges ahead. The Agricultural Research Service works
across the country to help deal with agriculture problems of
high national priorities. The National Institute for Food and
Agriculture was created in the 2008 Farm Bill to help drive
basic agricultural research through breakthroughs that can
ensure we are still the most innovative in the world.
The National Agricultural Statistic Service provides
valuable data to everyone who is involved at all levels of the
agricultural community. I use it as well as the entire ag
economy. Of course, the Economic Research Service helps inform
decision-making both inside and outside the United States on
food, farming, natural resources and other developmental
issues.
So let me close by saying that I am going to take
particular focus during the testimony on the area of the
Specialty Crop Research Initiative. That was something that a
number of us worked very hard on for the 2008 Farm Bill.
Our witnesses, I believe, are aware that the mandatory
funding for this program expires after the year 2012. I would
be interested to know your thoughts on how the unique needs of
specialty crops can be addressed in the USDA's research program
under the current budget environment. Specialty crops--and let
me underline this--represent approximately \1/2\ the value of
the U.S. agricultural industry and it has no support under the
Title I programs: 2008 was the first time that we provided some
technical assistance, which allows programs like the Market
Access Program to compete in foreign markets, the research
programs like the Specialty Crop Research Initiative that are
important in this effort, as well as the EQIP Program.
So I look forward to hearing from our witnesses in those
areas today in how we can maintain and strengthen our vital ag
research programs in a cost-savings environment that we are
currently working in today, Mr. Chairman. And I thank you for
your due diligence and your focus, and I look forward to the
testimony of our witnesses.
The Chairman. Thank you, Mr. Costa. And I ask that other
Members submit opening statements, if any, so that witnesses
can proceed.
With that, let me introduce the panel of witnesses. We have
one panel today, in order of your testimony: Dr. Edward B.
Knipling, Administrator, Agricultural Research Service, U.S.
Department of Agriculture here in D.C.; Dr. Chavonda Jacobs-
Young, Acting Director, National Institute of Food and
Agriculture; Dr. Cynthia Clark, Administrator, National
Agricultural Statistics Service; and Dr. Laurian Unnevehr,
Acting Administrator, Economic Research Service, U.S.
Department of Agriculture, Washington, D.C.
So with that, we turn to Dr. Knipling and we are more than
pleased to hear your comments.

STATEMENT OF DR. EDWARD B. KNIPLING, ADMINISTRATOR,
AGRICULTURAL RESEARCH SERVICE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.

Dr. Knipling. Chairman Johnson, Ranking Member Costa, and
Members of the Subcommittee, good morning. My name is Edward
Knipling. I serve as Administrator of the Agricultural Research
Service. Thank you all for your opening comments this morning
and ARS indeed appreciates the opportunity to discuss our work
with you.
The Agricultural Research Service is the Department of
Agriculture's intramural research agency for the biological and
other natural sciences. We in essence constitute USDA's Federal
laboratory network, and as such, a majority of ARS' funding
remains in-house, that is to employ government scientists and
support personnel. Our research is broad-based and is
particularly concerned with problem-solving and pre-commercial
research of long duration.
ARS is a multifaceted agency that is spread across the
country at over 100 locations. We also have four research
locations in foreign countries. We employ over 8,500 people,
2,500 of which are Ph.D. scientists. In Fiscal Year 2011, the
agency has a budget of $1.13 billion.
The mission of ARS is to conduct research to develop and
transfer solutions to agricultural problems of high national
priority and provide information access and dissemination to
ensure high-quality safe food and other agricultural products,
assess the nutritional needs of Americans, sustain a
competitive agricultural economy, enhance the natural resource
base in the environment, and provide economic opportunities for
rural citizens, communities, and society as a whole.
As an organization with national reach, ARS has a broad
spectrum of users and customers who help define the research
priorities of the agency. The agency was established nearly 60
years ago by our current name to, among other things, serve the
other agencies of USDA that need science information and
technology to carry out their programs. This remains an
important purpose of the agency.
Additionally, the agency is dedicated to serving producers
of both commodity and specialty crops, as well as private-
sector entities that depend on public research. Each year, the
agency on a continuing basis dedicates itself to an extensive
process of listening to these stakeholders as we determine
their needs and problems and we use this information for
setting priorities.
Research partnerships of all types are very important to
ARS and a hallmark of the agency is the collaborative nature of
our work. In addition to our sister agencies represented by my
colleagues on this panel, of particular importance is our close
partnership with the land-grant colleges and universities. Of
ARS' 105 laboratory locations, 60 are located on the campuses
of a land-grant institution and an additional seven are located
on other institutions of higher learning.
For 150 years, the U.S. has built a system for agricultural
research that has led to more innovation than by any other
nation in the world. This is a unique system emphasizing
necessary foundational research for the public good that cannot
and will not be done by private or commercial enterprises. As
part of the Research, Education, and Economics mission area,
ARS and the other three agencies represented here this morning
conduct joint planning, stakeholder conferences, peer review of
our projects, complementary allocation of funding, and program
reviews.
Like the other agencies, ARS is currently directing special
research attention to five broad national priorities that are
deemed of particular importance to society. These include
adaptation to the changing climate, food safety, children's
nutrition and health, global food security, and bioenergy,
particularly biomass production.
ARS organizes itself to accomplish these and all other
research goals into four major national program areas. These
are natural resources and sustainable agricultural systems,
crop production and protection, animal production and
protection, and nutrition, food safety, and quality. These
areas, in turn, are comprised of 20 national programs across
the country to address specific goals and priorities set out in
5 year action plans. My full written testimony that is provided
for the record cites some outstanding recent research
accomplishments in these program areas.
Once our research is complete, the agency also takes very
seriously its responsibility to transfer our research results
to the public. This is an important facet of our agency and we
take great pride in being able to provide technologies that
improve people's lives and producers' businesses. ARS' Office
of Technology Transfer is assigned this responsibility to
facilitate and accelerate the delivery of ARS research results
and innovation to the public benefit to private-sector entities
that further develop, commercialize, and market publicly
developed and known technology and----
The Chairman. If you want to bring your comments to a
close, we are a minute over. So let us try to stay on track.
Dr. Knipling. Yes. Well, this in essence completes my oral
testimony, Mr. Chairman, and we are pleased to answer any
questions later.
[The prepared statement of Dr. Knipling follows:]

Prepared Statement of Dr. Edward B. Knipling, Administrator,
Agricultural Research Service, U.S. Department of Agriculture,
Washington, D.C.
Chairman Johnson, Ranking Member Costa, and Members of the
Subcommittee, I am Edward Knipling, Administrator of the Agricultural
Research Service. Thank you for the invitation here today to discuss
the work of the ARS and the agricultural science that we pursue on
behalf of all Americans. I am delighted to share our work with you and
to have a discussion regarding our programs.
The Agricultural Research Service is the Department of
Agriculture's primary intramural scientific research agency. We
constitute USDA's Federal laboratory network and as such the majority
of ARS' funding remains ``in-house'' to employ government scientists
and technicians. Our research is broad-based covering all science
facets of agricultural and food production and utilization and is
particularly concerned with problem-solving and pre-commercial research
of long duration.
The Agricultural Research Service was officially founded in 1953
but has precursor agencies that date back as far as 1884 to the Bureaus
of Animal and Plant Industry. The importance of agricultural research
performed by the government goes back even farther, to the first work
done to stem hog cholera outbreaks in 1868. Prior to the formal
creation of the agency, Congress recognized the need for concentrated
centers of agricultural research focusing on issues of regional
importance and, for example, in 1938, appropriated funding to create
agricultural research laboratories in Peoria, Illinois; Wyndmoor,
Pennsylvania; Albany, California; and New Orleans, Louisiana; to work
particularly on utilization of agricultural commodities. These
locations still exist to this day as major centers of ARS work and
concentrations of our science. We are proud of this long history of
government commitment to solving agricultural problems that affect
every single American in one way or another.
Today, ARS is a multi-faceted agency that is spread across the
country at over 100 locations. We also have four research locations in
foreign countries. We employ over 8,500 people, 2,500 of whom are Ph.D.
scientists. In Fiscal Year (FY) 2011, the agency has a budget of over
$1.13 billion. The agency's funding is allocated to two budget lines;
the Salaries and Expense account and Buildings and Facilities. In FY
2011, the appropriation rescinded $230 million in balances from prior
appropriations, and there was no funding received under the Building
and Facilities line.
The stated mission of ARS (www.ars.usda.gov) is to conduct research
to develop and transfer solutions to agricultural problems of high
national priority and provide information access and dissemination to:

Ensure high-quality, safe food, and other agricultural
products;

Assess the nutritional needs of Americans;

Sustain a competitive agricultural economy;

Enhance the natural resource base and the environment; and

Provide economic opportunities for rural citizens,
communities, and society as a whole.

As an organization with national reach, ARS has a broad spectrum of
users and stakeholders who drive the research priorities of the agency.
When the agency was officially formed in 1953 it was with the intent to
create a clearing house for research issues within USDA and to serve
the other agencies of the Department that need science information and
technology to carry out their programs. This remains an important
purpose of the agency. Examples of customer agencies within USDA
include the Animal and Plant Health Inspection Service, the Food Safety
and Inspection Service, the Natural Resources Conservation Service, and
the Food and Nutrition Service. Additionally, the agency is dedicated
to serving producers of both commodity and specialty crops, as well as
private sector entities that depend on public research. Each year, the
agency dedicates itself to an extensive process of listening to these
stakeholders as we determine their needs and problems and use this
information in setting priorities.
As mentioned, most of ARS' research takes place inside of the
agency and is conducted by our federally employed scientists. However,
research partnerships of all types are very important to ARS and a
hallmark of the agency is the collaborative nature of our work. Of
particular importance is our close partnership with the land-grant
colleges and universities, as well as other universities. Of our 105
locations, 60 are located on the campus of a land-grant institution and
an additional seven are located on other institutions of higher
learning.
Our sister agency, the National Institute of Food and Agriculture
(NIFA), serves to complement ARS by providing grants and other forms of
extramural funding, largely to the land-grant institutions, which
enhances the research partnerships at the laboratory, field, and
scientific levels. Further, ARS scientists are often Co-Principal
Investigators with our university partners on grants funded by NIFA and
the National Science Foundation which serve as a source of extramural
funding for ARS.
Over the last 150 years the United States has built a system for
agricultural research that has led to more innovation than any other in
the world. This is a unique system emphasizing necessary foundational
research for the public good that cannot and will not be done by
private or commercial enterprises. ARS and NIFA, as well as the other
research agencies, broadly coordinate our research programs through
joint planning, stakeholder conferences, peer review of projects,
complementary allocation of funding and program reviews.
As part of the Research, Education, and Economics (REE) Mission
Area, ARS, like its fellow REE agencies, currently is directing special
research attention to five broad national priorities that the
Administration has deemed of particular importance:

Climate change/adaptation;

Food safety;

Children's nutrition and health;

Global food security;

Bioenergy.

To give you a better understanding of the Agricultural Research
Service and our work on these major priorities, I would like to
describe highlights and examples of significant accomplishments of our
work done under four major program areas: Natural Resources and
Sustainable Agricultural Systems; Crop Production and Protection;
Animal Production and Protection; and Nutrition, Food Safety and
Quality.
Natural Resources and Sustainable Agricultural Systems
Sustainable agricultural systems produce the agricultural crops and
livestock needed by society; protect the natural resource foundation
essential for production, processing, and other uses; and provide
economic and social value to producers, processors, consumers, and
communities. Our research creates profitable agricultural systems that
capitalize on the nation's vast renewable natural resources to preserve
the fertility and productivity of soils, provide abundant and high
quality water supply and clean air, maintain healthy agricultural and
rangeland ecosystems, and offer renewable energy and fuel alternatives
that form the basis of the U.S. economy and the well being of rural
America.
Today, farmers have a wide array of conservation techniques to
choose from, and the U.S. Government supports many of them through
cooperative programs. One problem associated with these efforts is
determining what works and what doesn't. The Conservation Effects
Assessment Project (CEAP) of the Natural Resources Conservation Service
answers this question, by determining the effectiveness of USDA
conservation programs on the environment. ARS plays a significant role
in this project by analyzing the impact of agricultural practices in
numerous watersheds across the country. The ARS watershed research
focuses on the effects of practices such as no till farming, terracing,
riparian buffers, cover crops, and chemical, fertilizer, and manure
application on soil erosion and water quality in agricultural
watersheds. Measurements at some watersheds have been going on for
decades, allowing tracking of changes in these areas over time and with
varying conservation scenarios.
These data have been used to construct models for the accurate
prediction of the consequences of conservation technologies, allowing
one to track conservation progress and select conservation
interventions for the future that work best given the characteristics
of the region. Examples of ARS contributions include an ARS study that
found that cattle manure deposited directly into streams contributed
12% of the phosphorus in water from the studied watershed. Improved
fencing to limit cattle access to streams solves this problem.
Scientists from ARS developed a weather advisory system to help farmers
decide when to apply manure so that nutrient runoff associated with
rain events could be avoided.
This research and the resulting models have led to improved
deployment of conservation practices that have significantly reduced
soil erosion and improved water quality. Two recent reports regarding
the Chesapeake Bay region and the Upper Mississippi River basin
indicate significant reduction in soil loss and nitrogen, phosphorus
and pesticide runoff. In the Chesapeake Bay region, soil losses were
reduced by 55%, nitrogen loss was reduced by 31% and phosphorus loss
was reduced by 41% due to conservation interventions deployed there. In
the Upper Mississippi River basin, soil loss was reduced by 69%,
nitrogen loss by 18%, phosphorus loss by 49%, and 51% reduction in
pesticide loss. This type of long term, large scale agriculturally-
based conservation research needed to realize these and future
improvements illustrates a primary strength of ARS in this research
area.
Crop Production and Protection
Crop Production and Protection research programs deliver science-
based information, genetic resources, and technologies for increased
crop productivity and quality, protection from plant diseases and
pests, and economically and environmentally sustainable methods of crop
production that meet consumers' demands for a ready supply of high
quality, safe, affordable and nutritious food, the public's desire to
protect the environment, and the global community's needs for food
security.
The ARS response to a new strain of wheat stem rust (Uganda 99 or
Ug99) illustrates another of the unique capabilities of ARS, its
disease experts and genetics resources enabled it to respond quickly to
this urgent agriculture issue. In the early 1900s, wheat stem rust
caused extensive losses of wheat worldwide, until rust resistant
varieties could be developed. These were extremely successful at
reducing the incidence of wheat stem rust for decades. In 1999, a new
strain of wheat stem rust was discovered in Uganda that had overcome
the resistance of currently available strains, and ARS disease experts
were the first to identify it as a new mutant strain called Ug99. Since
its discovery, this rust has spread across Africa, Asia and parts of
the Middle East.
Monitoring programs in the major wheat producing areas of the U.S.
were strengthened by ARS and others to detect Ug99 or related wheat
stem rust entry into the country. ARS scientists are also determining
the mechanisms by which the Ug99 strain was able to overcome the
disease resistance of commercial varieties. Worldwide surveys of wheat,
barley and related grasses were undertaken to discover resistance to
Ug99, and several resistant plants have been discovered. Research is
currently underway to transfer disease resistance from varieties where
it was discovered to all commercial forms of wheat grown in the U.S.
and worldwide. ARS scientists are also developing and studying the use
of appropriate fungicides to help combat wheat stem rust. Finally, ARS
scientists are participating in an international consortium that
monitors the movement of Ug99 from country to country, and supporting
efforts to provide Ug99 resistant wheat to areas of the world that have
been stricken with this disease. These interventions are intended to
prevent the entrance of this disease into the U.S., and mitigate or
prevent the negative consequences of the disease should it manage to
become established here.
Much of the infrastructure needed for U.S. monitoring for wheat
stem rust was already in place, maintained by ARS. This includes
scientific expertise in the diseases of cereal grains. Because of this,
ARS was able to rapidly mount an effective research response to this
problem.
Animal Production and Protection
The mission of the ARS Animal Production and Protection research
programs is to provide the scientific information and tools to help
support the U.S. food animal industries to continue to compete
successfully in worldwide trade, provide the supply of nutritional
animal products required by the nation, and contribute toward global
food security. ARS accomplishes this mission by maximizing production
efficiency and animal health through scientific innovation and the
discovery and development of new technologies focused on national
priorities. Strategic public-private partnerships have been established
to achieve our mission, including support of government action and
regulatory agencies responsible for trade, bio-defense, and global food
security.
The recent success of dairy cattle genomics illustrates a unique
strength of ARS, the ability to commit to a research topic long enough
to generate real solutions to complex agricultural problems. In the
early 1990s, ARS began investing resources in cattle genomics. ARS
cattle genomics research contributed significantly to early cattle
genome mapping and ARS leadership organized a successful collaborative
effort to sequence the bovine genome, which was published in 2009 in
Science.
Building from these accomplishments, ARS scientists in
collaboration with scientists at George Mason University, University of
Missouri, University of Maryland, University of Alberta and Illumina
Inc., developed the tool needed to enable dense genotyping on
individual cattle at a cost that allowed the analysis of enough cattle
for successful genomic prediction of quantitative traits. Combining
national production records for dairy cattle available and the ability
to do dense genotyping provided the opportunity to realize the huge
potential of genomic analysis for Dairy cattle selection. Subsequent
analyses by ARS demonstrated that use of genomic prediction in dairy
cattle substantially improved the accuracy of selection of young dairy
bulls compared to that derived from trait measurements in the parents,
and effectively shortened the generation interval. Scientists from ARS
have further developed genotyping tools, strategies and computer
analyses to further reduce the cost of genotyping without significantly
reducing accuracy.
These innovations have been extensively adopted by the U.S. dairy
industry. It is estimated that this technology will double the rate of
genetic progress. To put this in perspective, according to the National
Agricultural Statistics Service, milk production per cow has increased
at the rate of 1.6% per year over the last decade. If this rate were
doubled, the dairy herd in this country could be reduced by 30% in the
next decade without reducing the milk supply, significantly reducing
both the cost of producing milk and the demand on feed and natural
resources used. This success has been possible only through sustained
ARS commitment and leadership in cattle genetics and genomics.
Nutrition, Food Safety and Quality
The Nutrition, Food Safety and Quality research and information
area exists to lead and coordinate ARS research and information
dissemination to define the role of food and its components in
optimizing health for all Americans. Our scientists focus on developing
tests and processes that keep the food supply safe; reducing and
controlling pathogens and toxins in agricultural products; and
improving the economic viability and competitiveness of American
agriculture by enhancing the quality and utilization of agricultural
products for the benefit of producers and consumers.
Unique national resources that are part of this program include the
National Nutrient Databank and the ``USDA What We Eat in America/
NHANES'' national food consumption survey. Partnerships with other
Federal agencies and nonprofit and industry groups allow ARS to
leverage funds and build upon common research goals. Information
dissemination programs operated by ARS' National Agricultural Library
address general and specific human nutrition issues and audiences and
include general web portals such as www.nutrition.gov for the American
consumer as well as the targeted web sites for professionals such as
the Food and Nutrition Information Center.
The ARS response to E. coli contamination of a variety of foods
illustrates several distinguishing characteristics of ARS, which
includes the ability to rapidly respond to public health problems; the
development of real solutions to those problems; and the ability to
provide a long-term commitment of resources to a research topic. In
1993, hundreds were sickened after eating undercooked Jack-in-the-Box
hamburgers. The culprit was rapidly identified as Escherichia coli
O157:H7. E. coli is a common bacterium that is resident in the large
intestine of man and animals and is typically harmless. However,
O157:H7 E. coli produces toxins, which cause severe illness and death.
ARS scientists rapidly (within a year) developed tests for bacterial
contamination of meat that were used by the meat processing industry to
monitor and control contamination, followed by further tests to
specifically detect E. coli O157:H7.
According to the CDC, E .Coli disease has been reduced by 40% over
the last decade. However, outbreaks continue both in the U.S. and other
countries in meat and other foods such as fresh produce. Some outbreaks
have been linked to E. coli O157:H7, but others are due to non-O157 E.
coli (STEC) strains described as O26, O45, O103, O111, O121 and O145,
also known as the ``Big Six''. ARS scientists at the request of the
USDA-Food Safety and Inspection Service (FSIS) recently developed and
validated tests that can specifically detect and differentiate the
disease causing non-O157 strains for use in regulatory monitoring of
the food supply.
For 17 years, ARS' food safety research program has rapidly and
uniquely responded to the challenges of pathogenic E. coli
contamination of foods, and has successfully provided technological
solutions that have been rapidly adopted by its various stakeholders.
These technologies have been and will continue to be used to monitor,
eliminate the entrance, and/or reduce the level of disease causing E.
coli into the food supply.
International Research
ARS operates four laboratories abroad that are dedicated to the
biological control of invasive species and pests. These labs are
located in Montpelier, France; Brisbane, Australia; Buenos Aires,
Argentina; and Beijing, China. The laboratories exist primarily to
allow ARS scientists to evaluate harmful, non-native species that have
invaded the United States and to discover beneficial species in their
native environments that can be used to control the invasive species.
In addition to these laboratories, the agency's Office of
International Research Programs serves to promote and enhance the
research of ARS through mutually beneficial international research
agreements. We currently have cooperative agreements with researchers
in dozens of countries across the globe. These agreements cover the
entire spectrum of research and allow our scientists access to
information and conditions for their research that would otherwise be
unattainable.
Technology Transfer
ARS's Office of Technology Transfer (OTT) is assigned the
responsibility to facilitate and accelerate the delivery of ARS
research results for the public benefit to private sector entities that
further develop, commercialize, and market publicly developed and owned
technology and information Further responsibilities of the office
include protecting intellectual property (IP), and developing strategic
partnerships with outside organizations, ARS-OTT is centralized for
patent, license, and cooperative agreement policies and approvals, but
maintains field offices to provide one-on-one customer service to ARS
researchers and private sector partners throughout the U.S.
In addition to OTT activities, technology transfer is accomplished
through many other mechanisms, such as:

developing written information for customers and
stakeholders, including scientific publications, publications
in trade journals, and reports to stakeholders;

releasing plant germplasm to the public;

transferring research materials to scientists outside of
ARS;

delivering specific research results to regulatory agencies
to support their actions;

participating in meetings with industry organizations and
universities, workshops and field days; and

distributing information to the public via the ARS
Information Staff, the National Agricultural Library, and other
sources.
Buildings and Facilities
As the nation's science based Federal intramural agricultural
research agency, ARS uniquely owns and manages a large infrastructure
of modern research laboratories and other real property assets that
support and sustain the long term USDA science capacity. Collectively,
this network of over 100 locations spread across the country
essentially constitutes the national laboratory for agriculture. The
agency places the management of its physical assets as a high priority
proactively monitors and reviews the status of those facilities.
Currently ARS is developing a capital management strategy to take us
into the future.
ARS is now completing a number of repair, maintenance, and
modernization projects that were funded with $176 million made
available by the American Recovery and Reinvestment Act of 2009. This
program created jobs and corrected facility deficiencies which allow
ARS research to be effectively and efficiently conducted at suitable
facilities. Critical deferred maintenance is work associated with
critical systems such as HVAC, electric, roofing, exterior closure and
plumbing and involves maintenance to systems and components beyond
simple patch and repair tasks. Completion of this work will, in many
cases, result in improved energy efficiency, reduction in current
operation and maintenance costs, and arrested further deterioration of
ARS facilities.
At the end of FY 2010, ARS obligated approximately $171 million.
The balance of approximately $5 million was used as a reserve for
change orders typically expected in construction of this type. As of
July 2011, ARS has obligated a total of $174 million.
ARS also owns or leases over 400,000 acres of land across the
country, on which are more than 3,000 operational buildings with a
total gross square footage of over 13.5 million. The agency estimates
the replacement value of all of its real property assets to be $3.64
billion.
Mr. Chairman, as you can see ARS is a very active and involved
agency that is dedicated to solving the world's agricultural problems
and to delivering the science needed to feed and clothe a growing world
population. ARS has been focused on these issues for over half a
century and we are very excited about the next 50 years as well. I
appreciate this Committee's long-standing support of ARS and I would
like to again thank you for the opportunity to testify before you
today. I look forward to answering any questions that you may have.

The Chairman. Thank you very much.
Yes, ma'am.

STATEMENT OF CHAVONDA JACOBS-YOUNG, Ph.D., ACTING
DIRECTOR, NATIONAL INSTITUTE OF FOOD AND
AGRICULTURE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.

Dr. Jacobs-Young. Good morning, Chairman Johnson, Ranking
Member Costa, and Members of the Subcommittee. I am Chavonda
Jacobs-Young, and I am acting Director of USDA's National
Institute of Food and Agriculture, NIFA. I appreciate the
opportunity to appear before you and tell you about how NIFA is
serving the needs of the nation and addressing its challenges
through agricultural science.
Mr. Chairman, agricultural science is a fundamental part of
American agriculture from field to table, and NIFA is at the
intersection of research, education, and extension. By
supporting extramural agricultural research across the country,
typically at research universities and colleges, NIFA improves
agricultural science throughout the nation.
The 2008 Farm Bill created NIFA in order to coordinate a
diversity of research programs across functions and funding
methods. NIFA science institutes support the four main
priorities aimed at enhancing the impact of food, agriculture,
and natural resources sciences. These are the Institute of Food
Production and Sustainability; the Institute of Bioenergy,
Climate, and Environment; the Institute of Food Safety and
Nutrition; and the Institute of Youth, Family, and Community.
Through this reorganization, Congress made a bold step
toward streamlining agricultural science for the 21st century.
While only 1\1/2\ years old, NIFA already has a long and
impressive list of accomplishments. My written testimony,
submitted for the record, includes many examples of this, but I
would like to highlight just a few for you here today.
The Agriculture and Food Research Initiative, AFRI, is
NIFA's flagship granting mechanism. Among numerous
accomplishments, AFRI funding has been pivotal in mapping the
genomes of vital agricultural commodities, including wheat,
rice, pigs, cattle, and chickens. This science is the gateway
to fast-tracking improved breeding that helps our agricultural
producers meet our growing needs for domestic and global
populations.
NIFA's investment in AFRI is complemented by the Specialty
Crop Research Initiative, SCRI. SCRI supports research and
extension in plant breeding, pest and disease management, and
production efficiency. Though SCRI is still in its initial
stages, it promises to deliver significant benefits to growers
and consumers.
NIFA funds a variety of capacity-building programs that
support a wide range of agricultural science initiatives. Some
of these include minority-serving programs that work with
underserved communities. NIFA is also helping build the next
generation of producers through our Beginning Farmer and
Rancher Development Program. These are just a few of the many
successful programs from NIFA's first 2 years.
Going forward, NIFA will continue to make smart
investments, forge enduring relationships, and engage new
partners in scientific research, education, and extension
programs to maximize the public's investment in agricultural
research. As well, NIFA's investment in agriculture research
and extension helps support and sustain a highly skilled
workforce that is critical to the 21st century U.S. economy.
In addition, NIFA is committed to ensuring Federal dollars
are well spent through systematic monitoring and evaluation.
NIFA tracks scientific projects through a centralized database
to avoid duplication. NIFA and USDA's Agricultural Research
Service also hold joint stakeholder meetings on scientific
research to synchronize and coordinate compatible research
projects.
NIFA has a promising future, and in collaboration with our
Congressional partners, we look forward to building on our
leadership role in national agriculture scientific research,
education, and extension.
I appreciate your time and would be pleased to answer any
questions.
[The prepared statement of Dr. Jacobs-Young follows:]

Prepared Statement of Chavonda Jacobs-Young, Ph.D., Acting Director,
National Institute of Food and Agriculture, U.S. Department of
Agriculture, Washington, D.C.
Good morning Chairman Johnson, Ranking Member Costa, and Members of
the Subcommittee. Thank you for inviting me here today to participate
in this timely hearing on farm bill programs as they relate to USDA's
National Institute of Food and Agriculture (NIFA) of which I am the
Acting Director. I am pleased to have this opportunity to provide some
detailed information on our achievements and challenges and look
forward to learning about your interests.
Agricultural science is a dynamic system that moves from farm to
lab to dining table and back again. At USDA when we speak of
agricultural science we mean all the activities relating to research,
education, and extension and NIFA is a critical part of this.
That is why I am pleased to be leading an agency team of about 350
professionals at a time when both Congress and the Administration
understand the inherent value of investing in scientific research in a
smart and efficient way. One of our goals at NIFA is to elevate the
standing and stature of research, education and extension within the
Federal science enterprise while being effective stewards of the public
trust. This is the real challenge that NIFA faces.
Mandate from 2008 Farm Bill
It's against such a backdrop that the 2008 Farm Bill (FCEA Act of
2008) created the National Institute of Food and Agriculture in support
of extramural agricultural research across the nation. The 2008 Farm
Bill called for the integration of programs across functions and
funding methods within the Agency. As such, NIFA is comprised of four
main institutes. These are the:

1. Institute of Food Production and Sustainability;

2. Institute of Bioenergy, Climate, and Environment;

3. Institute of Food Safety and Nutrition; and the

4. Institute of Youth, Family, and Community.

These institutes coordinate a mixed portfolio of competitive and
capacity building programs all with the aim of enhancing the impact of
food, agricultural, and natural resource sciences. In reorganizing the
Federal extramural research efforts in this manner, Congress took a
21st century approach in the last farm bill in acknowledging the broad
reach and interdisciplinary nature of agricultural science.
But NIFA is not operating in a vacuum. NIFA scientists develop
research partnerships with a diverse group of scientists, farmers,
private sector investigators, and a wide array of higher learning
institutions across the nation. In fact, these relationships are key in
how NIFA identifies its priorities.
Input from Congress, The National Agricultural Research, Extension,
Education, and Economics Advisory Board (NAREEEAB), as well as our many
university, scientific and agricultural partners and stakeholders all
feed into a decision-making process. NIFA's leadership team takes this
all into consideration as it establishes broad program priorities and
goals across the Agency and ensures they are aligned with broad
strategic goals of the department and the mission area. These goals and
informed priorities are pursued via competitive programs and capacity
building programs.
While only a year and half old, NIFA has already collected a long
and impressive list of accomplishments, some of which I would like to
highlight in the next few minutes:
Agriculture and Food Research Initiative (AFRI)
NIFA's flagship granting initiative is the Agriculture and Food
Research Initiative (AFRI). AFRI's competitive grants program supports
both fundamental science and applied research and education for the
nation's leading scientists. In particular, AFRI is charged with making
research, education, and extension grants that address key problems of
national, regional, and multi-state importance in sustaining all
components of agriculture. These include farm efficiency and
profitability, ranching, renewable energy, forestry (both urban and
agroforestry), aquaculture, rural communities and entrepreneurship,
human nutrition, food safety, biotechnology, and classical breeding. In
fact, AFRI funding was pivotal in completing the genome of
agriculturally important plants and animals like wheat, rice, pigs,
cattle, and chickens.
An example of recent success includes the work by a team at the
University of California-Davis which has used AFRI funding to identify
genes in wheat that are responsible for the plant's tolerance to
freezing temperatures. Wheat breeders have long recognized the need to
produce cultivars with greater resistance to freezing temperatures and
this discovery may lead to improved crop production.
Another example comes from scientists in Connecticut who are
investigating the use of natural plant products to reduce foodborne
pathogens in broiler chickens. This work will potentially lead to
decreased bacterial outbreaks, improving public health, and economic
opportunity for poultry farmers.
Specialty Crop Research Initiative (SCRI)
NIFA's investment in AFRI is complemented by another program: the
Specialty Crop Research Initiative (SCRI). SCRI was created to help
fund solutions to critical issues of the specialty crop industry. SCRI
supports research in plant breeding, genetics and genomics to improve
crop characteristics and appearance, environmental responses and
tolerances, pest and disease management and production efficiency to
name a few. SCRI's multi-state, multi-institutional, interdisciplinary
funding not only requires a non-Federal one-to-one match but also
requires project proposals to combine research and extension. This
helps ensure that new products, processes, practices, and tools are
made available to specialty crop stakeholders. Even though most SCRI-
funded projects have not yet reached completion, growers and consumers
are already benefiting from this investment.
For example, water availability is an issue affecting all
Americans. SCRI has funded projects to reduce the amount of water
needed to profitably raise crops. One project in California has the
potential to reduce water use in grape production by 153 billion to 307
billion gallons per year. This is enough water to meet the daily
household water needs of over six million Americans for an entire year,
or about the equivalent of the populations of Los Angeles and Chicago
combined.
Fruit growers must reduce the quantity of fruit on their trees so
that the remaining fruit reaches marketable size. Until recently, U.S.
growers did this either with chemicals or manual labor.
One SCRI-funded project looking at mechanical thinning techniques
demonstrated $500 to $700 per acre savings in apricots and nectarines
and $200 to $500 per acre savings in cherries during commercial field
trials. This led to increasing adoption of this technology across the
entire country. This will result in local jobs to manufacture and
service the needed equipment, increased wages for workers who move from
manual labor to equipment operation, and savings for consumers in the
grocery store.
SCRI-funded work on biological control of insect pests (in
particular, codling moth) in orchards in the Pacific Northwest
demonstrated that sustainable pest management, which includes
maintaining natural predators of orchard pests, can reduce annual
orchard pest management costs of $2,300 by 25 percent.
Beginning Farmers and Rancher Development Program
While NIFA scientists are committed to ensuring that the scientific
pipeline for the next generation of scientists is being filled, NIFA's
Beginning Farmer and Rancher Development Program aims to support the
pipeline of our next generation of producers. Training for beginning
farmers and ranchers includes: webinars, seminars, internships,
mentorships, and on-farm field days. Other training sessions have
included face-to-face training events, such a regular non-credit
courses or workshop sessions at farming conferences. More than 5,300
new and potential farmers participated in training events.
For example, The Western Navajo Nation Beginning Farmers and
Ranchers Project engages, prepares, and supports socially
disadvantaged, underserved, and limited resource beginning Navajo
farmers and ranchers in eight communities covering 8,000 square miles
of the Navajo Nation. The overall goal of the project is to provide
Navajo community members who wish to begin farming and ranching with
the skills to effectively launch sustainable agricultural operations
using traditional and contemporary agricultural techniques in
conjunction with effective business practices. In the first year, the
project worked with 13 chapter members through direct agricultural
training and networking activities that included two roundtables, two
conferences, and weekly classes in technology, business, or
introductory farming and ranching to 1,000+ participants. Fifty percent
of participants are women. Seventy percent have been farming or
ranching for less than one year, or do not currently farm or ranch. The
project staff is comprised of four traditional Navajo locals of varying
ages and educational backgrounds. All are bilingual, fluent in Navajo,
and culturally sensitive to the target group's history and challenges.
Serving Minority Communities
NIFA is also working to ensure that its research and extension
programs continue to expand its reach into non-traditional, diverse
communities through its minority serving programs. These programs
include: Hispanic Serving Institutions Education Grants Program, the
Tribal Colleges Education Equity Grants Program, and the 1890
Institution Capacity Grants Program.
An example of a recent success is at Fort Valley State University
(FVSU) in Georgia where the 1890 Capacity Building Grant has been
essential in helping design and implement an Outdoor Forestry
Classroom/Laboratory Program. One of America's challenges is to attract
young people from all walks of life to the sciences and in particular
the agricultural sciences to fill the pipeline for our future. This
program provides hands-on and experiential learning to forestry course
students, trains and prepares high school agriculture students for
various forestry careers through development events, and allows use of
its facilities for summer workshops for high school agriculture
teachers throughout the state of Georgia. During Spring 2009, Area 3 of
district number 4 of Georgia used the site to conduct forestry career
development events. One hundred and fifty high school students were in
attendance and had the opportunity to interact and discuss careers in
the forestry industry with foresters from USDA, the Georgia Forestry
Commission and Weyerhaeuser.
Another example includes, the Teaching and Research in
Environmental Ecology Program at the University of Texas at San Antonio
which helped recruit, retain, and financially support underrepresented
undergraduate and graduate students.
Capacity Building Grant Programs
Another set of key programs are NIFA programs which build capacity
for research and extension in cooperation with our university partners.
These include:

a. Hatch Act programs which support research at state agricultural
experiment stations;

b. McIntire-Stennis Cooperative Forestry Research program which
funds research related to the use of the nation's forest
resources;

c. Evans-Allen Program, created to support agricultural research at
1890 Colleges; and

d. the Smith-Lever programs which support not only the national
Cooperative Extension System but also targeted programs within
the extension system on subjects like food and nutrition
education, pest management, and children, youth, and families
at risk.

Examples of recent successes made through these capacity building
programs run across a wide range of NIFA's activities. For instance,
scientists in North Dakota developed three varieties of barley which
has been recommended for malting and brewing by the American Malting
Barley Association. These efforts resulted in an additional $23 million
in revenue for growers in 2009.
In another example, researchers at the University of Georgia used
advanced genomic and proteomic approaches to identify and develop
strategies to improve pine tree resistance to an invasive wood wasp.
Conclusion
These are just a few examples of successes in the first 2 years of
NIFA's existence. However, the reach and scope of future
accomplishments are becoming increasingly challenging in a tight budget
environment. While research outcomes can never be fixed to a certain
timeline, NIFA is doing its best in this fiscal climate to make smart
investments, forge enduring relationships, and engage new partners in
scientific research, education and extension programs.
In addition, NIFA is committed to maximizing Federal dollars by
ensuring systematic monitoring and evaluation. While the scientific
method requires the flexibility to replicate results, NIFA's
leadership, program managers, and researchers rigorously track
scientific projects through its Current Research Information System
(CRIS) to avoid duplication. In addition NIFA and ARS hold joint
stakeholder meetings on scientific research to pull together research
projects that are compatible and not duplicative.
NIFA has a promising future and in collaboration with our
Congressional partners will continue to build on its leadership role in
national agricultural scientific research, education, and extension.
I appreciate your time and would be pleased to answer any
questions.

The Chairman. Thank you very much.
Dr. Clark?

STATEMENT OF DR. CYNTHIA CLARK, ADMINISTRATOR,
NATIONAL AGRICULTURAL STATISTICS SERVICE, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

Dr. Clark. Chairman Johnson, Ranking Member Costa, and
Members of the Subcommittee, I thank you for the opportunity to
appear before this Subcommittee. My name is Cynthia Clark, and
I have been an Administrator at the National Agricultural
Statistics Service, or NASS, since July of 2008. NASS
administers the U.S. agricultural statistics program, a program
that began at USDA in 1863 and conducts the quinquennial U.S.
Census of Agriculture first collected by the Census Bureau in
1840. Both programs are aligned with the basic mission of
NASS--to provide timely, accurate, and useful statistics in
service to U.S. agriculture.
NASS has 1,050 employees currently located in 46 field
offices and headquarters with the new operations center opening
in October 2011 in Overland, Missouri. Additionally, NASS has a
cooperative agreement with the National Association of State
Departments of Agriculture to collect agriculture data with a
core of 3,500 interviewers.
NASS' annual agricultural estimates reports are critically
important to assess the current supply and demand in
agriculture commodities. They are extremely valuable to
producers, agribusiness, farm organizations, commodity groups,
economists, public officials, and others who use the data for
decision-making. The statistics disseminated by NASS support
fairness in markets ensuring that buyers and sellers both have
access to the same official statistics at the same preannounced
time. This prevents markets from being influenced by inside
information.
Our program supplies important economic, environmental, and
demographic data that informs policy decisions. One example is
the Risk Management Agency relies on NASS annual county
estimates to administer crop insurance programs that provide
U.S. farmers a safety net ensuring protection against
unpredictable growing conditions. The Farm Service Agency
relies on NASS county-level data to administer the Conservation
Reserve Program, crop revenue support program, and emergency
assistance payments.
As we speak, NASS is undertaking a transformation of its
business process for collecting processing, analyzing, and
disseminating agricultural statistics. We are pursuing six
operational initiatives to improve data quality, create
business cost efficiencies, improve career opportunities for
NASS staff, and position the agency to better serve the future
statistical needs of USDA.
These efforts include centralizing IT services throughout
the agency, standardizing systems, using Apple iPads to collect
data securely in the field and transmit the information in real
time by a high-speed broadband into NASS systems, centralizing
telephone data collection, and utilizing video teleconferencing
for meetings and training.
The lynchpin of the centralized data collection initiative
is the new NASS National Operations Center in Missouri. NASS is
implementing these initiatives without a request for additional
appropriated funding. Once in place, they will result in
substantial cost savings to U.S. taxpayers. NASS has also
embarked on a research program to improve the quality and
accuracy of its agriculture estimates.
NASS is preparing now for the 2012 Census of Agriculture
with an initial mailing to farmers and ranchers in December
2012. The Census of Agriculture is the only source of
comprehensive data on farm operations at the national, state,
and county level. Detailed information at the county level
helps agricultural organizations, suppliers, handlers,
processers, and wholesalers and retailers better plan their
operations. Census demographic information provides a valuable
database for developing a public policy for rural areas. These
data have been critical for farm bill discussions.
The authority to conduct the Census of Agriculture was
transferred to USDA in 1997. During the past 14 years, NASS has
made significant strides to improve this vital data series. The
2007 Census provided the option for electronic reporting,
dramatically increased coverage of Native American, minority,
and disadvantaged farm operators, and released data meeting
newly defined needs for Congressional districts and for
watersheds. NASS listens to Congress, industry, local and state
governments, and stakeholders as it identifies emerging data
needs.
The 2012 Census will include new sections on organic
agriculture and on-farm renewable energy. It will have
additional questions on land-use practices and new questions on
agroforestry, on-farm packing facilities, and farms that sell
to intermediary outlets. Having the Census of Agriculture
within USDA enables the Census to be more responsive to USDA
and agriculture data needs.
I appreciate the opportunity to testify and to share with
your Subcommittee some of the important information that NASS
provides for public and private decision-making relevant to
food, agriculture, and rural America. Thank you.
[The prepared statement of Dr. Clark follows:]

Prepared Statement of Dr. Cynthia Clark, Administrator, National
Agricultural Statistics Service, U.S. Department of Agriculture,
Washington, D.C.
Mr. Chairman and Members of the Subcommittee, I appreciate the
opportunity to submit a statement for this Subcommittee's
consideration. The National Agricultural Statistics Service administers
the U.S. agricultural statistics program, which began at the United
States Department of Agriculture (USDA) in 1863. NASS also conducts the
quinquennial U.S. Census of Agriculture, first collected by the
Department of Commerce in 1840. Both programs are aligned with the
basic mission of NASS to provide timely, accurate, and useful
statistics in service to U.S. agriculture.
Agricultural Estimates
NASS's annual agricultural estimates reports are critically
important to assess the current supply and demand in agricultural
commodities. They are extremely valuable to producers, agribusinesses,
farm organizations, commodity groups, economists, public officials, and
others who use the data for decision-making. The statistics
disseminated by NASS support fairness in markets ensuring buyers and
sellers have access to the same official statistics at the same pre-
announced time. This prevents markets from being influenced by
``inside'' information, which might unfairly affect market prices for
the gain of an individual market participant. The efficiency of
commodity markets is enhanced by the free flow of information, which
minimizes price fluctuations for U.S. producers. Statistical measures
help the competitiveness of our nation's agricultural industry and have
become increasingly important as producers rely more on world markets
for their sales.
The U.S. food and agricultural sector relies on reliable
statistical information. The NASS statistical program serves most U.S.
agricultural commodity data needs and supplies important economic,
environmental, and demographic data that informs policy decisions that
impact the livelihood and quality of life of rural residents.
The Risk Management Agency relies on NASS annual county estimates
to administer crop insurance programs that provide U.S. farmers a
safety net ensuring protection against unpredictable growing
conditions. Additionally, the Farm Service Agency relies on NASS county
level data to administer the Conservation Reserve Program, crop revenue
support programs, and emergency assistance payments. Having accurate
estimates from an unbiased data source, has added fairness and
transparency to the overall process.
Additionally, NASS is undertaking a transformation of its business
process for collecting, processing, analyzing, and disseminating
agricultural statistics. NASS identified six operational initiatives
that allow the agency with the opportunity to improve data quality,
create business cost efficiencies, improve career opportunities to its
staff, and position the agency to better serve the statistical needs of
USDA and agricultural data users. These efforts include centralizing IT
services throughout the agency; standardizing systems; collecting data
in the field through the use of computer assisted personal interviewing
that relays the data into the NASS systems in real-time; centralizing
telephone data collection; and utilizing video teleconferencing in lieu
of certain travel. As a result of the centralized data collection
initiative, NASS has opened a National Operations Center in St. Louis,
Missouri and will begin operations in October. This facility will
handle questionnaire processing, telephone data collection, training of
telephone and field enumerators and statisticians and list maintenance
from one central location. These efforts are being implemented without
the request for additional appropriated funding and will eventually
result in cost savings to the U.S. taxpayers.
NASS has also embarked on a research program to improve the quality
and accuracy of our estimates. Projects include editing and imputation
research to make the pre-summary analytical processes more efficient,
model based estimation and forecasting to make NASS estimates more
reproducible, and remote sensing measurements to increase the accuracy
of estimates.
Census of Agriculture
NASS is currently preparing for the 2012 Census of Agriculture. The
initial mail out to the nation's farmers and ranchers will be in
December 2012. The Census of Agriculture is taken every 5 years and
provides comprehensive data at the national, state, and county level on
the agricultural sector. The Census of Agriculture is the only source
for this information on a local level and is extremely important to the
agricultural community. These data were used extensively by USDA to
help answer both internal and Congressional questions during the 2008
Farm Bill debate and will be as critical for the next farm bill.
Detailed information at the county level helps agricultural
organizations, suppliers, handlers, processors, and wholesalers and
retailers better plan their operations. Demographic information
supplied by the Census of Agriculture also provides a very valuable
database for developing public policy for rural areas. In addition to
the 50 states, the Census of Agriculture programs are conducted in
Puerto Rico, the Virgin Islands, Guam, and the Commonwealth of the
Northern Mariana Islands. Results from all of the Censuses are made
available on the NASS website.
The authority to conduct the Census of Agriculture was transferred
to USDA in 1997. During the past 14 years, NASS has made significant
strides to continually improve this vital data series. For the first
time in history, respondents had the option of reporting electronically
through the Internet on the 2007 Census of Agriculture. NASS also
targeted improved coverage for the 2007 Census of Agriculture by
working closely with Community Based Organizations and American Indians
tribes and reservations to increase awareness of the importance of
being represented. NASS published a report by watershed using data from
the 2007 Census of Agriculture. Finally, NASS continues to listen to
Congress and industry on the ever expanding need for additional
agricultural statistics. For example, the 2012 Census of Agriculture
includes an entire section on organic agriculture, a new section
covering on-farm renewable energy, an expanded list of questions on
land use practices, and sales data collected along-side production
questions. For the first time, NASS also plans to pick up information
on agroforestry, on-farm packing facilities, and farms that sell to
intermediary outlets These are just a few of the improvements and
successes achieved over the first decade of the Census of Agriculture
at USDA. Having the Census of Agriculture within USDA enables the
Census to be more responsive to USDA data needs.
Major Activities of the National Agricultural Statistics Service
The ongoing expansion of global markets for U.S. goods and services
continues to increase the need for modern and reliable statistical
information. The surveys and Censuses conducted by NASS contribute
significantly to economic decisions made by policymakers, agricultural
producers, lenders, transporters, processors, wholesalers, retailers
and, ultimately, consumers. NASS estimates have proven to provide
critically important principal economic indicators for the agricultural
food and fiber industry. Lack of relevant, timely, and accurate data
contributes to wasteful inefficiencies throughout the entire production
and marketing system.
An example of one of the many important surveys conducted by NASS
is the Agricultural Resource Management Survey (ARMS). This survey is
conducted in cooperation with the USDA's Economic Research Service and
is the primary input in developing the nation's farm income statements
used as one of the nation's principal economic indicators. The ARMS
provides vitally important information on the financial health of the
farming sector and is heavily used by program analysts to determine the
success and future scope of farm policies and programs.
The need for timely, accurate, and useful statistics on U.S.
agriculture continues to be emphasized throughout the sector. A few
examples highlight the importance these data have on the market place
and agricultural producers ability to manage their operations. The
importance of accurate agricultural data can be demonstrated through
the ever expanding use of the NASS county estimates for administering
farmer safety nets. Specifically, NASS county estimates impact billions
of dollars insured through the Risk Management Agency's Group Risk
Program and Group Risk Income Program. The difference of one bushel in
an average county yield estimate may result in the incorrect decision
on indemnity payments. Farmers trust and demand that these data be an
accurate gauge for administering these very important safety nets.
NASS works cooperatively with each State Department of Agriculture
throughout the year to provide commodity, environmental, economic, and
demographic statistics for agriculture. This cooperative program, which
began in 1917, has served the agricultural industry well and is
recognized as an excellent model of successful state-Federal
cooperation. Approximately sixty percent of the NASS staff is located
in its 46 field offices; 21 of these offices are collocated with State
Departments of Agriculture or land-grant universities. Working together
helps meet both state and national data needs while minimizing overall
costs by consolidating staff and resources, eliminating duplication of
effort, and reducing the reporting burden on the nation's farm and
ranch operators. Covering all fifty states and Puerto Rico, NASS
provides statistical information that serves national, state, and local
data needs.
NASS has been a leader among Federal agencies in providing
electronic access to information. All reports issued by NASS'
Agricultural Statistics Board are made available to the public at a
previously announced release time to ensure that everyone is given
equal access to the information. All national statistical reports and
data products, including graphics, are available on the Internet, as
well as in printed form, at the time they are released. Customers are
able to electronically subscribe to NASS reports and can download any
of these reports in an easily accessible format using standard
software. NASS also provides free Rich Site Summary and Podcast feeds
to interested data users. This technology sends an alert or audio clip
directly to data users when content of interest is posted to the NASS
Web site. A summary of NASS and other USDA statistical data are
produced annually in USDA's Agricultural Statistics, available on the
Internet through the NASS home page, on CD-ROM disc, or in hard copy.
All forty-six NASS field offices have home pages on the Internet that
provide access to special statistical reports and information on
current local commodity conditions and production.
The primary activity of NASS is to provide reliable data for
decision-making based on unbiased surveys and the Census of Agriculture
to meet the current data needs of the agricultural industry. Farmers,
ranchers, and agribusinesses voluntarily respond to a series of
nationwide surveys about crops, livestock, prices, chemical use and
other agricultural activities. Surveys are conducted during the growing
season to measure the impact of weather, pests, and other factors on
crop production. Many crop surveys are supplemented by actual field
observations in which various plant counts and measurements are made.
Administrative data from other state and USDA agencies, as well as data
on imports and exports, are thoroughly analyzed and utilized by the
agency to supplement survey data. NASS prepares estimates for over 120
crops and 45 livestock items which are published annually in more than
500 separate reports.
NASS's Statistical Research Program is conducted to improve methods
and techniques used for collecting, processing, and disseminating
agricultural data. This research is directed toward achieving higher
quality Census and survey data with less burden on respondents,
producing more accurate and timely statistics for data users, and
increasing the efficiency of the entire process. Graphical products
simultaneously displaying progress and condition were developed to make
it easier for data users and analysts to see the effects of conditions
on the crop. Research has also allowed NASS to utilize real-time
acreage and yield indications based on remote sensing methodology to
assist in estimating acreage and production for select major corn and
soybean states. This adds another objective measure to aid in
accurately forecasting current year crop production. The growing
diversity and specialization of the nation's farm operations have
greatly complicated procedures for producing accurate agricultural
statistics. Developing new sampling and survey methodology, expanding
modes of data collection, including electronic data reporting, and
exploiting computer intensive processing technology enables NASS to
keep pace with an increasingly complex agricultural industry.
NASS conducts a number of special surveys, as well as provides
consulting services for many USDA agencies, other Federal or state
agencies, universities, and agricultural organizations on a cost-
reimbursable basis. Consulting services include assistance with survey
methodology, questionnaire and sample design, information resource
management, and statistical analysis. NASS has been very active in
assisting USDA agencies in programs that monitor nutrition, food
safety, environmental quality, and customer satisfaction. In
cooperation with State Departments of Agriculture, land-grant
universities, and industry groups, NASS conducts over 200 special
surveys each year covering a wide range of issues such as farm injury,
nursery and horticulture, farm finance, fruits and nuts, vegetables,
and cropping practices. All results from these reimbursable efforts are
made publicly available.
NASS provides technical assistance and training to improve
agricultural survey programs in other countries in cooperation with
other government agencies on a cost-reimbursable basis. The NASS
international program focuses on the developing and emerging market
countries in Asia, Central and South America, and Eastern Europe.
Accurate foreign country information is essential for the orderly
marketing of U.S. farm products throughout the world. NASS works
directly with countries by assisting in the application of modern
statistical methodology, including sample survey techniques.
NASS annually seeks input on improvements and priorities from the
public through the Secretary of Agriculture's Advisory Committee on
Agriculture Statistics, interaction with producers at major commodity
meetings, data user meetings with representatives from agribusinesses
and commodity groups, special briefings for agricultural leaders during
the release of major reports, and numerous individual contacts. As a
result of these activities, the agency has made adjustments to its
statistics program, published reports, and expanded electronic access
capabilities to better meet the statistical needs of customers and
stakeholders.
This concludes my statement, Mr. Chairman. Thank you for the
opportunity to submit this statement for the record.

The Chairman. Yes, ma'am. Proceed.

STATEMENT OF LAURIAN J. UNNEVEHR, Ph.D., ACTING
ADMINISTRATOR, ECONOMIC RESEARCH SERVICE, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

Dr. Unnevehr. Good morning. Chairman Johnson, Ranking
Member Costa, and Members of the Subcommittee, I am Dr. Laurian
Unnevehr, Acting Administrator of the Economic Research
Service, or ERS. I appreciate this opportunity to discuss our
agency's programs.
The mission of ERS is to inform public and private
decision-making related to agriculture, food, the environment,
and rural development. The agency's research program is aimed
at the information needs of USDA policymakers, but ERS
information and analysis is also used by the media, trade
associations, public interest groups, and the general public.
In fact, our research findings improve the quality of the
market information that guides farmers' production decisions
and risk management in the agricultural sector.
ERS is the primary source of statistical indicators that,
among other things, gauge the health of the farm sector
including farm income estimates, assess the performance of the
agricultural sector, and provide measures of food and security
at home and abroad. ERS is in the Research, Education, and
Economics mission area within USDA, reflecting its role in
providing high-quality objective data and analysis.
As you have heard here this morning, the four REE agencies
are complementary but each has a distinct mission. For example,
the National Agricultural Statistics Service conducts surveys
that reflect facts on the ground. That is, NASS collects
primary data. ERS, on the other hand, uses data from a variety
of sources to carry out its research mission. For example, data
collected by NASS are used by ERS for its farm income
estimates. ERS also uses other sources of primary data, such as
the Census Bureau current population survey that provides the
basis for our domestic food security statistics. Thus, ERS
draws on primary data from different sources to construct
statistical indicators that inform our research mission.
Economic analysis is critical to making progress on
challenges facing U.S. agriculture, and thus, ERS collaborates
with ARS in carrying out research that supports the entire
range of REE mission area goals. ERS also coordinates with NIFA
regarding extramural funding priorities and in identifying
promising new areas for research.
The importance of public agricultural research to U.S.
agriculture is supported in a recent ERS publication, Public
Agriculture Research Spending and Future U.S. Agricultural
Productivity Growth. By 2050, global agricultural demand is
projected to grow by 70 to 100 percent due to population
increase, energy demands, and higher incomes in developing
countries. To meet this demand, agriculture will need to
produce more output per unit of input--that is, increased
productivity will be necessary.
Public agriculture research is the primary source of
increased productivity, including improved crop varieties and
animal breeds. ERS simulations indicate that if support for
U.S. public agricultural research remains constant at current
nominal levels, then productivity growth will fall and output
would only increase by 40 percent by 2050, falling short of
future demand. To meet future demand growth, an increase in
agricultural research support of 4.7 percent per year, or one
percent in inflation-adjusted spending would be needed.
Failing to meet future demand means that more land will be
put into production, more food would be imported into the
United States, and food consumers would pay higher prices. This
ERS analysis shows the importance of investments in public
agricultural research.
As documented in the written testimony, ERS carried out
research on several topics in response to requests related to
the 2008 Farm Bill. One study in particular on food deserts
provides the first-ever national assessment of food deserts
defined by Congress as, ``low-income areas with low access to
affordable and nutritious food.''
Our 2009 study and follow-up efforts at ERS to map food
deserts identified new opportunities for business and
employment. Two major retail chains, Wal-Mart and SUPERVALU,
announced last week plans to open more than 250 new stores in
underserved neighborhoods identified by USDA. This example
shows how ERS is able to create new information of value to the
business community.
We would be happy to brief the Committee Members on the
results of these or any other research projects. Mr. Chairman,
this concludes my statement. I will be happy to answer any
questions you or the Subcommittee may have.
[The prepared statement of Dr. Unnevehr follows:]

Prepared Statement of Laurian J. Unnevehr, Ph.D., Acting Administrator,
Economic Research Service, U.S. Department of Agriculture, Washington,
D.C.
Mr. Chairman and Members of the Subcommittee, I appreciate this
opportunity to discuss the Economic Research Service's (ERS) research,
market analysis, outlook, and data program. The mission of the Economic
Research Service is to inform and enhance public and private decision
making on economic and policy issues related to agriculture, food, the
environment, and rural development. While the agency's research program
is aimed at the information needs of USDA policy makers and programs,
ERS information and analysis is also used by the media, trade
associations, public interest groups, and the general public. Our
research is widely recognized in the research community for its
credibility, timeliness, and use of cutting edge data, models, and
methods.
Rather than make recommendations, ERS designs its research to
demonstrate to its users the consequences of taking alternative policy
or programmatic pathways. Reflecting the arms-length role it plays in
this regard, ERS is in the Research, Education, and Economics (REE)
mission area.
The four REE agencies are complementary and have distinct missions.
The National Agriculture Statistics Service (NASS) conducts basic
statistically valid surveys to create a body of data that reflects on-
the-ground factual information. ERS constructs data series, using data
from a variety of sources, to inform its program of research and market
analysis. Data collected by NASS are used by ERS for its farm income
estimates and research, and in the ERS program of market outlook and
analysis. Other data and research in ERS, such as the food security
statistics, rely on survey agreements with other Federal agencies such
as the Census bureau. ERS provides data, research and analysis that
support the wide range of program and policy issues of importance to
USDA.
ERS provides social science research and analysis to complement the
other scientific expertise of the REE agencies in multidisciplinary
research. ERS collaborates with ARS in carrying out research to address
the needs of U.S. agriculture, including research and data development
to support rural prosperity, agricultural productivity, global food
security, food safety, and better diets. ERS coordinates with NIFA
regarding extramural funding priorities and identifying promising new
areas for research.
ERS data, information and analysis meet the information needs of
USDA policy makers and programs, and are used by the media, trade
associations, public interest groups, and the general public. Findings
are useful to inform policymakers and for continuously improving the
quality of the market information that guides production decisions and
risk management.
ERS is also the primary source of statistical indicators that,
among other things, gauge the health of the farm sector (including farm
income estimates and projections), assess the current and expected
performance of the agricultural sector (including trade), and provide
measures of food insecurity here and abroad. ERS is one of the 14
Office of Management and Budget (OMB) officially designated Federal
statistical agencies.
ERS disseminates its research findings, market information, and
statistical indicators in a variety of outlets including our website
(www.ers.usda.gov), our award-winning magazine, Amber Waves, outlook
reports for specific commodity sectors, ERS research and information
reports, Oral briefings, written staff analyses, and Congressionally
mandated studies delivered directly to executive and legislative branch
policymakers and program administrators, and refereed journal articles,
which assure the professional credibility of findings.
There were three research studies requested of ERS in the Food,
Conservation, and Energy Act of 2008, Pub. L. No 110-246 (2008 Farm
Bill).
Study and Report on Grassland to Cropland in the Northern Plains.
Native grasslands in the U.S. Northern Plains, particularly those
located in the Prairie Pothole Region, are excellent breeding habitat
for migratory birds. The conversion of grassland to crop production
could damage this habitat and affect bird populations. House Report No.
110-627 accompanying the 2008 Farm Bill, requested the Secretary of
Agriculture to conduct a study of the conversion of native grasslands
to crop production. The study examined three questions: (1) How fast
are grasslands being converted to cropland in the United States and
especially in the Northern Plains?; (2) Can a temporary (5 year) ban on
crop insurance purchase for converted grassland slow grassland to
cropland conversion?; and (3) What has been the role of crop insurance
and other farm programs in grassland to cropland conversion? The study
found that: (1) roughly 770,000 acres (one percent) of 1997 rangeland
acreage in the Northern Plains were converted to cultivated crops by
2007; (2) a 5 year ban on crop insurance purchase for converted
grassland could slow but is unlikely to stop grassland to cropland
conversion; and (3) the benefits of crop insurance, disaster
assistance, and marketing loans increased cropland acreage by about 2.9
percent between 1998 and 2007. It is available on the ERS website at:
http://www.ers.usda.gov/Publications/ERR120/.
Study and Report on Food Deserts. Concerned that some areas have
become `food deserts'--areas with limited access to affordable and
nutritious foods, particularly low-income communities--Congress, in
section 7527 of the 2008 Farm Bill, requested that the Department of
Agriculture conduct a study on the topic. ERS took the lead in
conducting this study, with assistance from FNS and NIFA. The study
considered the prevalence, causes, and consequences of areas with low
access to affordable and nutritious food, as well as possible solutions
to reducing their negative impact on diets and health. The study found
that (1) according to the 2000 Census about 23.5 million people, or 8.4
percent of the U.S. population, live in low-income neighborhoods that
are more than a mile from a supermarket or large grocery store. Of
that, 11.5 million people, or 4.1 percent of the population who live in
these areas are also low income (below 200 percent of the Federal
poverty level). (2) Urban core areas with limited food access have
higher levels of racial segregation and greater income inequality. In
small town and rural areas with limited food access, the lack of
transportation infrastructure is the most defining characteristic. (3)
Many studies find a correlation between limited food access and lower
intake of nutritious foods. However, the causal links between access
and nutritional outcomes are not well understood. (4) The degree of
access to affordable and nutritious food depends on supply--costs that
stores face--and on consumer demand. Understanding the market
conditions that contribute to differences in access to food is critical
to the design of effective policy interventions. The final report was
delivered in June, 2009. It is available on the ERS website at: http://
www.ers.usda.gov/publications/ap/ap036/.
Study and Report on Animal Manure Bioenergy Operations. Section
11014 of the 2008 Farm Bill mandated a study to evaluate the role of
animal manure as a source of fertilizer and its potential additional
uses. The study included a determination of the extent to which animal
manure is utilized as fertilizer in agricultural operations by type
(including species and agronomic practices employed) and size. The
potential impact on consumers and on agricultural operations resulting
from limitations being placed on the utilization of animal manure as
fertilizer was evaluated, along with an evaluation of the effects on
agriculture production of increased competition for animal manure use
due to bioenergy production, including as a feedstock or a replacement
for fossil fuels. The study found that (1) About 15.8 million acres of
cropland, equivalent to about five percent of all U.S. cropland, are
fertilized with livestock manure. Patterns of manure use are driven by
the agronomic needs of crops and by transport costs, which limit the
distance that manure can be moved and create close links between types
of livestock and certain crop commodities. (2) Higher commercial
fertilizer prices also favor the use of manure as fertilizer. However,
manure is not a complete substitute for commercial fertilizer, and
farmers who use manure therefore reduce their use of commercial
fertilizer but rarely eliminate it. (3) Livestock operations can comply
with nutrient management plans by spreading manure on more of their own
cropland, by removing manure to other farms for spreading, by altering
feed mixes to reduce manure production, or by developing herds or
flocks with reduced manure production. (4) Estimated costs of
compliance with nutrient management plans vary sharply with the degree
to which excess manure needs to be disposed of and the willingness of
nearby farmers to accept manure for application to their cropland. With
a limited willingness to accept manure, the study finds that production
costs, including those for manure management, would likely rise by 2.5-
3.5 percent for large operations. Such increases are unlikely to alter
the emerging structure of livestock production. (5) Manure-to-energy
projects are not currently in widespread use; currently, the costs
generally exceed the revenues that most farmers can receive from
electricity production. But because such projects use existing
resources, they could provide society with benefits if manure replaces
newly mined fossil fuels in energy production, and if methane, a
greenhouse gas, can be captured. (6) Currently envisioned manure-to-
energy projects are not likely to impose substantive constraints on the
use of manure as fertilizer. The final report was delivered in June,
2009. It is available on the ERS website at: http://www.ers.usda.gov/
publications/ap/ap037/.
ERS also co-authored two other studies that were requested in the
2008 Farm Bill.
Analysis of the Planting Transferability Pilot Program. Section
1107 of the 2008 Farm Bill requires the Secretary of Agriculture to
periodically evaluate the effect of the 2008 Planting Transferability
Pilot Program (PTPP) authorized in that section, which relaxes the
planting restrictions placed on vegetables destined for processing.
This study was produced for the Farm Service Agency (FSA). It provides
an overview of the market for processing vegetables and uses farm-level
data from FSA to evaluate PTPP's effect on the supply and price of
processing vegetables. Using a simulation model representing the
national market, the study found that the PTPP entices a very modest
increase in processing vegetable production and a very modest decline
in processing vegetable prices. The quantity of processing vegetables
supplied was projected to increase between 0.1 and 0.6 percent, and
prices decline by 0.3 to 2.8 percent. The study did not find that PTPP
has an impact on fresh fruit and vegetable markets. It is available on
the FSA website at http://www.fsa.usda.gov/Internet/FSA_File/
fv_plantg_rstricts_rpt_120210.pdf.
Analysis of the Limited Base Provision of the 2008 Farm Bill.
Section 1101 of the 2008 Farm Bill included a provision to suspend
payments to farms with 10-base acres or less (base-10 provision).
Congress included this provision in the 2008 Farm Bill as a cost saving
measure. Not only would the provision eliminate the payments to farms
with limited base acres, but also reduce the number of farm payments
processed. The 2008 Farm Bill mandated that USDA evaluate the effects
of suspending payments under this provision. At the request of FSA, ERS
evaluated the impact of eliminating direct and countercyclical and ACRE
payments to farms with 10-base acres or less as required by the 2008
Farm Bill. The study examined the number and location of farms impacted
by the provision, the characteristics of those farms, and the amount
the government could save due to the suspension of program payments
under this provision. The evaluation included information about farm
characteristics and production as well as an assessment of the
provision on specialty crop producers. The study found that (1) The
base-10 provision affects a large number of farms but had little effect
on total payments. In 2009, nearly 371,000 FSA farms became ineligible
for payments under this provision, with prohibited payments equaling an
upper bound of $29.1 million. (2) The East Coast is more affected by
the base-10 provision than the Heartland and West Coast. (3) Adverse
effects on the fruit and vegetable sector are not expected as a result
of the base-10 provision. (4) FSA farms for which payments were
prohibited are generally part of larger operations. (5) Budgetary
savings would accrue from reducing administrative costs. The study
estimated $3.5 million in personnel cost savings to FSA and $0.2
million in mailing and paperwork savings associated with the base-l0
provision. Combined with the reduction in payment outlays to farms of a
maximum $29.1 million, the budgetary savings from prohibited payments
is estimated to total as much as $32.8 million for 2009. The study is
available on the FSA website
http://www.fsa.usda.gov/Internet/FSA_File/base_10_rpt_copy_ltrs_
6744901.pdf.
The Economic Research Service has also conducted a number of
studies on programs, policies, and issues raised by the 2008 Farm Bill.
Among these include the following:

ERS published the web-based The 2008 Farm bill Side-by-Side
Comparison--a comparison of the 2008 Farm Bill with previous
legislation. It offers a time-saving reference to farm bill
provisions. In addition to key provisions and details by Title,
the side-by-side includes links to related ERS publications and
to analyses of previous Farm Acts.

Economic analyses of commodity programs, including revenue-
based commodity support, factors influencing the Average Crop
Revenue Election (ACRE) program enrollment and the effect of
ACRE program payments on risk reduction.

Economic analysis of conservation programs, including the
impacts of regional equity provisions on conservation program
outcomes, participation in conservation programs by beginning,
limited-resource, and socially disadvantaged operators, and the
implications for program eligibility of alternative definitions
of U.S. agricultures basic unit, the farm.

We would be happy to brief the Committee Members and staff on the
results of any of our research projects, as well as our ongoing program
of research, market outlook, and data analysis.
Mr. Chairman, this concludes my statement. I will be happy to
answer any questions that the Subcommittee may have.

The Chairman. Thank you, all four of you, for your
testimony. I guess I will start the questions here maybe with
one for the whole panel and you can selectively take it. I
guess this is the category of a softball question but it is
sincerely trying to give an overall perspective.
Why now has the government been--and you specifically--in
the business of collecting data? I know that is a generic
question but maybe one of you would like to address that for
us. Not adversarial, just inquisitive.
Dr. Clark. Well, data is very important for public and
private decision-making. If you don't have complete data
provided by government, then private organizations collect
information. It is not complete, it is not comprehensive, it is
not available for access to all, and it often does not reflect
reality and the current situation. So if you are basing your
decision-making on inaccurate data, your decisions are going to
be flawed.
Dr. Unnevehr. I would just like to follow up and talk about
the importance of objective data and information, especially
for small businesses, small producers. Having a level playing
field in terms of the market information that is available in
agriculture means that prices are able to respond more quickly
to changes in supply and demand. It means that producers are
able to make informed decisions in response to those prices.
And without a single objective and timely source of data, the
market could be subject to manipulation from, well, subjective
sources controlled by those who have information that is not
available to all.
The Chairman. Dr. Unnevehr, how does the mission of your
agency, what you do daily, differ from what is done in the
Office of the Chief Economist?
Dr. Unnevehr. The Chief Economist is the advisor to the
Secretary on economic issues. He often draws on the data and
analysis carried out in the Economic Research Service. Because
we are a research agency, in REE, we carry out research and
analysis that is objective and informs policymakers of the
consequences of alternative decisions. And that information is
available both to the Office of the Chief Economist as well as
to USDA program agencies for use in their program planning and
analysis.
The Chairman. Thank you. And Dr. Young, when Congress
created your institute, the intent was for a ``independent,
scientific policy-setting agency for the food and agriculture
sciences.'' Do you believe that recent awards have been
consistent with that direction? And specifically, has the
construct of RFAs been determined by scientific need and merit?
And finally, has your directorship and peer review panel been
the sole determinates of those RFAs or have the offices of the
Under Secretary impacted the process outside the scientific
realm? I have particular interest in that on behalf of
universities, but just in general.
Dr. Jacobs-Young. Chairman Johnson, thank you for your
question. In addition to my role as acting Director for the
National Institute of Food and Agriculture, I am also the
Director for the Office of the Chief Scientist at the
Department of Agriculture and responsible for leading the
development of a scientific integrity policy for the
Department. And that scientific integrity not only applies to
NIFA but applies to the entire Department preventing or seeking
to ensure nonpolitical interference in science for the
Department.
In the National Institute of Food and Agriculture, our peer
review process is world renowned. We have taken many
painstaking efforts to ensure that we are meeting the needs of
our stakeholders, of our land-grant universities and setting
priorities. And so I would say that, yes, we are operating a
program that is a pious level of integrity.
The Chairman. I don't think we question the integrity. My
specific question is are those decisions solely based on the
criterion laid out in the statute, scientific-based, or has
Secretary Vilsack and the Under Secretary been involved in the
decision-making process outside that specific direction?
Dr. Jacobs-Young. Chairman Johnson, my answer is yes up
front. And second----
The Chairman. Yes what?
Dr. Jacobs-Young. Yes, we use a panel of experts from
across the scientific community to make the decisions and
recommendations for the funding for our program. So no, there
is no political interference, and yes, it is based solely on
science and the merit of the applications that have been
received.
The Chairman. I have come to the end of my own time, so I
would recognize the distinguished Ranking Member, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman.
Dr. Jacobs-Young, you are obviously aware that the
mandatory funding for Specialty Crop Research Initiative
expires at the end of 2012. As I mentioned at the outset, I
think it was an important breakthrough in the 2008 Farm Bill.
What are your thoughts in terms of where we go? It is unclear
whether or not that commitment is going to be there next year,
and I would like you to make a case for why the research has
been effective and plays a unique role if you can.
Dr. Jacobs-Young. I agree that the specialty crop industry
is a very important industry to agriculture, a $67 billion
industry, 46.9 percent of the U.S. crop. The specialty crops
program of the Specialty Crops Research Initiative that was----
Mr. Costa. Healthy, nutritional food.
Dr. Jacobs-Young.--and it is healthy and nutritional.
The Specialty Crops Research Initiative provides an
opportunity for us to pay particular attention to breeding and
genetics and genomes and pest and disease management for that
industry. Without the Specialty Crop Research Initiative, the
applicants would need to apply to our general plant-based
programs in AFRI, in our Hatch programs, in our SBIR programs,
in our Integrated Pest Management programs, and in those
programs, they all focus on national needs. And so we could not
ensure that those projects would rank in the funding range so
to speak, so we would not be able to pay----
Mr. Costa. Let me make two observations, then, because I
have some other questions I want to ask. One, I think you
should provide the Subcommittee and therefore the full
Committee with the information on where this research is
valuable as it relates to providing foods that require less use
of herbicides, pesticides, other kinds of things that provide
values to farmers as well as consumers because of the ability
of the research, things that are less drought-resistant. And
then the other observation is we probably should change the
name specialty crops. I think people think, specialty, well
what does that mean? Specialty crops took on the name
somewhere, but it is really fruits and vegetables and all the
other healthy stuff we eat, staples. They are not some exotic
pear that comes from some different part of the world.
So anyway, I need to move on here. Dr. Knipling, I hope you
were briefed with the Agriculture Research Service, which, as
you stated in your testimony, does good work, but they are
looking at closures of various facilities. I wrote a letter to
Secretary Vilsack about the UC Shafter Research and Extension
Center. Its efforts are important for not only other varieties
of cotton but pima cotton as well. Are you familiar with this?
Can you respond to what the department's outlook on this
particular research center that is in the San Joaquin Valley?
Dr. Knipling. Yes, I am quite familiar with that issue and
the Shafter Research Station itself. This is a proposal in the
President's 2012 budget yet to be acted on by the Appropriation
Subcommittees and Congress as a whole. The Shafter proposed
closure is one of ten ARS laboratories that are proposed for
closure for the general purpose of contributing to deficit
reduction but also to be able to allocate those resources,
perhaps, to some of these other priority areas of emphasis that
I mentioned earlier in my testimony.
Mr. Costa. Well, to cut to the chase as we say, I know I
will and I believe Congressman McCarthy will as well look
toward the response back from the Secretary as to the criteria
you are using. We are obviously all focused on cost-cutting but
we want to make sure that the validity and the criteria that
the Department is using justifies this. I know personally of
the research that takes place there, and I think it is
effective.
Quickly, as my time is running out, Dr. Unnevehr, you
talked about food deserts and the research that you are doing
and I was mentioning to the Chairman how the irony is because
we produce so much aplenty, as you know, in the San Joaquin
Valley in terms of healthy foods and yet certain areas within
the Valley have been designated as food deserts. And I think
that is an irony because when you are producing half the
nation's fruits and vegetables yet to be qualified a food
desert, I think you might want to explain in detail how you
came to that--if the Chairman wants to allow you to answer the
question because my time now has expired.
The Chairman. Proceed.
Dr. Unnevehr. Yes.
Mr. Costa. Briefly.
Dr. Unnevehr. Briefly. We worked with the Healthy Food
Financing Initiative to develop the definition of a food desert
so we would have national criteria that would identify areas of
greatest need for the U.S. And the criteria are as follows:
basically low-income areas--new market tax credit zones as
defined by Treasury--which is a certain proportion of people
under a certain level of income--combined with a fairly large
number of people or proportion of people more than a mile from
a supermarket in urban areas and more than 10 miles from a
supermarket in rural areas. So it was a combined criteria of
low-income areas with a significant number of folks at risk for
low access. And so that is why there may be food production in
your district but there may not be food retail outlets.
Mr. Costa. And so being near a fast-food outlet doesn't
count?
Dr. Unnevehr. That is correct.
Mr. Costa. All right. I just think it is important for the
Committee to understand how you arrived at that definition of a
food desert because the irony, of course, is in the case that I
pointed out is you have a tremendous amount of a wide variety
of agriculture production taking place, yet the access to that
same food because of the criteria you explained qualifies it in
those terms, correct?
Dr. Unnevehr. Correct.
Mr. Costa. Okay.
The Chairman. Thank you, Mr. Costa. I will now turn to the
gentleman from Pennsylvania, Mr. Thompson.
Mr. Thompson. Well, thank you to the panel for being here
and your leadership.
Dr. Clark, I want to start with you. You mentioned in your
testimony that NASS will for the first time have specific
statistics dealing with farm energy and agroforestry. What
kinds of statistics will this entail?
Dr. Clark. Well, these will be questions on the 2012
Census. They will not necessarily be detailed questions. They
will provide the opportunity to use the 2012 Census as a
sampling frame to develop a larger questionnaire for a survey
if that were to be desired. It also allows the opportunity of
combining that data with the demographic and economic and
environmental data that is on the Census form. So you get a
better picture of how an individual question response would
relate to an agriculture operation.
Mr. Thompson. Okay. Thank you. Our farmers and agriculture
in general are not getting the credit they deserve for their
extensive efforts in restoring the Chesapeake Bay. Dr. Clark or
Dr. Knipling, since you talked about conservation efforts and
watershed modeling, what kinds of information do you have on
the role of agriculture on these restoration efforts in the
Chesapeake Bay watershed?
Dr. Knipling. ARS has a number of our research locations
actually focused on the Chesapeake Bay watershed, one of which
is at University Park in Pennsylvania on the campus of Penn
State University. That is our Pasture Research Lab. And in fact
they have been looking at the upper reaches of the watershed of
the Susquehanna River and all of the Chesapeake Bay watershed.
Our Beltsville Agricultural Research Center located quite close
by is part of that network of laboratories. And we are working
closely with other Federal agencies, state agencies, various
environmental groups, producer organizations, and actual
farmers, producers on their land to monitor agricultural
practices and to develop such practices that might minimize the
runoff of fertilizer, nutrients, and pesticides.
Mr. Thompson. Dr. Clark, any follow up on that particular
question related to the Chesapeake Bay statistics gathering in
terms of the efforts in restoring the Bay and information that
is being collected on the outcomes or the efforts that are made
in agriculture?
Dr. Clark. I could speak to a project that has just been
initiated with the Natural Resources Conservation Service and
the National Agriculture Statistics Service. We are doing a
pilot data collection next year in the Chesapeake Bay that
would collect environmental and agricultural data from those
states. And I could get you more details on that if you would
like that.
Mr. Thompson. That would be great. I look forward to
visiting the Penn State Pasture Research Lab. I wasn't aware of
that actually. That is in my backyard for the most part. You
know, I appreciate within your testimony, Dr. Knipling, in
particular you talked about the Chesapeake Bay region's soil
losses reduced by 55 percent, nitrogen loss by 31 percent,
phosphorus reduced by 41 percent. I appreciate what all of you
do because obviously to make good decisions you need good data
to make sound decisions. And I think the data you report really
shows that we have made great progress within the Chesapeake
Bay. Frankly, I think it helpful in combating other agencies
that seem to use a hammer on agriculture such as the EPA.
Dr. Jacobs-Young, you mentioned the Institute of Bioenergy.
Can you talk a bit more about that and what it does?
Dr. Jacobs-Young. Yes. Thank you for the question. So one
of our five challenge areas is renewable energy, bioenergy. And
in the Department of Agriculture, including the National
Institute of Food and Agriculture, we are focusing on the
feedstock development piece of the supply chain for bioenergy
production. So the production of biomass in the way that is
environmentally friendly, that is developed to grow in areas
where there is drought or flooding or high temperatures or
salinity. And so much of our research deals with the genomics,
the genetics, the breeding of feedstock for bioenergy.
Mr. Thompson. Okay. Thank you.
Chairman, I think my time is about expired.
The Chairman. Thank you, Mr. Thompson. And the gentleman
from North Carolina, Mr. Kissell.
Mr. Kissell. Thank you, Mr. Chairman, and I welcome the
panelists today. And I want to get a little bit of a parochial
statement out of the way but it is much more than talking about
North Carolina. But in North Carolina we have a North Carolina
Research Campus. A gentleman, Mr. Murdoch, David Murdoch has
invested $\1/2\ billion of his own money along with the State
of North Carolina and local monies into a research campus that
is in my district. It is an incredible public-private
investment, research equipment that is almost one-of-a-kind in
the western hemisphere, is certainly very rare to find but made
available to various people to come in and seven of our
universities in North Carolina are there with a major focused
research. Also there are private entities there and it is an
agriculture research station there all focused upon food
nutrition and development. If you are not familiar with it, I
would love if you got familiar with it and came to visit us
because it is just an incredible example of what can be done
when we come together with all resources for research for the
advancement of the things we are talking about today.
Moving on to another area, we had a panel not that long ago
and we were talking about biotech research, and the statement
was made that it has been several years since we had a major
advancement in biotechnology that has been approved and brought
into the commercial arena, which I found to be of concern. When
we consider the things we are talking about today that if we
are going to be able to have the food that we need to have for
the growing populations and recognizing less resources
available, we have to continue to make these advancements in
research and bring those ideas forward.
Just wondering if any of you had any thoughts on why we are
not able to bring this research forward into viable commercial
products and what are our problems, what do we need to overcome
to do this?
Dr. Knipling. Congressman, I would start the commentary. Of
course, when you refer to new products coming into the market,
generally that implies genetically modified organisms, GMOs,
that actually require regulatory approval.
Mr. Kissell. And that is what I am talking about. Thank
you.
Dr. Knipling. Yes. And yes, there are additional products
coming on but they are utilizing mostly the crop protectants,
the protection against herbicides, the protection against
insects and so forth. And it is, I guess, a significant
regulatory burden, although I am sure my collegues here could
cite some statistics of the rapid adoption of genetically
modified crops throughout the country for some of the major
agronomic crops.
I would like to turn the discussion perhaps more to
biotechnology in the sense of other forms of molecular biology
that are significantly impacting crop production. That would be
the use of genomics to understand the genetic traits and how
those relate to phenotypic characteristics. And this is really
going to be the future of biotechnology, the use of genomics,
selective markers to support traditional crop and animal
breeding with great precision. And we have tremendous examples
of many species of crops, animals, some of the pathogens that
affect those, and we can, with precision, start targeting
genetic improvement through traditional means.
I would just cite the rapid progress just made in the last
few years with the dairy industry where using genetic markers
from high-performing cows, high-performing breeding stock to
make tremendous----
Mr. Kissell. I am going to interrupt you just one second. I
appreciate this tremendously, but my time is on caution right
now. So the concerns that were expressed in that panel from a
while back that we are not bringing forth these new products,
do any of you just flat out disagree or do you share these
concerns very quickly?
Dr. Jacobs-Young. Congressman Kissell, we are busy
providing the science to base the decisions on, but this is a
very complex issue. In the Department of Agriculture, we are
producing the data to support three different areas--and we
talk about coexistence--GE, non-GE, and organics. So we have
three alternative methods. And so what we are doing at REE is
providing the data for decision-making. And so we do believe
that all the regulatory actions should be based on science.
Mr. Kissell. Okay. And my time is out, but it is very much
a concern that all the research that takes place at all our
universities and other places, if we can't bring that forward
in a timely manner because of, yes, we should have concerns
about the regulations. But, if that becomes an obstacle in
itself which was indicated last time, it is something that we
just need to really work on.
Thank you, Mr. Chairman.
The Chairman. I have no other questions. I would turn to
the Ranking Member to see if you have another round of
questions? And Mr. Thompson or Mr. Kissell, I would be more
than happy if you would like. Mr. Thompson?
Mr. Costa. I have a couple questions. I don't think they
will take 5 minutes unless the answers are long.
Dr. Clark, you talked about the important role that you
play in terms of surveys and information. How good do you
believe is the information that you are reporting on, whether
it is on prices, specialty crop surveys, on civil rights, on
your focus on the organic program surveys? I am always
wondering when I see this information as how much you attest to
the validity of it.
Dr. Clark. I can tell you it is very good information. It
is probably better than any other information that is out
there, but it is collected from respondents, and so there is
always some variability in the data that you collect. It is
collected through sample surveys primarily. There is
variability in a sampling estimate. In most cases, you know
what the variability is and so you can factor that into your
decision-making. Some of the efforts that we are undertaking at
NASS will make our data even better than it is right now. Our
efforts to put in a national operations center will remove a
lot of the data collection processing efforts from 46 offices
to one center where we can put in quality-control procedures,
which are not feasible now in 46 different places.
So we are working to put more control on our processes,
which will improve the quality of our data. We are also working
on more sophisticated estimation procedures, which will also
improve the quality of our data. We have just begun publishing
measures on the quality of our data, so that should help you in
using the data.
Mr. Costa. So do you ever attempt to provide third-party
verification if a survey is--I don't know how--let us say a
typical survey may be on a crop survey. I suspect it is in the
hundreds if not larger. Do you determine that the information
that was sent back to the Department was accurately reported?
Dr. Clark. We don't generally do audits. Occasionally, we
do re-interview surveys and we measure the discrepancy between
the initial reported data and a second interview. Those are
ways to measure different types of error. There are many
different kinds of error that you could have in a data-
collection process and we design our processes to minimize
those errors and to measure them so that we have some
information on the quality of what we are producing.
Mr. Costa. Let me ask all of you if you want to comment
just quickly. When we look at the totality of the ag research
taking place, and I know that it varies regionally and in terms
of the tremendous diversity that reflects U.S. agriculture, but
are we really focusing where we ought to be? I mean can you
make that judgment within the four different agencies that are
represented here? Quickly.
Dr. Knipling. Just quickly, ARS is frequently asked why do
we have 100 laboratories across the country and that does
reflect the site specificity of agriculture, the diversity of
climates, the diversity of customers, users, the diversity of
our partnerships. And there is a historical previous priority-
setting basis for why we have all of these activities in the
places we do.
Mr. Costa. Would anyone else care to comment?
Dr. Unnevehr. Well, I will just offer the comment that we
all set our priorities in consultation with stakeholders, and
certainly in the case of ERS, our research programs are driven
by the needs of USDA policies and programs.
Mr. Costa. But you think the agriculture producers have a
large say in it in terms of the stakeholders you are speaking
of?
Dr. Unnevehr. Absolutely. Although I will say that there
are food programs for food consumers in USDA, and thus we also
have research on those issues.
Mr. Costa. But those are part of the stakeholders as well,
yes.
Dr. Unnevehr. Exactly.
Mr. Costa. But I mean you think that on a regular basis
they are letting their priorities be known and it is assessed
within the Department and people feel that the focus is being
spread throughout the diversity of America's food production
and its consumption?
Dr. Unnevehr. We hear from a wide variety of stakeholders
in all four of the agencies.
Dr. Jacobs-Young. Yes. And I would just like to add in NIFA
we have a strong partnership with the land-grant universities,
as next year we will celebrate our 150th year. And we work very
closely with the land-grant universities in addition to all of
the stakeholder groups that support the Department and the work
that we are doing. And thus far, we have had a very good
relationship. We are receiving feedback from our stakeholders.
And each one of our solicitations for applications provides an
opportunity for our stakeholders to give us feedback on what is
presented.
Mr. Costa. Thank you, Mr. Chairman. I have no further
questions.
The Chairman. Mr. Thompson?
Mr. Thompson. Thank you, Mr. Chairman. Thanks for the
opportunity for a second round.
An emerging issue in my area--I represent a very rural
district, 22 percent of the land mass of Pennsylvania, and in
some of the most rural areas of my district interestingly
enough is an issue of affordable housing. And it is a direct
result of the new and certainly booming natural gas industry in
Pennsylvania. Normally, we had no shortage of affordable
housing. That has certainly changed. And this is for all the
panelists. Are there any kinds of work that you are doing
regarding looking at rural housing? Is that anything that data
is collected on that you are aware of? I will take that as a no
at this point. Okay. Like I said, this is new for us as well in
the past few years. So I will probably be in contact with you.
Dr. Jacobs-Young. Secretary Vilsack is a part of a rural
council that was recently announced a couple of weeks ago, and
that rural council will be looking at those issues. How do we
improve the vitality of rural communities including providing
housing for the folks who live there and providing jobs and
opportunities and creating places where young people want to
return to and create lives?
Mr. Thompson. And I will reach out to the Secretary. I am
proud to say that many parts of my district, the young people
are finding great opportunities. They are not leaving now, and
frankly, we have a lot of folks moving into the area. So that
is more of a blessing than a problem.
And my final question, Dr. Jacobs-Young, you mentioned
NIFA's effort in Georgia to attract more students into the
forestry-related careers, which I think is great. Is NIFA
working on any similar forestry projects in other states and
obviously specifically I was interested if there was anything
going on in Pennsylvania?
Dr. Jacobs-Young. Congressman Thompson, NIFA participates
in many different education and training opportunities. Some of
you may have even been involved in 4-H during your primary
school years; Ag in the Classroom is a nationwide program. We
are now offering NIFA fellowships. We heard from our
stakeholders that they wanted us to do more in support of the
pipeline for agriculture. And so we are now offering NIFA
fellowships. We have the Veterinary Loan Repayment Program
where we want to place those veterinarians in areas where there
may be a shortage. And the Beginning Farmers and Ranchers
Program, I believe, supports the Georgia-based program, and
that is offered nationally. So we have similar programs
throughout the nation. And in our Youth, Family, and Community
Institute, we are looking at many different areas for education
and training, including looking at youth at risk. So, yes, we
have many programs across the nation. I would be more than
happy to find out what we have going on in Pennsylvania and
provide that in a written response.
Mr. Thompson. I appreciate that. Thank you to all the
panelists. Thank you, Mr. Chairman, for this hearing.
The Chairman. Thank you. Before we adjourn, I would ask if
the Ranking Member, Mr. Costa, has any closing remarks to make?
Mr. Costa. Just to say thank you again, Mr. Chairman, for
your due diligence, and we will continue to work together as we
try to fashion the most responsible 2012 Farm Bill we can put
together working with all these agencies, including those we
heard from this morning.
The Chairman. Well, I thank you, Mr. Costa, and Members of
the Committee and members of the panel. I appreciate your input
and your ongoing service to American agriculture and to
American consumers as represented by your testimony and by your
jobs.
Under the rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary responses from the
witnesses, with respect to any question posed by a Member.
So then with that, this hearing of the Subcommittee on
Rural Development, Research, Biotechnology, and Foreign
Agriculture is adjourned.
[Whereupon, at 11:11 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by R. Thomas Van Arsdall, Executive Director,
National Coalition for Food and Agricultural Research
July 27, 2011--via e-mail

Hon. Timothy V. Johnson,
Chairman,
Subcommittee on Rural Development, Research, Biotechnology, and Foreign
Agriculture, House Committee on Agriculture,
Washington, D.C.;

Hon. Jim Costa,
Ranking Minority Member,
Subcommittee on Rural Development, Research, Biotechnology, and Foreign
Agriculture, House Committee on Agriculture,
Washington, D.C.

RE: Comments on USDA Research Programs

Dear Chairman Johnson and Ranking Member Costa:

On behalf of the National Coalition for Food and Agricultural
Research (National C-FAR), I am pleased to submit these comments for
the July 28 hearing record, ``Agricultural Program Audit: Examination
of USDA Research Programs.'' National C-FAR is pleased that the
Subcommittee is holding this hearing learn how the 2008 Farm Bill
research title provisions are being implemented, while looking ahead to
the 2012 Farm Bill reauthorization.
National C-FAR is a nonprofit, nonpartisan, consensus-based and
customer-led coalition that brings food, agriculture, nutrition,
conservation and natural resource stakeholders together with the food
and agriculture research and extension community, serving as a forum
and a unified voice in support of sustaining and increasing public
investment at the national level in food and agricultural research,
extension and education.
Entire Farm Bill Dependent on Successful Research Title--The
Research Title of the farm bill represents the nation's signature
Federal investment in the future of the food and agricultural sector.
Other farm bill titles depend heavily upon the Research Title for tools
to help achieve their stated objectives. Public investment in food and
agricultural research, extension and education today and in the future
must simultaneously satisfy multiple needs, including food quality and
quantity, nutrition, food safety, resource preservation and producer
profitability.
Scientific outcomes and tools realized through USDA's research,
extension and education (REE) mission are needed to help achieve safer,
more nutritious, convenient and affordable foods delivered to sustain a
well nourished, healthy population; more efficient and environmentally
friendly food, fiber and forest production; improved water quality,
land conservation, wildlife and other environmental conditions; less
dependence on non-renewable sources of energy; expanded global markets
and improved balance of trade; and more jobs and sustainable rural
economic development.
Societal demands and expectations placed upon the food and
agricultural system are ever-changing and growing. Examples of current
and future needs include--strengthened bio-security; food-linked health
costs; environment and conservation; farm income and rural
revitalization; biofuels and climate change; the world demand for food
and natural fiber and improved diets; and biotechnology and genetic
resources research and public oversight.
Unsustainable Research Funding Deficit Threatens Future of U.S.
Agriculture--At the risk of oversimplification, funding is the fuel
that will fuel the USDA research mission engine and determine how
effectively the action plan will be implemented. National C-FAR
believes the nation has a serious food and agricultural science
deficit, just as the nation has a budget deficit. This food and
agricultural science funding deficit is serious, long running and
unsustainable. Failure to address this research deficit will have real
negative consequences, not just to the agriculture and food system but
to the entire nation and U.S. economy. If USDA's research mission
continues to be starved for funds, any action plan is destined to fall
short of not only its potential but of leading to the outcomes this
nation needs from the food and agricultural system.
National C-FAR's support for funding encompasses the entire REE
mission--both inter- and intra-mural programs--including the National
Institute of Food and Agriculture (NIFA), the Agricultural Research
Service (ARS), the Economic Research Service (ERS) and the National
Agricultural Statistics Service (NASS).
National C-FAR's strong support for a NIFA and other reforms in the
Research Title of the 2008 Farm Bill was motivated by the belief that
such reforms would result in increased funding for food and ag
research. Unfortunately, that has not been the case.
By any measure, Federal funding for food and agricultural research,
extension and education has failed to keep pace with identified
priority needs. Federal investment in research and development at the
USDA has declined by about \1/4\ since FY 2003. A continuing deficit in
terms of a commitment to Federal funding for agricultural research will
have detrimental effects on human and animal health and the nation's
economy.
Recent fundamental changes in the budget process have exacerbated
the deficit. Agricultural research has historically been more heavily
`earmarked' than other spending accounts. With the elimination of
congressionally directed spending from the budget process and failure
to recapture the funds involved, the critical USDA REE mission has been
disproportionately impacted.
Unless sufficient funding is achieved, the best concepts about how
to organize and conduct research won't be able to deliver the results
needed by the nation. With the nation and world seeking solutions for
climate change, sustainable fuel production, ecosystem health, food
security and nutrition challenges, now is the time to grow investment
in our nation's agricultural research enterprise.
Research Business Plan Needed--This quest starts with articulating
a compelling case to fund unmet needs. National C-FAR recommends that
this Subcommittee and USDA make it a priority to identify current and
future challenges to the food and agricultural sector and the REE needs
and resource requirements to respond to those challenges in the coming
years in a timely and effective manner.
USDA has involved stakeholders in the development of a new REE
Action Plan. Consistent with our stated mission, National C-FAR's input
focused on how the plan articulates the case for addressing the
longstanding REE funding deficit and helps lay the groundwork for
necessary increases in Federal investment.
National C-FAR recommended that the REE Action Plan include a
thoughtful and credible ``Research Business Plan,'' either as part of
the Action Plan, or as a necessary complement. The REE Action Plan is a
hollow shell unless the resources needed to accomplish stated goals are
identified and articulated, with a business/action plan to secure the
necessary resources.
Such a ``Research Business Plan'' should make the best case
possible for how much funding is needed to achieve the goals and REE
programs intended to meet those goals, as well as the likely
consequences of not providing sufficient funding. For example, an
evaluation of performance and needs should address the following--

What is the best estimate of funding needed to accomplish
stated desired outcomes?

What is the appropriate food and agricultural science role
of the public sector versus the private sector? Publicly
financed REE is a necessary complement to private sector
research, focusing in areas where the private sector does not
have an incentive to invest, when (1) the pay-off is over a
long term; (2) the potential market is more speculative; (3)
the effort is during the pre-technology stage; and (4) where
the benefits are widely diffused.

How will the Action Plan (and outcomes) be impacted by
different funding levels--for example, current funding, 2X
funding, funding at a level identified as needed to accomplish
all stated goals, 0.5X funding?

How will priorities change based on different funding
levels? How will outcomes be affected? What priority needs will
not be addressed due to insufficient funding? Will outcomes
still be timely to meet identified challenges, like closing the
productivity gap in time to feed nine billion people?

Those responsible for making difficult decisions about shaping the
2012 Farm Bill and future budgets in Congress and the Administration
arguably don't have even the basic information needed to make informed
decisions about REE funding levels with the information currently
available. Those who read the USDA Action Plan should also come away
with an appreciation of what will and won't be addressed at different
resource levels.

While studies touting the high returns on public investment
are helpful, that doesn't appear to be compelling enough to
attract additional funding, especially when the trend is to
during these challenging budget times is to cut spending, not
increase it.

National C-FAR recommends that USDA's REE Action Plan--and
its implementation--should emphasize the current leadership's
commitment to focusing resources to make a difference rather
than spreading limited funds a mile wide and an inch deep.

The Action Plan should articulate choices on what will and
will not be done [and done well] at different resource scenario
levels.

Invest in Research Business Plan--USDA and the Administration
should base annual budget requests for the REE mission on such a needs
assessment. The crafting of the research component of the 2012 Farm
Bill should be shaped around meeting future challenges and needs.
If ``Research Business Plan'' answers aren't available, then it is
time to invest additional resources in developing defensible answers--
even if just through a building block approach, improving the quality
of information provided to budget decision makers a step at a time so
they can better understand the rationale of budget requests and likely
consequences of funding decisions. This is a shared responsibility--of
USDA, Congress and REE stakeholders--those who authorize and fund the
programs, those who manage the programs and those who need the
outcomes.
For example, a ``productivity gap'' has been identified in tracking
what will be needed to produce enough food to feed nine billion people.

What is the commensurate ``research gap'' in developing the
science and tools to close the productivity gap?

What are defensible estimates of how much will be needed--
and when (lead times)?

What is the appropriate and/or necessary portion/role of
public sector REE investment?

How much can leveraging contribute to closing the ``research
gap?''

What are the consequences of not committing to adequate
public investment?

To the credit of the USDA Economic Research Service, a peer-
reviewed, new report, ``Public Agriculture Research Spending and Future
U.S. Agricultural Productivity Growth: Scenarios for 2010-2050,''
(Heisey, Wang and Fuglie, Economic Report No. EB-17, July 2011, http://
www.ers.usda.gov/publications/eb17) has just been released that
provides timely analysis and perspective on the vital linkage between
investments in research and productivity. In brief:

``By 2050, global agricultural demand is projected to grow by
70-100 percent due to population growth, energy demands, and
higher incomes in developing countries. Meeting this demand
from existing agricultural resources will require raising
global agricultural total factor productivity (TFP) by a
similar level. The rate of TFP growth of U.S. agriculture has
averaged about 1.5 percent annually over the past 50 years, but
stagnant (inflation-adjusted) funding for public agricultural
research since the 1980s may be causing agricultural TFP growth
to slow down. ERS simulations indicate that if U.S. public
agricultural R&D spending remains constant (in nominal terms)
until 2050, the annual rate of agricultural TFP growth will
fall to under 0.75 percent and U.S. agricultural output will
increase by only 40 percent by 2050. Under this scenario,
raising output beyond this level would require bringing more
land, labor, capital, materials, and other resources into
production.''

National C-FAR recommends utilizing this analysis and related new
information as a reference point in evaluating USDA's research program
and moving forward.
In ``Investing in a Better Future through Public Agricultural
Research,'' a Commentary released on March 14, 2011 by the Council for
Agricultural Science and Technology (CAST Commentary QTA2011-1), the
authors make a number of salient observations that National C-FAR
believes are germane to the funding debate and the future viability of
USDA's research program--

The benefits of past public investments in ag research are
measurable on multiple fronts. For example, farm productivity
has increased, and the share of U.S. household income spent on
food has declined to less than 10%.

Numerous studies find rates of return on public ag research
investments of 20 to 80%. Huffman and Evenson (2006) estimate a
marginal rate of return of approximately 50%. This level is
approached by few other public sector investments.

Publicly funded food and ag research in the U.S. has been
essentially flat over the past 2 decades, while funding of
other research fields has increased significantly. Public
funding of agricultural research in the rest of the world
during the same time period has outpaced investment in the U.S.

Advances in new science and technologies involve long
gestation periods, with later advances built on earlier
successes. Time lags between publicly funded ag research and
benefits are long, with a delay before any benefits are
realized.

There is an important and necessary role for public research
because the private sector faces weak incentives to undertake
research in numerous areas of national interest. Most research
in general, basic and pre-invention sciences occurs in public
and private universities. Applied research is shared among
universities, government institutions and private firms.

Funding for both inter- and intra-mural research is
important, as is formula funding, given the ``placed-based''
nature of agricultural science.

World population continues to grow. Demand for food will be
much greater, and limited new land is available.

Agricultural research is a low-cost source of future
agricultural productivity and output increases, but advances in
the frontiers of science are difficult and uncertain,
translating into long lags, typically 15-20 years. Productivity
cannot be easily jump-started after a long period of stagnant
investment in public agricultural research.

With agricultural research funding delays, productivity
increases are expected to slow, and world food prices will rise
more rapidly than otherwise projected during the next 40 years.

Other touchstone issues in evaluating USDA's research program
include:

The role of the private versus public sector in committing
to investments.

How does our nation invest in the science needed to do our
part in helping feed a global population that is projected to
grow to nine billion people in the not too distant future?

How do we develop the science needed to achieve other goals
expected and demanded of the food and agriculture sector, like
biofuels, conservation, nutrition, food safety and
environmental protection?

How do we develop the science needed to sustain the natural
resource base upon which agriculture depends while achieving
all the other goals?

What are the top priorities of USDA's research program?
While USDA's research Action Plan presents a list, it is not
clear what is most important and how resources are being
allocated.

National C-FAR believes it is imperative to lay the groundwork now
to respond to the many challenges and promising opportunities ahead
through Federal policies and programs needed to promote the long-term
health and vitality of food and agriculture for the benefit of both
consumers and producers. Stronger public investment in food and
agricultural REE is essential in producing research outcomes needed to
help deliver beneficial and timely solutions on a sustainable basis.
The potential payoff is enormous for Americans' health, rural America
and agriculture and the nation's economy, and world food security. It
is equally sobering to reflect on the likely negative consequences of
not making the necessary investments.
National C-FAR and others in the stakeholder community bear a
commensurate responsibility in articulating needs and making the case
for increased funding. It is incumbent on USDA, stakeholders in the REE
and ``customer'' communities, and the Congress to find the will and a
way to increase investments in this vital mission area and turn our
shared hope into an operational reality.
Thank you for the opportunity to share our views.
Sincerely,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

R. Thomas Van Arsdall, Executive Director.
______

Submitted Statement by Biotechnology Industry Organization
The Biotechnology Industry Organization (BIO) is the world's
largest biotechnology organization, providing advocacy, business
development and communications services for more than 1,100 members
worldwide. BIO members are involved in the research and development of
innovative healthcare, agricultural, industrial, and environmental
biotechnology products.
BIO would like to emphasize the value of agricultural research
programs within the U.S. Department of Agriculture (USDA), which have
sparked agricultural innovation and will help to solve the critical
food and energy security challenges facing a rapidly growing global
population.
The United Nations predicts that the global population will rise to
nine billion in 2050 and over ten billion by 2100. It is predicted that
global agricultural production will need to double by 2050. Because
there is a fixed amount of arable land on the planet, to meet these
challenges, new and existing technologies must provide at least 70
percent of the necessary increase in food production. Robust
agricultural research will allow scientists to improve technologies and
invigorate know-how so that humans can best produce food on a limited
land base using safe, efficient, and sustainable methods.
In the 6 decades since 1948, USDA estimates show that U.S. farm
output increased by an average of 1.58 percent per year, inputs under
the control of farmers increased by only 0.06 percent per year, and
agricultural productivity increased by 1.52 percent per year (USDA-ERS,
2011). Hence, virtually all the increase in U.S. farm output during the
past 60 years is due to productivity increases and a negligible amount
is due to increases in conventional inputs. According to the USDA
Economic Research Service, farm productivity has risen 158 percent
since 1948. This increase can be attributed to changes in the
efficiency of farming practices and research and development of
agricultural technologies. The return on investment of agricultural,
food, nutrition, and natural resource research and development is $20
or more to the U.S. economy for every dollar spent (Fuglie et al.,
2007).
Growth in agricultural productivity during the last 2 decades of
the twentieth century, which was sizable in developed countries and in
some developing countries, was built on previous investments in
agricultural research. For modern agriculture to fully flourish,
investments in agricultural research must grow. Today, the United
States is a leader in agriculture, producing $312 billion in
agricultural products and exporting $108 billion annually.
Unfortunately, however, investments in public agricultural research
in the United States has slowed since 1980 (Huffman and Evenson 2006;
Pardey et al. 2006).
In the United States, broadly defined public agricultural research
expenditures grew by an average of 3.2 percent per year (adjusted for
inflation) during the 2 decades leading up to 1980. No net growth
occurred between 1980 and 1990, and net growth averaged only 0.6
percent per year between 1990 and 2009. Public funding of agricultural
research in the rest of the world during the last 2 decades has
outpaced U.S. research investment.
Meeting the various complex modern agricultural demands of a
growing global population will require raising global agricultural
total factor productivity (TFP). The rate of TFP growth of U.S.
agriculture has averaged about 1.5 percent annually over the past 50
years, but stagnant (inflation-adjusted) funding for public
agricultural research since the 1980s may be causing agricultural TFP
growth to slow down. ERS simulations indicate that if U.S. public
agricultural R&D spending remains constant (in nominal terms) until
2050, the annual rate of agricultural TFP growth will fall to under
0.75 percent and U.S. agricultural output will increase by only 40
percent by 2050. Under this scenario, raising output beyond this level
would require bringing more land, labor, capital, materials, and other
resources into production (Heisey et al., 2011). With mean lags of 15
to 20 years, agricultural productivity cannot be easily jump-started
after a long period of stagnant investment in public agricultural
research.
BIO supports research funding for technologies that will provide
fuel for the future, improve agricultural production efficiency, and
allow us to raise crops in harsher climates. Research in plant and
animal biotechnology will play a key role not only in improving food,
feed, and fuel production and reducing the environmental impact of
agriculture but also in improving models of human disease and producing
pharmaceuticals for animal and human uses. Agricultural and forestry
biotechnology also contribute to rural economies and rural job growth.
BIO supports increased funding for the research programs at the
Department of Agriculture, including all programs within the Research,
Education, and Economics mission area: the National Institute of Food
and Agriculture and its Agriculture and Food Research Initiative, the
Agricultural Research Service, the National Agricultural Statistics
Service, and the Economic Research Service and research conducted by
the Forest Service. Results from these important research programs can
be leveraged across the research arms of the government to solve
critical problems that require science-based, cross-cutting and multi-
disciplinary solutions.
Through biotechnology, animals can be raised that produce high
concentrations of readily extractible human antibodies and other
proteins to treat human diseases and protect military personnel and to
replace tissues for regenerative medicine. High level research can be
performed on livestock that have been engineered to accurately develop
diseases that afflict humans. As agriculture continues to be pressed to
be ever more productive and economically and environmentally
sustainable, the targets of research are to increase yields; to develop
more nutritious and safer foods; to reduce requirements for water,
nitrogen and other inputs; and to develop disease resistant crops that
require fewer chemical protectants, crops that are used to produce more
and better biofuels, and crops that produce useful and valuable
materials that will fuel the industrial and pharmaceutical sectors of
the future.
While biotechnology has been heavily utilized in commodity crops,
it also shows great promise for specialty crops and in parts of the
world not already realizing its benefits. Nutrient-enhanced crops and
those tolerant of sub-standard growing conditions benefit people around
the world who otherwise would have difficulty getting the proper
nutrition. Many of these advances will come out the research performed
within public institutions, such as the USDA. Most research in general,
basic and pre-invention sciences, occurs in public and private
universities. Applied research is shared among universities, government
institutions and private firms.
Publicly financed Research, Extension, and Education is a necessary
complement to private sector research, focusing in areas where the
private sector does not have an incentive to invest, when (1) the pay-
off is over a long term; (2) the potential market is more speculative;
(3) the effort is during the pre-technology stage; and (4) where the
benefits are widely diffused. Public research, extension and education
help provide oversight and measure long-term progress. Public research,
extension and education also act as a means to detect and resolve
problems in an early stage, thus saving American taxpayer dollars in
remedial and corrective actions.
The Research Title of the farm bill represents the nation's
signature Federal investment in the future of the food and agricultural
sector. Other Farm Bill titles depend heavily upon the Research Title
for tools to help achieve their stated objectives. Continued authorized
and appropriated support for public research benefits producers
domestically and worldwide while preparing for the future of all of
agriculture.
References
Fuglie, K. and P.W. Heisey. September 2007. Economic Returns to
Public Agricultural Research. EB-10, U.S. Dept. of Agriculture,
Economic Research Service.
Heisey, P., S.L. Wang, and K. Fuglie. July 2011. Public Agriculture
Research Spending and Future U.S. Agricultural Productivity Growth:
Scenarios for 2010-2050. EB-17, U.S. Dept. of Agriculture, Economic
Research Service.
Huffman, W.E. and R.E. Evenson. 2006. Science for Agriculture: A
Long-Term Perspective. 2nd ed. Blackwell Publishing, Ames, Iowa.
Pardey, P.B., N.M. Beintema, S. Dehmer, and S. Wood. 2006.
Agricultural Research: A Global Divide? IFPRI Food Policy Report.
International Food Policy Research Institute, Washington, D.C.
U.S. Department of Agriculture-Economic Research Service (USDA-
ERS). 2011. Agricultural Productivity in the United States, http://
www.ers.usda.gov/Data/AgProductivity/ (8 February 2011).
______

Submitted Questions
Response from National Institute of Food and Agriculture; Agricultural
Research Service; National Agricultural Statistics Service; and
Economic Research Service, U.S. Department of Agriculture
Questions Submitted By Hon. Steve Southerland II, a Representative in
Congress from Florida
Question 1. Thank you for the U.S. Department of Agriculture's
ongoing efforts and commitment toward research to sustain and foster
U.S. agriculture production in our nation. I recognize the critical
significance of continuation and strengthening of research programs
authorized in the 2008 Farm Bill to address pressing agricultural
priorities, particularly for specialty crops, a significant segment of
the U.S. agricultural industry and in my home state of Florida.
The 2008 Farm Bill, the Food, Conservation, and Energy Act of 2008
(P.L. 110-246) strengthened emphasis on research, including
establishment of the Specialty Crop Research and Initiative (Section
7311) to address, ``the critical needs of the specialty crop industry
by developing and disseminating science-based tools to address needs of
specific crops and their regions, including--

``(1) research in plant breeding, genetics, and genomics to
improve crop characteristics, such as--

(A) product, taste, quality, and appearance;
(B) environmental responses and tolerances;
(C) nutrient management, including plant nutrient
uptake efficiency;
(D) pest and disease management, including resistance
to pests and diseases resulting in reduced application
management strategies; and
(E) enhanced phytonutrient content;

``(2) efforts to identify and address threats from pests and
diseases, including threats to specialty crop pollinators;
``(3) efforts to improve production efficiency, productivity,
and profitability over the long term (including specialty crop
policy and marketing);
``(4) new innovations and technology, including improved
mechanization and technologies that delay or inhibit ripening;
and
``(5) methods to prevent, detect, monitor, control, and
respondto potential food safety hazards in the production and
processing of specialty crops, including fresh produce.''

Could you please elaborate on how the Specialty Crop Research
Initiative (SCRI), aimed by its authors of the House Agriculture
Committee to meet the critical challenges of specialty crop production
in this nation--and my home state of Florida--which ranks second in the
nation in specialty crop value, is serving these ends?
Answer. NIFA believes that the keys to meeting the critical
challenges of the specialty crop industries in this country, as
articulated by the House Agriculture Committee in SCRI, are two-fold:
(1) engaging stakeholders and incorporating their needs and (2) funding
the highest quality science to develop the tools that address those
needs.
NIFA implements those two keys for an impactful program through
several mechanisms. First, the Request for Applications (RFA),
published each year to solicit applications for funding, includes a
short list of priorities for each of the five focus areas identified in
the SCRI legislation. These non-exclusionary priorities are written to
be fairly generic for many specialty crops, as they were gleaned from
the strategic plans and research roadmaps of many major U.S. specialty
crops. Each year, NIFA reevaluates those priorities and makes minor
adjustments as industry needs dictate. Second, from its inception, the
SCRI program has asked applicants to include stakeholders and
stakeholder organizations as full participants in their proposed
projects. This means stakeholder engagement in: identifying project
objectives, conducting the research and extension activities, and
evaluating project impacts. Furthermore, each applicant must
demonstrate that their project addresses an industry need. In the peer-
review process, each application is evaluated on these elements of
stakeholder needs and engagement as part of the application's
``relevance'' score. Based on the recommendations from a 2011 external
review of the SCRI program, NIFA has reevaluated the relevance scoring
and made some modifications for fiscal year 2012. Third, NIFA actively
seeks to include scientists from specialty crop industries on peer-
review panels to help ensure that the industry perspective is fully
considered and appreciated. Fourth, in addition to a possible score for
relevance, each application receives up to an equal score for
``scientific merit.'' Because of the highly competitive nature of the
SCRI program, only those applications that have demonstrated strong
industry relevance/need and high scientific merit are eventually
considered for funding. Finally, most projects funded by the SCRI
program are required to create, and meet regularly with, an advisory
board consisting of industry, academia, NGOs, technology providers,
etc. In most cases, specialty crop stakeholders are the majority, or
only, members of these advisory boards.
During the first 3 years of SCRI awards, investigators in Florida
are participating in 16 different SCRI projects covering a variety of
specialty crop needs that are important to that State's industries.
In addition, the following excerpt from the SCRI external review
report's Conclusion section attests that this NIFA program is meeting
the intents of the SCRI legislation:

The Review Panel believes that the SCRI Program is following
the guidelines mandated by the 2008 Farm Bill. The Panel views
the SCRI as an essential/critical Program to maintain and
enhance the competitiveness of the specialty crop industry in
the U.S. . . . Results from funded projects that are now in
mid-stream have already demonstrated value to the specialty
crop industry.

Question 2. Specifically, within the Specialty Crop Research
Initiative consideration process is there recognition of the following
factors:

a. Crops facing imminent dangers and threats to future production?

b. Magnitude and significance of the specialty crop in crop value
nationally?

c. Awards representational of specialty crop value regionally/
state, in award distribution?

d. Priorities of producer organizations and state agricultural
bodies?

Answer. Applications to the SCRI program are evaluated by a
scientific peer-review process based on both relevance to U.S.
specialty crop industries and scientific merit. These two components of
the review for each application are weighted equally. Given the
extremely competitive nature of the program and the overall quality of
applications received each year, only those applications that score
very high on both components are considered for funding. Certainly,
``imminent dangers and threats to future production'' is something that
many good applications clearly demonstrate. In general, the quality of
proposals as determined by review panels is such that NIFA could fund
twice as many projects each year, if the funds were available to SCRI.
Unlike the Specialty Crop Block Grant Program, which considers crop
size in each state as part of funding allocations, a scientific grant
program like the SCRI is intended to fund the best science,
irrespective of any crop's magnitude regionally or nationally. While
scientific merit can be evaluated quite objectively, it is much more
problematic to impartially assess the needs of one industry/crop versus
another. So, in the peer-review process, NIFA only asks that the panel
assess whether stakeholder need has been established, and then let
scientific merit guide the relative ranking of applications. All things
being equal among a group of applications, however, the panelists may
consider the size of the industry in its final ranking.
One would expect that larger, national industries would have a
larger, established base of scientific investigators already engaged,
and so that scientific community would apply to SCRI at a higher rate
and, all things being equal, receive a commensurate level of SCRI
funding. In the first two years of the SCRI, NIFA examined the
geographic distribution of awardees and subcontractors and found that
maps depicting geographic participation in SCRI awards matched very
closely maps displaying the intensity of U.S. specialty crop
production. So, while a scientific grant program does not seek
geographic proportionality, for the rationale stated above, SCRI
projects and specialty crop production seem to align geographically.
In addition to the response already provided regarding stakeholder
input to the SCRI, each published RFA asks for stakeholder input to the
program. Also, when preparing for the 2011 external review of SCRI,
NIFA made a special request for stakeholder input to help inform the
review team, publishing that request in the RFA and on our agency web
site.

Question 3. What are USDA's plan to address the National
Agricultural Research Extension, Education and Economic Advisory Board
(NAREEE) Report on Effectiveness of Research, Extension and Economics
Programs for U.S. Specialty Crops, issued on July 23, 2011, which
included recommendations and improvements from the specialty crops
stakeholder community regarding the Specialty Crop Research Initiate?
Answer. NIFA has received a copy of the NAREEE Board's report. A
number of the issues raised in that report, with respect to the SCRI,
are similar to several recommendations made by the SCRI external review
panel in their report (see response to question no. 1 above). Many of
that external review report's recommendations have been incorporated
into the upcoming 2012 Request for Applications. However, for the
record and to cover any remaining issues, NIFA plans to release a
response to the NAREEE Board's report shortly.
Question 4. I would like to formally commend the U.S. Department of
Agriculture for their July 11 announcement to ``Strengthen Efforts to
Address Citrus Greening'' through funding of $2 million into research
through Agricultural Research Service (ARS) and USDA's National
Institute of Food and Agriculture (NIFA) focusing $9 million in a 3
year, competitive grants program targeting citrus greening, as well as
establishment of a Citrus Disease Research and Development Advisory
Committee These efforts are greatly appreciated and extremely valuable,
and as is noted in the USDA's announcement:

Citrus greening is one of the most devastating diseases
affecting any commercial agricultural crop, according to the
National Academy of Sciences. Citrus greening threatens to
destroy over 1 million commercial citrus acres that have an
annual production value of approximately $3 billion across the
nation. Yearly losses could reach $10 billion if citrus
greening is left unchecked.

Could you please detail how this vital collaborative and research
initiative to Strengthen Efforts to Address Citrus Greening will be
carried out? (Agencies of jurisdiction, timeline, collaborative
stakeholders/research partners?)
Answer. Under the aegis and leadership of the APHIS Citrus Health
Research Program, ARS, and NIFA together with the National Citrus
Mutual representatives from Florida, Texas, and California have formed
a Science and Technology committee that coordinates research across the
Citrus Greening research community. This coordination includes keeping
an active inventory of currently funded research projects and helping
the research community organize into strategic outcome working groups.
The strategic outcomes, identified in an industry stakeholder workshop
are designed to produce short-, medium- and long-term outcomes,
respectively:

a. Maintain citrus groves that are already infected with Citrus
Greening productive and alive (primarily Florida);

b. Keep Citrus Greening disease from moving into areas that already
have the disease vector (the Citrus Psyllid)--(Texas, Arizona,
and California); and

c. Create new Psyllid management systems and Citrus genetics that
render Citrus Greening a non-issue.

Although each of these outcomes have distinct research pathways and
activities, there are overlaps and feedback among them.
The Citrus research community has embraced the strategic plan and
is organized in working groups representing the three outcome areas,
which meet via teleconference and report to the Science and Technology
committee monthly.
The Citrus research community meets biannually and will meet again
in October, 2011. These meetings facilitate intra- and inter working
group communications, research gap analyses, and peer and stakeholder
review of research outcomes. It is expected that this upcoming meeting,
and future such meetings, will be the genesis of collaborative projects
leading to participation in NIFA funding opportunities on Citrus
Greening.
While the SCRI program has explicitly solicited Citrus Greening
projects for the past several years, NIFA plans to further strengthen
that focus in the upcoming 2012 SCRI solicitation. Specific research
and extension targets in that solicitation will be closely aligned with
the priorities identified by the Science and Technology committee, as
noted above.
Additionally, after receiving input from many stakeholders,
Secretary Vilsack charged REE to work with the relevant components of
USDA to devise several other strategies to address this serious threat.
To this end, REE has been considering all options--from a stand-alone
committee to an entity within the NAREEE board to broader task forces--
in the formation of the new committee Citrus Disease Research and
Development Advisory Committee. While the details of the committee are
still being worked out, the USDA is committed to ensuring that
solutions incorporate continued input from producers, industry
representatives, and the scientific community. As timing and
flexibility are of utmost importance, REE is working quickly to design
a mechanism that meets the interests and requirements of the many
entities involved.

Question 5. Could you indicate the specific reasons why Citrus
Greening was not successful in an award through the Specialty Crop
Research Initiative, for the last 3 years,* in concert with the
recommendations of the Florida, Texas and California collaborative
research efforts, given that citrus ranks second in crop value among
fruit and vegetable crops, according to USDA's National Agricultural
Statistics Service, and USDA indicates that ``Citrus greening is one of
the most devastating diseases affecting any commercial agricultural
crop, according to the National Academy of Sciences''?
---------------------------------------------------------------------------
* Exception Texas ARS award in 2008.
---------------------------------------------------------------------------
Answer. SCRI has funded a number of projects in its first three
years of existence that are dealing with the Citrus Greening issue. Two
of these projects (ARS, 2008; Arizona State Univ., 2010) address
management and control strategies, covering prevention and economics.
Two other projects (Carnegie-Mellon, 2008; Wash. State, 2009) are
developing the management technologies for growers to better control
the disease (precision spraying, early detection of HLB infection) and
the genetic information for researchers to develop new plant material
(Citrus genomics database).
As noted above, the peer-review process equally weights relevance
and scientific merit in the evaluation of applications. No one disputes
the relevance of Citrus Greening projects to the needs of the citrus
industry. However, in a competitive scientific grant program,
applications must also demonstrate high scientific quality. Many of the
applications to date dealing with Citrus Greening have lacked the
necessary scientific merit for peer-review panels to rank them high
enough for NIFA to consider them for funding. For reasons of
confidentiality, NIFA only releases to an application's project
director detailed information (individual reviews and peer-review panel
summary) regarding why their project was not recommended for funding.

Question 6. The National Plant Diagnostic Network (NPDN) was
established in 2002 by legislative mandate to enhance agricultural
security through plant diagnostic laboratories carried out by National
Institute of Food and Agriculture (NIFA) and through the collective
efforts of many individuals representing Land Grant Universities,
federal agencies, state departments of agriculture, and other
stakeholders, the NPDN has grown into an internationally respected
consortium of plant diagnostic laboratories. The specific purpose of
the NPDN is to provide a nationwide network of public agricultural
institutions with a cohesive, distributed system to quickly detect high
consequence pests and pathogens that have been introduced into
agricultural and natural ecosystems, identify them, and immediately
report them to appropriate responders and decision makers.
NPDN Funding is located in the NIFA Budget: National Institute of
Food and Agriculture President's Proposed Budget for 2011. Funding
located under Integrated Activities--Item for Food and Agriculture
Defense Initiative (This item includes both USDA National Animal Health
Laboratory Network (NAHLN).
I understand that funding for the National Plant Diagnostic
Network, has been reduced by roughly 37% from FY 2010 to FY 2011:

2010--$9.830 million enacted $4,283,386 to NPDN

2011--$5.988 million reduction Enacted, $2,675,000 to NPDN

Can you please let me know the Administration's plans and specific
funding priorities for the National Plant Diagnostic Network program?
Answer. The specific purpose of the NPDN is to provide a nationwide
network of public agricultural institutions with a cohesive,
distributed first detector and laboratory system to quickly detect high
consequence pests and pathogens that have been introduced into
agricultural and natural ecosystems, identify them, and immediately
report them to appropriate responders and decision makers. To
accomplish this mission, the NPDN has invested in plant diagnostic
laboratory infrastructure and training, developed an extensive network
of first detectors through education and outreach, and enhanced
communication among agencies and stakeholders responsible for
responding to and mitigating new outbreaks.
NPDN is in the final year of a 5 year (May 2007-May 2012)
Cooperative Agreement, and the strategic objectives for the five year
plan are to:

1. Maintain a strong diagnostic network through communications,
evolving standard operating procedures, and diagnostic training
for high consequence pathogen and pest outbreaks;

2. Enhance the national database of real-time diagnostic records;

3. Develop and keep a registry of trained first detectors (field
scouts, extension agents, certified crop consultants) of high
consequence pathogens and pests;

4. Exercise, in every state, communications with regulatory
officials.

The work plan for 2011, due to the budget cut, must curtail
objective three activities, eliminate objective four activities, and
reduce the number APHIS training sessions that diagnosticians can
attend. Additionally, the NPDN was to complete the roll-out of a
Quality Assurance/Quality Control accreditation system by the end of
the Cooperative Agreement. With reduced funding, the QA/QC system will
not be implemented.
The highest order priority for the NPDN is to maintain its network
of diagnostic laboratories. The NPDN system is currently responding to
two high-impact outbreaks of regulatory plant diseases.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--
Agricultural Research Service
1. Program Name
Agricultural Research Service (ARS).
2. Subprograms/Department Initiatives
Animal Production and Protection

The mission of the ARS Animal Production and Protection (APP)
national programs is to provide the scientific information and tools to
help support the U.S. food animal industries to continue to compete
successfully in worldwide trade, provide the supply of nutritional
animal products required by the nation, and contribute toward global
food security. APP accomplishes this mission by research to maximize
production efficiency and animal health through scientific innovation
and the discovery and development of new technologies focused on
national priorities. Strategic public-private partnerships are
established to achieve our mission, including support of government
action and regulatory agencies responsible for trade, biodefense, and
global food security. Emphasis will be given to genetic improvements of
traits related to production and production efficiencies and germplasm
conservation; understanding the mechanisms of disease resistance, and
the development of tools to prevent, control, or eradicate diseases
that threaten our food supply and public health; and identifying and
developing sustainable systems for production of high quality meat,
fish, milk, and eggs that also ensure animal health and well-being. The
portion of the program that produces new solutions to the many
veterinary problems created by arthropod pests and vectors will be
leveraged to solve related problems affecting human health and the
well-being of American citizens.

APP Statistics:

Total Projects: 108
Total Locations: 37
Total Scientists: 295

The Food Animal Production program conducts research to furnish
scientific information about biotechnologies and management practices
that ensure an abundant supply of competitively priced animal products.
The mission of the Food Animal Production Program is to: safeguard and
utilize animal genetic resources, associated genetic and genomic
databases, and bioinformatic tools; develop a basic understanding of
the physiology of livestock and poultry; and develop information,
tools, and technologies that can be used to improve animal production
systems, all to ensure an abundant, safe, and inexpensive supply of
animal products produced in a healthy, competitive, and sustainable
animal agriculture sector of the U.S. economy.
U.S. systems of agricultural animal management and production face
formidable challenges. One of the most exacting challenges is
successful adaptation to the accelerating demands of society that
impact animal productivity and product quality. The demands placed on
the national system of food animal production by a rapidly changing
world can only be met by technologies that optimally harness the
inherent genetic potential of animal and plant germplasm in concert
with certified industry and food marketing practices. Production
systems that successfully identify, preserve, and harness that genetic
potential will maximize profits, secure supply, increase market
competitiveness, sustain small and mid-sized producers, and maintain
genetic diversity and consumer confidence.
This National Program addresses high-priority national needs for:

Understanding, Improving, and Effectively Using Animal
Genetic and Genomic Resources

Enhancing Animal Adaptation, Well-Being and Efficiency in
Diverse Production Systems

Measuring and Enhancing Product Quality

Total Projects: 32
Total Locations: 17
Total Scientists: 91

The Animal Health program aims to deliver scientific information
and tools to detect, control, and eradicate animal diseases of high
national priority. The goal of the program is to protect and ensure the
safety of the nation's agriculture and food supply through improved
disease detection, prevention, control, and treatment. Basic and
applied research approaches will be applied to solve animal health
problems of high national priority. Emphasis will be given to methods
and procedures to control animal diseases through the discovery and
development of diagnostics, biotherapeutics, animal genomics
applications, disease management systems, animal disease models and
farm biosecurity measures.
Achieving results in veterinary medical research, which provide
useful information for problem-solving, often demands an integrated
approach in which the experimental design may range from knowledge
development at the molecular level to clinical trials that will lead to
the development of countermeasures for preventing and controlling a
disease outbreak in the field. This national program provides the means
for the integration of research. Major initiatives draw upon relevant
expertise within the national program, coordinating and integrating
that expertise to develop a specific useful application of the
knowledge. Research projects also attract Federal, university, industry
and international partners. Because a significant number of projects in
the animal health research portfolio focuses on the discovery of novel
technologies, intellectual property strategies will be addressed in
project plans to facilitate technology transfers and the investment by
the private sector in the development of these technologies.
This National Program addresses high-priority national needs for:

Biodefense research

Animal genomics and immunology

Zoonotic, respiratory, reproductive, neonatal, enteric and
parasitic diseases

Transmissible spongiform encephalopathies

Total Projects: 40
Total Locations: 11
Total Scientists: 103

The Veterinary, Medical and Urban Entomology program develops more
effective means to prevent or suppress insects, ticks and mites that
affect animal and human well being. The program aims to eliminate
losses to animal production and products caused by arthropod borne
diseases and arthropod induced trauma; to reduce the risk to humans
from arthropod borne zoonotic diseases; to enhance the safety of animal
products and the quality of life for humans; and to increase the value
and competitiveness of United States agriculture.
More detailed behavioral studies of certain activities (e.g., blood
sucking) will result in the association of chemical and other stimuli
with these behaviors. A new understanding will also present the
possibility of entirely new tools being developed to alter arthropod
behavior in such a way that their damage is prevented. Beyond the
research needed to understand the nature of these behaviors, bioassays
that accurately measure them will be necessary to find out what
chemical or physical factors affect them. Before integrating bioassays
into an evaluation scheme, they should be validated independently to be
sure that they are measuring what is intended. Electrophysiology is
another essential part of development, representing a range of
activities and measurements. Among the organizational products required
for maximum impact are a standard vocabulary for influences on
hematophagous arthropods and a standard concept of how to develop
useful products.
This National Program addresses high-priority national needs for:

Medical Entomology for the Public and Military

Veterinary Entomology of Livestock and Poultry

Pests that Damage Structures

Fire Ants, other Invasive Ants, and Household Pests

Total Projects: 13
Total Locations: 7
Total Scientists: 49

The vision for the Aquaculture program is to support a thriving
domestic industry based on improved genetic stocks and scientific
information on biotechnologies and management practices to ensure a
high quality, safe supply of healthful seafood and aquatic products.
The U.S. aquaculture industries face formidable challenges. The
demand for seafood is increasing worldwide, yet the ability for U.S.
aquaculture producers to meet that demand requires development of
technologies to reduce the cost of production while maintaining and
improving product quality. Producers, processors and breeders are in
need of systems that successfully identify, promote, and harness the
aquatic animal improvements to maximize profits, secure supply, reduce
environmental impacts, increase market competitiveness, sustain small
and mid-sized scale producers, and earn consumer confidence. Research
in the disciplines of genetics, nutrition, health, and physiology will
support the biological improvement of animals, while ecology,
engineering and economics will support the improvement of systems and
help to ensure sustainability. Our research components strive to
develop and ensure an abundant, safe, and affordable supply of seafood
products for the 300 million U.S. consumers produced in a healthy,
competitive, and sustainable aquaculture sector, a sector supported by
over 4,300 aquaculture farmers that produced in excess of $1 billion
worth of goods in 2005 (National Agricultural Statistics Service
(NASS), 2005 Census of Aquaculture).
This National Program addresses high-priority national needs for:

Understanding, Improving, and Effectively Using Animal
Genetic and Genomic Resources

Enhancing Animal Performance, Well-being and Efficiency in
Diverse Production Systems

Defining Nutrient Requirements, Nutrient Composition of
Feedstuffs and Expanding Alternative Ingredients

Improving Health and Welfare of Aquatic Animals

Improving Production Systems, Developing New Products and
Enhancing Product Quality

Total Projects: 23
Total Locations: 11
Total Scientists: 52

Crop Production and Protection

Crop Production and Protection (CPP) National Programs deliver
science-based information, genetic resources, and technologies for
increased crop productivity and quality, protection from plant diseases
and pests, and economically and environmentally sustainable methods of
crop production that meet consumers' demands for a ready supply of high
quality, safe, affordable and nutritious food, the public's desire to
protect the environment, and the global community's needs for food
security.

CPP Statistics:

Total Projects: 379
Total Locations: 78
Total Scientists: 816

The Plant Genetic Resources, Genomics, and Genetic Improvement
program provides research that addresses national priorities of genetic
resource conservation, genomics and genetic improvement. This program
harnesses the inherent genetic potential of plants. This research
develops, and effectively applies new knowledge of crop genes, genomes,
and the control and expression of genes, to accelerate increases in
productivity and improves the quality of crops; realized via
traditional and novel plant breeding methods.
Genetic resources are the foundation of our agricultural future.
ARS crop genebanks contain the sources of resistance to biotic and
abiotic stresses and new genes to improve the quantity and quality of
crops. To ensure that these genes are available for research and
breeding, ARS continues to acquire and conserve crop genetic resources,
develop more effective screening methods for identifying superior
traits, characterize the genetic profiles of genebank holdings, ensure
that genetic resources are distributed where and when they are needed,
and safeguard these collections and their associated information for
future generations.
New crop genetic improvement methods are incorporating advances in
genome sequencing and analysis, molecular genetics, computational
biology, and metabolic engineering. New crop breeding theories and
strategies are being developed that more effectively capture the
intrinsic genetic potential of germplasm-especially to improve key
agronomic and horticultural traits-resulting in crops tailored for
consumer and producer needs.
This National Program addresses high-priority national needs for:

Plant and Microbial Genetic Resource Management

Crop Informatics, Genomics, and Genetic Analyses

Genetic Improvement of Crops

Plant Biological and Molecular Processes

Total Projects: 179
Total Locations: 55
Total Scientists: 360

The Plant Diseases program delivers research to develop and improve
ways to reduce crop losses caused by plant diseases. The program
focuses on developing effective disease control strategies that are not
environmentally harmful, do not threaten the safety of consumers, and
are compatible with sustainable and profitable crop production.
Plant diseases--spread by viruses, viroids, bacteria, phytoplasmas,
fungi, nematodes or other methods--cause billions of dollars in
economic losses each year to agriculture, landscape, and forest
settings in the United States. These diseases reduce yields, lower
product quality or shelf-life, decrease aesthetic or nutritional value,
and, sometimes, contaminate food and feed with toxic compounds. Control
of plant diseases is essential for providing an adequate supply of
food, feed, fiber and aesthetics. Yet, growers spend millions of
dollars each year only to partially control the pathogens that attack
their crops and other plants. Reducing these losses has long been a
high priority for agriculture and for the Agricultural Research Service
(ARS). Besides the obvious monetary benefits to producers and
processors, successful plant health protection is important for
maintaining and increasing food supplies with minimal increases in land
under cultivation. Additionally, the knowledge and management of plant
diseases of quarantine significance are vital, not only for protecting
our domestic crops from foreign disease, but also for maintaining and
expanding export markets for plants and plant products.
This National Program addresses high-priority national needs for:

Disease diagnosis: Detection, identification and
characterization of plant pathogens

Biology, ecology, epidemiology, and spread of plant
pathogens and their relationships

Plant disease resistance

Biological and cultural strategies for sustainable disease
management

Total Projects: 69
Total Locations: 29
Total Scientists: 141

The Crop Protection and Quarantine program provides fundamental and
applied research to develop improved strategies for the cost-effective
management and control of native and invasive insect, mite, and weed
pests, while minimizing impacts on the environment and human health.
The rationale for this National Program is that the development and
implementation of improved management and control strategies will
contribute to maintaining the competitiveness and vitality of
agriculture in America.
Insects, mites, and weeds have a considerable impact on our
nation's food and fiber crops, affecting domestic supply and exports
with economic losses estimated to be in the tens of billions of
dollars. This program also provides research contributing to greater
productivity in traditional and organic agricultural and horticultural
systems by improving and developing new, innovative control strategies,
by improving existing control methods and by alerting growers and
producers to problems so informed decisions regarding mitigation can be
accomplished at the earliest possible time.
This National Program addresses high-priority national needs for:

Systematics and Identification (of invasive insects, mites
and weeds as a threat)

Protection of Agricultural and Horticultural Crops

Protection of Natural Ecosystems

Protection of Post-Harvest Commodities and Quarantine

Total Projects: 92
Total Locations: 39
Total Scientists: 211

The Crop Production program's research develops economically and
environmentally sound technologies that improve the production
efficiency, quality, health and value of America's crops.
Contemporary U.S. crop enterprises for annual, perennial, and
greenhouse crop production are complex and depend on access to and
successful integration of highly diverse components, such as a steady
stream of superior crop varieties, new strategies for mitigation of
crop losses from biotic and abiotic stresses, and mechanization and
automation of undesirable or labor intensive activities. This program
is developing successful new production systems to sustain or increase
crop yield and quality by focusing on (1) productive and profitable
crop management strategies for new and traditional crops that conserve
natural resources; (2) efficient and effective integrated management
strategies for multiple pests; (3) mechanization of management
activities to address labor constraints; and (4) improved crop
management models and decision aids.
Pollination is a critical element in agriculture as well, because
honey bees pollinate more than 130 crops in the United States and add
$15 billion in crop value annually. Declining honeybee populations and
honey production due to Colony Collapse Disorder (CCD) require special
attention. CCD has now increased honey bee mortality to more than 30
percent. This program provides research to improve honey bee and non-
apis bee health and well being, better hive management practices for
more robust pollination, development of emerging technologies to be
used to address current and future challenges of the bee keeping
industry, conserving bee biodiversity, and develop pollinators for land
restoration.

This National Program addresses high-priority national needs for:

Integrated Sustainable Crop Production Systems

Bees and Pollination

Total Projects: 24
Total Locations: 17
Total Scientists: 71

The Methyl Bromide Alternatives program provides research to
develop alternatives to the agricultural uses of methyl bromide, a
widely used fumigant and known ozone depletor. Methyl bromide is a
highly efficacious fumigant that has for a number of decades been used
on more than 100 crops, in forest and ornamental nurseries, and on wood
products to control insects, nematodes, weeds, and pathogens, and thus,
has been critical to important segments of U.S. agriculture. The
research focuses on strawberry, pepper, tomato, perennial replant,
field-grown propagative material, and ornamental and cut flower
cropping systems for pre-plant methyl bromide use, and for processing
and storage structures, fresh and durable commodities, and quarantine
for post-harvest use. The ultimate goal of this National Program is to
make available to the U.S. agriculture community environmentally
acceptable, practical, economically feasible, and sustainable
alternatives to methyl bromide.
The U.S. Department of Agriculture (USDA) has vigorously responded
to the methyl bromide challenge. It has brought together agricultural
and forestry leaders from private industry, academia, state
governments, and the Federal Government to assess the problem,
formulate priorities, and implement research directed at providing
solutions to the problems predicted by the methyl bromide phase-out.
The Agricultural Research Service (ARS) was assigned the lead in this
process and has emphasized the importance of research on alternatives
to methyl bromide.
This National Program addresses high-priority national needs for:

Pre-plant Soil Fumigation Alternatives

Post-Harvest Alternatives

Total Projects: 15
Total Locations: 10
Total Scientists: 33

Natural Resources and Sustainable Agricultural Systems (NRSAS)

Sustainable agricultural systems produce the agricultural crops and
livestock needed by societies; protect the natural resource foundation
essential for production, processing, and other uses; and provide
economic and social value to producers, processors, consumers, and
communities. ARS develops scientific knowledge that enhances quality of
life for all Americans by ensuring safe, affordable, and sustainable
food, feed, fiber and renewable energy while enhancing natural
resources and the environment. ARS research creates profitable
agricultural systems that capitalize on the nation's vast renewable
natural resources to preserve the fertility and productivity of soils,
provide abundant and high quality water supply and clean air, maintain
healthy agricultural and rangeland ecosystems, and offer renewable
energy and fuel alternatives that form the basis of U.S. economy and
the well being of rural America.

NRSAS Statistics:

Total Projects: 171
Total Locations: 71
Total Scientists: 518

The Water Availability and Watershed Management National Program
conducts research that helps provide integrated, effective, and safe
water resource management. There is no substitute for fresh water, nor
are there replacements for its essential role in maintaining human
health, agriculture, industry, and ecosystem integrity. ARS scientists
conduct fundamental and applied research on the processes that control
water availability and quality and develop new and improved
technologies for managing agricultural water resources to help ensure
the health and economic growth of the nation. Results provide the
technologies to manage and deliver safe and reliable fresh water
supplies to the agricultural, urban, and industrial sectors of society
while enhancing the aquatic natural resources of the nation. Results
are a key part of the USDA's Conservation Effects Assessment Project
(CEAP), which seeks to determine and improve the effectiveness of farm
bill conservation practices and programs. Strategic approaches include
coordination of ARS' infrastructure of experimental watersheds and
rangelands, located in all major production regions of the nation, as a
single long-term agroecosystems research network focusing on natural
resources that provide the foundation for agriculture, especially
water.
This National Program addresses high-priority national needs for:

Effective Water Management in Agriculture

Erosion, Sedimentation, and Water Quality Protection

Improving Conservation Effectiveness

Improving Watershed Management and Ecosystem Services in
Agricultural Landscapes

Total Projects: 47
Total Locations: 30
Total Scientists: 151

The Climate Change, Soils, and Emissions National Program conducts
research to improve the quality of atmosphere and soil resources,
understand how agriculture and climate affect each other, develop
strategies to adapt agricultural systems to climate variability,
mitigate gaseous and particulate emissions, and convert research
results into decision-support capabilities for end-users.
The effects of climate change create challenges to agriculture and
offer new opportunities for production, and these are identified and
managed through research on crop and livestock responses and resilience
to abiotic stresses; changing risks related to pests, pathogens, and
weeds; soil, nutrient, and water management; and carbon sequestration.
Enhancement of soil productivity is a focus of ARS research and
together with crop improvement research, offers promise for meeting
future global agricultural demands. Atmospheric emissions from
agriculture are under increased scrutiny due to potential negative
environmental effects and threats to human and animal welfare.
Emissions contribute to tensions between agriculture and residential
communities from visibility impairment (haze) and nuisance odors.
Strategic, coordinated research projects include the nation-wide
Greenhouse gas Reduction through Agricultural Carbon Enhancement
network (GRACEnet project); the Renewable Energy Assessment Project
(REAP) in collaboration with universities; development of models such
as the Soil and Water Assessment Tool (SWAT), which is used worldwide
for conservation and land management applications; widely used models
for assessing and managing wind and water erosion; and leadership in
the Global Research Alliance on Agricultural Greenhouse Gases.
This National Program addresses high-priority national needs for:

Improvements of Air Quality via Management and Mitigation of
Emissions from Agricultural Operations

Knowledge and Technologies for Reducing Atmospheric
Greenhouse Gas Concentrations Through Management of
Agricultural Emissions and Carbon Sequestration

Agriculture to Adapt to Climate Change

Maintaining and Enhancing Soil Resources

Total Projects: 38
Total Locations: 29
Total Scientists: 97

The Bioenergy National Program conducts research to develop
technologies to enable sustainable commercial production of biofuels by
the agricultural sector in ways that enhance our natural resources
without disrupting existing food, feed, and fiber markets.
ARS research creates new varieties and hybrids of bioenergy
feedstocks with optimal traits; develops new optimal practices and
systems that maximize the sustainable yield of high-quality bioenergy
feedstocks; develops new, commercially preferred conversion
technologies; and optimizes both the production of plant feedstocks and
the biorefining of agricultural materials to bioenergy and value-added
coproducts. Much of the research is conducted through the USDA Regional
Biomass Research Centers, emphasizing development of crops and
sustainable production methods that can be regionally successful.
Strategic planning tools to identify research, technologies, and
organizational actions needed to achieve commercial viability of
biofuels are developed in cooperation with other agencies and industry.
This research leads to strengthened rural economies, provides knowledge
for increased supplies of renewable transportation fuel, enhance energy
security, and supports efforts to improve the U.S. balance of trade.
This National Program addresses high-priority national needs for:

Feedstock Development

Feedstock Production

Biorefining

Total Projects: 14
Total Locations: 6
Total Scientists: 45

The Agricultural and Industrial Byproducts National Program
conducts research to effectively and safely manage and use animal
wastes and other agricultural and industrial byproducts in ways that
maximize their potential benefits, while protecting the environment and
human and animal health.
Improvements are needed in animal feeding and management regimens
to increase the proportion of dietary nutrients retained in the animal
or animal products while decreasing the quantity of dietary nutrients
excreted and lost to water, air, and soil. Research tracks the fate and
transport of excreted nutrients in the major soil-crop systems common
to animal agriculture, providing the foundation for developing Best
Management Practices. New application methods improve nutrient use
efficiency and incorporate wastes to conserve nitrogen while
maintaining adequate crop residue to protect the soil from erosion and
runoff. These practices, and their associated nutrient management
plans, are developed from sound understanding of the fate and transport
of specific nutrients for major soils, hydrologic conditions, and
cropping systems. Other research addresses pathogen inactivation and
die-off as well as their potential for regrowth as functions of
environmental conditions (e.g., temperature, moisture, etc.) during all
stages of waste management. Technologically sound methods are developed
for utilizing byproducts that are characterized as beneficial and
result in products that are commercially sustainable. This includes
blending, composting, and amending byproducts as well as developing
land application and management techniques that improve soil, water,
and air quality in addition to improved plant growth. Much of the
research is done in collaboration with private sector entities, with a
strong emphasis on development of useful, safe, commercially desirable
products from what would otherwise be considered wastes.
This National Program addresses high-priority national needs for:

Management, Enhancement, and Utilization of Manure Nutrients
and Resources

Manure Pathogens and Pharmaceutically Active Compounds
(PACs)

Atmospheric Emissions

Developing Beneficial Uses of Agricultural, Industrial, and
Municipal Byproducts

Total Projects: 17
Total Locations: 15
Total Scientists: 54

The Rangeland, Pasture & Forages National Program develops and
integrates improved management practices, germplasm, and land-use
strategies to optimize productivity, economic viability and
environmental enhancement in managing vegetation, livestock and natural
resources on private and public grass and forage lands.
Grazing lands constitute the largest single land use in the United
States. Their environmental and economic sustainability are essential
to the nation, yet they are under stresses from many environmental
factors and land uses. Research to mitigate these problems and
strengthen their value include: enhancing conservation and restoration
of ecosystems and agroecosystems through improvements based on the
application of ecological principles; improving management of fire,
invasive weeds, grazing, climate change and other agents of change;
developing grazing-based livestock systems that reduce risk and
increase profitability in existing and emerging markets; developing
improved grass and forage legume germplasm for livestock, conservation,
turf and bioenergy and bioproduct systems; improving the sustainability
of turf management; and improving decision-support systems including
improving inventory, monitoring, and assessment tools.
This National Program addresses high-priority national needs for:

Rangeland Management Systems to Improve Economic Viability
and Enhance the Environment

Pasture Management Systems to Improve Economic Viability and
Enhance the Environment

Sustainable Harvested Forage Systems for Livestock,
Bioenergy and Bioproducts

Sustainable Turf Systems

Total Projects: 35
Total Locations: 25
Total Scientists: 106

The Agricultural System Competitiveness and Sustainability National
Program integrates information and technologies to develop dynamic
systems that enhance the productivity, profitability, energy
efficiency, and natural resource management of American farms.
The program uses interdisciplinary systems research to develop an
understanding of how different kinds of farm enterprises function, and
how changing or introducing new technology affect their productivity,
profitability, energy efficiency, and natural resource stewardship.
Finding the best combinations of practices helps producers achieve
their production goals, while enhancing the environmental goods and
services derived from agricultural lands. Diverse and dynamic
agricultural systems in development can adjust to changing
environmental and market conditions to increase the long-term financial
viability and competitiveness of farms, enhance natural resource
quality, contribute to the vibrancy of rural communities, and increase
the food, fiber, and energy security for the nation and the world.
This National Program addresses high-priority national needs for:

Agronomic Crop Production Systems

Specialty Crop Production Systems

Integrated Whole Farm Production Systems

Integrated Technology And Information To Increase Customer
Problem Solving Capacity

Total Projects: 20
Total Locations: 18
Total Scientists: 65

Nutrition, Food Safety and Quality

The Nutrition, Food Safety and Quality (NFSQ) research area leads
and coordinates ARS research and information dissemination to define
the role of food and its components in optimizing health for all
Americans; develop tests and processes that keep the food supply safe;
reduce and control pathogens and toxins in agricultural products; and
improve the economic viability and competitiveness of American
agriculture by enhancing the quality and utilization of agricultural
products for the benefit of producers and consumers.

NFSQ Statistics:

Total Projects: 226
Total Locations: 47
Total Scientists: 553

The Human Nutrition program provides the science base to undergird
U.S. food policy, i.e., the Dietary Guidelines for Americans, thus
enabling Americans to make nutritious and health-promoting dietary
choices. The mission of the Human Nutrition Program is to define the
role of food and its components in optimizing health throughout the
life cycle for all Americans. Distinctive aspects of this research
include an emphasis on a food-based approach to improving health; the
core capability to sustain long-term research; the availability of
state-of-the-science equipment and facilities for human research across
the lifecycle; and the conduct of multidisciplinary research to improve
the nutritional value of the American diet and the food supply.
This research is focused on maintaining health and preventing
disease through food-based recommendations. This unique USDA research
does not duplicate other Federal departments. The research emphasizes
study of essential nutrients and nonessential health-promoting
components in foods, evaluating the nutritional value of diets eaten by
people in America, determining how consumption of specific foods or
food components can enhance health, and developing strategies to
improve food choices and lifestyle factors to promote health in
Americans. Increasingly, research focuses on addressing over-
consumption and caloric imbalance (obesity related research) with
incorporation of cutting-edge genomic and metabolomic technologies.
Unique national resources that are part of this Program include the
National Nutrient Databank and the ``USDA What We Eat in America/
NHANES'' national food consumption survey. Partnerships with other
Federal agencies and nonprofit and industry groups allow ARS to
leverage funds and build upon common goals. Information dissemination
programs operated by the National Agricultural Library address general
and specific human nutrition issues and audiences and include general
Web portals such as www.nutrition.gov for the American consumer as well
as the targeted websites for professionals such as the Food and
Nutrition Information Center.
This National Program addresses high-priority national needs for:

Monitoring Nutrient Composition of the Food Supply and
Consumption by Americans

Strengthening the Scientific Basis for Dietary Guidance for
Health Promotion and Disease Prevention

Developing Strategies for Prevention of Obesity and Related
Diseases

Conducting Research on Life Stage Nutrition and Metabolism

Total Projects: 89
Total Locations: 9
Total Scientists: 172

The Food Safety program protects food from pathogens, toxins, and
chemical contamination during production, processing, and preparation.
The safety of the food supply is a highly visible public health issue
and a national priority for the Federal Government. The continued
priority is partly due to the diverse and complex system of production,
processing, and distribution of food in the U.S. and the increasing
global distribution. Outbreaks of foodborne illness are seen as a major
cause of morbidity and mortality, and economic costs, both nationally
and internationally. The full extent of the disease burden is still
unknown, even with recent Centers for Disease Control (CDC) estimates.
Foodborne illnesses can be caused by microbial pathogens, parasites,
viruses and an array of foodborne contaminants such as chemicals or
toxins. The cause of every outbreak is still unknown, but persistent
outbreaks of major commodity-specific foods that may directly affect
public health, regulations, industry, and trade, require our immediate
attention.
ARS has developed an integrated approach to food safety, that is,
food production is seen as a continuous process from production,
through harvesting and processing, to retail and the consumer. Pre- and
post-harvest are not separated but considered an integrated production
system of safe and quality food. Interventions and controls that are
applied to one phase will ultimately affect the other segments of food
production and processing. Food safety research has also changed during
the past decade, having moved past simple, surveillance/prevalence
studies to asking more complex questions. Consequently, researchers are
required to think creatively to solve problems, which means considering
alternate perspectives, exploiting new opportunities and technologies,
and crossing conventional boundaries. Multidisciplinary collaborations,
especially between Centers/Institutes, nationally and internationally
are an absolute necessity.
ARS provides the intramural infrastructure and expertise to address
short and long-term needs in food safety. Because of the
infrastructure, ARS is uniquely poised to respond quickly to emerging
and critical food safety issues. ARS also collaborates closely with
Federal regulatory agencies as well as industry, professional, and
international stakeholders to assist in addressing their specific food
safety needs.
This National Program addresses high-priority national needs for:

Foodborne Contaminants

Microbial Population Systems

Systems Biology (Pathogenicity and Virulence)

Technologies for the Detection and Characterization of
Microbial Contaminants

Intervention and Control Strategies to Decrease or Eliminate
Pathogens

Predictive Microbiology and Data Acquisition

Chemical and Biological Contaminants: Detection Methodology,
Toxicology and Toxinology

Total Projects: 64
Total Locations: 14
Total Scientists: 180

The Quality and Utilization of Agricultural Products program
conducts research to enhance the economic viability and competitiveness
of U.S. Agriculture by maintaining the quality of harvested
agricultural commodities or otherwise enhancing their marketability,
meeting consumer needs, developing environmentally friendly and
efficient processing concepts, and expanding domestic and global market
opportunities through the development of value-added food and nonfood
technologies and products, except energy and fuels.
Research is being conducted on the development of nonfood, nonfuel
biobased products from agricultural commodities and byproducts.
Interest in biobased products has increased as consumers and
governments have sought more environmentally friendly products that
provide alternatives to petroleum and which do not contribute to
greenhouse gases. Thus, biobased products can reduce our dependency on
petroleum and provide a more sustainable technology for the future.
Biobased products that were once too expensive to commercialize may now
be affordable. There is some public concern that biobased products
could contribute to the rising cost of food in the U.S. This program
seeks opportunities to develop biobased products from agricultural
feedstocks that do not compete with food, in cooperation with other ARS
national programs and partners. ARS also supports quality and
processing research on crop fiber, such as cotton, and animal hides,
leather and wool. Stakeholders who produce fibers and hides constitute
an important segment of our rural economy. These industries are
severely impacted by energy and production costs and have lost market
share to foreign competition. Technologies that improve fiber quality,
reduce the energy consumption of processing equipment, and develop new
products are needed to help the fiber industry to compete in a global
market.
This National Program addresses high-priority national needs for:

Methods and Technologies to Enhance Quality & Utilization of
Food Crops and Animals

Methods and Technologies to Enhance Quality & Utilization of
Agricultural Fibers

Non-Food, Non-Fuel Biobased Products and Sustainable
Technologies/Processes

Total Projects: 73
Total Locations: 24
Total Scientists: 201

ARS International Research Programs

ARS engages in international collaborations primarily that support
its mission but may also conduct research under external funding that
falls within its mission and also supports critical U.S. Foreign Policy
initiatives. ARS international research collaborations enable an
economically vibrant U.S. agricultural system by developing
technologies, knowledge and tools that help U.S. producers be more
productive, efficient and sustainable. ARS research also support the
Foreign Agricultural Service's (FAS) mission by providing key research
that helps FAS project crop production estimates in other countries and
by engaging in collaborations that underpin food security. The Office
of International Research Programs (OIRP) is an ARS Headquarters Office
under the Office of National Programs in Beltsville, Maryland. The OIRP
maintains a cadre of International Affairs Specialists who: (1) liaise
with each National Programs; (2) provide special focus on specific
regions of the world; and (3) oversee a portfolio of programs/projects
that are important to U.S. foreign policy objectives as well as the
agency's objectives.
This Program is currently focused on three major areas:

Global Food Security

Biosecurity Engagement

International Partnerships

ARS Operates four Overseas Biological Control Laboratories (OBCLs)
that offer the benefits of international projection of mission,
training for key personnel, and broadening of potential solutions for
invasive species. Having operations overseas forms a 365 days per year
presence for ARS, something that could never be accomplished by
temporary visits and assignments. As a result of that dedication to
their missions and host countries, the overseas laboratories have
established reputations as reliable partners. The flow of information,
training, and agricultural progress go in both directions. The OBCLs
are administered out of ARS Headquarters by a Director within the Crop
Production and Protection (CPP) mission area of the Office of National
Programs. There are four OBCLs:

The European Biological Control Laboratory in Montpelier,
France

The South American Biological Control Laboratory in Buenos
Aires, Argentina

The Australian Biological Control Laboratory in Brisbane,
Australia

The Sino-American Biological Control Laboratory in Beijing,
China

ARS Technology Transfer Programs

USDA broadly defines technology transfer as the adoption of
research outcomes for public benefit. Innovations arising from USDA
intramural research, such as new or improved technologies, processes,
products and services, benefit the nation by increasing productivity,
increasing efficiency (keeping costs low) and enhancing global
competitiveness for the U.S. agriculture sector. Thus, technology
transfer functions are critical to accelerating utility of public R&D
investments, creating economic activity, and in job creation and
sustainable economic development.
Principal among the formal instruments of technology transfer are
Cooperative Research and Development Agreements (CRADAs), patents, and
invention licenses for commercialization by the private sector, as well
as material transfer agreements and germplasm releases to industry.
To assist USDA in transferring technologies to the private sector,
the Agricultural Research Service (ARS) created the Agricultural
Technology Innovation Partnership (ATIP) program consisting of ten
economic development organizations across the U.S. serving as
``intermediaries'' to further enhance the likelihood that research
outcomes would be adopted by the private sector for commercialization.
ATIP members coordinate regional cosponsored events with ARS,
showcasing available technologies for licensing, and USDA intramural
research capabilities available to businesses to assist in solving high
priority, mission-related issues connected to the agricultural
industries. Additionally, members provide the current or prospective
private sector partners of ARS with access to business mentors,
entrepreneur schools, seed and venture funds, and the Manufacturing
Extension Partnership programs.
The Agricultural Research Service (ARS) has been delegated
authority by the Secretary of Agriculture to administer the patent
program for ARS, the review of CRADAs and the technology licensing
program for all intramural research conducted by USDA.
ARS's Office of Technology Transfer (OTT) is assigned the
responsibility for protecting intellectual property (IP), developing
strategic partnerships with outside organizations, and performing other
activities that effectively transfer ARS research outcomes and
technologies to the marketplace. ARS-OTT is centralized in policy and
approval procedures, but maintains field offices to provide one-on-one
customer service to ARS researchers. To facilitate technology transfer,
OTT is organized into five sections that include Administrative/
Headquarters, Patents Licensing, Marketing and Technology Transfer
Coordinators (TTCs). TTCs are seven highly qualified employees
stationed across the United States who are responsible for facilitating
the development and transfer of USDA technologies. They serve as
liaisons with scientists, ARS managers, university partners, and the
private sector.
Technology transfer is accomplished through many mechanisms, such
as:

developing written information for customers and
stakeholders, including scientific publications, publications
in trade journals, and reports to stakeholders;

releasing plant germplasm to the public;

transferring research materials to scientists outside of
ARS;

entering into formal partnership agreements, such as CRADAs,
and other cooperative agreements;

delivering specific research results to regulatory agencies
to support their actions;

licensing IP (patents, Plant Variety Protections
Certificates, and biological materials);

participating in meetings with industry organizations and
universities, workshops and field days; and distributing
information to the public via the ARS Information Staff, the
National Agricultural Library, and other sources.

Enhanced Use Lease Authority

Enhanced Use Lease (EUL) is provided under the authority of section
7409 of the Food, Conservation and Energy Act of 2008, Public Law 110-
246 (112 Stat. 1651), commonly referred to as the 2008 Farm Bill. This
authority grants the Secretary of the Department of Agricultural (USDA)
the authority to establish a pilot program at the Beltsville
Agricultural Research Center (BARC) to lease non-excess property to any
private or public entities.
Five calls for proposals were issued by ARS on or about December 4,
2010, requiring businesses to set forth a Business and Leasing plan, a
Development plan and a Property Management plan.
Within the Development plan, businesses are to identify the
collaborative research in-place or a plan of a potential project
consistent with the research mission of the USDA. The six calls for
proposals were directed to (i) use of greenhouse facilities, (ii) 10
acres for bio-byproduct production, (iii) an under-utilized composting
facility. (iv) Transgenic greenhouse space; and (v) large animal
transgenic research space, with screened barn, surgery room, lunch room
and storage and rest room facilities.
Four proposals were submitted by small businesses. All of which had
existing agreements with ARS. Proposals received from Renewable Carbon
Management, LLC and EnviRemed were uncannily similar and were directed
to a full scale composting business located at BARC. The two proposals
were rejected by committee as being deficient in failing to outline a
research component directed to the mission of ARS-USDA. Both entities
were advised by letter of the deficiencies in their proposals and no
reply was received. The existing agreements with these entities have
expired.
A Proposal from New Agriculture was received directed to production
of plant proteins from tobacco for use in plastics manufacture and as a
nutritional supplement. The proposal was unfocused and New Agriculture
was invited to tour the facility in which the proposed operation was to
be housed and to submit a more focused proposal directed to the
specific space to be occupied. New Agriculture failed to follow-up;
however a CRADA agreement is still active and is being worked to
completion with this entity.
A proposal from Plant Sensory Systems Inc. was received for the
purpose of leasing two transgenic greenhouses in building 010 at BARC,
for a total of 1859 ft\2\ for 3 years. The proposal was directed to
growing transgenic corn for purposes of drought and heat tolerance and
efficiency of nitrogen use. A lease was successfully negotiated and
Plant Sensory Systems occupied space on or about May 1, 2011. Today
both soybean and corn are being grown for the stated research purpose.
In a direct quote from the company, ``we could not live without the
space!''
This EUL project supports the USDA priority of responding to
climate change and is part of the Climate Change, Soils and Emissions
(#212).

Buildings and Facilities

Because ARS operates at over 100 locations both nationally and
internationally, a high priority and great degree of focus is placed on
the maintenance of the agency's facility assets. The Secretary has
received many requests from Members of Congress for the Administration
to support budget increases to complete pending ARS capital improvement
projects. In response, the Administrator of ARS was asked to establish
an objective process to guide orderly and timely capital investments
for ARS Laboratory facilities focusing on support to priority programs
and other long-term requirements of USDA scientific research. The
agency is also in the process of completing more than $176 million in
repair and maintenance projects across the country as a result of
funding from the A summary of those assets and a discussion of the
agency's developing capital asset strategy are below.
Land under ARS custody & control:

------------------------------------------------------------------------

------------------------------------------------------------------------
Leased 10,888
Owned 393,260
-----------------------------------
Subtotal.......................... 404,148
-----------------------------------
MOU 2,051
===================================
Total Acres..................... 406,199
------------------------------------------------------------------------

Buildings owned/leased (Gross Square Feet):

----------------------------------------------------------------------------------------------------------------
Number GSF
----------------------------------------------------------------------------------------------------------------
Owned Buildings Existing Operational 3,016 13,565,457
Existing Excess 294 80,498
------------------------------------------------------------------------------
Subtotal....................... 3,310 14,345,955
-------------------------------------------
Leased Buildings 116 495,596
===========================================
Total........................ 3,426 14,841,551
----------------------------------------------------------------------------------------------------------------

105 Domestic Locations; 3 Foreign Locations; & 60 worksites.

Location/Worksites collocated with Land-Grants/Institutes of
Higher Learning

Land-Grant Locations--60

Land-Grant Worksites--14

Non Land-Grant Locations--4

Non Land-Grant Worksites--1

Replacement Value $3.64B

With the issuance of Executive Order (E.O.) 13327, Federal Real
Property Asset Management in February 2004, the USDA recognized the
need to adopt a more consistent, structured, performance-based,
integrated planning process to better enable the Agency to oversee
management of its extensive real property portfolio. In October, 2007
USDA issued the Real Property Capital Programming and Investment
Process (CPIP). The CPIP was based upon the Office of Management and
Budget (OMB) Capital Planning and Investment Control (CPIC) guidance
(OMB A-11 Part 7; Planning, Budgeting, and Acquisition of Capital
Assets.) An ARS specific CPIP--the ARS Building Block Plan (BBP)--was
included as an appendix.
Similar to the USDA Plan, ARS built its process around the OMB CPIC
guidance; this allowed ARS to evaluate real property investments based
upon risks and returns throughout their lifecycle while ensuring that
USDA and ARS' investments are well-conceived, cost-effective, and
support strategic mission and business goals.
A key component of the ARS BBP is the use of investment review
boards as the decision-making body in matters related to real
property--the Boards are called Asset Management Review Boards (AMRB).
There are two levels of review; the initial process begins at each of
the eight Area offices, these eight plans are then consolidated and
reviewed at the Headquarters level. The AMRB's membership includes
representation from throughout the ARS and includes program, finance,
budget, planning, and facilities. This membership ensures a balanced
approach to investment decisions. The ARS Headquarters AMRB is chaired
by the Deputy Administrator, Administrative & Financial Management and
is responsible for:

Reviewing new Capital investments (includes new
construction, repair, land purchase, and disposal) using a
standard set of criteria to ensure proposed projects that will
support the ARS and Department missions and program delivery
processes.

Recommending approving/disapproving all projects over
$1,000,000. (The ARS AMRB assumes projects under $1,000,000
have been validated by the Area AMRB's).

Reviewing opportunities to right-size inventories and
operations and management costs.

Ensuring that both the Department's and ARS's criteria and
performance goals are considered and implemented when making
Agency investment decisions.

Assuring that the ARS's Real Property program remains in
compliance with E.O. and implementing directives.

As outlined above, once a decision is made on which real property
assets warrant attention, there is an OMB process for analyzing capital
investments. The process is generic, and it allows for the analysis of
various capital investments, not just real property. The guidance
provided in the USDA and ARS BBP process follows the basic criteria
outlined within the OMB guidance.
Informal discussions with NASA and National Institutes of Health
(NIH) staff have indicated that their Capital Investment Process
closely follows the OMB guidance. The criteria taken into account
include the following:

Does the investment in a major capital asset support core/
priority mission functions that need to be performed by the
Federal Government? (How does the project support the
Secretaries priorities, Congressional mandates, and the
Department's and agency's strategic goals and objectives);

Is the investment supported by a Life Cycle analysis?

Does the investment improve the Real Property Performance
Measures? (1) Utilization; (2) Condition Index; (3) Mission
Dependency; and (4) Annual Operation & Maintenance (O&M) costs.

The challenge for ARS is in identifying those real property assets
that warrant priority attention and investment to ensure core and
priority research needs are met. (There will always be a number of
facilities that require immediate attention due to failing building
systems and life safety issues; these assets also need to be
addressed.) ARS has identified the following tasks as necessary to
complete its capital investment strategy.

Task 1--Bench mark the ARS BBP against other government and
industry organizations (General Services Administration (GSA),
Department of Defense (DOD) activities, NIH, university,
pharmaceutical, etc.). Include the decision making process,
investment strategies, business systems and automation systems
used, and metrics on expenditures for operation, sustainment,
and recapitalization of similar assets.

Task 2--Identify funding amounts necessary to raise existing
facilities to an acceptable condition, sustain facilities at
that level, and recapitalize facilities.

Task 3--(concurrent with task 2) Implement processes and procedures
to improve ARS management of its assets and prioritize
investment priorities through a decision matrix that aligns and
relates research program priorities and investment requirements
with associated infrastructure needs in a systematic way to
support a rank-ordered priority plan for identifying,
scheduling, and sequencing existing and out-year capital
investments needed to address infrastructure improvement
requirements on a regular and recurring basis consistent with
facility engineering industry norms. The ranking process will
consider Congressional directed projects, recent construction,
and general facilities that need to be accounted for in ranking
priorities. ARS program priorities will relate both to
facilities where specific research is conducted and also to
facilities where the work could be conducted.
3. Brief History
The Agricultural Research Service was officially founded in 1953
but has precursor agencies that date back as far as 1884 to the Bureaus
of Plant and Animal Industry. The importance of agricultural research
performed by the government goes back even farther, to the first work
done to stem hog cholera outbreaks in 1868. In 1938, Congress
appropriated funding to create agricultural research laboratories in
Peoria, IL, Wyndmoor, PA, Albany, CA and New Orleans, LA. These
locations still exist to this day as major centers of ARS work and
concentrations of our science. We are proud of this long history of
government commitment to solving agricultural problems that affect
every single American in one way or another.
4. Purpose/Goals
ARS conducts research to develop and transfer solutions to
agricultural problems of high national priority and provide information
access and dissemination to:

Ensure high-quality, safe food, and other agricultural
products;

Assess the nutritional needs of Americans;

Sustain a competitive agricultural economy;

Enhance the natural resource base and the environment; and

Provide economic opportunities for rural citizens,
communities, and society as a whole.

As part of the Research, Education, and Economics (REE) Mission
Area, ARS, like its fellow REE agencies, focuses its research on five
priorities:

Climate change;

Food safety;

Children's nutrition and health;

International food security;

Bio-Energy.
5. Success in Meeting Programmatic Purpose/Goals
Climate Change

In an ARS study of the impact of global climate change, crops
responded positively to future levels of atmospheric carbon dioxide
(CO2), but soil tillage practices had little effect on this
response. This first long-term study comparing tillage practices under
high CO2 levels showed that elevated CO2 caused
soybean and sorghum plants to increase photosynthesis while reducing
transpiration, the amount of water the plants release. This resulted in
increased water use efficiency, whether the crops were grown with no-
till or conventional tillage.
ARS scientists have found that using alternative types of
fertilizers can cut back on greenhouse gas emissions, at least in one
part of the country, and are examining whether the alternatives offer
similar benefits nationwide. Nitrogen fertilizers are often a necessity
for ensuring sufficient crop yields, but their use leads to release of
nitrous oxide, a major greenhouse gas, into the atmosphere. Fertilizer
use is one reason an estimated 78 percent of the nation's nitrous oxide
emissions come from agriculture.
Current atmospheric ozone levels are already suppressing soybean
yields, according to ARS scientists' studies of the effect of global
climate change on crops. The scientists have been working on a project
called ``SoyFACE''--short for Soybean Free Air Concentration
Enrichment--to measure how the projected increases in carbon dioxide
(CO2) and ozone will affect soybean production. The
scientists found that soybean yields increase by about 12 percent at
the elevated CO2 levels predicted for the year 2050 (550
parts per million)--only \1/2\ of what previous studies estimated. They
also found that increased ozone is quite harmful to soybean yields,
reducing them by about 20 percent. In addition, current levels of ozone
are already suppressing soybean yields by up to 15 percent.

Food Safety

Innovative studies by ARS scientists are providing new information
about the impressive array of genes that a major foodborne pathogen,
Escherichia coli O157:H7, calls into action when attempting to colonize
leaves of fresh-cut lettuce. The investigation--the first to provide
extensive details about the biology of E. coli O157:H7 in fresh-cut
lettuce--could pave the way to new technologies to improve the safety
of bagged salads.
ARS scientists have used a type of high-tech imaging called
``hyperspectral imaging'' to distinguish the foodborne pathogen
Campylobacter from other microorganisms as quickly as 24 hours in
laboratory tests. Campylobacter infections in humans are a major cause
of bacterial foodborne illness both in the United States and other
countries throughout the world. Normally, isolation and detection for
identification of Campylobacter from foods like raw chicken can take
several days to a week. This ``sensing'' technology, which was nearly
100 percent accurate with pure cultures of the microorganisms, could be
used for early detection of presumptive Campylobacter colonies.
Using a cleansing solution to wash eviscerated chicken carcasses is
effective in removing bacteria that cause human foodborne diseases,
according to an ARS study. The findings provide data that may be useful
to poultry producers in designing practical, non-chlorine-based
sanitizers. The cleanser, which is composed of lauric acid and
potassium hydroxide, could be used to sanitize chicken carcasses during
processing prior to chilling. Since other countries do not use chlorine
rinses, ARS is looking at alternatives for them and is evaluating the
most effective rinses against foodborne pathogens in poultry.

Children's Nutrition and Health

Aspiring moms are often advised to achieve a healthy weight before
they become pregnant, and to gain only the recommended amount of weight
during their pregnancy, and ARS-funded studies could provide new
insights into those recommendations. The studies focus on how
influences that occur in the womb--and perhaps during the first few
months of life--might affect development of a child's ability to
regulate his or her weight later in life. In fact, the child's body-
weight-regulating mechanisms might be permanently altered by maternal
signals associated with the mother's own overweight, the scientists
say, and such maternal programming of the unborn child could increase
the risk that the child would become an overweight or obese adult and
would have a higher risk of obesity-related afflictions.
Parents of kids age 2 and up can check a handy website every 6
months to help determine if their children's weight gains or losses are
heading in the right direction. ARS-funded scientists developed the
easy-to-use, online resource and based it on growth charts issued by
the Centers for Disease Control and Prevention. In just a few minutes
spent at their computer, parents can easily calculate their child's
BMI, or Body Mass Index, and put it into perspective by viewing the
youngster's BMI percentile on a helpful graph.
A collaborative study conducted by ARS scientists and Harvard
University scientists showed decreased nutritional dietary quality and
increased caloric intake among U.S. children on days when they consumed
fast food. The authors analyzed existing dietary intake data from 6,212
children and adolescents, aged 4 to 19, from a nationally
representative USDA Continuing Survey of Food Intakes by Individuals,
1994-1996, and the Supplemental Children's Survey, 1998. The findings
showed that U.S. children who ate fast food, compared with those who
did not, consumed more total calories, more calories per gram of food,
more total and saturated fat, more total carbohydrate, more added
sugars and more sugar-sweetened beverages, but less milk, fiber, fruit
and nonstarchy vegetables.

International Food Security

ARS scientists have solved a longstanding mystery as to why a
pathogen that threatens the world's wheat supply can be so adaptable,
diverse and virulent. It is because the fungus that causes the wheat
disease called stripe rust may use sexual recombination to adapt to
resistant varieties of wheat. The scientists showed for the first time
that stripe rust, caused by Puccinia striiformis, is capable of
sexually reproducing on the leaves of an alternate host called
barberry, a common ornamental.
An international team of researchers co-led by an ARS scientist has
sequenced the genomes of two fungal pathogens--one that threatens
global wheat supplies and another that limits production of a tree crop
valued as a future source for biofuel. The sequencing of the genetic
codes of wheat stem rust pathogen (Puccinia graminis) and poplar leaf
rust pathogen (Melampsora larici-populina) is expected to help
researchers develop control strategies to address worldwide threats to
wheat fields and tree plantations.
ARS scientists and their colleagues completed a 4 year effort to
sequence the genome of corn, an achievement expected to speed up
development of corn varieties that will help feed the world and meet
growing demands for using this important grain crop as a biofuel and
animal feed. The results represent the largest and most complex plant
genome sequenced to date.

Bio-Energy

ARS scientists have found that barley grain can be used to produce
ethanol, and the leftover byproducts--barley straw, hulls, and dried
distillers grains--can be used to produce an energy-rich oil called
bio-oil. The bio-oil could then be used either for transportation fuels
or for producing heat and power needed for the grain-to-ethanol
conversion.
ARS scientists have long-term studies underway to examine growing
camelina as a bioenergy crop for producing jet fuel for the military
and the aviation industry. This research supports the recently signed
memorandum of understanding between the U.S. Department of Agriculture
(USDA) and the Department of the Navy (DON) and interests of the
Commercial Airlines Alternative Fuels Initiative (CAAFI). Native to
Europe, camelina (Camelina sativa) is a member of the plant family
Brassicaceae and has been grown since ancient times for use as lamp
fuel, among other things. The seed's high oil content has made it a
promising candidate as a new source for biofuels.
ARS scientists have developed a new tool for deciphering the
genetics of a native prairie grass being widely studied for its
potential as a biofuel. The genetic map of switchgrass is expected to
speed up the search for genes that will make the perennial plant a more
viable source of bioenergy. Interest in using switchgrass as a biofuel
has intensified in recent years because it can be burned to produce
electricity and, like corn stalks, can be converted to ethanol. It also
grows on marginal lands, is adaptable to different regions, and--as a
perennial--does not need to be replanted each year, which means lower
energy costs and less runoff.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)

------------------------------------------------------------------------

------------------------------------------------------------------------
Salaries and Expenses Buildings and Facilities
------------------------------------------------------------------------
FY 2002 $978,865 FY 2002 $216,824
FY 2003 $1,048,906 FY 2003 $228,703
FY 2004 $1,088,057 FY 2004 $63,434
FY 2005 $1,108,129 FY 2005 $186,335
FY 2006 $1,130,128 FY 2006 $149,883
FY 2007 $1,132,031 FY 2007 $0
FY 2008 $1,124,992 FY 2008 $51,752
FY 2009 $1,143,459 FY 2009 $46,752
FY 2010 $1,179,784 FY 2010 $70,873
FY 2011 $1,133,230 FY 2011 $0
------------------------------------------------------------------------
Note: In FY 2011, the appropriation rescinded $230 million in balances
from prior appropriations, and there was no funding received under the
Buildings and Facilities line.

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
Aggregate agency outlays are below. See next table for details by
location.

------------------------------------------------------------------------

------------------------------------------------------------------------
FY 2002 $928,330
FY 2003 $1,024,665
FY 2004 $1,076,374
FY 2005 $1,107,953
FY 2006 $1,133,833
FY 2007 $1,099,270
FY 2008 $1,135,728
FY 2009 $1,133,144
FY 2010 $1,169,025
FY 2011 $1,115,892
------------------------------------------------------------------------

United States Department of Agriculture
Agricultural Research Service
FY 2011 Estimated Research Funding by Location
($ in thousands)
------------------------------------------------------------------------
2011 NTL
Location Estimate
------------------------------------------------------------------------
Alabama, Auburn
Aquatic Animal Health Research 2,302,355
Soil Dynamics Research 3,604,375
---------------
Subtotal, Alabama 5,906,730
---------------
Alaska, Fairbanks
Subarctic Agricultural Research Unit 5,465,003
---------------
Subtotal, Alaska 5,465,003
---------------
Arizona, Maricopa--U.S. Arid Land Agricultural Research
Center
Aflatoxin Reduction 850,435
Pest Management and Biocontrol Research 2,897,456
Plant Physiology and Genetics Research 3,026,574
Water Management and Conservation Research 2,950,663
---------------
Maricopa Subtotal 9,725,128
---------------
Arizona, Tucson
Honey Bee Research 1,627,276
Southwest Watershed Research 3,318,636
---------------
Tucson Subtotal 4,945,912
===============
Subtotal, Arizona 14,671,040
===============
Arkansas, Booneville
Dale Bumpers Small Farms Research Center 1,764,605
Arkansas, Fayetteville
Poultry Production and Products Safety Research 1,627,547
Arkansas, Little Rock
Arkansas Children's Nutrition Center 6,348,600
Arkansas, Stuttgart
Dale Bumpers National Rice Research Center 3,600,124
Harry K. Dupree Stuttgart National Aquaculture 3,224,860
Research Center
---------------
Stuttgart Subtotal 6,824,984
===============
Subtotal, Arkansas 16,565,736
===============
California, Albany--Plant Gene Expression Center 4,116,816
California, Albany--Western Regional Research Center
Bioproduct Chemistry and Engineering Research 3,924,646
Crop Improvement/Utilization Research 4,507,709
Exotic and Invasive Weeds Research 4,967,546
Foodborne Contaminants Research 4,246,950
Genomics and Gene Discovery 2,092,410
Plant Mycotoxins Research 3,007,727
Processed Foods Research 3,855,196
Produce Safety and Microbiology Research 5,436,157
---------------
Albany Subtotal 36,155,157
---------------
California, Davis
Crops Pathology and Genetics Research 2,763,178
National Clonal Germplasm Repository--Tree Fruit & Nut 1,304,663
Crops & Grapes
Western Human Nutrition Research Center:
Obesity And Metabolism Research 3,400,766
Immunity and Disease Prevention Research Unit 3,485,541
---------------
Davis Subtotal 10,954,148
---------------
California, Parlier--San Joaquin Valley Agricultural
Sciences Center
Commodity Protection and Quality Research 3,358,348
Crop Diseases, Pests and Genetics 5,429,823
Plant Genetic Resources Conservation 625,023
Water Management Research 2,363,685
---------------
Parlier Subtotal 11,776,879
---------------
California, Riverside
U.S. Salinity Laboratory:
Contaminant Fate And Transport Research 2,114,961
Water Reuse And Remediation Research 2,316,566
National Clonal Germplasm Repository for Citrus 1,142,398
---------------
Riverside Subtotal 5,573,925
---------------
California, Salinas
Crop Improvement And Protection Research 4,907,345
California, Shafter
Western Integrated Cropping Systems Research 1,455,204
===============
Subtotal, California 70,822,658
===============
Colorado, Akron
Central Plains Resources Management Research 2,049,276
Colorado, Fort Collins
Agricultural Systems Research 2,132,160
Plant and Animal Genetic Resources Preservation 4,620,480
Research Unit
Soil, Plant And Nutrient Research 2,782,077
Sugarbeet Research 797,220
Water Management Research 1,819,074
---------------
Fort Collins Subtotal 12,151,011
===============
Subtotal, Colorado 14,200,287
===============
Delaware, Newark
Beneficial Insects Introduction Research 2,069,908
===============
Subtotal, Delaware 2,069,908
===============
District of Columbia
U.S. National Arboretum:
Education Unit 1,328,736
Floral And Nursery Plants Research Unit 6,489,013
Gardens Unit 3,594,923
===============
Subtotal, District of Columbia 11,412,672
===============
Florida, Brooksville
Beef Cattle Research 1,249,875
Florida, Canal Point
Sugarcane Production Research 2,888,264
Florida, Fort Lauderdale
Invasive Plant Research Laboratory 2,552,219
Florida, Fort Pierce--U.S. Horticultural Research
Laboratory
Horticulture and Breeding Research 4,117,253
Quality Improvement in Citrus and Subtropical Products 2,644,308
Research
Subtropical Insects Research 2,964,198
Subtropical Plant Pathology Research 4,543,843
---------------
Fort Pierce Subtotal 14,269,602
---------------
Florida, Gainesville--Center for Medical, Agricultural
and Veterinary Entomology
Chemistry Research 3,464,716
Imported Fire Ant and Household Insects Research 2,120,122
Insect Behavior and Biocontrol Research Unit 4,034,501
Mosquito and Fly Research 2,455,817
---------------
Gainesville Subtotal 12,075,156
---------------
Florida, Miami
Subtropical Horticulture Research 4,569,783
===============
Subtotal, Florida 37,604,899
===============
Georgia, Athens
Southeast Poultry Research Laboratory:
Endemic Poultry Viral Diseases Research 1,839,675
Exotic And Emerging Avian Viral Diseases Research 3,908,077
Richard B. Russell Research Center:
Bacterial Epidemiology and Antimicrobial Resistance 3,401,577
Research
Egg Safety and Quality Research 2,200,757
Poultry Microbiological Safety Research 2,735,627
Poultry Processing and Swine Physiology Research 1,721,610
Quality and Safety Assessment Research 3,847,038
Toxicology and Mycotoxin Research 2,617,726
Southern Piedmont Conservation Research 2,659,303
---------------
Athens Subtotal 24,931,390
---------------
Georgia, Byron
Fruit and Nut Research 3,650,947
Georgia, Dawson
Peanut Research 3,878,854
Georgia, Griffin
Plant Genetic Resources Conservation Research 2,318,940
Georgia, Tifton
Crop Genetics and Breeding Research 2,205,021
Crop Protection and Management Research 4,075,707
Southeast Watershed Research 3,412,954
---------------
Tifton Subtotal 9,693,682
===============
Subtotal, Georgia 44,473,813
===============
Hawaii, Hilo--U.S. Pacific Basin Agricultural Research
Center
Tropical Crop and Commodity Protection Research Unit 5,961,010
Tropical Plant Genetic Resources and Disease Research 3,583,427
Unit
===============
Subtotal, Hawaii 9,544,437
===============
Idaho, Aberdeen
Small Grains and Potato Germplasm Research 6,011,779
Idaho, Boise
Watershed Management Research 2,142,620
Idaho, Dubois
Range Sheep Production Efficiency Research 2,149,498
Idaho, Kimberly
Northwest Irrigation and Soils Research 3,584,719
===============
Subtotal, Idaho 13,888,616
===============
Illinois, Peoria--National Center for Agricultural
Utilization Research
Bacterial Foodborne Pathogens & Mycology Research 6,453,938
Bioenergy Research 4,215,810
Bio-Oils Research 4,260,469
Crop Bioprotection Research 2,876,133
Functional Foods Research 4,650,895
Plant Polymer Research 5,032,373
Renewable Product Technology Research 4,328,884
---------------
Peoria Subtotal 31,818,502
---------------
Illinois, Urbana
Global Change and Photosynthesis Research 2,959,242
Soybean/Maize Germplasm, Pathology, and Genetics 2,771,594
Research
---------------
Urbana Subtotal 5,730,836
===============
Subtotal, Illinois 37,549,338
===============
Indiana, West Lafayette
Crop Production and Pest Control Research 3,514,487
Livestock Behavior Research 1,471,316
National Soil Erosion Research 2,766,782
===============
Subtotal, Indiana 7,752,585
===============
Iowa, Ames
Corn Insects and Crop Genetics Research 6,881,204
National Animal Disease Center:
Food Safety and Enteric Pathogens 5,384,398
Infectious Bacterial Diseases 9,413,272
Ruminant Diseases and Immunology 7,217,472
Virus and Prion 10,029,973
Plant Introduction Research 3,407,852
National Laboratory for Agriculture and the
Environment:
Soil, Water & Air Resources Research 3,428,406
Agroecosystems Management Research 5,323,618
===============
Subtotal, Iowa 51,086,195
===============
Kansas, Manhattan--Center for Grain and Animal Health
Research
Arthropod-Borne Animal Diseases Research 3,133,205
Engineering and Wind Erosion Research 2,204,583
Grain Quality and Structure Research 2,973,412
Hard Winter Wheat Genetics Research 2,712,749
Stored Product Insect Research 2,777,678
===============
Subtotal, Kansas 13,801,627
===============
Kentucky, Bowling Green
Animal Waste Management Research 2,583,864
Kentucky, Lexington
Forage-Animal Production Research 2,635,527
===============
Subtotal, Kentucky 5,219,391
===============
Louisiana, Baton Rouge
Honey Bee Breeding, Genetics, and Physiology Research 2,580,696
Louisiana, Houma
Sugarcane Research 4,068,690
Louisiana, New Orleans--Southern Regional Research
Center
Commodity Utilization Research 4,449,989
Cotton Chemistry and Utilization Research 3,573,813
Cotton Fiber Bioscience Research 1,344,318
Cotton Structure and Quality Research 3,535,833
Food and Feed Safety Research 4,871,129
Food Processing and Sensory Quality Research 4,509,075
Formosan Subterranean Termite Research 2,868,331
---------------
New Orleans Subtotal 25,152,488
===============
Subtotal, Louisiana 31,801,874
===============
Maine, Orono
Cranberry Research 374,250
National Cold Water Marine Aquaculture Center 820,496
===============
Subtotal, Maine 1,194,746
===============
Maryland, Beltsville
Animal and Natural Resources Institute:
Animal Biosciences and Biotechnology Laboratory 6,675,716
Animal Improvement Programs Laboratory 2,632,700
Animal Parasitic Diseases Laboratory 6,850,965
Bovine Functional Genomics Laboratory 6,649,867
Crop Systems and Global Change Laboratory 2,673,959
Environmental Management and By-Product Utilization 5,196,763
Laboratory
Environmental Microbial and Food Safety Laboratory 7,773,429
Hydrology and Remote Sensing Laboratory 4,861,439
Sustainable Agricultural Systems Laboratory 4,649,332
Beltsville Human Nutrition Research Center:
Diet, Genomics and Immunology Laboratory 3,796,455
Food Components and Health Laboratory 5,636,649
Food Composition and Methods Development Laboratory 2,585,426
Food Surveys Research Group 6,588,506
Nutrient Data Laboratory 3,137,610
Plant Sciences Institute:
Bee Research Laboratory 2,476,706
Food Quality Laboratory 3,895,437
Genetic Improvement for Fruits and Vegetables 5,420,857
Laboratory
Invasive Insect Biocontrol and Behavior Laboratory 6,261,849
Molecular Plant Pathology Laboratory 3,673,159
National Germplasm Resources Laboratory 4,309,679
Nematology Laboratory 2,478,053
Soybean Genomics and Improvement Laboratory 4,169,210
Sustainable Perennial Crops Laboratory 4,100,507
Systematic Mycology and Microbiology Laboratory 1,953,259
Systematics Entomology Laboratory 4,736,782
---------------
Beltsville Agricultural Research Center Subtotal 113,184,314
---------------
Maryland, Beltsville--National Agricultural Library 21,184,588
Maryland, Frederick
Foreign Disease-Weed Science Research 5,630,325
===============
Subtotal, Maryland 139,999,227
===============
Massachusetts, Boston
Human Nutrition Research Center on Aging 15,258,288
===============
Subtotal, Massachusetts 15,258,288
===============
Michigan, East Lansing
Avian Disease and Oncology Research 3,269,791
Sugarbeet and Bean Research 1,326,766
===============
Subtotal, Michigan 4,596,557
===============
Minnesota, Morris
Soil Management Research 2,643,268
Minnesota, St. Paul
Cereal Disease Research 2,547,162
Plant Science Research 2,493,211
Soil and Water Management Research 1,752,683
---------------
St. Paul Subtotal 6,793,056
===============
Subtotal, Minnesota 9,436,324
===============
Mississippi, Mississippi State
Crop Science Research Laboratory:
Corn Host Plant Resistance Research 2,050,412
Genetics and Precision Agriculture Research 4,292,462
Poultry Research 2,873,253
---------------
Mississippi State Subtotal 9,216,127
---------------
Mississippi, Oxford
National Sedimentation Laboratory:
Water Quality and Ecology Research 3,345,131
Watershed Physical Processes 5,169,338
Natural Products Utilization Research 5,525,076
---------------
Oxford Subtotal 14,039,545
---------------
Mississippi, Poplarville
Southern Horticultural Research 5,168,880
Mississippi, Stoneville
Biological Control of Pests Research 5,246,151
Catfish Genetics Research 8,860,750
Cotton Ginning Research 1,428,364
Crop Genetics Research 6,450,422
Crop Production Systems Research 5,655,407
Genomics and Bioinformatics Research 1,831,962
Human Nutrition Research 273,454
Southern Insect Management Research 4,687,200
Soybean Research 778,425
---------------
Stoneville Subtotal 35,212,135
===============
Subtotal, Mississippi 63,636,687
===============
Missouri, Columbia
Biological Control of Insects Research 1,692,322
Cropping Systems and Water Quality Research 3,172,521
Plant Genetics Research 4,239,347
===============
Subtotal, Missouri 9,104,190
===============
Montana, Miles City
Range and Livestock Research 3,337,966
Montana, Sidney--Northern Plains Agricultural Research
Laboratory
Agricultural Systems Research Unit 2,563,705
Pest Management Research Unit 2,573,427
---------------
Sidney Subtotal 5,137,132
===============
Subtotal, Montana 8,475,098
===============
Nebraska, Clay Center--U.S. Meat Animal Research Center
Animal Health Research 1,552,861
Environmental Management Research 1,957,037
Genetics and Breeding Research 4,215,173
Meats Safety & Quality Research 5,349,777
Nutrition Research 2,972,038
Reproduction Research 3,537,864
---------------
Clay Center Subtotal 19,584,750
---------------
Nebraska, Lincoln
Agroecosystem Management Research 3,175,627
Grain, Forage, and Bioenergy Research 2,808,228
---------------
Lincoln Subtotal 5,983,855
===============
Subtotal, Nebraska 25,568,605
===============
New Mexico, Las Cruces
Cotton Ginning Research 1,856,867
Range Management Research 4,174,766
===============
Subtotal, New Mexico 6,031,633
===============
New York, Geneva
Grape Genetics Research 1,662,812
Plant Genetic Resources 2,263,266
---------------
Geneva Subtotal 3,926,078
---------------
New York, Greenport
Foreign Animal Disease Research 3,840,400
New York, Ithaca
Biological Integrated Pest Management Research 3,283,196
Plant, Soil and Nutrition Research 5,539,605
Plant-Microbe Interactions Research 1,771,550
---------------
Ithaca Subtotal 10,594,351
===============
Subtotal, New York 18,360,829
===============
North Carolina, Raleigh
Food Science Research 1,310,075
Market Quality and Handling Research 1,112,911
Plant Science Research 4,922,910
Soybean and Nitrogen Fixation Research 2,055,687
===============
Subtotal, North Carolina 9,401,583
===============
North Dakota, Fargo--Red River Valley Agricultural
Research Center
Animal Metabolism-Agricultural Chemicals Research 2,405,557
Cereal Crops Research 4,104,352
Insect Genetics and Biochemistry Research 1,928,232
Sugarbeet and Potato Research 2,290,933
Sunflower and Plant Biology Research 3,542,935
Weed Biology Research 1,511,423
---------------
Fargo Subtotal 15,783,432
---------------
North Dakota, Grand Forks--Grand Forks Human Nutrition
Research Center
Dietary Prevention of Obesity-Related Research 4,337,437
Healthy Body Weight Research 5,224,694
---------------
Grand Forks Subtotal 9,562,131
---------------
North Dakota, Mandan
Natural Resource Management Research 3,442,163
===============
Subtotal, North Dakota 28,787,726
---------------
Ohio, Columbus
Soil Drainage Research 1,477,805
Ohio, Coshocton
North Appalachian Experimental Watershed Research 1,250,740
Ohio, Wooster
Application Technology Research 3,236,110
Corn and Soybean Research 879,325
Soft Wheat Quality Research 943,096
---------------
Wooster Subtotal 5,058,531
===============
Subtotal, Ohio 7,787,076
===============
Oklahoma, El Reno--Grazinglands Research Laboratory
Forage and Livestock Production Research Unit 2,933,754
Great Plains Agroclimate and Natural Resources 2,427,656
Research Unit
---------------
El Reno Subtotal 5,361,410
---------------
Oklahoma, Lane--South Central Agricultural Research
Laboratory
Genetics and Production Research 1,962,617
Oklahoma, Stillwater
Hydraulic Engineering Research 938,916
Wheat, Peanut, and Other Field Crops Research 2,721,669
---------------
Stillwater Subtotal 3,660,585
---------------
Oklahoma, Woodward
Rangeland and Pasture Research 1,645,398
===============
Subtotal, Oklahoma 12,630,010
===============
Oregon, Burns
Range and Meadow Forage Management Research 2,726,833
Oregon, Corvallis
Forage Seed and Cereal Research 4,633,549
Horticultural Crops Research 5,741,888
National Clonal Germplasm Repository 1,484,276
---------------
Corvallis Subtotal 11,859,713
---------------
Oregon, Pendleton
Soil and Water Conservation Research 1,961,163
===============
Subtotal, Oregon 16,547,709
===============
Pennsylvania, University Park
Pasture Systems & Watershed Management Research 4,216,231
Pennsylvania, Wyndmoor--Eastern Regional Research Center
Biobased and Other Animal Co-Products Research 3,668,679
Dairy and Functional Foods Research 4,966,168
Food Safety and Intervention Technologies Research 5,784,714
Molecular Characterization of Foodborne Pathogens 6,939,849
Research
Residue Chemistry and Predictive Microbiology Research 4,766,582
Sustainable Biofuels and Co-Products Research 5,416,802
---------------
Wyndmoor Subtotal 31,542,794
===============
Subtotal, Pennsylvania 35,759,025
===============
South Carolina, Charleston
Vegetable Research 4,434,754
South Carolina, Clemson
Cotton Quality Research 2,355,935
South Carolina, Florence
Coastal Plain Soil, Water and Plant Conservation 4,148,647
Research
===============
Subtotal, South Carolina 10,939,336
===============
South Dakota, Brookings
Integrated Cropping Systems Research 2,968,164
===============
Subtotal, South Dakota 2,968,164
===============
Texas, Beaumont
Rice Research 1,428,857
Texas, Bushland--Conservation and Production Research
Laboratory
Renewable Energy and Manure Management Research 1,731,850
Soil and Water Management Research 5,228,070
---------------
Bushland Subtotal 6,959,920
---------------
Texas, College Station--Southern Plains Agricultural
Research Center
Areawide Pest Management Research 3,233,491
Cotton Pathology Research 1,511,849
Crop Germplasm Research 3,363,939
Food and Feed Safety Research 5,087,980
---------------
College Station Subtotal 13,197,259
---------------
Texas, Houston
Children's Nutrition Research Center 13,677,579
Texas, Kerrville--Knipling-Bushland U.S. Livestock
Insects Research Laboratory
Screwworm Research 1,023,231
Tick and Biting Fly Research 4,640,802
---------------
Kerrville Subtotal 5,664,033
---------------
Texas, Lubbock--Cropping Systems Research Laboratory
Cotton Production and Processing Research 1,187,720
Livestock Issues Research 1,157,043
Plant Stress and Germplasm Development Research 3,635,239
Wind Erosion and Water Conservation Research 3,058,531
---------------
Lubbock Subtotal 9,038,533
---------------
Texas, Temple
Grassland, Soil and Water Research Laboratory 3,585,877
Texas, Weslaco--Kika de la Garza Subtropical
Agricultural Research Center
Beneficial Insects Research 2,967,672
Crop Quality and Fruit Insects Research 1,972,766
Honey Bee Research 1,616,482
Integrated Farming and Natural Resources Research 3,140,728
---------------
Weslaco Subtotal 9,697,648
===============
Subtotal, Texas 63,249,706
===============
Utah, Logan
Forage and Range Research 3,931,926
Poisonous Plant Research 3,292,975
Pollinating Insect-Biology, Management, Systematics 1,784,531
Research
===============
Subtotal, Utah 9,009,432
===============
Washington, Prosser
Vegetable and Forage Crops Production Research 3,319,128
Washington, Pullman
Animal Disease Research 6,957,540
Grain Legume Genetics Physiology Research 974,874
Land Management and Water Conservation Research 1,673,928
Plant Germplasm Introduction and Testing Research 2,735,366
Root Disease and Biological Control Research 1,485,447
Wheat Genetics, Quality Physiology and Disease 2,686,923
Research
---------------
Pullman Subtotal 16,514,078
---------------
Washington, Wapato
Fruit and Vegetable Insect Research 4,550,497
Washington, Wenatchee
Physiology and Pathology of Tree Fruits Research 2,107,760
===============
Subtotal, Washington 26,491,463
===============
West Virginia, Beaver
Appalachian Farming Systems Research Center 7,376,867
West Virginia, Kearneysville--Appalachian Fruit Research
Laboratory
Innovative Fruit Production, Improvement and 7,185,870
Protection
West Virginia, Leetown
Cool and Cold Water Aquaculture Research 7,157,417
===============
Subtotal, West Virginia 21,720,154
===============
Wisconsin, Madison
Cereal Crops Research 2,657,598
U.S. Dairy Forage Research Center:
Cell Wall Biology and Utilization Research 3,019,146
Dairy Forage and Aquaculture Research 4,696,175
Environmentally Integrated Dairy Management 1,781,972
Vegetable Crops Research 3,933,194
===============
Subtotal, Wisconsin 16,088,085
===============
Wyoming, Cheyenne
Rangeland Resources Research 2,313,149
===============
Subtotal, Wyoming 2,313,149
===============
Puerto Rico, Mayaguez
Tropical Crops and Germplasm Research 2,837,405
===============
Subtotal, Puerto Rico 2,837,405
===============
Other Countries
Argentina, Buenos Aires--South American Biological 532,225
Control Laboratory
France, Montpellier--European Biological Control 3,078,341
Laboratory
===============
Subtotal, Other Countries 3,610,566
===============
ARS Research Total 965,639,582
===============
Repair & Maintenance of Facilities (Arboretum & NAL) 1,553,266
Office of the Director--WRRC Renovation 495,096
Administrator and Immediate Staffs 54,740,337
National Programs 36,916,510
Administrtive and Financial Management 28,557,007
Research Operations and Management 16,994,855
Beltsville Area Office of the Director 5,936,605
North Atlantic Area Office of the Director 3,291,214
Midwest Area Office of the Director 3,252,327
Pacific West Area Office of the Director 3,751,231
Northern Plains Area--Office of the Director 3,276,233
Southern Plains Area Office of the Director 2,819,470
Mid South Area Office of the Director 2,913,196
South Atlantic Area Office of the Director 3,093,069
---------------
Subtotal, Admin 165,542,054
===============
Total ARS 1,133,229,998
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)
United States Department Of Agriculture
Agricultural Research Service
Annual Delivery Cost (FY 2007-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------------------
USDA Strategic Goal 1: Assist rural communities to create prosperity so they are self-sustaining, repopulating and economically thriving.
--------------------------------------------------------------------------------------------------------------------------------------------------------

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
Program Items ($000) ($000) ($000) ($000) ($000)

Product Quality/Value Added 95,383 94,310 96,737 99,496 99,950
Livestock Production 38,510 38,077 38,830 39,368 39,547
Crop Production 114,550 113,262 115,396 107,564 119,763
National Agricultural Library 21,428 20,843 21,022 21,213 20,010
Repair and Maintenance 17,635 17,524 17,491 17,461 17,503
Collaborative Research Program 2,959 3,824 2,913 -- --
Miscellaneous Fees 8,727 554 120 167 --
Indirect Costs 28,263 29,000 30,220 29,738 31,030
-------------------------------------------------------------------------------
Total Costs 327,455 317,394 322,729 315,007 327,803
FTEs 2,182 2,154 2,114 2,106 2,436
----------------------------------------------------------------------------------------------------------------

Note: Total is from 2012 and was based on the Full Year Continuing Resolution.

--------------------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------------------
USDA Strategic Goal 2: Ensure our National Forests and private working lands are conserved, restored, and made more resilient to climate change,
while enhancing our water resources.
--------------------------------------------------------------------------------------------------------------------------------------------------------

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
Program Items ($000) ($000) ($000) ($000) ($000)

Environmental Stewardship 178,547 176,539 179,109 185,975 186,825
Indirect Costs 18,699 19,211 19,901 20,664 20,758
-------------------------------------------------------------------------------
Total Costs 197,246 195,750 199,010 206,639 207,583
FTEs 2,084 2,058 2,024 2,017 1,709

--------------------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------------------
USDA Strategic Goal 3: Help America promote agricultural production and biotechnology exports as America works to increase food security.
--------------------------------------------------------------------------------------------------------------------------------------------------------

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
Program Items ($000) ($000) ($000) ($000) ($000)

Livestock Production 38,510 38,077 38,830 39,368 39,548
Crop Production 91,081 90,058 91,880 107,564 96,348
Indirect Costs 13,572 13,943 14,523 16,326 15,100
-------------------------------------------------------------------------------
Total Costs 143,163 142,078 145,233 163,258 150,996
FTEs 1,079 1,065 1,050 1,056 1,060

--------------------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------------------
USDA Strategic Goal 4: Ensure that all of America's children have access to safe, nutritious and balanced meals.
--------------------------------------------------------------------------------------------------------------------------------------------------------

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
Program Items ($000) ($000) ($000) ($000) ($000)

Food Safety 94,818 94,240 95,126 96,837 96,837
Human Nutrition 77,545 76,964 76,778 80,761 80,761
Livestock Protection 78,528 73,967 74,659 80,825 81,194
Crop Protection 178,341 176,334 180,283 184,346 185,140
H1N1 Transfer -- -- -- 1,416 --
Indirect Costs 44,952 45,868 47,427 49,197 49,325
-------------------------------------------------------------------------------
Total Costs 474,184 467,373 474,273 493,382 493,257
FTEs 3,166 3,130 3,080 3,103 3,077
----------------------------------------------------------------------------------------------------------------

Note: Annual delivery cost is reported consistent with the President's 2012 Budget and the USDA Strategic Plan
FY 2010-2015.

9. Eligibility Criteria
ARS is not a granting agency and as such does not have programs
that distribute money to outside organizations and thus does not have
eligibility criteria for its programs.
10. Utilization (Participation) Data
In the traditional sense, because ARS is an intramural research
agency, it does not have direct outside utilization of it programs by
other individuals or entities through granting. However, the agency
does execute a large number of extramural agreements with other
research organizations and does provide funding to aid in the
completion of these projects by our collaborators. A summary of the
agency's current extramural agreements is below and a detailed list
follows. The table below reflects the aggregate of agreements currently
in force. These agreements may have been entered into and funds
obligated as early as 2006.

------------------------------------------------------------------------
Number of
Performing Organization Type Agreements Dollar Amount
------------------------------------------------------------------------
Other Federal Agency 1 $150,000.00
State Agricultural Experiment Station 34 $36,766,986.24
1862 Land-Grant College 1,335 $189,618,764.02
1890 Land-Grant College or Tuskegee 138 $17,860,097.79
Institute
Private University or College 46 $54,664,158.92
Public University or College (non-land- 114 $53,134,432.50
grant)
Private for Profit Organization 14 $797,632.44
Private nonprofit Organization 112 $78,111,607.51
State or Local Government 8 $1,642,399.00
Small Business 4 $836,658.35
Minority-owned Business 1 $45,000.00
Female Owned Business 2 $95,000.00
Other 5 $1,741,095.10
Individual 4 $293,775.00
Tribal Colleges and Universities 1 $102,000.00
Foreign 97 $10,610,575.57
-------------------------------
Total 1,916 $446,470,182.44
------------------------------------------------------------------------

------------------------------------------------------------------------
Type Perf Org Number of
Description Cooperator Name Agreements Dollar Amount
------------------------------------------------------------------------
FR Other Federal NASA Goddard Space 1 $150,000.00
Agency Flight Center
SA State Connecticut 2 $3,950,532.00
Agricultural Agricultural
Experiment Station Experiment
Station
SA State Mississippi Agri & 29 $30,708,547.24
Agricultural Forestry Exp
Experiment Station Station
SA State Rutgers-New Jersey 2 $1,976,457.00
Agricultural Agricultural
Experiment Station Exper Sta
SA State Texas Agricultural 1 $131,450.00
Agricultural Experiment
Experiment Station Station
LG 1862 Land-Grant Arizona Board Of 9 $2,296,472.94
College Regents
LG 1862 Land-Grant Auburn University 10 $5,000,208.94
College
LG 1862 Land-Grant Board of Regents-- 14 $913,982.67
College Univ of Wisconsin
System
LG 1862 Land-Grant Board of Trustees 3 $935,280.00
College of the Univ of
Illinois
LG 1862 Land-Grant Clemson University 11 $1,219,728.86
College
LG 1862 Land-Grant Colorado State 25 $2,105,979.45
College University
LG 1862 Land-Grant Cornell University 53 $7,323,596.03
College
LG 1862 Land-Grant Curators of the 26 $7,473,576.87
College University of
Missouri
LG 1862 Land-Grant Iowa State 50 $3,090,966.48
College University
LG 1862 Land-Grant Kansas State 43 $6,817,111.89
College University
LG 1862 Land-Grant Louisiana State 18 $8,471,005.47
College Univ Agricultural
Center
LG 1862 Land-Grant Michigan State 37 $3,829,112.74
College University
LG 1862 Land-Grant Mississippi State 9 $7,676,027.00
College University
LG 1862 Land-Grant Montana State 7 $151,474.06
College University
LG 1862 Land-Grant New Mexico State 21 $2,366,107.72
College University
LG 1862 Land-Grant North Carolina 55 $3,819,326.99
College Agricultural
Research Service
LG 1862 Land-Grant North Carolina 4 $170,640.00
College State University
LG 1862 Land-Grant North Dakota State 59 $7,362,212.36
College University
LG 1862 Land-Grant Ohio State 1 $4,000.00
College University
Libraries
LG 1862 Land-Grant Ohio State 14 $2,726,026.25
College University
Research
Foundation
LG 1862 Land-Grant Oklahoma State 19 $693,196.24
College University
LG 1862 Land-Grant Oregon State 87 $7,425,573.67
College University
LG 1862 Land-Grant Pennsylvania State 29 $2,779,442.93
College University
LG 1862 Land-Grant Purdue University 31 $6,867,373.78
College
LG 1862 Land-Grant Regents of the 89 $17,035,168.73
College University of
California
LG 1862 Land-Grant Regents of the 14 $2,796,725.31
College University of
Minnesota
LG 1862 Land-Grant Rutgers, The State 7 $743,699.60
College University of New
Jersey
LG 1862 Land-Grant South Dakota State 17 $2,051,651.23
College University
LG 1862 Land-Grant Texas A&M 9 $337,883.00
College University
LG 1862 Land-Grant Texas A&M 3 $74,000.00
College University-
Kingsville
LG 1862 Land-Grant Texas AgriLife 34 $5,627,731.56
College Research
LG 1862 Land-Grant The Board of 6 $281,745.08
College Trustees,
University of
Illinois
LG 1862 Land-Grant The Ohio State 14 $120,464.95
College University
LG 1862 Land-Grant U of AK--Alaska 2 $113,250.50
College Agric & Forestry
Exp Sta
LG 1862 Land-Grant U of ID--Idaho 2 $140,086.51
College Agricultural Exp
Sta
LG 1862 Land-Grant University of 6 $2,901,927.79
College Alaska
LG 1862 Land-Grant University of 2 $27,401.00
College Alaska Museum
LG 1862 Land-Grant University of 4 $73,143.92
College Arizona
LG 1862 Land-Grant University of 20 $1,240,258.30
College Arkansas
LG 1862 Land-Grant University of 3 $112,500.00
College California
LG 1862 Land-Grant University of 58 $2,126,281.93
College California, Davis
LG 1862 Land-Grant University of 8 $5,344,456.98
College Connecticut
LG 1862 Land-Grant University of 17 $689,161.03
College Delaware
LG 1862 Land-Grant University of 32 $3,088,401.12
College Florida
LG 1862 Land-Grant University of 7 $271,828.00
College Georgia
LG 1862 Land-Grant University of 23 $7,054,349.38
College Hawaii
LG 1862 Land-Grant University of 22 $2,404,977.12
College Idaho
LG 1862 Land-Grant University of 44 $6,211,402.53
College Illinois
LG 1862 Land-Grant University of 3 $281,017.72
College Kentucky
LG 1862 Land-Grant University of 9 $5,987,369.21
College Kentucky Research
Foundation
LG 1862 Land-Grant University of 9 $417,891.00
College Maine
LG 1862 Land-Grant University of 44 $5,265,610.54
College Maryland at
College Park
LG 1862 Land-Grant University of 1 $41,042.00
College Maryland
Biotechnology
Inst
LG 1862 Land-Grant University of 2 $47,319.00
College Massachusetts
LG 1862 Land-Grant University of 30 $1,984,057.37
College Minnesota
LG 1862 Land-Grant University of 31 $5,076,024.35
College Nebraska
LG 1862 Land-Grant University of 9 $625,104.00
College Nevada
LG 1862 Land-Grant University of 3 $220,062.83
College Puerto Rico
LG 1862 Land-Grant University of 1 $106,680.00
College Rhode Island
LG 1862 Land-Grant University of 19 $3,305,247.57
College Tennessee
LG 1862 Land-Grant University of 3 $55,948.80
College Texas Medical
Branch
LG 1862 Land-Grant University of 3 $54,979.00
College Vermont & St
Agricultural Col
LG 1862 Land-Grant University of 40 $2,419,070.00
College Wisconsin--Madiso
n
LG 1862 Land-Grant University of 6 $416,685.31
College Wyoming
LG 1862 Land-Grant Utah State 16 $2,715,207.87
College University
LG 1862 Land-Grant Virginia 14 $4,082,277.28
College Polytechnic
Institute and
State Univ
LG 1862 Land-Grant West Virginia 4 $3,548,993.27
College University
Research
Corporation
HB 1890 Land-Grant Alabama A&M 3 $672,747.22
College or Tuskegee University
Institute
HB 1890 Land-Grant Alcorn State 3 $1,652,469.83
College or Tuskegee University
Institute
HB 1890 Land-Grant Delaware State 3 $104,371.11
College or Tuskegee University
Institute
HB 1890 Land-Grant Florida A&M 1 $516,283.00
College or Tuskegee University
Institute
HB 1890 Land-Grant Fort Valley State 1 $4,000.00
College or Tuskegee University
Institute
HB 1890 Land-Grant North Carolina 1 $22,000.00
College or Tuskegee Agric & Tech
Institute State University
HB 1890 Land-Grant Southern 1 $1,262,000.00
College or Tuskegee University & A&M
Institute College
HB 1890 Land-Grant Tennessee State 3 $2,233,030.51
College or Tuskegee University
Institute
HB 1890 Land-Grant Tuskegee 1 $125,358.15
College or Tuskegee University
Inst.
HB 1890 Land-Grant University of 5 $1,261,534.45
College or Tuskegee Arkansas at Pine
Institute Bluff
HB 1890 Land-Grant University Of 4 $503,000.00
College or Tuskegee Maryland/Eastern
Institute Shore
HB 1890 Land-Grant Virginia State 1 $37,029.00
College or Tuskegee University
Institute
HB 1890 Land-Grant Washington State 109 $8,956,772.52
College or Tuskegee University
Institute
HB 1890 Land-Grant West Virginia 3 $519,502.00
College or Tuskegee State Univ Res
Institute and Dev Corp
PR Private Abilene Christian 1 $5,000.00
University or University
College
PR Private Baylor College of 6 $17,670,562.00
University or Medicine
College
PR Private Brandeis 1 $249,447.00
University or University
College
PR Private Brigham Young 1 $30,890.45
University or University
College
PR Private Columbia 2 $256,341.00
University or University in the
College City of New York
PR Private Drexel University 3 $10,000.00
University or
College
PR Private Duke University 1 $20,000.00
University or
College
PR Private Eastern Mennonite 1 $15,000.00
University or University
College
PR Private Johns Hopkins 1 $2,798,370.00
University or University
College
PR Private Miami University 1 $268,494.00
University or
College
PR Private Mountain State 1 $725,755.49
University or University
College
PR Private Texas Christian 1 $20,000.00
University or University
College
PR Private Tufts University 15 $28,151,966.58
University or
College
PR Private Tulane University 3 $2,596,653.73
University or
College
PR Private Washington 3 $81,166.00
University or University in St.
College Louis
PR Private William Carey 1 $14,883.00
University or University
College
PR Private Wilson College 1 $20,000.00
University or
College
PR Private Wittenberg 1 $8,000.00
University or University
College
PR Private Xavier University 1 $14,674.35
University or
College
PR Private Yale University 1 $1,706,955.32
University or
College
PU Public University Arkansas State 2 $82,979.97
or College (non- University
land-grant)
PU Public University Board of Trustees, 1 $624,390.00
or College (non- Southern Illinois
land-grant) Univ
PU Public University California State 1 $27,390.00
or College (non- Univ Fresno
land-grant)
PU Public University Columbia Basin 1 $10,000.00
or College (non- College
land-grant)
PU Public University Florida Atlantic 1 $1,659,942.12
or College (non- University
land-grant)
PU Public University George Mason 1 $30,000.00
or College (non- University
land-grant)
PU Public University George Mason 3 $129,680.00
or College (non- University
land-grant)
PU Public University Indiana University 1 $63,631.00
or College (non-
land-grant)
PU Public University Mississippi Valley 4 $31,276.00
or College (non- State University
land-grant)
PU Public University Northern Illinois 2 $61,000.00
or College (non- University
land-grant)
PU Public University Ohio State 1 $54,667.00
or College (non- University
land-grant) Agricultural Tech
Inst
PU Public University Southeastern 1 $11,700.00
or College (non- Louisiana
land-grant) University
PU Public University Southern Illinois 1 $16,000.00
or College (non- University
land-grant)
PU Public University Stephen F. Austin 2 $11,000.00
or College (non- State University
land-grant)
PU Public University Tarleton State 1 $9,955.96
or College (non- University
land-grant)
PU Public University Tennessee Tech 1 $10,800.00
or College (non- University
land-grant)
PU Public University Texas State 8 $2,694,602.00
or College (non- University
land-grant)
PU Public University Truman State 1 $9,756.00
or College (non- University
land-grant)
PU Public University University of 1 $6,600.00
or College (non- Akron
land-grant)
PU Public University University of 1 $1,153,656.00
or College (non- Arkansas at
land-grant) Little Rock
PU Public University University of 1 $151,847.95
or College (non- Central Florida
land-grant)
PU Public University University of Iowa 5 $123,500.00
or College (non-
land-grant)
PU Public University University of 1 $33,265.00
or College (non- Louisiana at
land-grant) Lafayette
PU Public University University of 11 $448,046.87
or College (non- Maryland
land-grant)
PU Public University University of 1 $46,628.00
or College (non- Memphis
land-grant)
PU Public University University of 15 $25,963,746.17
or College (non- Mississippi
land-grant)
PU Public University University of 5 $1,105,355.00
or College (non- Missouri
land-grant)
PU Public University University of New 2 $20,004.00
or College (non- Orleans
land-grant)
PU Public University University of 1 $9,600.00
or College (non- North Carolina
land-grant)
PU Public University University of 8 $6,477,316.47
or College (non- North Dakota
land-grant)
PU Public University University of 2 $431,219.00
or College (non- North Texas
land-grant)
PU Public University University of 1 $59,826.00
or College (non- Northern Iowa
land-grant)
PU Public University University of 1 $3,839.98
or College (non- Oklahoma
land-grant)
PU Public University University of 1 $15,000.00
or College (non- Oregon
land-grant)
PU Public University University of 2 $71,543.00
or College (non- Pittsburgh
land-grant)
PU Public University University of 1 $1,300,000.00
or College (non- Southern
land-grant) Mississippi
PU Public University University of 4 $2,453,938.77
or College (non- Toledo
land-grant)
PU Public University University of 6 $773,600.64
or College (non- Washington
land-grant)
PU Public University University of 1 $995,206.00
or College (non- Wisconsin--Milwau
land-grant) kee
PU Public University West Chester 1 $39,991.00
or College (non- University of
land-grant) Pennsylvania
PU Public University West Texas A&M 5 $831,610.00
or College (non- University
land-grant)
PU Public University Western Illinois 1 $75,000.00
or College (non- University Inc
land-grant)
PU Public University Western Kentucky 3 $5,005,322.60
or College (non- University
land-grant)
PP Private for Agriculture 1 $137,695.00
Profit Organization Development
Group, Inc.
PP Private for Biotechnology 1 $195,122.00
Profit Organization Foundation, Inc.
PP Private for Clear Springs 1 $30,000.00
Profit Organization Foods, Inc.
PP Private for Craft Technologies 1 $3,240.00
Profit Organization Inc
PP Private for Duarte Nursery/Dry 1 $5,000.00
Profit Organization Creek
Laboratories
PP Private for Empire Prototype 1 $125,492.44
Profit Organization and Product
Development, Inc.
PP Private for Fabrate, LLC 1 $20,000.00
Profit Organization
PP Private for ISCA Technologies 1 $50,000.00
Profit Organization
PP Private for Norwalt Design, 1 $59,310.00
Profit Organization Inc.
PP Private for Pasteuria 1 $48,519.00
Profit Organization BioScience
PP Private for Peerbolt Crop 1 $30,254.00
Profit Organization Management
PP Private for Smith Helicopters, 1 $55,000.00
Profit Organization Inc.
PP Private for SPECTIR LLC 1 $46,000.00
Profit Organization
PP Private for Spectrum Research 1 $7,000.00
Profit Organization Inc.
PP Private for Tetracam Company, 1 $5,000.00
Profit Organization Inc.
PN Private nonprofit American Assoc of 1 $165,855.00
Organization Botanic Gardens &
Arboreta
PN Private nonprofit American 1 $4,000.00
Organization Biological Safety
Association
PN Private nonprofit American Chemical 1 $3,400.00
Organization Society
PN Private nonprofit American Council 1 $43,000.00
Organization for Food Safety &
Quality
PN Private nonprofit American Indian 1 $20,000.00
Organization Science &
Engineering
Society
PN Private nonprofit American 1 $33,000.00
Organization Phytopathological
Society
PN Private nonprofit American Society 1 $4,000.00
Organization for Nutrition,
Inc.
PN Private nonprofit American Society 1 $39,933.52
Organization for Testing
Materials
PN Private nonprofit AOAC 1 $2,000.00
Organization
PN Private nonprofit Arkansas 3 $34,243,929.10
Organization Children's
Hospital
PN Private nonprofit Arkansas 1 $1,637,550.00
Organization Children's
Hospital Research
Center
PN Private nonprofit Audubon Nature 1 $692,046.66
Organization Institute
PN Private nonprofit Beet Sugar 1 $58,659.85
Organization Development
Foundation
PN Private nonprofit Biotechnology Res 2 $9,325,847.00
Organization & Develop Center
PN Private nonprofit Boys, Girls, & 1 $282,500.00
Organization Adults Comm Dev
Ctr (BGACDC)
PN Private nonprofit Brooklyn Botanic 1 $5,000.00
Organization Garden
PN Private nonprofit Canaan Valley 1 $1,286,972.00
Organization Institute, Inc.
PN Private nonprofit Cary Christian 1 $4,000.00
Organization Center, Inc.
PN Private nonprofit Cold Spring Harbor 1 $548,750.79
Organization Laboratory
PN Private nonprofit Conference on 1 $22,500.00
Organization Asian Pacific
American Leadersh
PN Private nonprofit Council for 1 $20,000.00
Organization Agricultural Sci
& Tech (CAST)
PN Private nonprofit Crow Valley 1 $258,302.24
Organization Livestock Coop
Inc
PN Private nonprofit Delta Health 2 $500,268.00
Organization Alliance
PN Private nonprofit Donald Danforth 1 $50,000.00
Organization Plant Science
Center
PN Private nonprofit Environmental 1 $96,702.39
Organization Resource
Coalition
PN Private nonprofit Farm Foundation 2 $57,000.00
Organization
PN Private nonprofit FASEB 1 $5,000.00
Organization
PN Private nonprofit Geisinger Clinic 1 $362,085.57
Organization
PN Private nonprofit Gordon Research 1 $4,000.00
Organization Conferences
PN Private nonprofit Hawaii Agriculture 1 $1,712,779.00
Organization Research Center
PN Private nonprofit High Plains RCD 1 $2,500.00
Organization Council, Inc.
PN Private nonprofit Imperial Valley 1 $180,820.00
Organization Cons Res Ctr Com
PN Private nonprofit J. Craig Venter 3 $898,755.00
Organization Institute
PN Private nonprofit Just Food, Inc. 1 $4,900.00
Organization
PN Private nonprofit Malpais 1 $10,000.00
Organization Borderlands Group
PN Private nonprofit Marshfield Clinic 1 $66,000.00
Organization Research
PN Private nonprofit MBI International 1 $962,000.00
Organization
PN Private nonprofit MedStar Health 2 $286,590.00
Organization Research
Institute
PN Private nonprofit Methyl Bromide 1 $40,000.00
Organization Alternatives
Outreach
PN Private nonprofit Michael Fields 1 $624,213.00
Organization Agricultural
Institute
PN Private nonprofit Missouri Botanical 1 $60,000.00
Organization Garden
PN Private nonprofit Morton Arboretum 2 $34,535.00
Organization
PN Private nonprofit Nat Assoc of Seed 1 $25,000.00
Organization and Venture Funds
(NASVF)
PN Private nonprofit National Academy 1 $50,000.00
Organization of Sciences
PN Private nonprofit National Center 6 $4,378,850.00
Organization for Genome
Resources
PN Private nonprofit National Cotton 1 $333,836.00
Organization Council
PN Private nonprofit National Turfgrass 1 $8,000.00
Organization Evaluation
Program, Inc.
PN Private nonprofit Pollinator 1 $12,927.00
Organization Partnership
PN Private nonprofit Potato Variety 1 $14,237.00
Organization Management
Institute
PN Private nonprofit Practical Farmers 1 $173,072.00
Organization of Iowa
PN Private nonprofit Research 1 $236,735.00
Organization Foundation of
SUNY
PN Private nonprofit Rodale Institute 4 $498,062.00
Organization
PN Private nonprofit Samuel Roberts 2 $11,800.00
Organization Noble Foundation
PN Private nonprofit Society for Range 3 $69,512.00
Organization Management
PN Private nonprofit Soil and Water 3 $16,300.00
Organization Conservation
Society
PN Private nonprofit Sugar Processing 1 $86,666.66
Organization Research
Institute
PN Private nonprofit The Conservation 2 $11,339,104.00
Organization Fund
PN Private nonprofit The Institute for 1 $53,625.00
Organization Genomic Research
(TIGR)
PN Private nonprofit The Research 1 $11,215.42
Organization Foundation of
SUNY
PN Private nonprofit The Student 2 $88,608.00
Organization Conservation
Association, Inc.
PN Private nonprofit U.S. Civilian 1 $4,361,346.00
Organization Research &
Develop.
Foundation
PN Private nonprofit University of 2 $253,193.00
Organization Alabama
PN Private nonprofit University of 31 $1,494,236.30
Organization Georgia Research
Foundation
PN Private nonprofit Woods End Research 1 $30,000.00
Organization Laboratory
PN Private nonprofit World Food Prize 2 $477,146.00
Organization Foundation
SL State or Local Arizona Cotton 1 $158,699.00
Government Research &
Protection
Council
SL State or Local Nevada Tahoe 1 $4,100.00
Government Conservation
District
SL State or Local Oklahoma Water 1 $274,100.00
Government Resource Board
SL State or Local Pennington 2 $1,123,500.00
Government Biomedical
Research Center
SL State or Local Soil & Water 1 $72,000.00
Government Conser District
Dekalb County
SL State or Local Texas Engineering 2 $10,000.00
Government Experiments
Station
SB Small Business Alaska Berries 1 $1,658.35
SB Small Business Applied Biomics, 1 $16,188.00
Inc.
SB Small Business Crystal River 1 $30,000.00
SB Small Business Houma Avionics, 1 $5,000.00
Inc.
SB Small Business Service 1 $800,000.00
Specialist, Ltd.
MO Minority-owned Federal Asian 1 $45,000.00
Business Pacific American
Council
FO Female Owned ASOMBRO Institute 1 $13,000.00
Business for Science
Education
FO Female Owned Bluewave 1 $82,000.00
Business Microbics, LLC
OT Other Akwesasne Task 1 $30,000.00
Force on the
Environment
OT Other Boyce Thompson 2 $1,674,907.10
Inst Plant Rsch,
Inc.
IN Individual Barry Lavine 1 $12,075.00
IN Individual Brent Larson 1 $8,000.00
IN Individual Darrel M. Temple 1 $198,700.00
IN Individual Earline Strickland 1 $75,000.00
TC Tribal Colleges Cankdeska Cikana 1 $102,000.00
and Universities Community College
FN Foreign Agricultural 1 $33,000.00
Research Council
FN Foreign Agriculture and 1 $85,800.00
Agri-Food Canada
FN Foreign Al-Qasemi Academic 1 $40,000.00
Collage
FN Foreign Animal Sciences 1 $243,902.00
Institute
FN Foreign Azerbaijan 1 $4,000.00
National Academy
of Sciences
FN Foreign Biotechnology & 3 $40,000.00
Biological
Control Agency
FN Foreign Bioversity 1 $165,659.00
International
FN Foreign Bioversity 1 $32,580.00
International--CI
AT
FN Foreign Cabi BioSciences, 2 $987,808.00
U.K.
FN Foreign CAPECO 1 $182,500.00
FN Foreign CATIE 3 $150,659.00
FN Foreign Chinese Academy of 1 $464,508.65
Agricultural
Sciences
FN Foreign Chung-Ang 1 $20,000.00
University
FN Foreign CIMMYT 4 $441,403.15
FN Foreign CIRAD-BIOS 2 $160,900.00
FN Foreign Cocoa Research 1 $80,000.00
Institute of
Ghana
FN Foreign CONCELLAE, AB 1 $40,000.00
FN Foreign Consultoria 1 $7,000.00
Agropecuaria
Junior (CONAPEC
Jr.)
FN Foreign CORPOINIAP 1 $87,000.00
FN Foreign CSIRO Entomology 1 $1,835,431.00
FN Foreign Department of 1 $269,000.00
Animal Health
FN Foreign Department of 1 $13,500.00
Veterinary
Services
FN Foreign Elhawakeer- 1 $40,000.00
Association
FN Foreign Far East Forestry 1 $25,000.00
Research
Institute
FN Foreign Federal University 1 $35,000.00
of Santa Maria
FN Foreign Gyeongsang 1 $60,309.00
National
University
FN Foreign Honduran 1 $7,000.00
Foundation for
Agriculture
Research
FN Foreign ICARDA 4 $80,000.00
FN Foreign ICIPE--Intl Centre 2 $185,000.00
of Insect Physio
and Ecol
FN Foreign IICA Costa Rica 1 $3,000.00
FN Foreign ILIA Chavchavadze 1 $13,370.00
State University
FN Foreign Indian Council of 1 $453,000.00
Agricultural
Research
FN Foreign INIA 1 $39,000.00
FN Foreign INIAP 1 $6,150.00
FN Foreign INIFAP 2 $45,500.00
FN Foreign INRA Animal 1 $5,000.00
Genetics Division
FN Foreign Institute of 1 $24,000.00
Botany
FN Foreign Instituto de 1 $455,000.00
Cultivos
Tropicales
FN Foreign Instituto Nacional 3 $219,890.00
de Technologia
Agropecuari
FN Foreign Instituto UNIEMP 1 $143,080.00
FN Foreign International 4 $216,898.00
Institute
Tropical
Agriculture
FN Foreign International 2 $319,500.00
Livestock
Research
Institute
FN Foreign International 1 $4,500.00
Potato Center
(CIP)
FN Foreign International 1 $868,730.00
Science &
Technology Center
FN Foreign Kenya Agricultural 2 $257,968.00
Research Service
FN Foreign Kenya Medical 1 $250,000.00
Research
Institute
FN Foreign Kyrgyz National 1 $17,490.00
Agrarian
University
FN Foreign Ministry of 1 $100,000.00
Agriculture &
Land Reclamation
FN Foreign National Genebank 1 $4,000.00
of Morocco
FN Foreign Natl Ctr for Agr 1 $17,000.00
Reseach &
Extension (NCARE)
FN Foreign Philippine Animal 2 $487,652.00
Health Center
(PAHC)
FN Foreign PICTIPAPA 1 $12,541.00
FN Foreign Plant Research 1 $3,787.28
(NZ) Ltd
FN Foreign Polish Academy of 1 $16,000.00
Sciences
FN Foreign Punjab 1 $80,000.00
Agricultural
University
FN Foreign Rothamsted 1 $5,000.00
Experiment
Station
FN Foreign Seoul National 2 $20,000.00
University
FN Foreign Simon Fraser 2 $115,000.00
University
FN Foreign South African 1 $3,000.00
Agricultural
Research Council
FN Foreign Tel Aviv 2 $33,000.00
University
FN Foreign The University of 1 $132,000.00
Adelaide
FN Foreign Universidad 1 $2,000.00
Autonoma de
Zacateca
FN Foreign University of 1 $22,000.00
Calgary
FN Foreign University of 1 $64,940.00
Ottawa
FN Foreign University of 2 $146,265.00
Reading
FN Foreign University of 1 $7,000.00
Saskatchewan
FN Foreign University of 1 $15,000.00
Science and
Technology of
China
FN Foreign University of the 2 $128,574.49
West Indies
FN Foreign Wuhan Botanical 1 $32,780.00
Garden, Chinese
Academy Scienc
FN Foreign Zentralverband der 1 $4,000.00
Deutschen
Schweineprodukti
-------------------------------
1,916 $446,470,182.44
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
ARS research does not duplicate or overlap other programs. REE and
ARS are committed to maximizing Federal dollars by ensuring systematic
monitoring and evaluation. While the scientific method requires the
flexibility to replicate results, ARS and NIFA leadership, program
managers, and researchers rigorously track scientific projects to avoid
duplication. In addition NIFA and ARS hold joint stakeholder meetings
on scientific research to pull together research projects that are
compatible and not duplicative.
ARS does play a critical role in providing research relevant to the
mission of USDA's action and regulatory agencies and other Federal
departments. Examples include:

Research on bacterial pathogens in produce and meats is
relevant to the missions of the Food and Drug Administration
and the USDA, Food Safety and Inspection Service, respectively.

Improving conservation practices enhances the environmental
benefits of farm bill conservation programs and supports the
mission of the Natural Resources Conservation Service.

Research on the nutrient needs of children, adults and the
elderly provides the science base to undergird U.S. food
policy, the Dietary Guidelines for Americans, essential to the
missions of USDA (Food and Nutrition Service (FNS), Center for
Nutrition Policy and Promotion (CNPP), ERS), Health and Human
Services (Food and Drug Administration (FDA), CDC, NIH), and
the Department of Defense.

Determining the effects of biotech products on the ground
beetle population benefits sustainable agricultural
productivity and also is relevant to the mission of USDA,
APHIS, Biotechnology Regulatory Services.

Long-term assessment of the effectiveness of biotech
products contributes to maintaining crop disease protection but
is also relevant to the mission of the Environmental Protection
Agency.

Research on tree pathogens benefits fruit tree improvement
but is also relevant to forest trees and contributes to the
mission of the Forest Service.

Research on reducing cereal grain mycotoxins improves grain
quality but is also relevant to the mission of the Grain
Inspection, Packers, and Stockyards Administration (GIPSA).

Research on effective biological control of invasive weeds
and pests supports sustainable farming systems but is also be
relevant to protecting the U.S. border and the mission of
Homeland Security.

Developing new sorghum and forage grass germplasm with high
value for animal feed also benefits the mission of the
Department of Energy to develop biofuels.

Creation of planning tools for research, development, and
commercial production of biofuels benefits plans for the
Department of Defense and the Federal Aviation Administration
to achieve diverse fuel sources.

Research contributing to the sound design, maintenance, and
assessment of dams, levees, and channels for water storage and
control supports the mission of the Army Corps of Engineers and
the Federal Emergency Management Agency.

Development of vaccines, diagnostic tests and other
countermeasures to control foreign animal diseases in
coordination with the Department of Homeland Security to help
the Animal Plant Health Inspection Services to protect the
United States from these diseases.

Research to develop and validate novel methods to protect
United States military deployed abroad from threats posed by
disease-carrying insects. This program is in support of the
Department of Defense.

ARS partners with other Federal agencies in responding to national
needs and emergencies through cooperation in Task Forces and
Interagency Working Groups that identify urgent research needs and
agency roles. Recent examples include interagency task forces and
working groups to develop and implement action plans to address Soybean
Rust, Avian Influenza, Childhood Obesity, Antibiotic Resistance, Citrus
Greening, Ug99 Wheat Stem Rust, Water Resources, and Climate Change.
These group's national plans clearly identify the specific roles and
responsibilities of ARS research projects and researchers. Often, ARS
is responsible for providing unique disease and pest scientific
expertise, specialized genetic resources and collections, critical
human nutrition and food safety expertise and resources, natural
resource management expertise, and nationally coordinated research
teams.
ARS partners with the USDA Research, Education and Economics (REE)
agencies through the leadership of the Under Secretary and Chief
Scientist. One of the most important of these partnerships is with the
National Institute of Food and Agriculture (NIFA), which provides
grants that support universities and also much collaboration between
universities and ARS. ARS research is funded by Congressional
appropriations that can support multi-year, long-term research while
NIFA grants support complementary, shorter-term agricultural research.
Cooperation and avoidance of duplication is guided through REE
administrative leadership, budget development, and according to REE
research priorities. The REE Action Plan identifies important goals for
the agencies and specifies the role of ARS, NIFA and the other REE
agencies. Other coordination is provided by multiple working groups,
committees, and joint customer/stakeholder workshops that insure that
ARS long-term research is optimally leveraged with NIFA awards and
research supported by other agencies. These types of partnerships are a
perfect mesh of interests and collaboration for the public good. The
list of accomplishments that have come from partnerships between ARS
and land-grant schools is long and impressive. Examples include:

The Interagency Working Group on Plant Genomes, guides
research on plant genome sequencing with NIFA supporting
sequencing projects and ARS supporting crop genome database to
curate and distribute the data information to crop breeders and
other researchers (REE Action Plan, Goal 8).

ARS manages and safeguards the national genebanks and seed
collections. NIFA has recently awarded a Triticeae grant to a
university-led project that will evaluate accessions in the ARS
small grains collection for weather stress tolerance traits.

The USDA BioEnergy Science team guides interagency
cooperative research on bioenergy with ARS researchers
developing new bioenergy feedstock lines.

ARS and NIFA national program leaders include their
counterparts in national program planning workshops including
some joint workshops such as the 2011 joint ARS-NIFA Animal
Genomics Workshop.

In addition to complementing the work of other agencies, ARS
ensures that duplication and overlap are avoided within its own
programs by developing nationally coordinated research Action Plans for
each of the ARS National Programs. The ARS Office of National Programs
and National Program Leaders provide oversight to guarantee that
individual ARS project plans are targeted to the problem priorities and
optimally coordinated to achieve the expected results. The National
Programs are planned centrally with extensive input with external
customers, stakeholders, research partners, and ARS scientists. Those
providing perspectives on problems to be solved and research needs
include producers, industry and other agricultural processors,
consumers, Administration officials, representatives of USDA action and
regulatory agencies, other government agencies, Congress, non-
governmental groups (e.g., commodity groups and advisory groups), state
and local governments, national and international trade organizations,
university scientists, private researchers, and government
laboratories. Research collaborations among Agency scientists and with
non-ARS scientists are a frequent outcome of the input and planning
process, which ensures complementary objectives and approaches,
prevents redundancies, and leads to research projects and programs that
have impact for the public. Routinely, the agency's senior line
managers and field scientists also meet with customers, stakeholders,
and partners to build a strong understanding of regional and local
issues.
Input from these constituencies leads to development of an Action
Plan that provides the documentation of needs and researchable
problems, which guides development of individual research project
plans. Those plans--which include an assessment of related research
already accomplished or in progress--are reviewed by peer panels who
have the Action Plan in hand. This rigorous process, developed by ARS
in response to a mandate in the 1995 Farm Bill, is a further check
point for ensuring that research will solve problems without wasteful
programmatic redundancies.
In an era of limited available funds, there is a strong incentive
to not repeat what others in the agricultural research arena are doing
unless there is a stronger public good provision requirement. ARS
national leaders and scientists participate on over 160 Federal
interagency working groups, and an uncounted but similarly large number
of formal and informal professional associations and an even larger
number of private-academic-ARS scientist work collaborations. As a
result, ARS prevents redundancies in its programs, complements the
missions of many other science-based Departments and agencies, and
achieves much of the value in its research through mission-driven
responsiveness to customer needs.

Intra-Agency Duplication

As an example of how the agency conducts research on important
issues in multiple locations across the country without duplicating
itself, the agency would like to highlight three particular programs
that have multiple scientists collaborating across the country to
answer complex research questions without unnecessary duplication.

ARS Watersheds

The Agricultural Research Service (ARS) operates a network of
approximately 23 Benchmark Watersheds, Experimental Ranges, and
associated/related research facilities that collect long-term physical,
chemical, and biological data on agricultural sustainability, climate
change, ecosystem services, and natural resource conservation at the
watershed or landscape scale. Data records extend as far back as 98
years. The distribution of these sites across the nation gives them
great value because the interactions of agricultural production systems
with natural resources are highly environment-dependent. ARS sustains
this land-based infrastructure for research and environmental
management testing to enable understanding and forecasting of the
nation's capacity to provide agricultural commodities and other
ecosystem goods and services under geographically variable, ever-
changing environmental and resource-use conditions.
In addition to supporting high-quality, location-based research,
these sites provide an unparalleled opportunity to make important
comparisons between very different environments, across large
distances. The multi-location approach allows ARS to develop research
questions that are shared and coordinated across sites; provide the
capacity to address these large-scale questions across sites through
shared research protocols; collect compatible data sets across sites;
provide the capacity and infrastructure for cross-site data analysis;
and generally facilitate and foster shared engagement in agricultural
research across the nation's highly diverse environments.
The watershed/rangeland network is a key infrastructure for the
research in many ARS National Programs and addresses the needs of other
USDA agencies, such as the evaluation and improvement of farm bill
conservation programs through the Conservation Effects Assessment
Project (CEAP). Collectively, the sites are a platform to support
multi-organization research and funding efforts; a resource for
developing and testing regional- and national-scale hypotheses that
cannot be undertaken by individual locations alone; and a foundation
for developing long-range, multi-agency/institutional funding plans.
During the last 10 years, a concept for a Long-Term Agroecosystems
Research (LTAR) network has been proposed in a number of highly visible
publications, e.g., the 2003 National Research Council report,
Frontiers in Agricultural Research, which urged the USDA to adapt a
strategic, long-term approach to food and agricultural research.
Creation of a new LTAR network would cost tens of millions of dollars,
and universities or other organizations could not likely duplicate the
existing ARS resource and its long-term data records. Two of ARS'
Experimental Range research sites are already part of the National
Science Foundation's (NSF) Long-Term Ecological Research (LTER)
Network; three have been selected to become part of NSF's proposed
National Ecological Observatory Network (NEON). Thus, the
geographically distributed LTAR network needed by the scientific
community already exists in ARS' experimental watershed/rangeland
network.
ARS' unique watershed/rangeland resource is widely available for
partnerships with non-USDA organizations, and research in cooperation
with university scientists, other Federal agencies, and others is
widespread within the network.

ARS Bee Research

The bee industry is essential for the security of the nation's food
supply. Pollination is responsible for $15 billion in added crop value;
bee pollinated crops include important field crops such as alfalfa, and
many fruits and nuts, major sources of vitamins. The bee industry is
threatened by invasive mites (varroa and tracheal), predators (small
hive beetle), diseases (American foulbrood, chalkbrood, viruses),
insecticide poisoning, Africanization of managed colonies, the
pressures of migratory beekeeping, and other problems leading to
decreased colony health and manageability. With the appearance of
colony collapse disorder in 2007, 30% or more of the nation's colonies
are now lost annually, an unsustainable situation that threatens the
entire bee industry and crops such as almond and apple that are totally
dependent on bee pollination. In response, ARS has the core national
responsibility for ensuring an adequate force of pollinators, and
conducts honey bee research at four laboratories, in Arizona,
Louisiana, Maryland, and Texas. In addition, ARS conducts research on
other (non-honey bee) pollinating bees in Utah. Each laboratory has a
unique regional advantage and research role:

Arizona, Tucson, the ``Bee Health and Nutrition
Laboratory'': (1) determines nutritional needs of bees and
develops supplementary diets such as a highly successful
protein diet now commercialized as MegaBee; (2) determines the
negative effects of fungicides and bactericides on bee bread,
the fermented pollen-based protein diet that bees store to feed
their brood; (3) conducts research for beekeepers that
transport colonies for pollination, particularly into
California, where crops pollinated by bees have a value in
excess of $12.7 billion; (4) identifies new compounds for
varroa mite control, such as newly commercialized plant beta-
acids from hops; (5) develops tools to manage the genetics of
commercial colonies in Africanized areas; (6) and maintains an
Africanized Honey Bee (AHB) Identification Service.

Louisiana, Baton Rouge, the ``Bee Breeding Laboratory'': (1)
focuses uniquely on breeding improved bees, and has developed a
Southern-based island system for isolation of breeding stocks
during breeding; (2) selected and commercialized the Russian
bee for varroa and tracheal mite resistance (and high honey
production and survival in harsh climates); (3) and is using
molecular and other techniques to determine genes for
introgression of resistance traits into bee lines preferred by
beekeepers for their docility, honey production, and other
characteristics.

Beltsville, Maryland, the ``Bee Disease Laboratory'': (1)
has a Bee Disease Diagnosis Service that works with APHIS to
prevent introduction of new pathogens and pests; (2) has been
lead in developing antibiotics for controlling bee bacterial
diseases and kits for detection of bee viruses for maintenance
of pure stock; and, (3) is the laboratory leading international
efforts to exploit the genomes of bees and their parasites and
pathogens.

Texas, Weslaco, the ``Bee IPM Laboratory'': (1) conducts
research in a region that has served as a pathway for invasive
problems, e.g., Africanized honey bee; (2) is the principal
laboratory developing systems, including miticide resistance
management, for control of bee pests; and (3) is working to
elucidate bee immunity to disease.

Utah, Logan, the ``Native Bee Laboratory'': (1) is the only
ARS facility (and only large facility in the world) developing
alternative species of bees for pollination of crops and for
land restoration; and, (2) maintains the premier bee
systematics laboratory.

ARS Beef Production Research

Beef cattle research is conducted in the USDA-ARS in three primary
locations: the U.S. Meat Animal Research Center in Clay Center Nebraska
(USMARC), Fort Keogh Livestock and Range Research Laboratory in Miles
City, Montana and the Sub Tropical Agriculture Research Station in
Brooksville, Florida (STARS). Research and priority for these ARS labs
is outlined below. In addition, ARS conducts research in forage
efficiencies, manure management, range and pasture management, parasite
control, climate change/adaptation and forage toxicology at various
other locations where cattle and/or sheep serve as experimental units,
but are not the focus of the primary research objectives.
USMARC: Research at USMARC is focused on bovine genetic and
genomics and improvement of beef cattle growth and efficiencies in
typical corn belt pasture production systems. Beef cattle research is
specifically focused on improving feedlot nutrient utilization
efficiency, enhancing reproductive efficiencies, improving meat quality
and consumer acceptance, combating bovine respiratory disease and
improving the management and adaptability of feedlot cattle to
environmental stressors. USMARC also conducts significant research in
emerging genetic and genomic technologies to improve the rate of
genetic improvement for numerous traits of economic importance for the
beef industry.
Fort Keogh: Research at Fort Keogh in Miles City Montana is focused
on range cattle production efficiencies particularly on cow-calf
production and the interface between beef cattle production and range-
forage management and ecosystem services on open range lands in the
Western U.S. Specific beef cattle research includes genetic and genomic
technology development to improve the productivity and efficiency of
cattle grazing open range and the improvement of reproductive
efficiencies of cows in typical Western range production environments.
Additional research is focused on rumen ecology and the relationship
between the rumen microbiome and beef cattle production efficiencies,
particularly in cow-calf production systems.
STARS: Research at STARS in Brooksville Florida is focused on breed
improvement of cattle adapted to the severe production environments of
the subtropics which include additional stressors of poorer quality
forages, extreme heat and humidity, and significantly increased disease
and parasite infestation challenges than cattle production in the rest
of the U.S. Beef cattle production in the subtropics of the U.S. is
largely confined to the cow-calf sector but represents 40% of the total
U.S. beef cow herd. Specific research is being conducted to improve the
Brahman (Bos indicus) breed and their crosses to enhance adaptation
throughout the subtropics and tropics around the world. Brahman cattle
exhibit adaptive characteristics for these extreme environments but are
discriminated against for poor dispositions, inferior reproductive
performance, inferior feedlot performance, and inferior carcass quality
particularly meat tenderness. To ensure the sustainability and
competitiveness of beef producers in sub-tropical and tropical
environments Brahman cattle are being genetically improved to
consistently demonstrate better performance and efficiency for these
critical economic traits.
12. Waste, Fraud and Abuse
There are currently no fraud, waste, and abuse audits ongoing. The
agency utilizes various internal procedures to prevent and detect
fraud, waste, and abuse instances and provide an annual assurance
statement to the Department of Agriculture Chief Financial Officer with
our assessment of the effectiveness of our procedures. Over the past
several years, the assurance statement has not identified any
exceptions related to fraud, waste, and abuse. Some of the procedures
that support our assurance statement are as follows:

Office of Management and Budget Circular A-123 Appendix A
``Internal Control over Financial Reporting'' covering
Financial Reporting, Reimbursable Agreements, Property
Management, Funds Management, Budgeting, and Human Resources

Consolidated Assistance, Review, and Evaluations of ARS Area
offices and Locations

National Program Reviews

National Institute of Standards and Technology and Federal
Information Security Management Act Risk Assessments

Human Resources Management Evaluations

Quality Control Reviews of Near Field Communications (NFC)
Data Elements

Facilities Contracting and Engineering Management Design
Review Board and Contract Review Board Meetings

Safety, Health, and Environmental Management Reviews,
Evaluations, and Studies

Procurement and Personal Property Management Reviews

Purchase Card Audits and Reviews

Open Audit Summary

ARS is undergoing several Government Accountability Office (GAO)
and Office of the Inspector General (OIG) audits. The focus of the
majority of these audits is how effective and efficient ARS is in
conducting its research, securing and protecting select agents,
addressing critical and emerging issues (such as Colony Collapse
Disorder) and managing its resources. In the table below is a breakout
of the different types of audits ongoing at ARS.

----------------------------------------------------------------------------------------------------------------
Financial and Fraud, Waste and
Audit Entity Program Audits IT Audits Administrative Abuse Audits/ Total Open
Audits Investigations Audits
----------------------------------------------------------------------------------------------------------------
GAO 11 1 0 0 12
OIG 2 3 2 0 7
----------------------------------------------------------------------------------------------------------------

Open GAO Audit Findings

There is currently one GAO audit with open findings that ARS must
address related to Agroterrorism Response and Recovery Efforts. ARS has
responded to these findings and is awaiting additional instructions. In
our response, ARS did not disagree with the findings, however the
agency believes that additional information is required to further
explain observations made in the report.

GAO Audits (In Progress)

120788, DOD Research Facilities and Administration Cost Reimbursement
311044, Update to the 2005 Wireless Network Security Report
361174, Quality Assurance of Carbon Offsets in U.S. Climate Change
Programs
361177, The USDA Protocols and Standards to Ensure the Safety of Meat
and Other Food Procured by Schools
361185, Renewable Energy Initiatives
361191, Ethanol Blends and Risk
361204, Agroterrorism Response and Recovery Efforts
361216, Chesapeake Bay Action Plan
361223, Antibiotic Use in Food and Animals
361260, USDA Efforts to Reduce E. Coli
460612, High Containment Laboratories: GAO Assessment of Commissioned
Reports on Biosafety and Biosecurity
460619, Duplication of Federal Inspections of High-Containment
Laboratories

OIG Audits (In Progress)

50401-01-11, Fiscal Year 2011 USDA Consolidated Financial Statements
Audit
50501-1-12, USDA's Security over Domain Name Systems Services
50501-2-12, FY 2011 Federal Information Security Management Act Audit
50601-01-22, Effectiveness of the Departments Recent Efforts to
Entrance Agricultural Trade
50703-01-HQ, Oversight and Control of USDA ARRA Activities
50099-84-HY, USDA's Response to Colony Collapse Disorder
50501-01-IT, USDA's Management and Security Over Wireless Handheld
Devices
13. Effect of Administrative PAYGO
None.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--National
Institute of Food and Agriculture
1. Program Name
1890 Institutions Capacity Building Grants Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
This program is authorized by section 1417(b)(4) of the National
Agricultural Research, Extension, and Teaching Policy Act of 1977, as
amended (NARETPA) (7 U.S.C. 3152(b)(4)) and pursuant to annual
appropriations made available specifically for the 1890 Capacity
Building Program.
Section 7107 of the Food, Conservation, and Energy Act of 2008
(2008 Farm Bill) (Pub. L. 110-246) amended the authority for the 1890
Capacity Building Program to allow for extension capacity building, as
well as teaching and research. In accordance with the statutory
authority, subject to the availability of funds, the Secretary of
Agriculture may make competitive grants, for a period not to exceed 5
years, to design and implement food and agricultural programs to build
Teaching, Research and Extension capacity at colleges and universities
having significant minority enrollments.
4. Purpose/Goals
The purpose of the 1890 Capacity Building Program is to support
research, education, and extension as well as integrated research,
teaching, and/or extension by awarding grants that address key problems
of national, regional, and multi-institutional importance in sustaining
all components of agriculture, including farm efficiency and
profitability, ranching, renewable energy, forestry (both urban and
agroforestry), aquaculture, rural communities and entrepreneurship,
human nutrition, food safety, family and consumer sciences,
biotechnology, and conventional breeding.
5. Success in Meeting Programmatic Purpose/Goals
The 1890 Capacity Building Grant strengthens teaching, research and
extension programs in the food and agricultural sciences by building
the institutional capacities of the 1890 Land-Grant Institutions, and
Tuskegee University. The program supports projects that strengthen
teaching programs in the food and agricultural sciences in the need
areas of curriculum design and materials development, faculty
development, and others. It supports projects that strengthen research
and extension programs in need areas of studies and experimentation,
extension program development support systems, and others.
Examples of success include:
As a result of the capacity building grant at Kentucky State
University, the Geospatial Education and Analysis Center provided ESRI
(a GIS software company) authorized training to faculty, staff, and
students and to state, regional and local government employees and
others who use the ESRI suite of software products. The KSU GIS
Training facility has had 382 students take the Introduction to ArcGIS
I and II courses taught by KSU staff. Almost ten percent of the total
number of students that enrolled in the courses were KSU students,
faculty, and staff. The Center's ESRI Authorized Training courses have
provided the facility the means to be self-sustaining. The center
generates funds needed to maintain the equipment, upgrade the facility,
and invest in new hardware, software, and data needed to meet the needs
of campus users, as well as local GIS users. The KSU GIS resources have
been used to produce several map products that are in use by the
Frankfort/Franklin County Riverfront Development Commission in their
efforts to create better interaction between citizens and the Kentucky
Riverfront environment.
An educational effort at Tennessee State University (TSU)
collaborates with India's G.B. Pant Agricultural University of
Agriculture and Technology (GBPUA&T) to internationalize TSU's
agriculture program, enhance the competitiveness of Tennessee's
agricultural entrepreneurs, and foster on-going research collaborations
with GBPUA&T faculty. The new course contents were developed for two
courses in agribusiness after the interactive meetings with faculty and
students of the GBPUA&T and other Indian agricultural universities on
issues related to curriculum in Agribusiness. International content is
being integrated in several courses at TSU's undergraduate and graduate
agriculture program. The content has greater examples of real-life
situations. More interdisciplinary content in courses are being
designed to include research opportunities for graduate and
undergraduate students. Scientific information is being made available
on faculty and student experience with international exchange program,
and best management practices and lessons learned. Students now have a
better appreciation and understanding of global problems.
Fort Valley State University (FVSU) in Georgia has designed and
developed an Outdoor Forestry Classroom/Laboratory to provide hands-on
and experiential learning experiences to students enrolled in the
FVSU's forestry course, to use the Outdoor Forestry Classroom/
Laboratory to train and prepare high school agriculture students for
various forestry career development events, and to use the Outdoor
Forestry Classroom/Laboratory for summer workshops for high school
agriculture teachers throughout the state of Georgia. During Spring
2009, Area 3 of district number 4 of Georgia used the site to conduct
Forestry Career Development Event activities. One hundred and fifty
high school students were in attendance and had the opportunity to
interact and discuss careers in the forestry industry with foresters
from USDA, the Georgia Forestry Commission and Weyerhaeuser. In the
future this site will be used to train and prepare high school
agriculture students (FFA) for various forestry career development
events. Forestry Camps (Workshops) will be conducted to upgrade the
skills of limited resource forestry, land owners and provide continuing
education for FFA teachers.
Participation in global education programs is low and there are
deficiencies in gathering and managing data for decision-making in
global education programs. A NIFA-funded project at North Carolina A&T
State University developed a set of best practices and retool curricula
to equip faculty and students with the skills needed to function
smartly around the world in order to strengthen America's leadership in
international agriculture. As outcome, a 30 percent improvement in
international content in curricula in agricultural courses; a reported
increase of 40 percent in participation in study abroad programs among
students enrolled in schools of agriculture in 1890 institutions; a 40
percent increase in awareness of and interest in international
agricultural issues among faculty and students in schools of
agriculture in 1890 institutions. In the long run the project will
produce students and faculty capable of working with their counterparts
in a transnational context to solve complex global agricultural
problems.

6. Annual Budget Authority (Fiscal Year (FY) 2007-FY 2011)
(in thousands of dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Budget Authority $9,479 $11,404 $11,411 $12,312 $12,189 $12,375 $13,592 $15,000 $18,250 $19,336
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays $1,238 $7,547 $13,246 $14,762 $17,059
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Applications may only be submitted by 1890 Land-Grant Institutions,
including Tuskegee University and West Virginia State University.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 110 None 344
Received
Applications Funded 43 None 118
------------------------------------------------------------------------
Note: FY 2009 funds were awarded collectively with FY 2010 funds.

11. Duplication or Overlap with Other Programs
USDA's Research, Education, and Economics (REE) mission area is
committed to maximizing Federal dollars by ensuring systematic
monitoring and evaluation. While the scientific method requires the
flexibility to replicate results, NIFA's leadership, program managers,
and researchers rigorously track scientific projects through its
Current Research Information System (CRIS) to avoid duplication.
Program leadership also holds joint stakeholder meetings and/or
coordinates with other science agencies (ARS, ERS, others) to ensure
that programs are complementary, and do not duplicate other science
programs in USDA and other Federal agencies. The creation and staffing
of the USDA Office of the Chief Scientist has bolstered this
coordination.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Agriculture and Food Research Initiative (AFRI).
2. Subprograms/Department Initiatives
Foundational Program
Childhood Obesity
Climate Change
Global Food Security
Food Safety
Sustainable Bioenergy
NIFA Fellowship Grant Program
3. Brief History
Section 7406 of the 2008 Farm Bill amended section 2(b) of the
Competitive, Special, and Facilities Research Grant Act (7 U.S.C.
450i(b)) to authorize AFRI.
4. Purpose/Goals
The Foundational Program Request for Application (RFA) focuses on
building a foundation of knowledge in fundamental and applied food and
agricultural sciences critical for solving current and future societal
challenges.
The Childhood Obesity Prevention Challenge Area RFA focuses on the
societal challenge to end child obesity through specific program areas
that are designed to achieve the long-term outcome of reducing the
prevalence of overweight and obesity among children and adolescents.
The Climate Change RFA focuses on the societal challenge to
mitigate and adapt to climate change through specific program areas
that are designed to achieve the long-term outcome of reducing the use
of energy, nitrogen, and water in the production of food, fiber and
fuel, and increase carbon sequestration.
The Global Food Security RFA focuses on the societal challenge to
keep American agriculture competitive while ending world hunger through
specific program areas that are designed to achieve the long-term
outcome of increasing food availability and decreasing the number of
food insecure individuals.
The Food Safety Challenge Area RFA focuses on the societal
challenge to improve food safety for all Americans through specific
program that areas are designed to achieve the long-term outcome of
reducing foodborne illnesses and deaths through a safe food supply.
The Sustainable Bioenergy RFA focuses on the societal challenge to
secure America's energy future through specific program areas that are
designed to achieve the long-term outcome of reducing the national
dependence on foreign oil through the production of sustainable
bioenergy.
The AFRI NIFA Fellowships Grant Program is focused on developing
technical and functional competence for pre-doctoral students, and the
research independence and teaching credentials of postdoctoral
scientists in the food, forestry and agricultural sciences that are
within NIFA's challenge areas through well-developed and highly
interactive mentoring and training activities.
5. Success in Meeting Programmatic Purpose/Goals
AFRI at the National Institute of Food and Agriculture (NIFA) is
charged with funding research, education, and extension grants and
integrated research, extension, and education grants that address key
problems of national, regional, and multi-state importance in
sustaining all components of agriculture, including farm efficiency and
profitability, ranching, renewable energy, forestry (both urban and
agroforestry), aquaculture, rural communities and entrepreneurship,
human nutrition, food safety, biotechnology, and conventional breeding.
Providing this support requires that AFRI advances fundamental sciences
in support of agriculture and coordinates opportunities to build on
these discoveries. This will necessitate efforts in education and
extension that deliver science-based knowledge to people, allowing them
to make informed practical decisions.
Examples of success include:
The AFRI Wheat Coordinated Agricultural Project (WheatCAP) is led
by the University of California, Davis implemented genetic Marker
Assisted Selection (MAS) strategies for quality and disease resistance
traits across the U.S. public breeding programs. The project generated
approximately 1,000,000 MAS data points that were used to develop 90
new germplasm lines and cultivars and thousands of improved lines for
breeding. The WheatCAP provided a stimulating learning environment that
supported training of 117 undergraduates and 73 graduate students, many
of which are being hired as breeders in companies and public
institutions.
An international team of scientists have mapped the genome of the
plant pathogen that causes downy mildew disease which causes major
losses to crops such as corn, grapes, and lettuce. The genome sequence
of Hyaloperonospora arabidopsidis, the pathogen that causes downy
mildew disease, is published this week in the journal Science. In the
paper, researchers compare the sequence of H. arabidopsidis with other
fully-sequenced genomes of destructive plant pathogens to shed light on
the differences in the ways microbes interact with their host and how
those differences evolve. The study could lead to new ways to
investigate how these pathogens cause plant disease and find new ways
to prevent plant loss in the future.
S. Enteritidis and C. jejuni are major foodborne pathogens
transmitted through poultry products. Many plant-derived antimicrobials
are natural, generally regarded as safe molecules used to preserve
foods and enhance food flavor. Preliminary research by Connecticut
scientists revealed that plant molecules, including trans-
cinnamaldehyde, carvacrol, thymol, and eugenol were bactericidal on S.
Enteritidis and C. jejuni in chicken bowel contents in the laboratory.
Additionally, trans-cinnamaldehyde and eugenol reduced significant
bowel populations of these pathogens in chickens. The current research
is investigating the effect of trans-cinnamaldehyde, carvacrol, thymol,
and eugenol as dietary supplements to reduce colonization of S.
Enteritidis and C. jejuni in broiler chickens and their safety in
chickens. The work will potentially lead to decreased outbreaks of
salmonellosis and campylobacteriosis, thereby improving public health
and economic opportunities for poultry farmers.
Scientists at the University of Wisconsin created a Relative
Antioxidant Index (RACI) which provides standardization of information
about the antioxidant content of various fruits and vegetables and is
useful as a ranking tool for use by the food industry, scientists, and
consumers. The RACI statistically integrates the antioxidant capacity
values generated using seven different chemical methods and was
validated using 20 commonly consumed vegetables.
With funding from NIFA, scientists at the University of California-
Davis have identified the genes in wheat that are responsible for the
plant's tolerance to freezing temperatures. This discovery may lead to
improved crop production since wheat breeders have long recognized the
need to produce cultivars with greater resistance to freezing
temperatures, but have had limited success to date.
NIFA-funded scientists at the University of Missouri in cooperation
with the Agricultural Research Service developed a new tool for cattle,
called the Illumina BovineSNP50 Chip. This tool allows scientists to
examine the animal's entire genome to detect variations in a more
efficient and economical way. Researchers around the world are using
the chip to identify regions within the bovine genome that harbor
variants that cause animals to differ in the outward expression of
important traits. More importantly, the high resolution of this snip
chip will allow scientists to predict an animal's total genetic merit
from its SNP profile. Breeding companies are using the chip to assist
in the genetic selection process of dairy animals. As a result, the
industry is saving millions of dollars annually by more efficiently
prescreening young bulls and streamlining the process of identifying
elite cows. Producers base these and other decisions on each animal's
genetic merit, as estimated from their SNP profiles.

6. Annual Budget Authority (Fiscal Year (FY) 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget $120,452 $166,045 $164,02 $179,55 $181,17 $190,22 $190,88 $201,50 $262,48 $264,47
Authority 7 2 0 9 3 4 2 0
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays $9,511 $76,124 $143,464 $198,017 $223,339
----------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost $7,609 $7,635 $8,060 $10,499 $10,579
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
AFRI makes awards under two legislative authorities with different
eligibilities. Depending on Program Area Priorities and the requested
activities, the authority used, and hence eligibility, may differ
within a particular Program Area.
Eligibility is also linked to the project type requested in Program
Area Descriptions.
Eligible applicants for Research Projects include:

State Agricultural Experiment Stations;

Colleges and universities (including junior colleges
offering associate degrees orhigher);

University research foundations;

Other research institutions and organizations;

Federal agencies;

National laboratories;

Private organizations or corporations;

Individuals who are U.S. citizens, nationals, or permanent
residents; and

any group consisting of two or more entities identified in
(1) through (8).

Eligible institutions do not include foreign and international
organizations.
Eligible applicants for Integrated Projects include: (1) colleges
and universities; (2) 1994 Land-Grant Institutions; and (3) Hispanic-
serving agricultural colleges and universities.
Eligible applicants for the Research, Education, or Extension
Projects include: (1) State Agricultural Experiment Stations; (2)
colleges and universities (including junior colleges offering associate
degrees or higher); (3) university research foundations; (4) other
research institutions and organizations; (5) Federal agencies, (6)
national laboratories; (7) private organizations or corporations; (8)
individuals who are U.S. citizens, nationals, or permanent residents;
and (9) any group consisting of two or more entities identified in (1)
through (8).
Eligible institutions do not include foreign and international
organizations.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None 2,417 1,569
Received
Applications Funded None 151 350
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
REE is committed to maximizing Federal dollars by ensuring
systematic monitoring and evaluation. While the scientific method
requires the flexibility to replicate results, NIFA's leadership,
program managers, and researchers rigorously track scientific projects
through its Current Research Information System (CRIS) to avoid
duplication. Program leadership also holds joint stakeholder meetings
and/or coordinates with other science agencies (ARS, ERS, others) to
ensure that programs are complementary, and do not duplicate other
science programs in USDA and other Federal agencies. The creation and
staffing of the USDA Office of the Chief Scientist has bolstered this
coordination.
A peer review panel verifies that the project described in the
application is original compared to the published literature; however,
a search of the CRIS database is also conducted to ensure that the
program is not unwarrantedly repeating work that is not yet published
in scientific journals or other outlets. The CRIS search would include
any work under the name of the Project Director (PD) and a separate
search for key words associated with the specific investigation
described in the project application. Search results must be checked
for the possibility of supporting duplicative work by two different
investigators or the overlapping support of one investigator from two
sources for essentially the same work. Should the NIFA National Program
Leader (NPL) suspect duplication of effort the NPL must contact the PD
to discuss any potential or suspected overlaps or duplication. The AFRI
will not fund any project for overlapping objectives receiving funds
from another USDA program or that is unnecessarily duplicative. The
search is documented on the Competitive Proposal Recommendation Form
(Form 3) with the following statement: ``A CRIS search performed on
(Date) for the PD and using the following key words deemed appropriate
for this application: (key words). Results confirm that this is
original work and is not inappropriately duplicative of, or overlapping
with, other work supported by USDA.''
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Beginning Farmer and Rancher Development Program (BFRDP).
2. Subprograms/Department Initiatives
None.
3. Brief History
Section 7405(c) of the Farm Security and Rural Investment Act of
2002 (2002 Farm Bill) (Pub. L. 107-171) (7 U.S.C. 3319f(c)), as amended
by section 7410 of the 2008 Farm Bill, established a competitive grants
program for the purpose of providing education, outreach, training and
technical assistance to benefit beginning farmers and ranchers in the
United States.
Section 7405(d) of the 2002 Farm Bill established beginning farmer
and rancher education teams to develop curricula and conduct
educational programs and workshops for beginning farmers orranchers in
diverse geographical areas of the United States.
4. Purpose/Goals
The primary goal of BFRDP is to enhance food security by providing
beginning farmer and rancher producers and their families in the U.S.
and its territories, with the knowledge, skills and tools needed to
make informed decisions for their operations, and enhance their
sustainability.
5. Success in Meeting Programmatic Purpose/Goals
Training activities are the cornerstone of almost all the BFRDP
grantee programs. Types of training included webinars, seminars,
internships, mentorships, on-farm field days, etc. Face-to-face
training events, such as regular non-credit courses or workshop
sessions at farming conferences, were the most frequent types of
events. More than 5,000 new and potential farmers were counted as
participants in BFRDP project training events. Most attended face-to-
face workshops or courses, but many also participated in other types of
training, including roundtable discussions, hands-on field days, farm
internships, and working with mentor farmers. This outcome indicates
that the BFRDP goal to train more than 6,000 beginning farmers and
ranchers will most likely be met, if not greatly exceeded. Data from
BFRDP training program participants who responded to surveys shows that
approximately 17 percent of the 5,339 farmers trained had very little
or no experience in farming. About 12-16 percent are farm workers,
females, limited resource, and socially disadvantaged.
Examples of success include:
The Northeast Beginning Farmer Coalition is a learning network for
beginning farmer training programs. Three major strategies to foster
the network include the delivering of mentoring, training, and program
development resources; developing evaluation resources and outreach
strategies to understand and enhance the impacts of training efforts;
and engaging K-12 teachers and young farmer activists to shift youth
cultural norms about farming career options. During the coalition's
first year, it conducted needs assessments of new farm start-ups
focused on gaps in service. A course to train new instructors reached
20 farmers, nonprofit, and extension educator participants. Attendees
developed five new online courses for beginning farmers. The coalition
also developed and reviewed materials and resources and created
resources to support teachers at eight schools in New York with
agriculture education programs.
The Western Navajo Nation Beginning Farmers and Ranchers Project
engages, prepares, and supports socially disadvantaged, underserved,
and limited resource beginning Navajo farmers and ranchers in eight
communities covering 8,000 square miles of the Navajo Nation. The
overall goal of the project is to provide Navajo community members who
wish to begin farming and ranching with the skills to effectively
launch sustainable agricultural operations using traditional and
contemporary agricultural techniques in conjunction with effective
business practices. Utilizing multiple learning methods, the project
features Navajo language-based instruction, intensive experiential
education with successful Navajo farmer and rancher mentors, regional
peer roundtables with expert facilitators, and production experts. The
project is teaching ancestral traditional ways to introduce
participants to farming or ranching.
In the first year, the project worked with 13 chapter members
through direct agricultural training and networking activities that
included two roundtables, two conferences, and weekly classes in
technology, business, or introductory farming and ranching to 1,000+
participants. Fifty percent of participants are women. Seventy percent
are farming or ranching less than 1 year, or do not farm/ranch
currently. The project staff is comprised of four traditional Navajo
locals of varying ages and educational backgrounds. All are bilingual,
fluent in Navajo, and culturally sensitive to the target group's
history and challenges
The Florida A&M University New and Beginning Farmer Training
Program encourages farm entry by removing the barriers in four major
areas that face the next generation farmers: (1) access to training,
education, and technical assistance; (2) access to land; (3) access to
capital and credit, and; (4) access to markets. This project uses non-
traditional approaches in its extension training and assistance
activities to reach the target African-American audience. These
opportunities include the Young Farmer Entrepreneur Incubator; a
business incubator model for agricultural production and marketing
demonstrations that targets new and beginning farmers under the age of
25; and a beginning farmer demonstration/training website with various
alternative enterprises, production management practices, and market
development models. The demonstration site uses hands-on training
activities in collard and green bean production and marketing to show
the viability of alternative market opportunities, including
institutions, retail, and direct-to-consumer outlets.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
----------------------------------------------------------------------------------------------------------------
(1) (1) $18,000 $19,000 $19,000
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity Credit Corporation (CCC).

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
----------------------------------------------------------------------------------------------------------------
(1) (1) $1,800 $10,000 $18,550
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity Credit Corporation (CCC).

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
----------------------------------------------------------------------------------------------------------------
(1) (1) $720 $760 $760
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity Credit Corporation (CCC).

9. Eligibility Criteria
BFRDP program recipients must be a collaborative state, tribal,
local, or regionally-based network or partnership of public or private
entities, which may include: a state cooperative extension service; a
Federal, state or tribal agency; a community-based and nongovernmental
organization; college or university (including an institution awarding
an associate's degree) or foundation maintained by a college or
university; or any other appropriate partner, as determined by the
Secretary. In accordance with the authorizing legislation, Priority
will be given to partnerships and collaborations led by or including
nongovernmental and community-based organizations with expertise in new
agricultural producer training and outreach.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None 196 122
Received
Applications Funded None 29 40
------------------------------------------------------------------------

1. Program Name
Community Food Projects Competitive Grants Program (CFPCGP).
2. Subprograms/Department Initiatives
None.
3. Brief History
CFPCGP was authorized by Section 25 of the Food Stamp Act of 1977
(7 U.S.C. 2034), as amended by the Food and Nutrition Act of 2008 and
reauthorized by Section 4402 of the 2008 Farm Bill.
Since 1996, CFPCGP has promoted self-sufficiency and food security
in low-income communities through community food projects (CFP) and
Training and Technical Assistance (T&TA) projects. CFPs unite the
entire food system, assessing strengths, establishing linkages, and
creating systems that improve self-reliance over food needs.
4. Purpose/Goals
CFPCGP was established to meet the needs of low-income people by
increasing access to fresher, more nutritious food supplies; increase
the self-reliance of communities in providing for their own food needs;
promote comprehensive responses to local food, farm, and nutrition
issues; meets specific state, local, or neighborhood food and
agricultural needs for infrastructure improvement and development;
plans for long-term solutions; and create innovative marketing
activities that benefit both agricultural producers and low-income
consumers. Grants are intended to help eligible private nonprofit
entities in need of a one-time infusion of Federal assistance to
establish and carryout multipurpose community food projects.
5. Success in Meeting Programmatic Purpose/Goals
Examples of success include:
The Philadelphia Horticultural Society (PHS) is establishing and
developing a network of urban entrepreneurial growers in Philadelphia
that will significantly increase the supply of locally grown fruits and
vegetables to Philadelphia communities. Over the course of 3 years,
approximately 66 entrepreneurial growers are being supplied with
locally grown seedlings as well as soil, tools and all necessary
materials for sustainable urban food gardening for market. These
growers are developing skills and experience in areas such as organic
pest management, season extension, growing for market, crop planning,
marketing, and networking through five mandatory workshops and on-going
technical assistance delivered by PHS staff. Marketing and distribution
opportunities for the growers are being developed by PHS staff (with
grower input) and includes community farmers markets, mobile purchase
by a local co-op market, purchase by a local food assistance provider,
and relationships with 20 wholesale outlets. They are also establishing
and operating three Neighborhood Green Centers to serve the network of
growers as well as the surrounding community; and improving food
security and access to affordable, locally grown produce in targeted
neighborhoods by establishing three community farmers markets with
partner organizations to provide 50 market days over the course of 3
years in targeted areas in which CGA produce can be sold at affordable
prices. Over 4300 pounds of naturally grown produce was made available
to local residents during this first year of the project. As additional
growers are added in years 2 and 3, this annual output will increase.
The American Friends Service Committee in New Mexico (AFSC) is to
increasing economic development and food security for low-income
communities in the South Valley and surrounding areas. They are
providing direct technical assistance to farmers to develop farm
infrastructure, increase technical farming skills and entrepreneurial
capacity; facilitating the development of a network of community-based
farms with a joint business plan and set up procurement by
institutional buyers, retail outlets, and wholesale distributors and
families; (3) documenting training curricula, best practices and
lessons learned for farmer-to-farmer information sharing and outreach;
and increasing local food sales and nutritional education in
Albuquerque Public Schools and among low-income communities in the
South Valley. The project has met and exceeded expectations in its
first year, especially in terms of training outcomes (meeting trainee
learning objectives) and enterprise capacity. Project participants
experienced market growth, production growth, and increased income,
notable given the farmers limited to no farming experience or training
at the beginning of the project. The year one trainees/farmers all have
ongoing farm enterprises and expect to continue to earn substantial
parts of their household income from farming into the near future. In
addition to its market successes, the establishment of ACN promises to
represent an important advancement in institutionalized organizational
collaboration in the South Valley.
World Hunger Year, Inc. (WHY) is working in conjunction with the
Community Food Security Coalition (CFSC) on ongoing evaluation of the
Food Security Learning Center (FSLC). These evaluation measures will
help gain a better understanding of the FSLC audience, what tools and
resources they need to conduct their work or research and how to take
action and combat challenges facing our food system. WHY staff is
currently evaluating the effectiveness of the FSLC. This includes
determining how the outcomes and outputs of the FSLC can be best
measured. Finally, WHY will document major initiatives that take place
as a result of this project through event surveys, meeting minutes,
photographs and video, etc. These will be used to inform future
decisions, delegate responsibilities and write final reports.

6. Annual Budget Authority (Fiscal Year (FY) 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 * $0 $10,000 $5,000 $5,000
Authority
----------------------------------------------------------------------------------------------------------------
* FY 2008 funds were made available to NIFA in FY 2009.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
----------------------------------------------------------------------------------------------------------------
Annual Outlays (*) (*) (*) (*) (*)
----------------------------------------------------------------------------------------------------------------
* Mandatory funding was provided by transfer from the Food and Nutrition Service. Therefore, NIFA does not
report outlays for the program.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost $200 $0 $400 $200 $200
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
A. Community Food Projects (CFP) and Planning Projects (PP)
Eligibility

Only private, nonprofit entities, meeting the following three (3)
requirements are eligible to receive a CFP or PP grant:

(a) have experience in the area of:

(i) community food work, particularly concerning
small and medium-size farms, including the provision of
sustainably produced food to people in low-income
communities and the development of new markets in low-
income communities for agricultural producers; or
(ii) job training and business development activities
for food-related activities in low-income communities;

(b) demonstrate competency to implement a project, provide
fiscal accountability, collect data, and prepare reports and
other necessary documentation; and
(c) demonstrate a willingness to share information with
researchers, evaluators, practitioners, and other interested
parties, including a plan for dissemination of results.

B. Partners and Collaborators

Applicants with CFP and PP proposals are encouraged to seek and
create partnerships with public or private, nonprofit or for-profit
entities, including links with academic institutions (including
minority-serving colleges and universities), and/or other appropriate
professionals, community-based organizations, and local government
entities. Only the applicant must meet the eligibility requirements.
Project partners and collaborators need not meet the eligibility
requirements.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 113 159 171
Received
Applications Funded None 50 27
------------------------------------------------------------------------

1. Program Name
Distance Education Grants for Insular Areas.
2. Subprograms/Department Initiatives
None.
3. Brief History
The Distance Education Grants for Insular Areas (DEG) program is
administered under the Provisions of 7 U.S.C. 3362, to strengthen the
capacity of Insular Area institutions to carry out distance education
programs in the food and agricultural sciences. This program was first
funded in FY 2010.
4. Purpose/Goals
The purpose of this program is to strengthen the capacity of
institutions of higher education in Insular Areas to carry out resident
instruction, curriculum, and teaching programs in the food and
agricultural sciences through distance education technology. The
Distance Education Grants Program for Institutions of Higher Education
in Insular Areas (DEG) is a NIFA-administered competitive grants
program focused on improving formal, post-secondary agricultural
sciences education.
5. Success in Meeting Programmatic Purpose/Goals
Although this grant program is too new to have any discernable
success to date examples of expected success include:
These new funds will strengthen the University of Guam's Distance
Education for the Consortium of Caribbean and Pacific Island
institutions (CariPac) and are a key strategy for fulfilling the
mission. The Caribbean and Pacific Island students contribute to
sustaining a balanced and healthy society, and provide excellent higher
education in Agriculture and Food Science, within the Insular Areas, to
meet the evolving needs of a global society supports the Distance
Education program goals: (1) to increase the number of graduates with a
degree in the food and agricultural sciences and (2) helps students
achieve their career goals and help meet workplace needs by increasing
the quality of undergraduate instruction. The goals of CariPac are to
harness research and education to help address local food,
agricultural, and environmental needs; support local economic growth;
and to prepare students to achieve their own personal career goals.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays (1) (1) (1) $38 $112
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost (1) (1) (1) $30 $30
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.

9. Eligibility Criteria
Applications may only be submitted by an institution of higher
education, as defined in section 101(a) of the Higher Education Act of
1995 (20 U.S.C. 1001(a)), that is located in an Insular Area and that
has a demonstrable capacity to carry out teaching and extension
programs in the food and agricultural sciences. Individual land-grant
colleges and universities, and other institutions that have secured
land-grant status through Federal legislation, and which are located in
Insular Areas are automatically eligible for awards under the DEG
grants program, either as direct applicants or as parties to a
consortium agreement. The eight insular areas are the Commonwealth of
Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern
Mariana Islands, the Federated States of Micronesia, the Republic of
the Marshall Islands, the Republic of Palau, and the Virgin Islands of
the United States.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None None 1
Received
Applications Funded None None 1
------------------------------------------------------------------------

1. Program Name
Farm Business Management and Benchmarking Program (FBMB).
2. Subprograms/Department Initiatives
None.
3. Brief History
The authority for this program is under Section 7208 of the 2008
Farm Bill which amended the Food, Agriculture, Conservation and Trade
Act of 1990 by adding section 1672D (7 U.S.C. 5925f) which established
a competitive research and extension grants program to support improved
farm management. The FBMB program was newly authorized by the FCEA and
initially funded in FY 2010.
4. Purpose/Goals
The Farm Business Management and Benchmarking (FBMB) Competitive
Grants Program provides funds to (1) improve the farm management
knowledge and skills of agricultural producers; and (2) establish and
maintain a national, publicly available farm financial management
database to support improved farm management.
5. Success in Meeting Programmatic Purpose/Goals
Although this grant program is too new to have any discernable
success to date examples of expected success include:
This competitive grants program provides funds to improve the farm
management knowledge and skills of agricultural producers; and
establish and maintain a national, publicly available farm financial
management database to support improved farm management.
The University of Minnesota is leading the effort by developing and
maintaining a national, publicly available online farm financial
database that any U.S. producer can use for benchmarking and improving
their farm management. The project will improve the profitability and
competitiveness of small and mid-sized U.S. farms and ranches by
providing benchmarking resources using high-quality farm financial
management data. Benchmarking allows producers to compare their
performance to farms and ranches of similar size that produce the same
products. The benchmarking database will let producers identify their
businesses strengths and weaknesses. To develop and expand a national
benchmarking database of actual farm data, the data will be collected
by farm business management education programs and associations that
deliver financial analyses to producers. Data collection and
aggregation into a national database will be accomplished through
increased collaboration between state-level farm management education
programs and associations. A National Farm Management Center is being
established to develop and maintain the benchmarking database and to
facilitate collaboration among the many state level programs that will
partner to implement the database. The national center will coordinate
development of standardized procedures and training for financial
analysis and data collection methodologies to ensure the database
provides uniform benchmarking data. Twelve farm business management
education programs and associations in eleven states will collaborative
to implement this project. Several additional programs will be involved
in a task force to discuss how to expand the database to include more
states. The national database will be publicly available to all U.S.
producers. Use of the database for benchmarking will improve producers'
abilities to successfully manage risk and financial challenges and to
become more globally competitive.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays (1) (1) (1) $150 $825
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost (1) (1) (1) $60 $60
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.

9. Eligibility Criteria
Pursuant to 7 U.S.C. 450i(b)(7), eligible applicants means: (A)
state agricultural experiment stations; (B) colleges and universities;
(C) university research foundations; (D) other research institutions
and organizations; (E) Federal agencies; (F) national laboratories; (G)
private organizations or corporations; (H) individuals; or (I) any
group consisting of two or more of the entities described in
subparagraphs (A) through (H).

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None None 6
Received
Applications Funded None None 1
------------------------------------------------------------------------

1. Program Name
Food and Agriculture Defense Initiative (FADI).
2. Subprograms/Department Initiatives
National Animal Health Laboratory Network (NAHLN)
National Plant Diagnostic Network (NPDN)
Extension Disaster Education Network (EDEN)
3. Brief History
Section 1484 (7 U.S.C. 3351) of the National Agricultural Research,
Extension, and Teaching Policy Act of 1977 (NARETPA), which was amended
by the 2002 Farm Bill, provides amounts for agricultural research,
extension, and education. There are also amounts authorized to be
appropriated for agricultural research, education, and extension
activities for biosecurity planning and response.
According to NARETPA of 1977, using any authority available to the
Secretary, the Secretary shall use funds made available under this
section to carry out agricultural research, education, and extension
activities (including through competitive grants) for the following:

(1) To reduce the vulnerability of the United States food and
agricultural system to chemical or biological attack.

(2) To continue partnerships with institutions of higher education
and other institutions to help form stable, long-term programs
to enhance the biosecurity of the United States, including the
coordination of the development, implementation, and
enhancement of diverse capabilities for addressing threats to
the nation's agricultural economy and food supply with special
emphasis on planning, training, outreach, and research
activities related to vulnerability analyses, incident
response, and detection and prevention technologies.

(3) To make competitive grants to universities and qualified
research institutions for research on counterbioterrorism.

(4) To counter or otherwise respond to chemical or biological
attack.
4. Purpose/Goals
a. The National Animal Health Laboratory Network (NANLN)--The
United States Department of Agriculture established the NAHLN
as part of a national strategy to coordinate and network the
diagnostic testing capacities of the Federal veterinary
diagnostic laboratories with the extensive infrastructure
(facilities, professional expertise, and support) of state and
university veterinary diagnostic laboratories. This network
enhances the nation's early detection of, response to, and
recovery from animal health emergencies, including bioterrorist
events, newly emerging diseases, and foreign animal disease
(FAD) agents that threaten the nation's food supply and public
health. NIFA and the Animal and Plant Health Inspection Service
cooperatively provide leadership for this network.

b. National Plant Diagnostic Network (NPDN)--The NPDN mission is to
quickly detect, diagnose and communicate outbreaks of newly
introduced and emerging high consequence pests in over 1
billion acres of forest, pasture, and crop lands of the United
States of America (please see attached Impact of the NPDN).
Early detection leads to early response and successful
remediation.

c. Extension Disaster Education Network (EDEN)--The Extension
Disaster Education Network (EDEN) mission is to reduce the
impact of disasters through extension education. Seventy
institutions from all 50 states and three U.S. territories
participate in EDEN. This valuable network of multidisciplinary
professionals ensures that the cooperative extension system can
appropriately respond to local, state, regional, and national
education needs during a crisis. This network and its
management fit well into the nation's Homeland Security
framework.
5. Success in Meeting Programmatic Purpose/Goals
The National Animal Health Laboratory Network (NAHLN) is a national
network of non-Federal public animal diagnostic laboratories; under the
leadership of NIFA, Animal and Plant Health Inspection Service (APHIS),
and the American Association of Veterinary Laboratory Diagnosticians.
It has 12 core laboratories who receive NIFA support; which are located
at Cornell University (New York), Louisiana State University,
University of Georgia, Texas A&M, University of Wisconsin, Iowa State
University, Colorado State University, Washington State University,
University of California at Davis, University of Arizona, North
Carolina Department of Agriculture and Consumer Services, and Florida
Department of Agriculture and Consumer Services. In addition to these
core laboratories, NIFA provides a reduced amount of funding for
laboratories in 16 other states: Oregon, Utah, New Mexico, Wyoming,
South Dakota, Nebraska, Kansas, Minnesota, Mississippi, Tennessee,
Indiana, Michigan, Kentucky, Ohio, Pennsylvania, and New Jersey. Animal
disease-detection criteria have been developed for the following ten
high-consequence diseases: Foot-and-Mouth Disease, Exotic Newcastle
Disease, Classical Swine Fever (or hog cholera), High Pathogen Avian
Influenza, Low Pathogen Avian Influenza, Bovine Spongiform
Encephalopathy, Scrapie, Chronic Wasting Disease, Rift Valley Fever and
African Swine Fever. African Swine Fever, added in Fiscal Year 2010,
causes swine to have high fevers, reddening of the skin, hemorrhages in
lymph nodes and internal organs, and occasionally enlargement of the
spleen. NAHLN is part of a national strategy to coordinate the nation's
Federal, state and university laboratory resources.
The National Plant Diagnostic Network (NPDN) is a 50 state network
of land-grant university based plant diagnostic laboratories. The
network is led by diagnostic laboratory centers at Cornell University
(New York), University of Florida, Kansas State University, Michigan
State University, and University of California at Davis. These
institutions receive direct funding from NIFA and provide support to
the other land-grant plant diagnostic laboratories in their region
through subcontracts, training, and leadership. Because of this, plant
laboratories in every state receive Federal funding and other support
from the five NPDN centers. All 50 states and many U.S. territories are
connected to the NPDN through digital distance diagnostics, used
throughout the nation to speed early detection of high consequence
plant pathogens and solve other agricultural problems. This web-based
diagnostics system allows plant diagnosticians in one location to
transmit a digital image across the country to someone with special
expertise. Plant disease (and insect) detection criteria have been
developed for soybean rust, sudden oak death, Ralstonia stem rot, plum
pox virus, pink hibiscus mealybug, potato wart, huanglongbing (citrus
greening), Potato Cyst Nematode, Late Blight and Beet Curly Top. The
laboratory network partnered with other cooperative extension officials
to quickly and efficiently conduct a widespread outreach and detection
campaign on tomato and potato Late Blight, which became a significant
problem in 2009 for the first time since the network was established. A
new diagnostic test was implemented for Beet Curly Top, a disease
spread by insects that affects tomatoes, sugarbeets, table beets,
beans, and cucurbits.
The Extension Disaster Education Network (EDEN) is a collaborative
multi-state effort by extension services across the country to improve
the delivery of services to citizens affected by disasters. NIFA leads
this effort. For example, the University of Arkansas Cooperative
Extension Service assisted communities in the aftermath of severe ice
storms and tornadoes that tore through Arkansas in the winter and
spring. Faculty and staff helped residents and community leaders cope
with disaster, identify and locate sources of assistance, make
emergency plans, find information on emergency sheltering, manage storm
damaged trees and debris, and negotiate FEMA regulations

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
------------------------------------------------------------------------
FY06 FY07 FY08 FY09 FY10 FY11
------------------------------------------------------------------------
Annual Outlays $495 $3,957 $7,397 $9,848 $9,638
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
------------------------------------------------------------------------
FY06 FY07 FY08 FY09 FY10 FY11
------------------------------------------------------------------------
Annual Delivery $396 $393 $393 $393 $240
Cost
------------------------------------------------------------------------

9. Eligibility Criteria
Although applications may be submitted by universities and
qualified research institutions for research on counterbioterrorism,
NIFA makes awards through non-competitive cooperative agreements.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 35 35 36
Received
Applications Funded 35 35 35
------------------------------------------------------------------------

1. Program Name
Food Animal Residue Avoidance Database Program (FARAD).
2. Subprograms/Department Initiatives
There are no subprograms.
3. Brief History
Section 604 of the Agricultural Research, Extension, and Education
Reform Act of 1998 (7 U.S.C. 7642) authorized this program. Section
7312 of the 2008 Farm Bill authorized appropriations and reauthorized
the program through FY 2012.
4. Purpose/Goals
This funding is used to establish and maintain FARAD, a computer-
based decision support system designed to provide livestock producers,
extension specialists, and veterinarians with practical information on
how to avoid drug, pesticide, and environmental contaminant residue
problems.
5. Success in Meeting Programmatic Purpose/Goals
NIFA administers the funding that establishes and maintains the
Food Animal Residue Avoidance Databank (FARAD), a computer-based
decision support system designed to provide livestock producers,
extension specialists, and veterinarians with practical information on
how to avoid drug, pesticide, and environmental contaminant residue
problems. The drugs and pesticides used in modern animal agriculture
improve animal health and thereby promote more efficient and humane
production.
Wherever drugs are used to treat sick animals or prevent disease,
there is a potential that residues may be incurred. The U.S. Food and
Drug Administration (FDA), which must approve all drugs meant to be
marketed for use in animals, establishes tolerances for drug residues
(similar to speed limits) to ensure food safety. The FDA also
establishes ``withdrawal times'' or ``withholding periods,'' which are
times after drug treatment when milk and eggs are not to be used for
food and during which animals are not to be slaughtered. This allows
time for the animals to eliminate the drug residues.
FARAD is a repository of comprehensive residue avoidance
information. FARAD also is sanctioned to provide these estimates to the
U.S. Pharmacopeia-Drug Information (USP-DI) Veterinary Medicine
Advisory Committee. Since 1982, FARAD has been working with producers,
extension specialists and agents, and veterinarians to help avoid and
mitigate residue problems. As a cooperative multi-state program, FARAD
is available nationwide to offer advice about residue avoidance.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays (1) (1) $484 $898 $977
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost (1) (1) $32 $40 $40
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.

9. Eligibility Criteria
The Secretary shall offer to enter into a contract, grant, or
cooperative agreement with one or more appropriate colleges and
universities to operate the FARAD program.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None 5 4
Received
Applications Funded None 5 4
------------------------------------------------------------------------

1. Program Name
Grants for Youth Serving Institutions (Rural Youth Development
Grants Program or RYD).
2. Subprograms/Department Initiatives
None.
3. Brief History
Section 410 of the Agricultural Research, Extension, and Education
Reform Act of 1998 (7 U.S.C. 7630) authorized this program.
Section 7309 of the 2008 Farm Bill reauthorized 7 U.S.C. 7630 and
also amended to provide additional flexibility in content delivery to
each organization receiving funds and to allow recipients to
redistribute all or part of the funds to individual councils or local
chapters without further need of approval from the Secretary.
4. Purpose/Goals
The goals are to support and enhance the goals, objectives, and
priorities of the eligible youth organizations; Support programs which
address issues and needs of rural youth; Involve youth in design and
implementation of their educational activities; Increase knowledge,
skills, attitudes and behaviors necessary for rural youth to live
productive, contributing, and fulfilling lives; and Increase economic
opportunities and sustainability and improve quality of life in rural
communities through enhanced human, social, civic, natural, financial,
cultural, and built capital.
5. Success in Meeting Programmatic Purpose/Goals
NIFA makes grants available to the Girl Scouts of the United States
of America, the Boy Scouts of America, the National 4-H Council, and
the National FFA Organization to establish pilot projects to expand the
programs carried out by the organizations in rural areas and small
towns.
Examples of success:
The Girl Scouts in Rural Communities (GSRC) project utilizes Girl
Scouting to facilitate the training and experiences that will empower
rural girls with the leadership and personal development assets and
skills to improve their lives and their communities. Funds enable the
implementation of the ``Challenge and Change: Challenge Yourself,
Change Your World'', a social entrepreneurship curriculum-based project
for rural teen girls (ages 14-17) that was launched in FY 2005. Through
this program the Girls Scouts recruit and train rural girls in social
entrepreneurship (Challenge and Change Curriculum); provide
opportunities for rural girls to assess the needs of their rural
communities; provide opportunities for rural girls to identify, plan
and lead projects aimed at solving identified needs in their
communities; recruit and train adults to facilitate girl participation
and serve as caring adults; and develop partnerships with other
organizations in their communities to facilitate social
entrepreneurship projects and the development of rural girls.
National FFA Organization is providing outreach and dissemination
of their ``Living to Serve'' materials to over 7,000 chapters serving a
membership base of approximately 500,000. They deliver tools that
motivate and mobilize rural youth to partner with adults in joint
ventures to create change in their communities that address identified
needs and build capital. This program was the catalyst to move FFA from
a model of ``community service'' to a much more rich and meaningful
model of ``service-learning''. The ``Living to Serve'' instructional
materials provide education on the principles of service-learning.
These projects have dealt with specific community needs identified by
the FFA members, plus the overarching goal of civic engagement and
youth leadership.
The National 4-H Council implemented the ``Engaging Youth, Serving
Community'' (EYSC) program that supports land-grant university efforts
to develop, implement, and evaluate community based issues forums and
action plans in rural communities. Projects provide youth with adult
partners and constructive peer interaction through youth-adult
partnerships and empower youth through meaningful leadership roles and
life skills development. Youth and adults gain the life skills and
experience needed to emerge as effective leaders and contributing
members of society; develop positive attitudes towards the roles of
youth in communities; improve their abilities to work with diverse
community members to identify local issues and develop strategies for
addressing these issues; and provide more opportunities for youth and
families in rural communities for positive youth development
experiences during out-of-school time.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget $8,000 $2,981 $2,667 $2,646 $1,980 $1,980 $1,737 $1,767 $1,784 $1,780
Authority
----------------------------------------------------------------------------------------------------------------
Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency from Commodity
Credit Corporation funds.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays $1,188 $1,775 $1,723 $1,761 $1,783
----------------------------------------------------------------------------------------------------------------
Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency from Commodity
Credit Corporation funds.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost $79 $70 $71 $71 $71
----------------------------------------------------------------------------------------------------------------
Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency from Commodity
Credit Corporation funds.

9. Eligibility Criteria
Pursuant to 7 U.S.C. 7630(a), only the Girl Scouts of the United
States of America (GSUSA), the National 4-H Council (4-H), the Boy
Scouts of America (BSA), and the National FFA Organization (FFA) are
eligible.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 3 3 4
Received
Applications Funded 3 3 3
------------------------------------------------------------------------

1. Program Name
Healthy Urban Food Enterprise Development Center (HUFED).
2. Subprograms/Department Initiatives
There are no subprograms.
3. Brief History
The Healthy Urban Food Enterprise Development Center (HUFED)
legislative authority is located in Section 25(h) (7 U.S.C. 2034(h)) of
the Food and Nutrition Act of 2008. The HUFED Center program was
created to respond to the need to redevelop a food enterprise structure
in the United States in order to make more healthy, affordable food
available in low-income areas, to improve access for small and mid-
sized agricultural producers, and to promote positive economic
activities generated from attracting healthy food enterprises into
underserved communities.
Section 4402 of the 2008 Farm Bill provided mandatory funding for
the HUFED Center and program-specific requirements.
4. Purpose/Goals
The purpose of the HUFED Center grant program is to establish and
support a Healthy Urban Food Enterprise Development Center to increase
access to healthy affordable foods, including locally produced
agricultural products, to underserved communities. The HUFED Center
will provide training and technical assistance for food enterprises and
award sub-grants to eligible entities for healthy food enterprise
development.
5. Success in Meeting Programmatic Purpose/Goals
The purpose of the this program is to establish and support a
Healthy Urban Food Enterprise Development Center (HUFED) to increase
access to healthy affordable foods, including locally produced
agricultural products, to underserved communities.
Since the Center started, several high profile Federal initiatives
interested in food access have emerged: Let's Move; Know Your Farmer,
Know Your Food; and Healthy Food Financing Initiative. They have been
actively pursuing news, information, and research to better position
the Center to take advantage of the direction and interest in food
access and regional food systems. The Center's understanding of the
need for funding for healthy food enterprises was significantly
deepened. They received 538 Letters of Interest (LOIs) within a 4 week
outreach period. The LOIs spanned across the country, and included 47
states, as well as the District of Columbia and the U.S. Virgin
Islands. A preliminary analysis of the applicant database has provided
further insight on the landscape of food access work, which will inform
future strategies not only for HUFED, but also for USDA. The
enterprises for Year 1 grantees are underway and outcomes and impacts
from their enterprises will be reported in Year 2's Accomplishments
Report. Due to the new high profiled initiatives, the Center has taken
a stronger effort in meeting and sharing information with USDA Deputy
Undersecretaries and Senior Advisors to further link the Center's
resources and knowledge. After designing and managing the proposal
process for Year 1, an evaluation was conducted to identify
efficiencies and areas of improvement for future RFAs. The grant making
process will be streamlined towards the needs of the applicants, as
well as the review panel. As the grantees begin the enterprises, HUFED
is working with the internal evaluator, Kingslow Associates LLC, to
ensure that metrics and indicators are in place so that the Center as
well as the individual enterprises, can effectively measure their
successes and challenges, with the long term goal of documenting best
practices and lessons learned. The Center is also providing grantees
guidance, and coaching around evaluation, and assisting with reporting
and working with government grants, as needed.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget Authority (1) (1) $1,000 $1,000 $1,000
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided through direct appropriation from the farm bill.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays (1) (1) $100 $550 $1,000
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided through direct appropriation from the farm bill.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost (1) (1) $100 $100 $100
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided through direct appropriation from the farm bill.

9. Eligibility Criteria
Eligible Applicants are nonprofit organizations are eligible to
apply for and receive awards under the HUFED Center authority (7 U.S.C.
2034(h)(2)).
Regarding Eligible Applicants for Subgrants, the term ``eligible
entity'' for the purpose of subgrants means (A) a nonprofit
organization; (B) a cooperative; (C) a commercial entity; (D) an
agricultural producers; (E) an academic institution; (F) an individual;
and (G) such other entities as the Secretary may designate. Award
recipients may subcontract to organizations not eligible to apply
provided such organizations are necessary for the conduct of the
project.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None 13 1
Received
Applications Funded None 1 1
------------------------------------------------------------------------

1. Program Name
Hispanic-Serving Agricultural Colleges and Universities (HSACU).
2. Subprograms/Department Initiatives
None.
3. Brief History
The authority for this program is under Section 7101 of the 2008
Farm Bill which amended section 1404 of the National Agricultural
Research, Extension, and Teaching Policy Act of 1977 to add a
definition for a new group of cooperating educational institutions
known as Hispanic-Serving Agricultural Colleges and Universities.
Additionally, Section 7129 of the 2008 Farm Bill authorizes the
following five new programs for HSACUs: (1) HSACU Endowment Fund
(formula-based); (2) HSACU Equity Grants Program (formula-based); (3)
HSACU Institutional Capacity-Building Grants Program (competitive); (4)
HSACU Extension Grants Program (competitive); and (5) HSACU Fundamental
and Applied Research Grants Program (competitive).
As of FY 2011, none of the five new programs have received an
appropriation.
4. Purpose/Goals
Establishing a process to identify and certify HSACUs supports the
Federal Government-wide initiative to streamline and standardize all
Federal assistance processes across the Federal Government. NIFA will
be able to apply consistent rules used to determine HSACU eligibility
for Federal assistance programs, including programs created or amended
by the passage of the FCEA.
Use of funds from the HSACU Endowment Fund and the resulting
interest distribution are authorized under the Act of August 30, 1980,
(commonly known as the `Second Morrill Act') (7 U.S.C. 321 et seq.).
These funds benefit the HSACUs by supporting teaching programs in the
food and agricultural sciences in the targeted areas of (1) curricula
design and instructional materials development, (2) faculty development
and preparation for teaching, (3) instruction delivery systems, (4)
student experiential learning, (5) equipment and instrumentation for
teaching, and (6) student recruitment and retention.
5. Success in Meeting Programmatic Purpose/Goals
This program was not funded by appropriation and, therefore, has no
examples of success in meeting programmatic goals. However, another
funded program within NIFA, Higher Education--Hispanic Serving
Institutions has examples of success which include:
The education program at California State University in Fresno has
improved and enhanced the capacity of food and agricultural science
education on organic agriculture for plant science, food science,
dietetic, and culinology. The grant helped create and facilitate an
expansion of organic farming for teaching, research, and outreach
programs. This project has attracted a number of under-represented
student groups who are interested in learning and working with various
aspects of healthy farming. CSU-Fresno has been able to establish year-
round organic vegetable operation, organic greenhouse, organic herb
garden, compost and vermicompost on campus farm operations for the
first time which became an outdoor classroom demonstration to various
classes and interested individuals, community, and local organizations
such as Fresno City College, 4-H programs, and K-12 schools.
The function of the TREE (Teaching and Research in Environmental
Ecology) Program at the University of Texas at San Antonio is to
recruit, retain and financially support underrepresented undergraduates
and graduate students. Workshops, training programs and mentorship from
local community entities have been used to foster and develop the
student's interest in careers in conservation and natural resources.
While only three role-model seminars were planned, twenty-eight (28)
role-model seminars were presented by a USDA research scientist, the
Endangered Species Grants Coordinator from Texas Parks and Wildlife,
faculty from the University of Texas at San Antonio, and faculty from
other universities in the United States. The program has increased the
number of minority and disadvantaged students participating in
conservation and natural resource research from one to twelve.
Through partnerships with USDA Forest Service, University of
California Riverside and University of California Santa Barbara, Mt.
San Jacinto College in San Jacinto, California has implemented a
strategic student recruitment and retention plan to increase diversity
in the Environmental Studies degree program and facilitate seamless
transfer to 4 year universities. As a result there have been
significant increases in enrollment and retention of underrepresented
groups. There has been a 148% growth in students enrolling and majoring
in environmental studies during the first year of the project, and a
205% growth moving into the second year. The Summer Field Institute
showed a 400% increase in the enrollment of Hispanic and other under-
represented students, outpacing the 375% growth in overall enrollment
over the last year. Students mentored under this program have become
increasingly active on campus and in the local communities, which will
likely generate future growth as well.
6. Annual Budget Authority (FY 2002-FY 2011)
This program has not been funded.
7. Annual Outlays (FY 2002-FY 2011)
This program has not been funded.
8. Annual Delivery Cost (FY 2002-FY 2011)
This program has not been funded.
9. Eligibility Criteria
HSACUs are defined as colleges and universities that qualify as
Hispanic-serving Institutions (HSIs) and offer associate, bachelors, or
other accredited degree programs in agriculture-related fields.
HSACUs do not include 1862 land-grant institutions, as defined in
section 2 of the Agricultural Research, Extension, and Education Reform
Act of 1998 (7 U.S.C. 7601).

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None None None
Received
Applications Funded None None None
------------------------------------------------------------------------

1. Program Name
Integrated Research, Education, and Extension Competitive Grants
Program (Section 406).
2. Subprograms/Department Initiatives
A. Water Quality

B. Food Safety

C. Regional Pest Management Centers

D. Crops at Risk *
---------------------------------------------------------------------------
* No funds were provided for this program in FY 2011 or FY 2012
Budgets

---------------------------------------------------------------------------
E. Risk Avoidance and Mitigation *

F. Methyl Bromide Transition

G. Organic Transitions
3. Brief History
Section 406 of the Agricultural Research, Extension, and Education
Reform Act of 1998 (AREERA) (7 U.S.C. 7626), as reauthorized by Section
7306 of the 2008 Farm Bill and authorized a competitive grants program
that provides funding for integrated, multifunctional agricultural
research, extension, and education activities.
Section 7206 of the 2002 Farm Bill amended section 406(b) of AREERA
to add the 1994 Land-Grant Institutions as eligible to apply for grants
under this authority.
Section 7129 of the FCEA amended section 406(b) of AREERA (7 U.S.C.
7626(b)), adding Hispanic-serving agricultural colleges and
universities (HSACUs) as eligible entities for competitive funds
awarded under this authority.
4. Purpose/Goals
The purpose of the Integrated Research, Education, and Extension
Competitive Grants Program (Section 406) is to provide funding for
integrated, multifunctional agricultural research, extension, and
education activities through a research, education, and extension
competitive grants program. Grants are to be awarded to address
priorities in United States agriculture that involve integrated
research, education, and extension activities as determined by the
Secretary in consultation with the National Agricultural Research,
Extension, Education, and Economics Advisory Board (NAREEEAB).
5. Success in Meeting Programmatic Purpose/Goals
Examples of success include:

Water Quality Program

Faculty at the University of Rhode Island are heading up the
Northeast States and Caribbean Islands (NESCI) Regional Water Program
which is promoting collaboration, enhancing delivery of successful
programs, and encouraging multi-state efforts to protect and restore
water resources. The regional Sustainable Landscaping focus area has
developed lawn care recommendations specific for northern and southern
New England and is using these recommendations with residents to
promote water quality protection. Post-evaluations of private well
water workshops indicate that workshop participants are adopting
practices to protect their private well, including: 52% had their well
water tested; 67% inspected their wellhead; 18% maintained their water
treatment system; 13% had a water treatment system installed. Moreover,
Private Wells Nonpoint Education for Municipal Officials (NEMO)
programs work with communities are resulting in changes to community
plans, land use regulations, development practices, and the local
decision making process that include strategies to protect water
quality.
The University of Maine has worked with four communities which have
learned more about groundwater resources, private well water, and water
quality testing. Training participants expressed increased awareness
and interest in local groundwater issues and solutions to address
quality and quantity concerns. To date, the trainings enabled 90
students and parents to participate in ``GET WET!'' (a K-12
environmental education program) and private well water screening for
contaminants. At three different academic conferences, they shared
preliminary findings regarding (a) social capital production through
community-based research about groundwater and private wells, and (b)
the factors that influence private well water testing as a result of
extension activities, and intergenerational learning between students
and parents of environmental education content.

Food Safety Program

Scientists at the University of Wisconsin are assisting small and
very small plants in HACCP validation through: (1) development of
methods for in-plant validation of heating/drying regimes used in
making ground and formed beef jerky and for in-plant validation of beef
carcass interventions, using lactic acid bacteria as pathogen
surrogates; and (2) development of a multi-media outreach program to
disseminate project results and assist processors and regulators in
validating Critical Limits. This research showed that methods commonly
recommended to consumers for drying beef jerky in home-style products
do not produce a safe product. Recommendations are being prepared to
share with consumers wishing to make ground-and-formed beef jerky
safely at home.
According to the Centers for Disease Control & Prevention, human
enteric viruses are estimated to cause \2/3\ of the foodborne illness
in the U.S. each year, with the great majority of those attributed to
norovirus (NoV). Fruits and vegetables have increasingly been
implicated as vehicles for NoV gastroenteritis. Researchers in Illinois
are developing a method which will serve as a foundation for upcoming
cross contamination studies which will in turn lead to the development
of a risk assessment model for NoV transfer within the food service
setting. The methods developed from this project thus far, allowed for
an assessment of recover methods for viruses. Recovery rates varied
widely and the project team was able to use the information in method
selection and refinement to ensure consistent recovery of viruses.

Regional Pest Management Centers

The goal of the Regional Integrated Pest Management Centers (IPM
Centers) is to promote the development and implementation of IPM by
facilitating collaboration across states, disciplines, and purposes.
IPM Centers will establish and maintain information networks, build
partnerships to address pest management challenges and opportunities,
evaluate the impact of IPM implementation, communicate positive
outcomes to key stakeholders, and manage funding resources effectively.
The IPM Roadmap addresses pest management needs for production
agriculture, natural resources and recreational environments, and
residential and public areas.
Examples of success include:
The Integrated Pest Management Pest Information Platform for
Extension and Education (ipmPIPE) informs growers about seasonal
development and spread of Asian soybean rust, a devastating disease of
legumes. The Regional IPM Centers manage this program that has allowed
soybean growers to save a conservative estimate of $1 billion or more
since 2005. Most of the savings derive from the ability by growers of
98% of the crop to avoid unnecessary fungicide applications. USDA's
Economic Research Service estimated farmers avoided as much as 0.2lb of
fungicide per acre per season, which works out to about 74 million
pounds of fungicide avoided since 2005. Soybean growers in Gulf Coast
states, where the disease is more prevalent, use the program to
properly choose fungicides and time applications to protect their crop.
In a similar program, pecan growers estimated gains of $268/acre from
the ipmPIPE Pecan system representing a potential benefit of $77
million for the 288,000 acres in participating states. Another ipmPIPE
component for vine crops (cucumber, pumpkin, melons, etc.) saved many
participants 2-3 fungicide sprays in 2009.
The Regional IPM Centers are collaborating with the EPA Tribal
Pesticide Program Council (TPPC), USDA Tribal Education Equity and
Extension Programs, 1994 and 1862 Land-Grant institutions, First
American Land-Grant College and Organization Network (FALCON), American
Indian Higher Education Consortium and First Nations to increase IPM
practices and reduce pesticide usage and risk on reservations. The
development of culturally sensitive IPM curricula and training modules
allows for greater acceptance and implementation of IPM practices on
the 56 million acres of tribal land. The program focuses on developing
relationships at the state, regional and national levels to share
knowledge of existing practices and foster adoption of these practices
by other First Nations.
The Regional IPM Centers are coordinating ``IPM Training in Public
Housing,'' a national project to reduce pest-related risks that can
trigger asthma. This collaborative effort between the Regional IPM
Centers, U.S. Department of Housing and Urban Development's Healthy
Homes Initiative, the Environmental Protection Agency, Land-Grant
institutions, and public housing personnel and residents is
implementing IPM to reduce human health risks. There are 1.2 million
public housing units in the U.S. This project addresses many urban pest
issues including bed bug infestations that are increasing at an
alarming rate across the U.S. Partnering with the public housing
personnel and residents will allow this sustainable approach to have
long-term impacts in reducing asthma and other human health problems
resulting from pest infestations.

Crops at Risk

In December 2008, the invasion of the Mexican rice borer (MRB) was
discovered in two pheromone traps a few kilometers from the western
Louisiana state line, in accordance with previously modeled forecasts.
Annual yield losses of $220 million (sugarcane) and $45 million (rice)
are forecast when the regions of both industries become fully infested.
Research at Louisiana State University indicates that management
techniques to mitigate the infestation which involve irrigation in
sugarcane can reduce MRB losses up to 29%, use of environmentally
friendly insecticides can reduce losses up to 53%, and resistant
cultivars can reduce losses by 24%. The multi-year quarantine on MRB
movement through the transport of sugarcane into Louisiana is projected
to save between $1.1 and $3.2 billion (depending on management) during
the time for complete invasion of both industries.
The University of California Davis has developed a polymerase chain
reaction (PCR)-based diagnostic assay to differentiate races one and
two of Verticillium dahliae, the pathogen that causes Verticillium wilt
in lettuce. No resistance in lettuce cultivars is currently available
against race two. This assay has allowed the determination of the
current distribution of the two races in coastal California. Based on
these results, the growers have been able to avoid planting lettuce in
fields that contained race two. These results have been disseminated
widely to the California Leafy Greens Board that is attended by
growers, processors, seed company representatives, and everyone
associated with the lettuce supply chain.

Risk Avoidance and Mitigation

Scientists at the University of Georgia developed a method which
documented high level of resistance to Tomato spotted wilt virus (TSWV)
in tomato under field conditions. This single tactic provides an
available, viable means of managing this serious pest problem in
commercial production systems. Growers were able to view the different
resistant cultivars in the field so that they could evaluate the plants
directly. Growers that participated in this project will likely base
planting decisions on these results in subsequent commercial plantings.
As early in the project as 2009, scientists were able to demonstrate an
8-12 fold increase in tomato yield with the resistant lines under heavy
TSWV infection pressure in the field. The implementation of the use of
host plant resistant lines and other tactics presented here could save
growers millions of dollars annually.
Research by scientists in California is developing integrated pest
management strategies to control the potato psyllid, a pathogen which
is causing millions of dollars in damage to crops. As a result of
research there has been a change in the understanding that many
pesticides reduce transmission of the bacterial pathogen by the potato
psyllid through repellency, not simply by killing the psyllid. As the
result of an aggressive effort to disseminate this information, growers
are beginning to change their pesticide use patterns from very
intensive weekly control efforts that relied on large amounts of
chemical pesticides, to a more sustainable approach using greener
chemistries and application technique. This more sustainable approach
also incorporates sampling to eliminate pesticide applications when the
pest is not present, and to manage the potential development of
pesticide resistance. As a result fewer pesticide applications are
made, resulting in reduced costs to the grower and enhanced
profitability, and as importantly, reduced farm worker and consumer
exposure to agricultural chemicals.

Methyl Bromide Transition

The goal of the Methyl Bromide Transitions (MBT) program is to
support the discovery and implementation of practical pest management
alternatives to methyl bromide uses or minimize methyl bromide
emissions for which the United States is requesting critical use
exemptions. The program seeks to ensure that economically viable and
environmentally sound alternatives to methyl bromide are in place and
available as soon as possible. The program is focused on integrated
commercial or field scale research that targets short- to medium-term
solutions and associated extension activity that will foster the
adoption of these solutions.
Kansas State University's objective it to show a reduction in
methyl bromide (MB) usage as a structural treatment in food-processing
facilities by facilitating adoption of MB alternatives strategies such
as sulfuryl fluoride (SF), heat treatment and integrated pest
management (IPM) approaches through pilot and commercial scale
evaluations. Documenting cost-effectiveness of each strategy is central
to adoption of MB strategies. The work also involves quantifying
effects of structure air-tightness and weather conditions on fumigant
emissions from and dispersion around fumigated structures, an aspect
useful in defining buffer zones for MB and SF fumigants. Research
results showed that both methyl bromide and sulfuryl fluoride
equilibrated throughout the five floors of the 340,000 cubic foot mill
within 2 hours. Results are encouraging. When 1,250 pounds of sulfuryl
fluoride was applied in a May application, all life stages of the red
flour beetle were killed when using forced air heat treatment.
Virginia ranks third in the U.S. in fresh-market tomato production,
with the majority of acres grown on plasticulture, utilizing methyl
bromide (MeBr). Bell peppers are grown using similar production
practices. Both of these crops are highly susceptible to soilborne
pests and overgrowth by noxious weeds. The use of MeBr has been the
primary tool to suppress these pest problems, and tomatoes and peppers
are listed as MeBr Critical Use Nominations for 2009. Results of
research at Virginia Tech show that field trials in 2008 and 2009 were
able to identify a bacterial wilt resistant tomato cultivar (BHN669)
that produced commercially acceptable fruit and yield. A small acreage
of BHN669 was commercially produced in 2009 by two tomato producing
companies and was found to be a suitable cultivar in terms of agronomic
qualities and was extremely successful at delivering acceptable yields
with high levels of bacterial wilt resistance. In 2010, full scale
production using BHN669 was implemented by several producers resulting
in successful management of bacterial wilt in historically problematic
fields. Cultivar screens are continuing in small research plots to
determine if any replacements other than BHN669 are suitable for
production on the Eastern Shore of Virginia. In addition to the
favorable results obtained with BHN669, the fumigant dimethyl disulfide
(DMDS) was discovered to effectively suppress levels of bacterial wilt
in small plots.

Organic Transition Program

Georgia scientists examined the feasibility of using protected
cultivation in plastic tunnels as a means of producing high quality,
organic blueberries, blackberries, and raspberries under southeastern
conditions. As a result, high tunnels were found to speed up vegetative
and reproductive development of blueberries. Tunnels were effective at
advancing the spring harvest of highbush blueberries and the summer
harvest of floricane blackberries and raspberries. Tunnels also
extended the season of autumn-producing primocane blackberries and
raspberries. Overall, tunnels advanced spring production and extended
fall production of blackberries and raspberries, increasing total
harvest and berry size. Upon completion of the research, the high
tunnels in Georgia became an integral part of the organic teaching
program, assuring that students get hands-on experience with high
tunnels.
Organic soybean growers have few options for controlling the
soybean aphid, which can severely depress soybean yields. Scientists in
Minnesota found that planting a rye winter cover crop prior to soybeans
can lead to lower densities of soybean aphids and an increase in yield
when soybean aphid pressure is high. This is an important finding for
organic farmers that have no reliable insecticides to use against
soybean aphid.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget $42,853 $43,942 $39,558 $42,714 $42,286 $42,286 $41,990 $41,990 $45,148 $28,942
Authority
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays $2,114 $16,900 $29,451 $40,384 $41,679
----------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost $1,691 $1,680 $1,680 $1,806 $1,158
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Colleges and universities (as defined in section 1404 of NARETPA)
(7 U.S.C. 3103) are eligible to submit applications for the Integrated
Research, Education, and Extension Competitive Grants (Section 406)
Programs.
Section 1404 of NARETPA was amended by section 7101 of the Food,
Conservation, and Energy Act of 2008 (Pub. L. 110-246), to define and
include as eligible, Hispanic-serving Agricultural Colleges and
Universities (HSACUs), and to include research foundations maintained
by eligible colleges or universities.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 289 375 319
Received
Applications Funded 77 95 84
------------------------------------------------------------------------

1. Program Name
McIntire-Stennis Cooperative Forestry Research Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
Pub. L. 87-778 (76 Stat.806, 16 U.S.C. 582a, et seq.) signed into
law on October 10, 1962, is also known as the McIntire-Stennis
Cooperative Forestry Research Act. This law provides the basis for
Federal funding in forestry research and graduate education programs at
state-certified schools of forestry in the United States.
Funding is provided to the states through a formula-based
allocation process which depends on several factors. First, a base
amount (approximately $25,000) is allocated to each state; however,
this base amount is excluded from the formula. The balance of funding
to each state is determined through a ranking process and dependent
upon the following three factors: (1) forty percent of the remaining
balance is allocated based on the area of non-Federal commercial
forestland; (2) forty percent is allocated based upon the volume of
timber cut annually from stock; and (3) twenty percent is allocated
based on the total expenditures for forestry research from non-Federal
sources. Funds are then distributed to the eligible state-certified
Institutions within the state as determined by the Governor's designee.
Section 7412 of the Food, Conservation, and Energy Act of 2008
amended section 2 of the McIntire-Stennis Cooperative Forestry Act (16
U.S.C. 582a-1) to include the 1890 Land-Grant Institutions and made
this change effective October 1, 2008. On an annual basis, USDA
contacts the Governors of each state in which an eligible 1890
institution is located and receives the names of the McIntire-Stennis
certified institutions and the proportionate amount of the state's
McIntire-Stennis funding that is to be allocated to each.
4. Purpose/Goals
The purpose of this program is to increase forestry research in the
production, utilization, and protection of forestland; to train future
forestry scientists; and to involve other disciplines in forestry
research.
5. Success in Meeting Programmatic Purpose/Goals
This program assists all states in carrying out a program of state
forestry research at state forestry schools and colleges and developing
a trained pool of forest scientists capable of conducting needed
forestry research, which should include: (1) ecological restoration;
(2) catastrophe management; (3) valuing and trading ecological
services; (4) energy conservation, biomass energy and bio-based
materials development; (5) forest fragmentation: (6) carbon
sequestration and climate change; and (7) ways of fostering healthy
forests and a globally competitive forest resources sector.
Examples of success include:
Scientists in Kansas have produced applied knowledge on a series of
herbicides to eradicate saltcedar, which is an invasive weed tree found
on the flood plains on the Cimmaron National Grasslands in Kansas. From
this research, techniques have been developed that result in more
effective control with reduced labor and herbicides with a resulting
reduction in costs.
An invasive insect, the woodwasp Sirex noctilio, has recently
become established in North American where it poses a significant
threat to pine forests. The wasp transmits a pathogenic fungus and
helps the fungus establish lethal infections by injecting a phytotoxic
mucus into the trees along with the fungus and its eggs. Basic research
at the University of Georgia is using advanced genomic and proteomic
approaches to identify the bioactive protein and peptide constituents
of the wasp mucus that facilitate fungal colonization of the pine
tissues. Better understanding of the constituents and their mechanisms
of action will enable development to develop genetic approaches and
strategies to improve pine resistance to this pest.
Research at the University of Kentucky on the black bear in both
Florida and Kentucky have provided important demographic, resource and
habitat use, and movement data valuable to wildlife and other natural
resource managers and land stewards. Detailed GPS-based movement data
are providing a foundation for new analytical approaches that is
changing the way black bear and other large mammal telemetry data are
collected and interpreted. These findings continue to inform both
professional and public findings and perceptions of these ecologically
and economically important species. Both the black bear and elk have
the potential to drive a productive recreation-based economy in
economically challenged southeastern Kentucky. A science-based
understanding and appreciation for the black bear and elk will strongly
influence educational efforts and concomitant public perceptions about
the species in ways that reduce human-wildlife conflict and that
promotes species viability.
Research at the University of Illinois developed methods which were
used to map the flooding regimes and internal drainage of soils in
newly-acquired Weaver Park in Urbana, Illinois. This information is
being used to plan the ecological restoration of native forest,
prairie, and wetland plants in the park. A soil moisture regime map
with micro-ecosystem level precision and greater accuracy than county
soil maps was developed and reported in an article in the journal
``Restoration Ecology.'' Soil moisture adaptations of plants to be used
in the ecosystem restoration project are being matched to planting
sites across a precisely mapped gradient of soil moisture from flooded
to moderately well-drained. This is being done through a collaboration
among the University of Illinois Agricultural Experiment Station, the
Illinois State Geological Survey, and the Urbana Park District.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget $21,884 $21,742 $21,755 $22,205 $22,008 $30,008 $24,791 $27,535 $29,000 $32,934
Authority
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays $27,007 $25,313 $27,261 $28,854 $32,541
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Applications may be submitted by state-certified Schools of
Forestry as stipulated in accordance with Section 2 of Pub. L. 87-788,
McIntire-Stennis Act.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 65 65 65
Received
Applications Funded 65 65 65
------------------------------------------------------------------------

1. Program Name
New Era Rural Technology Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
Section 1405 of the National Agricultural Research, Extension, and
Teaching Policy Act (NARETPA) of 1977, as amended (7 U.S.C. 3121),
designates the U.S. Department of Agriculture (USDA) as the lead
Federal agency for agriculture research, extension and teaching in the
food and agricultural sciences.
Section 1473E of NARETPA (7 U.S.C. 3319e), as amended, required the
establishment of a New Era Rural Technology Competitive Grants Program
(RTP), which NIFA administers.
The RTP was authorized by Section 7137 of the 2008 Farm Bill and
first funded in 2009.
4. Purpose/Goals
The New Era Rural Technology Competitive Grants Program will make
grants available for technology development, applied research, and/or
training, with a focus on rural communities, to aid in the development
of a workforce for bioenergy, pulp and paper manufacturing, or
agriculture-based renewable energy.
5. Success in Meeting Programmatic Purpose/Goals
The New Era Rural Technology Competitive Grants Program makes
grants available to community colleges or advanced technological
centers, located in a rural area, for technology development, applied
research, and training necessary to produce graduates capable of
strengthening the nation's technical, scientific and professional
workforce in the fields of bioenergy, pulp and paper manufacturing, and
agriculture-based renewable energy resources.
Examples of success include:
North Dakota State College of Science is addressing the workforce
training needs in emerging technologies through the creation of a
Regional Bio-fuels Advanced Technological Center (RBATC) The RBATC is
addressing the educational and technical training needs in the biofuels
industry in Minnesota, North Dakota and South Dakota by establishing an
education and training center designed to deliver biofuels industry
based, educational programs, hands-on skill development and industry
training. The workforce challenges addressed by the RBATC include: (1)
availability and capacity of education and training; (2) development of
entry-level employee skills; (3) enhancement of incumbent employee
skills; (4) promotion of career awareness and outreach opportunities
for students and the general public.
Treasure Valley Community College in Oregon is conducting regional
agriculture-based renewable energy summit with broad-based
representation from regional businesses, agencies and education for the
purpose of providing information for identifying: current agricultural
renewable energy practices in the rural region, new or expanded
renewable energy practices planned in the next 3-5 years, workforce
skills related to renewable energy needed by agriculture-related
employers where workforce skills are taught in current programs, and
where revisions or new programs are required. They are developing and
disseminating a final strategic workforce plan to guide curricular
improvement, revision and innovation Identify and implement renewable
energy curricular revision options to in agriculture, natural
resources, and basic manufacturing.
An Indian Hills Community College in Iowa project is focusing on
improving the quality of bioenergy education through professional
development for instructors and creating opportunities for students to
gain valuable experiential learning through internships and applied
research with bioenergy companies. It is improving the students'
marketable skills and exposing them to industry contacts for future
employment references and connections. For the industry, this program
is helping smaller bioenergy companies realize the value of internships
which is, in turn, creating a sustainable pool of companies for student
internship opportunities in the future. It is also helping smaller
bioenergy companies conduct applied research to support specific
product development projects that they might otherwise have been unable
to afford.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays (1) (1) $75 $425 $819
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost (1) (1) $30 $35 $35
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.

9. Eligibility Criteria
Applications may be submitted by either: (1) public or private
nonprofit community colleges, or (2) post-secondary, degree-granting
advanced technological centers, either of which must:

a. be located in a rural area (see definition in Part VIII, E.);

b. have been in existence as of June 18, 2008;

c. participate in agricultural or bioenergy research and applied
research;

d. have a proven record of development and implementation of
programs to meet the needs of students, educators, business,
and industry to supply the agriculture-based, renewable energy
or pulp and paper manufacturing fields with certified
technicians, as determined by the Secretary; and

e. have the ability to leverage existing partnerships and
occupational outreach and training programs for secondary
schools, 4 year institutions, and relevant nonprofit
organizations.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None 13 13
Received
Applications Funded None 6 5
------------------------------------------------------------------------

1. Program Name
Outreach and Assistance for Socially Disadvantaged Farmers and
Ranchers.
2. Subprograms/Department Initiatives
None.
3. Brief History
Established by the Food, Agriculture, Conservation, and Trade Act
of 1990, Section 2501, Public Law 101-624, 7 U.S.C. 2279. In accordance
with Section 14013 of the 2008 Farm Bill, the Office of Advocacy and
Outreach was established within USDA and authority to carry out this
program was transferred to that office.
4. Purpose/Goals
The objective of the Outreach and Assistance for Socially
Disadvantaged Farmers and Ranchers (OASDFR) program is to provide
outreach, training, education, assistance, and technical assistance to
encourage and assist socially disadvantaged farmers, ranchers and
forest landowners in owning and operating farms, ranches and
nonindustrial forestlands.
The intent of the competitive grant program is to communicate in a
linguistically appropriate manner, to socially disadvantaged farmers,
ranchers and forest landowners about participating equitably in the
full range of agricultural programs offered by the Department.
5. Success in Meeting Programmatic Purpose/Goals
Examples of success include:
As a result of outreach activities by the University of Arkansas at
Pine Bluff, approximately 20 individuals were assisted in developing
financial plans for their farm operations. Eight producers used their
plans to obtain $763,000.00 in USDA Operating Loans. Six producers were
assisted in restructuring their debts, and five producers were assisted
in developing plans to determine the feasibility of adding different
alternatives to their operation. Many of these producers were assisted
in determining crop insurance premium cost, breakeven prices, and in
developing marketing plans for their grain crops. Five individuals were
assisted in using their local elevators to pre-market portions of their
crops using forward contracts. Using Conservation Programs--In Central
Arkansas approximately eight Environmental Quality Incentive Program
(EQIP) contracts were awarded to Socially Disadvantaged Producers for a
total of $683,575. Most of this went toward helping producers level
land to improve drainage and increase irrigation efficiency.
As a result of outreach activities at Alcorn State University in
Mississippi, 102 borrowers received structured training to increase
their knowledge and skills needed to complete a balance sheet, income
statement and inventory analysis for their farming operations.
Borrowers have gained knowledge of current farm practices, minimize
farm risks. Borrowers also met their educational requirement according
to the USDA-FSA regulation and qualify to receive additional funds from
USDA and have currently assisted in putting $2.5 million into the
Mississippi economy. There were a 100 percent passing rate. In
addition, 176 small farmers now have the knowledge, skills and a
formulized record keeping system to keep accurate farm records; 72
small farmers have gained knowledge of legal issues associated with
family farm operations and the risk management strategies; and 531
small farmers, ranchers and women and business are knowledgeable of new
and innovative alternative enterprises that would have a greater return
with less startup capital or input cost.
Because of the New Entry Sustainable Farming Project (New Entry)
which assists immigrants, refugees, and other underserved producers to
develop commercial farming opportunities across Eastern Massachusetts,
farmers participating in New Entry since October 2008 have increased
their technical crop production skills, trained and shared practical
farm skills with each other, and utilized educational resources on New
Entry's website. Since October, a total of 29 potential farmers
enrolled in the Explore Farming classes to assess their farming
interest and a total of 45 people enrolled in the Farm Business
Planning Course (FBPC). New Entry graduated total of 23 people from its
FBPC, representing 19 farm businesses. All graduates completed a
comprehensive business plan. 12 new graduates are currently
implementing their business plans on farmland, and another nine New
Entry farmers graduates began another season of business/production
plan implementation. New Entry farmers are experiencing an increase in
production and sales over prior years. A total of 20 New Entry farmers
have joined together into a cooperative to sell their produce into the
2009 Community Supported Agriculture (CSA) program. A total of 218 CSA
shares were purchased by customers (double over 2008). Combined CSA
revenues for New Entry farmers are projected to be about $67,000 for
the 2009 season.
As a result of the Small Farm Program's outreach activities at the
University of California, small-scale growers, many of whom speak
Spanish, Hmong, or Chinese as their primary language, have gained
access to results of applied research on specialty crops, business
management skills, relevant market analysis, and irrigation/water
quality management in agriculture. Information was disseminated through
ongoing personal consultations, workshops, classes, field days, radio
and printed newsletters and other printed materials. The diversity of
information delivery means that small-scale producers in the five
regions covered by the Small Farm Program gained access to one-on-one
consultation when relevant, and that this information also reached
wider audiences. Workshops and classes typically attracted between 20
and 60 producers, while field days and conferences reached 100 or more
during this period.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget $3,243 $3,470 $5,935 $5,888 $5,940 $5,940 $6,395 $15,000 $0 $0
Authority
----------------------------------------------------------------------------------------------------------------
Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer from CCC. The program
was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays $1,500 $8,250 $13,500 $6,750
----------------------------------------------------------------------------------------------------------------
Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer from CCC. The program
was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Delivery Cost $238 $256 $750 $0 $0
----------------------------------------------------------------------------------------------------------------
Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer from CCC. The program
was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010.

9. Eligibility Criteria
As determined in 7 U.S.C. 2279, eligibility is defined as follows:
1890 Land-Grant Institutions, including Tuskegee University and West
Virginia State College, Indian Tribal Community Colleges, Alaska Native
Cooperative Colleges, Hispanic-serving post-secondary educational
institutions, other accredited post-secondary educational institutions,
and Indian tribes providing agricultural education or other
agriculturally-related services to socially disadvantaged farmers and
ranchers in their region, and community-based organizations that: (1)
have demonstrated experience in providing agricultural education or
other agriculturally related services to socially disadvantaged farmers
and ranchers in their region; (2) provides documentary evidence of its
past experience in working with socially disadvantaged farmers and
ranchers during the 2 years preceding its application for assistance;
and (3) does not engage in activities prohibited under Section
501(c)(3) of the Internal Revenue Code of 1986.
Also eligible are organizations or institutions that received
funding under 7 U.S.C. 2279(a) before January 1, 1996, but only with
respect to projects that the Secretary considers are similar to
projects previously carried out by the organization or institution
under such subsection.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 57 91 None
Received
Applications Funded 15 55 None
------------------------------------------------------------------------

1. Program Name
Secondary Education, Two-Year Postsecondary Education, and
Agriculture in the K-12 Classroom Challenge Grants Program.
2. Subprograms/Department Initiatives
There are no subprograms.
3. Brief History
Section 1405 of the National Agricultural Research, Extension, and
Teaching Policy Act of 1977, as amended, (7 U.S.C. 3121) designates the
U.S. Department of Agriculture (USDA) as the lead Federal agency for
agriculture research, extension and teaching in the food and
agricultural sciences. Section 7109 of the Food, Conservation, and
Energy Act of 2008 (P.L. 110-246) amends authority for this program
contained in section 1417(j) of the National Agricultural Research,
Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3152(j)).
Section 7109 of the 2008 Food, Conservation, and Energy Act (Pub.
L. 110-246) expanded the eligibility to include other institutions of
higher education and nonprofit organizations and the objectives to
support current Agriculture in the classroom programs for grades
Kindergarten through 12.
4. Purpose/Goals
The Secondary Education, Two-Year Postsecondary Education, and
Agriculture in the K-12 Classroom Challenge Grants (SPECA) program
seeks to: (a) promote and strengthen secondary education and 2 year
post-secondary education in agri-science and agribusiness in order to
help ensure the existence in the United States of a qualified workforce
to serve the food and agricultural sciences system; and (b) promote
complementary and synergistic linkages among secondary, 2 year post-
secondary, and higher education programs in the food and agricultural
sciences in order to advance excellence in education and encourage more
young Americans to pursue and complete a baccalaureate or higher degree
in the food and agricultural sciences.
5. Success in Meeting Programmatic Purpose/Goals
Agriculture in the Classroom (AITC) is a partnership of
agriculture, business, education, government, and volunteers,
coordinated through NIFA Higher Education Programs, to improve
agricultural literacy in the nation's secondary schools. AITC
accomplishes this goal through two mechanisms; projects developed by
the national office, and projects developed by the individual state
programs.
Examples of success include:
New York has developed school food gardens through the New York Ag
in the Classroom Kids Growing Food program. Survey data indicates that
the gardens impacted well over 65,000 students, teachers, and community
members in 2007 by creating opportunities to make links to agriculture,
food systems, and good nutrition; increasing student motivation;
providing opportunities for peer teaching; teaching life skills;
integrating garden-based learning into the core curriculum; and
involving the community in the gardens. Moreover, 40,000 elementary age
students received instruction during New York's Ag Literacy Week
Program, 150 Educators were trained on the Food, Land and People
Curriculum, and over 30,000 passed through the Moo Country area at the
New York State Fair.
In California Ag in the Classroom (CFAITC), the number of CFAITC
ambassadors increased by 10.3% in 2010 (13,427 in December 2010
compared to 12,173 in December 2009), showing significant gains in the
target audience. CFAITC is represented by Ambassadors in 44% of
California's schools. The CFAITC website (www.learnaboutag.org)
received 23% more website hits (2,626,608 in total) in 2010 compared to
2009, an increase of more than 492,761 website hits. Moreover, 100
percent of conference attendees agreed that, after attending the
conference they would implement the materials/ideas received upon
returning to class.
In Michigan, Agricultural Literacy activities conducted by
volunteers, increased across the state by 30 percent in 2010. The
number of students reached through agriculture in the classroom
increased by 40 percent in 2010. 80 percent of the volunteers trained
at the state level conduct AITC lessons at the local level. Volunteer
involvement in Michigan Agricultural Education programs rose by 25
percent in 2010. The number of Project RED (Rural Education Day) events
held across the state has increased by 35 percent to 31 counties, 46
percent of all the involved counties across the state. Moreover,
teachers reached through in-service activities increased by 25 percent
in 2010. Of the teachers trained, 90 percent said they planned to
continue to integrate agriculture into their existing curriculum.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget $1,000 $994 $890 $992 $990 $990 $983 $983 $983 $981
Authority
----------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays $50 $148 $494 $987 $983
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Applications may only be submitted by: (1) public secondary
schools, (2) public or private nonprofit junior and community colleges,
(3) institutions of higher education, or (4) nonprofit organizations.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 43 75 66
Received
Applications Funded 24 24 24
------------------------------------------------------------------------

1. Program Name
Smith-Lever 3(d) Extension Activities Programs.
2. Subprograms/Department Initiatives
A. Expanded Food and Nutrition Education (EFNEP)

B. Pest Management

C. Farm Safety (aka Assistive Technology Program for Farmers with
Disabilities or AgrAbility)

D. New Technologies for Agricultural Extension

E. Children, Youth, and Families at Risk (CYFAR)

F. Youth Farm Safety Education and Certification

G. Sustainable Agriculture (SARE)

H. Federally Recognized Tribes (formerly Extension Indian
Reservation or EIRP)
3. Brief History
Various Extension Activities are authorized under Section 3(d) of
the Smith-Lever Act (7 U.S.C. 343(d)); section 1680 of the Food,
Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 5933).
Section 7116 of the Food, Conservation, and Energy Act of 2008
(FCEA) provided several amendments to Section 1425 of the National
Agricultural Research, Extension, and Teaching Policy Act of 1977
(NARETPA) (7 U.S.C. 3175); including inserting sec. 1425 Nutrition
Education Program and the definition of 1862 and 1890 Institutions for
the Agricultural Research, Extension, and Education Reform Act of 1998
(7 U.S.C. 7601).
Section 7403 of the Food, Conservation, and Energy Act of 2008
(Public Law 110-246) (FCEA) amended section 3(d) of the Smith-Lever Act
(7 U.S.C. 343(d)) to provide the opportunity for 1862 and 1890 land-
grant institutions, including Tuskegee University and West Virginia
State University, and the University of the District Columbia, to
compete for and receive these funds directly from the Secretary of
Agriculture. However, section 1425 of the National Agricultural
Research, Extension, and Teaching Policy Act of 1977 (NARETPA) provides
a statutory formula for the distribution of funds appropriated for the
Expanded Food and Nutrition Education program (EFNEP). Section 7116 of
FCEA amended NARETPA section 1425 to revise this statutory formula
effective October 1, 2008.
4. Purpose/Goals
Expanded Food and Nutrition Education (EFNEP)

Grants under this program are to assist all states in carrying out
a program of extension activities designed to employ and train
professional and paraprofessional aides to engage in direct nutrition
education of low-income families and in other appropriate nutrition
education programs.

Pest Management

Pest management includes a wide range of programs addressing human
health, environmental and economic issues related to the management of
pest populations through a variety of science based technologies.
Americans want safe, pest and disease-free homes, schools, parks,
recreational areas, as well as a safe and affordable supply of blemish-
free food products and a wholesome pesticide-free environment. NIFA
funds programs and projects which support research, education, and
extension activities that promote pest management in general, and
reduced risk pest management in particular. The agency's pest
management programs are implemented through working partnerships with
scientists in our nation's colleges and universities, other Federal
agencies and the private sector.

Farm Safety (aka Assistive Technology Program for Farmers with
Disabilities or AgrAbility)

AgrAbility increases the likelihood that individuals with
disabilities and their families engaged in production agriculture
(AgrAbility customers) become more successful. The primary outcome is
enhanced quality of life for people with disabilities in agriculture.
The program supports cooperative projects in which State Cooperative
Extension Services (CES) based at either 1862 or 1890 Land-Grant
Universities subcontract to private, nonprofit disability
organizations. Measures of success may include improvements in
customers' financial stability or access to life activities and the
capacity of states and regions to deliver services this population
requires in a timely and satisfying manner. To address the specialized
needs of AgrAbility's customers, the program builds service capacity on
national, regional, state, and local levels through education and
networking. In the absence of capacity, projects provide assistance to
customers. Projects use marketing to direct the public to initiatives
in education, networking, and assistance.

New Technologies for Agricultural Extension

The purpose of the New Technologies for Ag Extension Program (NTAE)
is to increase the capacity of each state to contribute expertise and
content to the development of eXtension, a national web-based
information and education delivery system that provides direct access
to science-based educational resources from land-grant and other
partner institutions about subjects of high importance to the general
public. This initiative is intended to dramatically change how the CES
does business with its customers. Applications are being solicited for
the NTAE to deliver: state of the art technology and software
applications, high quality leaders and staff, training for an
exceptional CES workforce, legally binding contractual and financial
instruments, and comprehensive evaluation, communications and marketing
activities.

Children, Youth, and Families at Risk (CYFAR)

Through an annual Congressional appropriation for the National
Children, Youth, and Families at Risk (CYFAR) Program, NIFA allocates
funding to land-grant university extension services for community-based
programs for at-risk children and their families. Since 1991, CYFAR has
supported programs in more than 600 communities in all states and
territories. State and local public and private organizations have
contributed cash and in-kind resources that match or exceed the Federal
appropriation. The CYFAR Program is based on research on effective
programs for at-risk youth and families and on the human ecological
principle of working across the lifespan in the context of the family
and community. To assure that critical needs of children and families
are met, CYFAR supports comprehensive, intensive, community-based
programs developed with active citizen participation in all phases.
CYFAR promotes building resiliency and protective factors in youth,
families, and communities. CYFAR supports collaboration--forming
lasting partnerships to achieve greater outcomes and to provide a
support base for sustaining programs for those at risk. CYFAR also
promotes the use of technology to improve programs, provide efficient
access to educational resources, and provide essential technological
skills for youth and adults in at-risk environments.

Youth Farm Safety Education and Certification

The Youth Farm Safety Education and Certification Program (YFSEC)
supports national efforts to deliver timely, pertinent, and appropriate
training to youth seeking employment or already employed in
agricultural production. The program has critical ties to the current
regulations for youth employment in agriculture, especially the
exemptions provided in 29 CFR Part 570, subpart E-1 for youth under the
age of 16 employed in some agricultural occupations having obtained
certification. Significant changes in agricultural production and in
the agricultural workforce since this regulation took effect in the
early 1970's have encouraged the USDA to consider training and
certification innovations along with developing appropriate training
and restrictions on youth employment in hazardous agricultural jobs.
YFSEC's funding has appeared under the Smith-Lever 3(d) line for Youth
Farm Safety Education and Certification since 2001.

Sustainable Agriculture (SARE)

SARE works to increase knowledge about--and help farmers and
ranchers adopt--practices that are profitable, environmentally sound,
and good to communities. Several types of competitive grants are
awarded by four regional administrative councils. Research and
education grants, generally ranging from $60,000 to $150,000, fund
projects that usually involve scientists, producers and others in an
interdisciplinary approach. Professional development grants, generally
ranging from $20,000 to $90,000, offer educational opportunities for
extension, NRCS, and other agricultural professionals. Producer grants,
typically between $1,000 and $15,000, go to farmers and ranchers who
test innovative ideas and share the results with their neighbors.
Projects address crop and livestock production and marketing,
stewardship of soil and other natural resources, economics and quality
of life.

Federally Recognized Tribes (formerly Extension Indian Reservation
or EIRP)

The purpose of this program is to support Extension Agents who
establish Extension education programs on the Indian Reservations and
Tribal jurisdictions of Federally-Recognized Tribes. To the extent
practicable, priorities should reflect the following national critical
needs areas: (1) Development of sustainable energy; (2) Increased
global food security; (3) Adaptation/mitigation of agriculture and
natural resources to global climate change; (4) Reduction of childhood
and adolescent obesity; and (5) Improved food safety.
5. Success in Meeting Programmatic Purpose/Goals
Expanded Food and Nutrition Education Program

The Expanded Food and Nutrition Education Program (EFNEP) program
continues to be highly effective in changing participants' behaviors,
resulting in significant improvements in daily living skills. In 2010
94 percent of adults reported improvements in their diets including
consuming the equivalent of nearly one additional cup of fruits and
vegetables, 84 percent of recent graduates improved food management
practices, 89 percent improved nutrition practices, and 67 percent
improved food safety practices. Multiple cost-benefit studies in past
years show that every dollar invested in EFNEP results in from $3.63 to
$10.64 in saved health care costs and $2.48 saved in food expenditures.
State success examples include: Pennsylvania State University's EFNEP
reported over 96% of the EFNEP adult participants made positive changes
in one or more food groups including consuming the equivalent of an
additional \1/2\ cup of fruits and vegetables. Louisiana State
University's EFNEP survey found that over 96% of EFNEP program
participants reported positive change in any food group at program exit
including consuming the equivalent of one additional cup of fruits and
vegetables. Utah State University's EFNEP reported over 98% of its
EFNEP families made a positive change in consumption of at least one
food group including consuming the equivalent of nearly one additional
cup of fruits and vegetables. The Mississippi State University
Extension EFNEP reported over ninety-five percent (95%) of the EFNEP
adult participants made positive changes in one or more food groups.
The Iowa State University EFNEP survey found that over 98% of EFNEP
program participants reported positive change in any food group at
program exit. The University of Missouri reported over 87% of its EFNEP
families made a positive change in consumption of at least one food
group.

Smith-Lever 3(d) Program

The Smith-Lever 3(d) Renewable Resources Extension Act (RREA) calls
for ``expanded extension programs for forest and rangeland resources''
to enhance the sustainability of these renewable natural resources.
With NIFA funding, 69 land-grant institutions educated private
forestland and rangeland owners regarding forest and rangeland
sustainability. As a result of these activities: 937 income-generating
business were created or expanded, 2,390 new jobs were created, 27,300
landowners increased their awareness of forest or rangeland resources,
21,100 landowners implemented at least one new renewable resource
practice, landowners either earned or saved and estimated $17,810,000,
loggers either earned or saved $198,571,756 by adopting new harvesting
technologies, and every RREA dollar leverages from $5-$15 from state,
county and other resources.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Smith-Lever $32,688 $31,926 $28,563 $28,228 $29,955 $30,979 $31,970 $32,383 $33,199 $33,133
3(d)
Extension
Activities
Programs
(excluding
EFNEP)
Expanded $32,688 $31,926 $28,563 $28,228 $29,955 $30,979 $31,970 $32,383 $33,199 $33,133
Food and
Nutrition
Education
Program
(EFVEP)
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Smith-Lever 3(d) Extension Activities Programs $18,587 $30,644 $31,568 $32,531 $33,117
(excluding EFNEP)
Expanded Food and Nutrition Education Program $38,123 $62,843 $64,584 $66,610 $67,899
(EFVEP)
----------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Smith-Lever 3(d) Extension Activities Programs $1,131 $1,278 $1,187 $1,328 $1,325
(excluding EFNEP)
Expanded Food and Nutrition Education Program $341 $422 $446 $522 $517
(EFVEP)
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Section 7403 of the Food, Conservation, and Energy Act of 2008
(Public Law 110-246) (FCEA) amended section 3(d) of the Smith-Lever Act
(7 U.S.C. 343(d)) to provide the opportunity for 1862 and 1890 land-
grant institutions, including Tuskegee University and West Virginia
State University, and the University of the District of Columbia, to
compete for and receive these funds directly from the Secretary of
Agriculture.
10. Utilization (Participation) Data
For Smith-Lever 3(d) Extension Activities Programs (excluding
EFNEP):

------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 193 269 274
Received
Applications Funded 165 223 234
------------------------------------------------------------------------

For Expanded Food and Nutrition Education Program (EFNEP):

------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 74 75 75
Received
Applications Funded 74 75 75
------------------------------------------------------------------------

1. Program Name
Specialty Crop Research Initiative Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
The authority for this program is under Section 7311 of the 2008
Farm Bill which amended Section 412 to the Agricultural Research,
Extension, and Education Reform Act of 1998 (7 U.S.C. 7621 et seq.) and
established the Specialty Crop Research Initiative Program. This
represents a newly authorized and newly funded program.
4. Purpose/Goals
The Specialty Crop Research Initiative (SCRI) Program was
established to address the critical needs of the specialty crop
industry by developing and disseminating science-based tools to address
needs of specific crops and their regions including research in plant
breeding, genetics, and genomics to improve crop characteristics (such
as product, taste, quality, and appearance; environmental responses and
tolerances; nutrient management, including plant nutrient uptake
efficiency; pest and disease management, including resistance to pests
and diseases resulting in reduced application management strategies;
and enhanced phytonutrient content); efforts to identify and address
threats from pests and diseases, including threats to specialty crop
pollinators; efforts to improve production efficiency, productivity,
and profitability over the long term (including specialty crop policy
and marketing); new innovations and technology, including improved
mechanization and technologies that delay or inhibit ripening; and
methods to prevent, detect, monitor, control, and respond to potential
food safety hazards in the production and processing of specialty
crops, including fresh produce.
5. Success in Meeting Programmatic Purpose/Goals
The Specialty Crop Research Initiative (SCRI) was established to
solve critical industry issues through research and extension
activities. SCRI gives priority to projects that are multi-state,
multi-institutional, or trans-disciplinary; and include explicit
mechanisms to communicate results to producers and the public. Projects
must address at least one of five focus areas: research in plant
breeding, genetics, and genomics to improve crop characteristics;
efforts to identify and address threats from pests and diseases,
including threats to specialty crop pollinators; efforts to improve
production efficiency, productivity, and profitability over the long
term; new innovations and technology, including improved mechanization
and technologies that delay or inhibit ripening; and methods to
prevent, detect, monitor, control, and respond to potential food safety
hazards in the production and processing of specialty crops.
Examples of success include:
The RosBREED project being led by Michigan State University is
creating a national, dynamic, sustained effort in research,
infrastructure establishment, training, and extension for applying
marker-assisted breeding (MAB) to deliver improved plant materials more
efficiently and rapidly. The Rosaceae family (almonds, apples,
apricots, blackberries, peaches, pears, plums, sweet cherries, tart
cherries, strawberries, raspberries, roses and other ornamentals)
provides vital contributions to human health and well-being, and
collectively constitutes the economic backbone of many U.S. rural
communities. Rosaceae genetics and genomics are developing rapidly but
have not been translated to routine practical application. This project
will increase the likelihood of new cultivar adoption, enlarge market
potential, and increase consumption of rosaceous fruits by using
socioeconomic knowledge of stakeholder values and consumer preferences
to inform breeding; establish sustainable technical infrastructure for
an efficient MAB Pipeline in Rosaceae, including crop specific SNP
genome scan platforms for breeding-relevant germplasm exploiting the
shared ancestry of Rosaceae crops; integrate breeding and genomics
resources by establishing a user-friendly U.S.-wide standardized
statistical framework and breeding information management system;
implement MAB in core RosBREED breeding programs with a common focus on
fruit quality traits; and enhance sustainability of cultivar
development by transferring MAB technologies to the public and private
community of U.S. Rosaceae breeders through training current and future
breeders as well as engaging the production, processing and marketing
sectors, allied scientists, and consumers.
Carnegie Mellon University is working with the specialty crop
industry to fulfill its vision of significantly reducing the cost of
production of U.S. fruit. They are developing, integrating, testing,
deploying, and assessing a carefully chosen set of information,
mobility, manipulation and plant science technologies, assessing their
socioeconomic utility, and transferring results to the end-users via
commercialization and outreach. Among the numerous preliminary results
include initial trials with harvest assist system showed ten percent
improvement in harvesting speed with 5% reduction in bruising;
management efficiency trials in pilot orchards demonstrated increases
in efficiency as high as 78 percent; and over 27 percent of
Pennsylvania producers who attended field days are adopting trellised
planting systems to increase efficiency and 65 percent plan to make
this change.
Washington State University (WSU) is leading a team of scientists
in the western U.S. to improve the long-term sustainability of the
apple, pear and walnut industries in the by enhancing biological
control of pest insects and mites, and synthesize the information
developed in this project along with existing information to provide
the outreach tools needed to bring about change in grower practices.
Preliminary results are encouraging and will be added to the WSU-
Decision Aid System and University of California UC-IPM web sites for
easy access and will be very useful to apple, pear and walnut growers
and pest control advisors. These recommendations will to lead to
increased biological control in orchards, which should reduce pesticide
inputs leading to higher grower profits and lower worker safety
problems.
Water and nitrogen management in deciduous perennial crops is
constrained by a lack of information and an inability to provide
targeted management. Currently, the application of fertilizers and
water follows standardized practice with little consideration of
spatial, temporal and crop variability resulting in lost income and
negative environmental impact. The University of California is
addressing these needs through a multi-discipline, multi-scale activity
that integrates remote and local sensing, with modeling and on-farm
validation to derive grower appropriate management tools and sound
knowledge to inform policy decisions. Initial activities are being
conducted in Almond, Pecan, Grape and Pistachio and are being adapted
to the full range of perennial fruit and nut species through
collaborative agreements in years 3 through 5 of this project. Thus
far, the RESET remote sensing model (which measures evaporation and
transpiration) has been published online, and provides e-mail output to
users. Researchers in California have tested the model against Almond
data and have help improved the operation and user interface of the
model.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget Authority (1) $30,000 $50,000 $50,000 $50,000
----------------------------------------------------------------------------------------------------------------
1 Program was first authorized in 2008.
Note: Mandatory funding was provided by transfer from CCC.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays (1) $1,500 $13,000 $30,500 $45,000
----------------------------------------------------------------------------------------------------------------
1 Program was first authorized in 2008.
Note: Mandatory funding was provided by transfer from CCC.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Outlays (1) $1,200 $1,720 $2,000 $2,000
----------------------------------------------------------------------------------------------------------------
1 Program was first authorized in 2008.
Note: Mandatory funding was provided by transfer from CCC.

9. Eligibility Criteria
The Secretary may carry out the SCRI Program through (1) Federal
Agencies; (2) national laboratories; (3) colleges and universities; (4)
research institutions and organizations; (5) private organizations or
corporations; (6) state agricultural experiment stations; (7)
individuals; or (8) groups consisting of two or more entities described
in paragraphs (1) through (7).
In making grants under this section, the Secretary shall provide a
higher priority to projects that (1) are multi-state, multi-
institutional, or multi-disciplinary; and (2) include explicit
mechanisms to communicate results to producers and the public.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 238 265 149
Received
Applications Funded 27 92 32
------------------------------------------------------------------------

1. Program Name
Sun Grant Program.
2. Subprograms/Department Initiatives
There are no subprograms.
3. Brief History
The authority for this program is contained in section 7526 of the
2008 Farm Bill. USDA received its first funding for this program in FY
2010.
4. Purpose/Goals
The purpose of this program is to provide grants to the North-
Central, Southeastern, South-Central, Western, and Northeastern Sun
Grant Centers and the Western Insular Pacific Subcenter (as designated
in section 7526(b)(1)(A)-(F) of the FCEA). The Sun Grant Centers and
Subcenter will use the majority of grant funds for competitive grants
and the remainder for research on technology development and
implementation.
All activities conducted in this program must seek to (a) enhance
national energy security through the development, distribution, and
implementation of bio-based energy technologies; (b) promote
diversification in, and the environmental sustainability of,
agricultural production in the United States through bio-based energy
and product technologies; (c) promote economic diversification in rural
areas of the United States through bio-based energy and product
technologies; and (d) enhance the efficiency of bioenergy and biomass
research and development programs through improved coordination and
collaboration among the Department of Agriculture, the Department of
Energy, and land-grant colleges and universities.
5. Success in Meeting Programmatic Purpose/Goals
Although this grant program is too new to have any discernable
success to date examples of expected success include:
This program is providing grants to the North-Central,
Southeastern, South-Central, Western, and Northeastern Sun Grant
Centers and the Western Insular Pacific Sub-center. All activities
conducted in this program are seeking to enhance national energy
security through the development, distribution, and implementation of
biobased energy technologies; promote diversification in, and the
environmental sustainability of, agricultural production in the United
States through biobased energy and product technologies; promote
economic diversification in rural areas of the United States through
biobased energy and product technologies; and enhance the efficiency of
bioenergy and biomass research and development programs through
improved coordination and collaboration among the Department of
Agriculture, the Department of Energy, and land-grant colleges and
universities.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
------------------------------------------------------------------------
2010 2011
------------------------------------------------------------------------
Annual Budget Authority $2,250 $2,246
------------------------------------------------------------------------
Note: Program was first funded in FY 2010.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
------------------------------------------------------------------------
2010 2011
------------------------------------------------------------------------
Annual Outlays $225 $1,237
------------------------------------------------------------------------
Note: Program was first funded in FY 2010.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
------------------------------------------------------------------------
2010 2011
------------------------------------------------------------------------
Annual Delivery Cost $90 $90
------------------------------------------------------------------------
Note: Program was first funded in FY 2010.

9. Eligibility Criteria
Eligible applicants are the five centers that will competitively
award projects to eligible entities in the states and territories
within their regions:
North-Central Center--A north-central sun grant center at South
Dakota State University for the region composed of the States of
Illinois, Indiana, Iowa, Minnesota, Montana, Nebraska, North Dakota,
South Dakota, Wisconsin and Wyoming.
Southeastern Center--A southeastern sun grant center at the
University of Tennessee at Knoxville for the region composed of the
States of Alabama, Florida, Georgia, Kentucky, Mississippi, North
Carolina, South Carolina, Tennessee and Virginia, the Commonwealth of
Puerto Rico, and the United States Virgin Islands.
South-Central Center--A south-central sun grant center at Oklahoma
State University for the region composed of the States of Arkansas,
Colorado, Kansas, Louisiana, Missouri, New Mexico, Oklahoma, and Texas.
Western Center--A western sun grant center at Oregon State
University for the region composed of the States of Alaska, Arizona,
California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington and a
Western Insular Pacific Subcenter at the University of Hawaii for the
region of Alaska, Hawaii, Guam, American Samoa, the Commonwealth of the
Northern Mariana Islands, the Federated States of Micronesia, the
Republic of the Marshall Islands, and the Republic of Palau.
Northeastern Center--A northeastern sun grant center at Cornell
University for the region composed of the States of Connecticut,
Delaware, Massachusetts, Maryland, Maine, Michigan, New Hampshire, New
Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, and West
Virginia.
Funding for the Western Insular Pacific Sun Grant Subcenter at
University of Hawaii must come from Western Sun Grant Center at Oregon
State University.
Eligible applicants for competitively awarded projects within the
respective regions of the individual Sun Grant Centers and Subcenter
are: state agricultural experiment stations; colleges and universities;
university research foundations; other research institutions and
organizations; Federal agencies; national laboratories; private
organizations or corporations; individuals; or any group consisting of
two or more of the entities described in this paragraph.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None None 5
Received
Applications Funded None None 5
------------------------------------------------------------------------

1. Program Name
Tribal Colleges Education Equity Grants Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
Authority for this program is contained in the Equity in
Educational Land-Grant Status Act of 1994 (7 U.S.C. 301 note) as
amended by the Agricultural Research, Extension, and Education Reform
Act of 1998 (7 U.S.C. 7601 note). Under this authority, appropriated
funds are to be awarded to the 1994 Land-Grant Institutions
(hereinafter referred to as 1994 Institutions) for Education capacity
building and funds are to be distributed equally among institutions
that meet eligibility requirements.
Section 7402 of the 2008 Farm Bill added Ilisagvik College as a
1994 Land-Grant Institution.
4. Purpose/Goals
The purpose of the Tribal Colleges Education Equity Grants Program
(TCEG) is to provide funding to enhance educational opportunities for
Native Americans in the food and agricultural sciences. The TCEG
program is intended to strengthen institutional capacity to deliver
relevant formal education opportunities. The TCEG is intended to be a
component of the applicant 1994 institution's land-grant roadmap or
strategic planning process. To the extent practicable, priorities
should reflect NIFA's following national critical needs areas: (a)
Development of sustainable energy; (b) Increased global food security;
(c) Adaptation/mitigation of agriculture and natural resources to
global climate change; (d) Reduction of childhood and adolescent
obesity; and (e) Improved food safety.
5. Success in Meeting Programmatic Purpose/Goals
This program provides funding to enhance educational opportunities
for Native Americans in the food and agricultural sciences; and
strengthens institutional capacity to deliver relevant formal education
opportunities.
Examples of success include:
As a result of a move of the Equity program to the Math & Science
Department at Oglala Lakota College in South Dakota, the program has
had a 300% increase in contact with new and/or potential students for
the Natural Resource degree plan of study. Two Native American men
advanced their care goals through hard work earning an Associate of
Arts or a Baccalaureate of Science degree in either General Agriculture
or Natural Resource Management. The program has been able to serve a
larger group of students through instruction of the course Bio 113
People and the Environment, which is a core course to meet the science
requirements in the majority of Oglala Lakota College's degree
programs. Moreover, a current student working for the Bureau of Indian
Affairs in Pine Ridge South Dakota stated that through the programs
course content he learned more than he has in any other program,
especially courses taught by the project director.
The Omaha Nation and Santee Sioux have epidemic numbers for Health
Problems, diabetes, obesity, heart disease, and malnutrition. Nebraska
Indian Community College (NICC) is enhancing the short-term and long-
term educational opportunities for the Omaha Nation and Santee Sioux
Nation by strengthening specific instructional programs in the Food,
Natural Resources, Native Foods and Agricultural Sciences Area. Twenty-
six students were enrolled in courses with a specific focus in agri-
science and agribusiness. Other courses incorporated these topics to a
lesser extent. The impacted students are in a wide-variety of degrees
(education, science, business, general liberal arts), allowing for
information to be disseminated to a large constituency in these
communities.
A Sinte Gleska University (South Dakota) project developed
curricula and syllabi in Natural Resources History and Management,
Tribal Land Management and History, Horticulture and Environmental Law.
This project also worked on revision of the Tribal Land Management
degree programs and produced new degree programs. They also developed a
career guide for students based on available careers on the Rosebud
Reservation. As a result, one student completed a bachelor's degree in
Environmental Science; ten students have been recruited to the Tribal
Lands Management degree program; collaborations have been formed with
tribal land programs, Federal land programs and with South Dakota state
extension programs; Career Guide is available for local schools and as
a recruitment tool; and an advisory committee was formed to provide
community and stakeholders input into future planning for the USDA
programs.
The Turtle Mountain Community College's (North Dakota) formed an
articulation agreement between the college and a local agricultural
high school--St. John Public--to provide Equine Science offerings to
its students as dual credit. They designed and implemented agricultural
related curriculum in GIS/GPS and NSCA Certified Personal Trainer
Certificate which will be part of the college's course catalog.
Moreover, the College enhanced the community's knowledge of animal
sciences by offering a series of workshops throughout the year and
provided educational opportunities to youth and adults in a vast array
of subjects in the areas of health, wellness, community wellness, and
outreach education. The program has allowed the community to
participate in a vast number of educational programming in the
agricultural fields. Participating students are now academically
prepared to further their education or seek employment in Equine
Science, GPS/GIS and Certified Personal Training. The program has
perked the interest of the community to be more actively involved in
gardening and other agricultural-related disciplines which will in turn
contribute to better health and fitness. The college's Anishinabe
Center has become a `One Stop Wellness Center' which actively promotes
and has integrated the seven pillars of wellness--Social, Emotional,
Occupational, Spiritual, Physical, Environmental, and Intellectual.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
----------------------------------------------------------------------------------------------------------------
Annual Budget $1,549 $1,689 $1,679 $2,232 $2,228 $3,342 $3,319 $3,342 $3,342 $3,335
Authority
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Tribal colleges and universities designated as 1994 Land-Grant
Institutions under the Educational Land-Grant Status Act of 1994, as
amended. This Act, as amended in Section 533(a), requires that each
1994 Land-Grant Institution be accredited or making progress towards
accreditation and be recognized as a legal entity. If accreditation is
being sought, a college must demonstrate its progress towards
accreditation by a letter from a nationally recognized accreditation
agency affirming receipt of application for an accreditation site visit
or other such documentation.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 30 31 30
Received
Applications Funded 30 30 30
------------------------------------------------------------------------

1. Program Name
Veterinary Medicine Loan Repayment Program.
2. Subprograms/Department Initiatives
None.
3. Brief History
In January 2003, NVMSA was passed into law adding section 1415A to
the National Agricultural Research, Extension, and Teaching Policy Act
of 1997. This law established a new Veterinary Medicine Loan Repayment
Program (7 U.S.C. 3151a)
Section 7105 of the 2008 Farm Bill amended section 1415A to revise
the determination of veterinarian shortage situations to consider (1)
geographical areas that the Secretary determines have a shortage of
veterinarians; and (2) areas of veterinary practice that the Secretary
determines have a shortage of veterinarians, such as food animal
medicine, public health, epidemiology, and food safety. This section
also added that priority should be given to agreements with
veterinarians for the practice of food animal medicine in veterinarian
shortage situations.
4. Purpose/Goals
USDA's Veterinary Medicine Loan Repayment Program (VMLRP),
authorized by the National Veterinary Medical Services Act (NVMSA)
helps qualified veterinarians offset a significant portion of the debt
incurred in pursuit of their veterinary medicine degrees in return for
their service in certain high-priority veterinary shortage situations.
The National Institute of Food and Agriculture (NIFA) will carry out
NVMSA by entering into educational loan repayment agreements with
veterinarians who agree to provide veterinary services in veterinarian
shortage situations for a determined period of time.
5. Success in Meeting Programmatic Purpose/Goals
Veterinarians are critical to the national food safety and food
security infrastructures, and to the health and well-being of both
animals and humans; however, major studies indicate significant and
growing shortages of food supply veterinarians and veterinarians
serving in certain other high priority specialty areas. A leading cause
for this shortage is the heavy cost of 4 years of professional
veterinary medical training, which can average between $100,000 and
$140,000. Congress established the VMLRP as a way to remedy this
growing need.
In Fiscal Year 2010, NIFA made 62 award offers of which 53 were
accepted for a total of $5,185,970 (includes loan and tax payments)
with the average award at $97,848 (includes loan and tax payments). The
average eligible debt for repayment was $98,672. Sixty-five percent of
recipients received the maximum payment of $25,000 per year (plus
taxes), and 65 percent of awards went to those who obtained their
Doctor of Veterinary Medicine within the last 3 years. Thirty-four
states will fill at least one shortage area through VMLRP:

Iowa will fill five shortage areas

Idaho, Kansas and Texas will fill four shortage areas

Kentucky and South Dakota will fill three shortage areas

Shortage type breakdown:

Type 1 (at least 80 percent private practice): 24 awards

Type 2 (at least 30 percent private practice): 24 awards

Type 3: (at least 49 percent public practice): 5 awards

Participants are required to serve in one of three types of
shortage situations. Type 1 shortage areas are private practice
dedicated to food animal medicine at least 80 percent of the time. Type
2 shortages are private practices in rural areas dedicated to food
animal medicine up to 30 percent of the time. Type 3 shortage areas are
dedicated to public practice up to 49 percent of the time.

9. Eligibility Criteria
To be eligible to apply to the VMLRP, an applicant must: (1) Have a
degree of Doctor of Veterinary Medicine (DVM), or the equivalent, from
a college of veterinary medicine accredited by the AVMA Council on
Education; (2) Have qualifying educational loan debt as defined in 7
CFR 3431 Section 3; (3) Secure an offer of employment or establish and/
or maintain a practice in a veterinary shortage situation, as
determined by the Secretary, within the time period specified in the
VMLRP service agreement offer; and (4) provide certifications and
verifications in accordance with 7 CFR 3431 Section 16.

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications 0 0 260
Received
Applications Funded 0 0 53
------------------------------------------------------------------------

1. Program Name
Women in Minorities in Science, Technology, Engineering and
Mathematics Fields Program (WAMS).
2. Subprograms/Department Initiatives
There are no subprograms.
3. Brief History
Section 7204 of the 2008 Farm Bill amended Section 1672 of the
Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 5925),
authorizes the Secretary of Agriculture to make competitive grants to
support research and extension activities to increase participation by
women and underrepresented minorities from rural areas in the fields of
science, technology, engineering, and mathematics.
4. Purpose/Goals
Purpose/Goals include:

(1) To support research and extension projects to increase
participation by women and underrepresented minorities from
rural areas in science, technology, engineering, and
mathematics fields related to the food and agricultural
sciences;

(2) to improve the economic health and viability of rural
communities through the development of research and extension
initiatives focused on new and emerging employment
opportunities in STEM occupations; and

(3) to fund projects that address the national challenge to
increase the number and diversity (i.e., having a food and
agricultural sciences workforce representative of the nation's
population) of students entering food and agriculture related
STEM disciplines.
5. Success in Meeting Programmatic Purpose/Goals
Although this grant program is too new to have any discernable
success to date examples of expected success include:
An education grant to Twin Cities Public Television in Minnesota
aims to encourage more girls to consider careers in STEM fields via the
``SciGirls'' program. While girls and women have increased their
representation in many fields of science in recent years, their
progress is still not keeping pace with the rising demand for skilled
workers in many STEM fields. Although women make up nearly \1/2\ the
college-educated workforce, they represent only \1/4\ of the college-
educated workforce in science and engineering occupations. ``SciGirls''
will be distributed through PBS Plus to the nation's 350 PBS stations.
From experience with comparable PBS Plus programs, they project that
each episode will attract several million viewers over its broadcast
life, nearly \1/2\ of which will be rural audiences.
A University of Georgia project is enhancing the readiness of women
and underrepresented males from Georgia's rural communities to
successfully transition into careers in STEM in general and food,
agriculture, natural resources, and related sciences (UFANRRS) in
particular. In addition to addressing the clogs in the existing
pipeline of trained women and minorities from high school to
undergraduate degrees, the project is also including a component that
introduces middle school students to career options in food and
agricultural sciences. The innovativeness and significance of this
project rest on the project's design in building the pipeline to the
undergraduate pool through increased interest in STEM programs early in
the education process and recognizing the need to transition students
from bachelor's to master's STEM programs through better preparation.

6. Annual Budget Authority (FY 2007-FY 2011)
(in thousands of dollars)
------------------------------------------------------------------------
2010 2011
------------------------------------------------------------------------
Annual Budget Authority $400 $399
------------------------------------------------------------------------
Note: Funding began in FY 2010.

7. Annual Outlays (FY 2007-FY 2011)
(in thousands of dollars)
------------------------------------------------------------------------
2010 2011
------------------------------------------------------------------------
Annual Outlays $240 $387
------------------------------------------------------------------------
Note: Funding began in FY 2010.

8. Annual Delivery Cost (FY 2007-FY 2011)
(in thousands of dollars)
------------------------------------------------------------------------
2010 2011
------------------------------------------------------------------------
Annual Delivery Cost $16 $16
------------------------------------------------------------------------
Note: Funding began in FY 2010.

9. Eligibility Criteria
Eligible applicants are: (a) state agricultural experiment
stations; (b) colleges and universities; (c) university research
foundations; (d) other research institutions and organizations; (e)
Federal agencies; (f) national laboratories; (g) private organizations
or corporations; (h) individuals; or (i) any group consisting of two or
more of the entities described in subparagraphs (a) through (h).

10. Utilization (Participation) Data
------------------------------------------------------------------------
Fiscal Year 2008 2009 2010
------------------------------------------------------------------------
Applications None None 13
Received
Applications Funded None None 2
------------------------------------------------------------------------

House Committee on Agriculture Farm Bill Audit Questionnaire--National
Agricultural Statistics Service
1. Program Name
National Agricultural Statistics Service.
2. Subprograms/Department Initiatives
Agricultural Estimates and Census of Agriculture:

i. 2008 Organic Production Survey,

ii. Cash Rents Survey,

iii. Prices Survey,

iv. Specialty Crops Survey, and

v. Civil Rights Report.
3. Brief History
a. 2008 Organic Program Survey: The 2007 Census of Agriculture
showed more than 20,000 farmers engaged in organic production
in the United States. As a follow-up to the 2007 Census, USDA
conducted it first ever, wide-scale survey of organic
agriculture.

b. Cash Rents Survey: NASS has been directed through the 2008 Farm
Bill to collect cash rents data for use by the Farm Service
Agency (FSA) in program administration. The Food, Conservation,
and Energy Act of 2008, Section 2110, states,

``The Secretary (acting through the National
Agricultural Statistics Service) shall conduct
an annual survey of per acre estimates of
county average market dry land and irrigated
cash rental rates for cropland and pastureland
in all counties or equivalent subdivisions
within each state that have 20,000 acres of
cropland or pastureland.''

The Cash Rents Survey is conducted annually by
the USDA's National Agricultural Statistics
Service (NASS). The Cash Rents Survey obtains
annual average cash rental rates by farmers and
ranchers for all counties in the U.S. that meet
the requirements outlined in the 2008 Farm
Bill. This survey provides the basis for
estimates of the current year's Cash Rent paid
for Irrigated Cropland, Non-irrigated Cropland,
and Permanent Pasture. Data collection on the
Cash Rents Survey is from February through mid
July. The final 2011 Cash Rents estimates will
be published on September 9, 2011. Data will be
published at the county, district, state, and
national level.

c. Prices Survey: The collection and publication of prices received
by farmers gained importance with passage of the Farm Security
and Rural Investment Act of 2002 (2002 Farm Bill) and the
importance continued with the passage of the Food,
Conservation, and Energy Act of 2008 (2008 Farm Bill).

d. Specialty Crops Survey: Issued in November 2009, this is the
first time NASS has summarized and published the Census of
agriculture data for specialty crops.

e. Civil Rights Report: FARM BILL Section 14006 TRANSPARENCY AND
ACCOUNTABILITY FOR SOCIALLY DISADVANTAGED FARMERS OR RANCHERS
requires USDA to annually compile program application and
participation rate data regarding socially disadvantaged
farmers or ranchers: race, ethnicity, and gender for the entire
U.S. for each state and county.
4. Purpose/Goals
a. 2008 Organic Program Survey: Through the Organic Production
Survey, USDA's National Agricultural Statistics Service (NASS)
gathered additional information on how the growth of organic
farming is changing the face of U.S. agriculture. This survey
gave organic producers an opportunity to share information
about their industry and help ensure the continued growth and
sustainability of organic farming in the United States. The
survey results can be utilized to help shape decisions
regarding farm policy, funding allocations, availability of
goods and services, community development and other key issues.
In addition, the information can help producers of organic
agriculture make informed decisions about the future of their
own organic production operations. The survey looked at organic
farming during the 2008 calendar year, including:

Production of field crops, vegetables, fruits, tree
nuts, berries, livestock and
poultry

Production practices, including pest management, cover
crops, crop rota-
tion, rotational grazing, conservation tillage, water
management and buffer
zones

Production expenses

Marketing practices, including wholesale, retail and
direct-to-consumer
sales

Value-added production and processing

The survey included not only farm operations that are currently
engaged in organic production, but those making the transition
to organic agriculture.

b. Cash Rents Survey: The Cash Rents Survey provides the per acre
estimate of county average cash rent paid by farmers. Estimates
derived from this survey supply basic information needed by
farmers to make decisions for both short term and long term
planning. The Cash Rents Report may also be used by individual
producers in planning expenses for their agricultural operation
or by Extension or University Staff in developing operating
budgets for agricultural operations in their locale.

c. Prices Survey: Farm commodity prices are subject to the market
forces of supply and demand. However, in times of depressed
commodity prices the government will make counter cyclical
payments to producers to assist them. The 2008 Farm Bill
continued many of the commodity programs introduced in the 2002
Farm Bill, adjusting payment levels and eligibility while
introducing the ACRE program. The data showing prices received
by farmers is collected and published by NASS, and is critical
to implementing and administering these programs.

d. Specialty Crops Survey: The 2007 Census of Agriculture Specialty
Crop publication provides data that supplement the 2007 Census
of Agriculture, Volume 1. As a service to agricultural and
economic data users, the 2007 data for specialty crops are
published at the U.S. and state-level.

e. Civil Rights Report: As stated in the farm bill ``Using the
technologies and systems of the National Agricultural
Statistics Service, the Secretary shall compile and present the
data compiled under paragraph (1) for each program described in
the paragraph in a manner that includes the raw numbers and
participation rates for (A) the entire United States; (B) each
state; and (C) each county in each state.'' The department will
use the report to ensure all farm producers are treated
equitably by departmental service providers.
5. Success in Meeting Programmatic Purpose/Goals
a. 2008 Organic Program Survey: Data were collected, edited,
analysis conducted and results released on February 3, 2010.
There was an 87 percent response rate and NASS counted 14,540
USDA certified and exempt organic farms.

b. Cash Rents Survey: The survey has been conducted each year since
the 2008 Farm Bill was enacted. Published results have been
made available to FSA and the general public for 2008, 2009,
and 2010 as mandated by the farm bill. The 2011 results will be
published on August 4, 2011.

c. Prices Survey: NASS has maintained this important data series
for many years, making this critical data available to FSA and
the general public. Data are published each month in the
Agriculture Prices report--a Principal Economic Indicator of
the United States.

d. Specialty Crops Survey: A volume was published on this subject
in November 2009 at the U.S. level and state level. An
additional volume was published for Outlying Areas including
Puerto Rico, U.S. Virgin Islands, Guam, and the Commonwealth of
Northern Mariana Islands.

e. Civil Rights Report: NASS has participated with the department
in an ongoing process for several years to fulfill this
important section of the farm bill: ``(1) Annual requirement.--
For each county and state in the United States, the Secretary
of Agriculture (referred to in this section as the 'Secretary')
shall annually compile program application and participation
rate data regarding socially disadvantaged farmers or ranchers
by computing for each program of the Department of Agriculture
that serves agricultural producers and landowners--

(A) raw numbers of applicants and
participants by race, ethnicity, and gender,
subject to appropriate privacy protections, as
determined by the Secretary; and
(B) the application and participation rate,
by race, ethnicity, and gender, as a percentage
of the total participation rate of all
agricultural producers and landowners.''

NASS has created a web-based tool that will provide participation
rates for every applicable USDA program at the state and county
level. NASS has worked with other agencies in developing a
format the agencies can use to submit participation data to the
database which the web-based tool uses. This software works to
facilitate data queries for USDA program Agencies who will load
program application and participation data and will be
maintained by the Department. As per the farm bill, both
percentage rate and number of applicants and participants will
be available. NASS has also summarized the data for total
agricultural producers at the appropriate levels which will be
used as the denominator in the participation rate calculation.

6. Annual Budget Authority (FY 2007-FY 2011)
National Agricultural Statistics Service
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Grand Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget Authority from the Farm Bill
--------------------------------------------------------------------------------------------------------------------------------------------------------
a. 2008 Organic Production Survey--Farm bill funds transferred to NASS $1,000,000 $1,000,000
through Farm Service Agency (FSA) Commodity Credit Corporation (CCC)
b. Cash Rents Survey--Reimbursable Agreement with FSA CCC $800,000 $4,811,132 $5,700,000 $5,700,000 $4,275,000 $21,286,132
c. Prices Survey--Reimbursable Agreement with FSA CCC $2,486,000 $2,800,000 $2,800,000 $2,800,000 $2,800,000 $13,686,000
d. Specialty Crops Survey * -- -- -- -- -- --
e. Civil Rights Report * -- -- -- -- -- --
--------------------------------------------------------------------------------
Grand Total $1,800,000 $4,811,132 $5,700,000 $5,700,000 $4,275,000 $22,286,132
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The farm bill directed work to be done on Specialty Crops Survey and Civil Rights Report but no funds were given through the farm bill.

7. Annual Outlays (FY 2002-FY 2011)

Budget authority is the authority provided by public law to enter into financial obligations that will result in immediate or future outlays of
funds. Outlays are the issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a Federal obligation. Outlays may be
from unexpended balances of prior-year budgetary resources plus the current budgetary resources.
For example: The farm bill authorized $1.0 million in 2008 for the Organic Production Survey but most of those funds were obligated and spent in
2009. The farm bill directed work on Specialty Crops and Civil Rights but no funds were provided in the farm bill. NASS used resources from the Census
of Agriculture to summarize data needed for the survey and report. This data is considered a special tabulation of the Census, a service provided under
Census of Agriculture authority.

National Agricultural Statistics Service
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Grand Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays of Farm Bill Funds
--------------------------------------------------------------------------------------------------------------------------------------------------------
a. 2008 Organic Production Survey--Farm bill funds transferred to NASS $12,355 $987,645 $0 $0 $0 $1,000,000
through FSA CCC
b. Cash Rents Survey--Reimbursable Agreement with FSA CCC $800,000 $4,811,132 $5,700,000 $5,700,000 $4,275,000 $21,286,132
c. Prices Survey--Reimbursable Agreement with FSA CCC $2,486,000 $2,800,000 $2,800,000 $2,800,000 $2,800,000 $13,686,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays of NASS Funds for Farm Bill Directed Activities
--------------------------------------------------------------------------------------------------------------------------------------------------------
d. Specialty Crops Survey * $0 $15,413 $9,438 $0 $0 $24,851
e. Civil Rights Report * $1,512 $4,320 $9,720 $11,448 $0 $27,000
--------------------------------------------------------------------------------
Grand Total $813,867 $5,818,510 $5,719,158 $5,711,448 $4,275,000 $22,337,983
--------------------------------------------------------------------------------------------------------------------------------------------------------
* NASS redirected funds to fulfill the farm bill direction. NASS used resources from the Census of Agriculture to summarize data needed for the survey
and report. This data is considered a special tabulation of the Census, a service provided under Census of Agriculture authority.

8. Annual Delivery Cost (FY 2002-FY 2011)

NASS programs are very integrated; most of the surveys are done from questionnaires with the farmers and ranchers. The questions cover a wide
variety of crops; farming and ranching practices; operator characteristics (primary occupation, sex, age, race, and Spanish, Hispanic, or Latino
origin); farm size and type of ownership (family, partnership, corporation, other). NASS produces over 500 reports derived from this data.

National Agricultural Statistics Service
Annual Cost of Surveys
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Grand Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
a. 2008 Organic Production Survey--Farm bill funds transferred to NASS through FSA CCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Salary expenses Subtotal $12,355 $987,645 $0 $0 $0 $1,000,000
FTEs 0.0 6.2 0.0 0.0 0.0 6.2
--------------------------------------------------------------------------------
2008 Organic Production Survey--funds appropriated to NASS Salary $174,410 $441,040 $0 $0 $615,450
expenses Subtotal
Contracts $0 $485,897 $0 $0 $0 $485,897
Printing $0 $0 $45,008 $0 $0 $45,008
Postage $0 $59,947 $0 $0 $0 $59,947
--------------------------------------------------------------------------------
Subtotal $0 $720,254 $486,049 $0 $0 $1,206,303
FTEs 0.1 4.6 4.1 0.0 0.0 8.8
================================================================================
Total $12,355 $1,707,899 $486,049 $0 $0 $2,206,303
Total FTEs 0.1 10.8 4.1 0.0 0.0 15.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
b. Cash Rents Survey--Reimbursable Agreement with FSA CCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Salary expenses Subtotal $800,000 $4,811,132 $5,700,000 $5,700,000 $4,275,000 $21,286,132
FTEs 7.4 44.3 52.5 52.5 39.4 196.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
c. Prices Survey--Reimbursable Agreement with FSA CCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Salary expenses Subtotal $2,486,000 $2,800,000 $2,800,000 $2,800,000 $2,800,000 $13,686,000
FTEs 22.9 25.8 25.8 25.8 25.8 126.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
d. Specialty Crops Survey *--Funds appropriated to NASS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Salary expenses Subtotal $0 $13,313 $4,438 $0 $0 $17,750
FTEs 0.0 0.1 0.0 0.0 0.0 0.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
e. Civil Rights Report *--Funds appropriated to NASS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Salary expenses $1,512 $4,320 $9,720 $11,448 $0 $27,000
FTEs 0.0 0.0 0.1 0.1 0.0 0.2
================================================================================
Grand Total $3,299,867 $9,336,664 $9,000,206 $8,511,448 $7,075,000 $37,223,185
Grand Total FTEs 30.4 81.0 82.5 78.4 65.2 337.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The farm bill directed work to be done on Specialty Crops and Civil Rights but funds were not given from the farm bill. NASS used resources from the
Census of Agriculture to summarize data needed for the survey and report. This data is considered a special tabulation of the Census, a service
provided under Census of Agriculture authority.

9. Eligibility Criteria
a. 2008 Organic Production Survey: USDA-certified organic
producers; Producers exempt from USDA certification; Producers
transitioning to organic identified from the 2007 Census of
Agriculture and updated for newly certified, exempt, and
transitioning farms.

b. Cash Rents: The population for the Cash Rents Survey is the
USDA-NASS farm population. It includes ``all operations that
sold or have the potential to sell at least $1,000 worth of
agricultural products during the year.'' A sample of farmers/
ranchers is surveyed that have or could have a cash rental
agreement.

c. Prices Survey: All entities that purchase grains, oilseeds,
pulse crops, peanuts, or cotton directly from farmers are
eligible to be surveyed, and represent the population. All
sampled units are visited each year to go over all procedures
and detailed reporting instructions to ensure that the data is
accurate and complete.

d. Specialty Crops Survey: A specialty crop is defined by Section 3
of the Specialty Crops Competitiveness Act of 2004 (7 U.S.C.
1621 note; Public Law 108-465) as fruits and vegetables, tree
nuts, dried fruits, and nursery crops (including floriculture).
Maple syrup is included because some USDA agencies consider it
a specialty crop. Data are provided that include and exclude
maple syrup to accommodate either definition.

e. Civil Rights Report: The population for the Civil Rights Report
is the USDA-NASS farm population. It includes ``all operations
that sold or have the potential to sell at least $1,000 worth
of agricultural products during the year.''
10. Utilization (Participation) Data
a. 2008 Organic Production Survey: The final mail list included
28,938 farms that met the criteria of which 14,540 farms were
USDA certified or exempt.

b. Cash Rents: NASS sampled approximately 220,000 producers and
strives to get 80% percent response rate.

c. Prices Survey: NASS strives to achieve an 80% response rate for
operations surveyed each month.

d. Specialty Crops Survey: The number of farms producing specialty
crops totals 247,772.

e. Civil Rights Report: NASS used already collected data from the
Census of Agriculture. The Census form was mailed to
approximately 3.1 million potential farm operations. The 2007
Census of Agriculture counted 2.2 million farming operations.
USDA program agencies will load application and participation
data for their programs. The application and participation
rates and data will then be available to the general public.
11. Duplication or Overlap with Other Programs
a. 2008 Organic Production Survey: No duplication. These data were
collected from the organic producers themselves and not from
certifying entities as is published from other agencies.

b. Cash Rents: No duplication. This is the only source of
information on farm level cash rent rates for all qualifying
counties in the United States.

c. Prices Survey: No duplication. This data series is the only
available source of prices received by farmers available for
the U.S.

d. Specialty Crops Survey: No duplication.

e. Civil Rights Report: No duplication. This is the only source of
information for participation and application rate data.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--Economic
Research Service
1. Program Name
Economic Research Service (ERS).
2. Subprograms/Department Initiatives
Economic Research and Analysis.
3. Brief History
The Economic Research Service (ERS) was established in 1961 from
components of the former Bureau of Agricultural Economics principally
under the authority of the Agricultural Marketing Act of 1946 (7 U.S.C.
1621-1627).
4. Purpose/Goals
The mission of ERS is to inform and enhance public and private
decision making on economic and policy issues related to agriculture,
food, the environment, and rural development.
ERS has six strategic goals which correspond to each of the four
USDA strategic goals. To achieve these goals, ERS enhances the
understanding of policy makers, regulators, program managers, and those
shaping debate of economic issues affecting agriculture, food, the
environment, and rural development. Activities to support ERS' mission
and goals involve research and development of economic and statistical
indicators on a broad range of topics, including but not limited to
global agricultural market conditions, trade restrictions, agribusiness
concentration, farm and retail food prices, foodborne illnesses, food
labeling, nutrition, food assistance programs, agrichemical usage,
livestock waste management, conservation, agricultural productivity,
technology transfer, and rural employment. Research results and
economic indicators on such important agricultural, food, natural
resource, and rural issues are fully disseminated to public and private
decision makers through published and electronic reports and articles;
special staff analyses, briefings, presentations, and papers;
databases; and individual contacts.
5. Success in Meeting Programmatic Purpose/Goals
The long-term performance goal for the Economic Research Service is
the successful execution of the ERS program of economic research and
analysis to provide policy makers, regulators, program managers, and
those shaping the public debate on agricultural economic issues with
timely, relevant, and high quality economic research, analysis, and
data to enhance their understanding of economic issues affecting food
and agriculture. The key outcome of the ERS program is informed public
and private decision-making on economic and policy issues related to
agriculture, food, the environment, and rural development.
Central to effective ERS performance is successful completion of
planned research that enhances understanding by policy makers,
regulators, program managers, and those shaping the public debate of
economic issues related to enhancing economic opportunities for
agricultural producers. ERS research and management practices use many
methods to ensure that the direction of agency research activities
reflects current and anticipated needs of ERS stakeholders and
customers, that research and analysis produced by the agency adheres to
disciplinary standards to ensure the highest possible quality, and that
the agency's research products are delivered in a way that is
accessible to customers.
ERS interacts with stakeholders and customers in many ways to
ensure that the research agenda focuses on topics relevant to public
and private decision makers. ERS regularly convenes workshops,
stakeholder sessions, or other meetings in which the results of recent
agency research are discussed, upcoming policy issues are identified,
and questions for future research are explored.
ERS strategic planning activities include reviews of progress in
meeting program plans and implementing revisions as necessary. ERS
strategic planning includes discussions with customers and stakeholders
on prospective research projects to meet anticipated needs of policy
officials. Stakeholder conferences are used to help set priorities for
ERS extramural funding programs. ERS management regularly discusses
implementation of research activities with key customers and
stakeholders including USDA Agencies, other Federal departments,
Congressional staff and members, and private sector partners to ensure
continued and improved agency effectiveness. Suggestions and ideas from
our key customers informs our program planning process to ensure that
ERS continues to provide the information, data, market outlook and
analysis needed to inform decision making on economic issues related to
food, agriculture, and rural America.
ERS uses independent expert review panels that evaluate the
effectiveness of the ERS program of economic research and analysis to
enable better informed decisions on food and agricultural policy
issues. Over the past 6 years, review panels have assessed major
segments of the ERS program. In each review, the external panels assess
the relevance, quality, and performance of program plans, activities,
and accomplishments. This assessment includes an evaluation using a
quantitative analysis tool to rate portfolio effectiveness on a multi-
category scale (excellent, adequate, needs improvement). The panel
recommendations are used in agency strategic planning and priority
setting. All past reviews have rated ERS performance as ``Excellent.''
6. Annual Budget Authority (FY 2002-FY 2011) ($000)
FY 2002: $67,154
FY 2003: $68,674
FY 2004: $70,981
FY 2005: $74,170
FY 2006: $75,172
FY 2007: $75,193
FY 2008: $77,397
FY 2009: $79,500
FY 2010: $82,478
FY 2011: $81,814
7. Annual Outlays (FY 2002-FY 2011) ($000)
FY 2002: $69,892
FY 2003: $70,262
FY 2004: $65,543
FY 2005: $72,847
FY 2006: $72,778
FY 2007: $72,760
FY 2008: $77,707
FY 2009: $79,719
FY 2010: $67,927
FY 2011: $82,000 (est.)

8. Annual Delivery Cost (FY 2007-FY 2011) ($000)

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Salaries and Expenses $34,157 $32,945 $39,621 $39,675 $40,781 $42,311 $45,080 $48,897 $52,361 $52,400
Data Acquisition $4,000 $6,500 $6,950 $10,450 $10,027 $10,250 $13,116 $16,407 $16,095 $16,199
Contracts, Agreements, and Grants $12,859 $11,732 $5,130 $5,899 $6,899 $5,240 $8,750 $8,223 $9,050 $8,634
Direct costs $492 $270 $283 $480 $2,176 $1,757 $1,200 $1,200
Indirect Costs * $16,029 $17,243 $18,637 $17,743 $17,015 $16,335 $7,908 $3,606 $3,037 $3,381
-------------------------------------------------------------------------------------------------------------
Total Cost $67,045 $68,420 $70,830 $74,037 $75,005 $74,616 $77,030 $78,890 $81,743 $81,814
Total FTEs 479 462 439 427 400 376 386 388 400 400

* Variances in Indirect Costs throughout the years are attributed to differences in charging data acquisition, contracts, and agreements to the budget
object class for categories included in Indirect costs.

9. Eligibility Criteria
N/A.
10. Utilization (Participation) Data
N/A.
11. Duplication or Overlap with Other Programs
The four REE agencies are complementary and have distinct missions.
The National Agriculture Statistics Service (NASS) conducts basic
statistically valid surveys to create a body of data that reflects on-
the-ground factual information. ERS constructs data series, using data
from a variety of sources, to inform its program of research and market
analysis. Data collected by NASS are used by ERS for its farm income
estimates and research, and in the ERS program of market outlook and
analysis. Other data and research in ERS, such as the food security
statistics, rely on survey agreements with other Federal agencies such
as the Census bureau. ERS provides data, research and analysis that
support the wide range of program and policy issues of importance to
USDA. ERS data, information and analysis meet the information needs of
USDA policy makers and programs, and are used by the media, trade
associations, public interest groups, and the general public. Findings
are useful to inform policymakers and for continuously improving the
quality of the market information that guides production decisions and
risk management.
ERS provides social science research and analysis to complement the
other scientific expertise of the REE agencies in multidisciplinary
research. ERS collaborates with ARS in carrying out research to address
the needs of U.S. agriculture, including research and data development
to support rural prosperity, agricultural productivity, global food
security, food safety, and better diets. ERS coordinates with NIFA
regarding extramural funding priorities and identifying promising new
areas for research.
ERS is the primary source of statistical indicators that, among
other things, gauge the health of the farm sector (including farm
income estimates and projections), assess the current and expected
performance of the agricultural sector (including trade), and provide
measures of food insecurity here and abroad. ERS is one of the 14 OMB
officially-designated Federal statistical agencies.
ERS collaborates with the staff of the Office of the Chief
Economist and staff economists in USDA program agencies to provide
data, research findings, and market analysis and outlook to support
Departmental decision making on program implementation and development.
12. Waste, Fraud and Abuse
No such instances have to date been identified.
13. Effect of Administrative PAYGO
None.

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF USDA DAIRY PROGRAMS)

----------

THURSDAY, SEPTEMBER 8, 2011

Subcommittee on Livestock, Dairy, and
Poultry,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:15 p.m., in
Room 1300, Longworth House Office Building, Hon. Thomas J.
Rooney [Chairman of the Subcommittee] presiding.
Members present: Representatives Rooney, Goodlatte,
Neugebauer, Conaway, Huelskamp, DesJarlais, Gibson, Ribble,
Cardoza, Scott, Courtney, Boswell, Owens, Peterson (ex
officio), Costa, and Welch.
Staff present: John Goldberg, Debbie Smith, Lauren
Sturgeon, Suzanne Watson, Michelle Weber, John Konya, Nathaniel
B. Fretz, Mary Knigge, and Jamie Mitchell.

OPENING STATEMENT OF HON. THOMAS J. ROONEY, A REPRESENTATIVE IN
CONGRESS FROM FLORIDA

The Chairman. This hearing of the Subcommittee on
Livestock, Dairy, and Poultry for the purpose of conducting an
agricultural program audit; an examination of USDA dairy
programs will come to order.
I would like to welcome y'all to today's hearing to review
the current dairy programs. I would like to begin by thanking
Ranking Member Cardoza for his help in preparing for today's
hearing. I would also like to welcome our witnesses and extend
our gratitude for you making the effort to be here and to share
your time and expertise with our Subcommittee.
This hearing is the tenth in a series of audits of USDA
farm programs. Through these discussions, we hope to gain a
better understanding of how each program is operating and what
we might do to improve farm policy, moving forward. Our
witnesses today will share their knowledge and expertise in
administering Federal dairy programs.
The events of 2009 exposed what many have long held to be
an inadequacy of some of our current dairy programs. While some
observers may argue that additional funding may improve the
overall effectiveness of our dairy safety net, our current
budgetary outlook makes this option a nonstarter. Innovative
and effective ideas are needed in order to ensure that our
programs support our producers, facilitate product and market
development, and continue to ensure the availability of safe,
abundant, and affordable products for our consumers.
Our witnesses will provide the Subcommittee with detailed
information on existing programs, testifying to their current
conditions, productivity, and possible public policy
challenges. In this hearing, we hope to gain some perspective
about the issues we should focus on in greater detail later in
this Congress.
I appreciate my colleagues' attendance and interest in this
hearing and encourage suggestions and recommendations as we
move forward with our Subcommittee's agenda.
[The prepared statement of Mr. Rooney follows:]

Prepared Statement of Hon. Thomas J. Rooney, a Representative in
Congress from Florida
Good afternoon, and welcome to today's hearing to review current
dairy programs. I would like to begin by thanking Ranking Member
Cardoza for his help in preparing for today's hearing. I would also
like to welcome our witnesses and extend our gratitude for making the
effort to be here and to share their time and expertise with our
Subcommittee.
This hearing is the tenth is a series of audits of USDA farm
programs. Through these discussions we hope to gain a better
understanding of how each program is operating and what we might do to
improve farm policy, moving forward. Our witnesses today will share
their knowledge and expertise in administering Federal dairy programs.
The events of 2009 exposed what many have long-held to be an
inadequacy of some of our current dairy programs. While some observers
may argue that additional funding may improve the overall effectiveness
of our dairy safety net, our current budgetary outlook makes this
option a non-starter. Innovative and effective ideas are needed in
order to ensure that our programs support our producers, facilitate
product and market development, and continue to ensure the availability
of safe, abundant and affordable products for our consumers.
Our witnesses will provide the Subcommittee with detailed
information on existing programs, testifying to their current
conditions, productivity, and possible public policy challenges. In
this hearing we hope to gain some perspective about the issues we
should focus on in greater detail later in this Congress.
I appreciate my colleagues' attendance and interest in this hearing
and encourage suggestions and recommendations as we move forward with
our Subcommittee's agenda.

The Chairman. With that, I would like to recognize the
Ranking Member, Representative Cardoza.

OPENING STATEMENT OF HON. DENNIS A. CARDOZA, A REPRESENTATIVE
IN CONGRESS FROM CALIFORNIA

Mr. Cardoza. Thank you, Mr. Chairman.
I very much appreciate your friendship and your
organizational ability putting this hearing together. I want to
also thank our witnesses for being with us today. This is a
vital hearing with regard to our dairy programs at USDA.
The dairy industry has always faced a rocky road, but the
past few years have been particularly challenging. In
California, we produce 21 percent of the country's milk supply,
producing some of the highest amounts of cheese, milk, butter,
yogurt, nonfat dry milk than anywhere else in the country.
Alone, the dairy industry produces $4.5 billion in annual
sales and generates $63 billion in economic activity. This
equates to over 443,000 jobs for our country; therefore, it is
vital that USDA implement programs that keep the industry
strong and are equitably distributed throughout the country in
order to keep dairymen and women producing wholesome products
that we all enjoy and so that parents can provide their
children with the best available nutrition.
It is also essential that this Congress enact dairy policy
reforms that lift up the industry and lay the foundation for
the future of dairy production. As a country and as a
Committee, we need to ensure that we lay the long-term
foundation for a strong industry so that we can continue to
produce milk and other dairy products at home and not rely on
imports from other countries. Producing our own food is vital
to our national security. It is imperative that we protect our
domestic food production industry, especially the dairy
industry.
I look forward to hearing from our witnesses today and
thank them all for being here. We will use this information to
craft dairy policies, moving forward, and I appreciate your
input.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Cardoza follows:]

Prepared Statement of Hon. Dennis A. Cardoza, a Representative in
Congress from California
Thank you, Mr. Chairman, and thank you to our witnesses for sharing
with us today the status of the dairy programs at USDA.
The dairy industry has always faced a rocky road, but the past few
years have been particularly challenging.
In California, we produce 21% of the country's milk supply,
producing some of the highest amounts of cheese, milk, butter, yogurt,
and nonfat dry milk in the country.
Alone, the dairy industry produced $4.5 billion in annual sales and
generated $63 billion in economic activity. This equates to over
443,000 jobs.
Therefore, it is vital that USDA implement programs that keep the
industry strong and are equitably distributed throughout the country,
to keep dairymen and women producing the wholesome products that we all
enjoy, and so that parents can provide their children with the best
available nutrition.
It is also essential that this Congress enact dairy policy reforms
that lift up the industry and lay a foundation for the future of dairy
production.
As a country and as a Committee, we need to ensure that we lay the
long-term foundation for a strong industry so that we can continue to
produce milk and other dairy products at home--and not rely on imports
from other countries.
Producing our own food is vital to our national security. It is
imperative that we protect our domestic food production industry,
including dairy.
I look forward to hearing from our witnesses today and thank them
for being here. We'll use this information to craft dairy policies,
moving forward, and I appreciate your input. Thank you.

The Chairman. Thank you, Mr. Cardoza.
The chair would request that other Members submit their
opening statements for the record so that the witnesses may be
able to begin their testimony and ensure that there is ample
time for questions.
[The prepared statements of Mr. Peterson and Mr. Baca
follow:]

Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Good afternoon. Thank you Chairman Rooney and Ranking Member
Cardoza for continuing the Agriculture Committee's farm bill audit
hearings.
We have known for some time now that our current dairy programs are
not working. They are not keeping pace with the challenges facing
today's dairy industry.
I worry that if we have another situation like we had in 2009 we
could easily lose half our nation's dairies. Unfortunately, the current
environment in the dairy sector is becoming very similar to what we saw
leading up to the 2009 collapse. This is why I believe we need to
address dairy programs sooner than later.
I've put forward a draft dairy reform proposal that I hope to
introduce in the coming weeks. We can discuss the proposal more at
another time but I do believe that we're on the right track to reaching
a solution.
It is also important to note that whatever this Committee decides
to do, with dairy programs specifically or the farm bill as a whole, we
will have to make some tough choices to reduce spending.
Again, I thank the chair for holding today's hearing and look
forward to hearing from our witnesses.
______

Prepared Statement of Hon. Joe Baca, a Representative in Congress from
California
Chairman Rooney and Ranking Member Cardoza:

I am pleased to be here today to review the current state of dairy
programs at USDA--and to discuss what steps, if any, the Federal
Government should take to stabilize the dairy market in the 2012 Farm
Bill.
I thank the Chairman and Ranking Member for convening this hearing
and hope we will be able to gain valuable insight into this critical
issue.
I also want to thank our witnesses for coming here today--and
taking time from their schedule to help us in Congress better
understand current dairy policy.
Everyone in this room understands the important work America's
dairy farmers do, and the vital need to keep the dairy industry healthy
and prosperous.
When agricultural markets fluctuate, there is a direct and
significant impact on our nation's food supply--and thus the health and
nutrition of virtually every American.
In my own Congressional District in the Inland Empire of
California--dairy is a significant agricultural and economic product.
We all know the dairy industry has been hit harder than most by the
recent economic downturn. We also know that our dairy farmers continue
to see higher levels of production costs.
As Members of the Subcommittee on Livestock, Dairy, and Poultry, it
is vitally important that we review the current efficiency and
effectiveness of dairy programs.
America's dairy industry must remain strong and secure.
We must be willing to work together on this issue. The USDA,
industry groups, the Federal and state governments all play an
important role in stabilizing our markets.
I look forward to hearing from our witnesses today and again thank
the Chairman and Ranking Member for their leadership.
Thank you.

The Chairman. I would like to welcome our panel of
witnesses to the table: Mr. Juan Garcia, Acting Deputy
Administrator for Farm Programs, Farm Service Agency, U.S.
Department of Agriculture, accompanied by Dr. Larry Salathe,
Senior Economist, Office of the Chief Economist, USDA; and Ms.
Dana Coale, Deputy Administrator for Dairy Programs,
Agricultural Marketing Service, U.S. Department of Agriculture,
Washington, D.C.
Mr. Garcia, please begin when you are ready.

STATEMENT OF JUAN M. GARCIA, ACTING DEPUTY
ADMINISTRATOR FOR FARM PROGRAMS, FARM SERVICE AGENCY, U.S.
DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.; ACCOMPANIED BY LARRY SALATHE, Ph.D., SENIOR
ECONOMIST, OFFICE OF THE CHIEF
ECONOMIST, USDA

Mr. Garcia. Thank you, Mr. Chairman.
Mr. Chairman, Ranking Member Cardoza, and Members of the
Subcommittee, thank you for the opportunity to discuss the
dairy provisions associated with the 2008 Farm Bill. Today, I
will review dairy programs of the Farm Service Agency, Foreign
Agricultural Service and Risk Management Agency. I will also
briefly mention some important dairy assistance programs
authorized outside the farm bill.
Dairy production in the United States is marked by
significant volatility and low market predictability. Our dairy
producers are the most productive in the world, but their
livelihood comes with a great deal of uncertainty regarding
prices and input costs. Given the roller coaster cycle of the
dairy market, market downturns can have very significant
impacts very quickly. We saw this unfold in 2009 with the last
dramatic and rapid decline in dairy prices. The global economic
recession, the melamine scare in China, and increases in the
value of the dollar lowered the demand for U.S. dairy products
in world markets, while grain prices kept feed costs relatively
high. As you know, this puts tremendous pressure on U.S. dairy
producers.
Since 2009, Secretary Vilsack has exercised every authority
at hand to provide as much relief as possible to dairy
producers under a variety of programs. Today, I would like to
mention those programs briefly.
Since April 2009, FSA has provided more than $900 million
for producers under the Milk Income Loss Contract Program,
which makes payments when market prices are low relative to a
level fixed in statute. Most of those payments went out at the
height of the crisis in 2009.
We are also working hard to be sure credit is available for
dairy producers, in particular during market downturns when
commercial credit is hard to come by.
In March 2009, FSA authorized the release of MILC sales
proceeds for essential family living and farm operating
expenses and notified borrowers of a wide variety of additional
loan servicing options.
Stable markets are crucial to a healthy dairy industry. The
Commodity Credit Corporation stands ready to buy certain dairy
products at support levels under the Dairy Product Price
Support Program. By doing so, the Dairy Product Price Support
Program helps support market prices. The acquired products are
largely used to provide assistance to needy families, both in
the U.S. and overseas.
The Foreign Agricultural Service, in turn, operates a Dairy
Export Incentive Program, which provides a bonus on a bid basis
to exporters of dairy products to bridge the gap between world
market prices and U.S. domestic prices. Since 2002, world dairy
prices have warranted issuing allocations under the program
five times.
In addition to these authorities under the farm bill, USDA
has also expedited emergency non-farm bill aid to producers.
The Fiscal Year 2010 Agricultural Appropriations Act authorized
$290 million in additional direct payments to dairy producers
under the Dairy Economic Loss Program, as well as $60 million
for the purchase of cheese and other products. The $290 million
was paid in near record time, with payments beginning within 60
days of legislative passage. We are particularly proud that
these important payments were made so quickly to the greatest
possible benefit during a time of crisis for U.S. dairies.
Finally, insurance makes up an important part of the safety
net for dairy producers. There are two basic insurance models
used to provide livestock insurance: the Livestock Risk
Protection and Livestock Gross Margin. The Livestock Risk
Protection provides protection against unexpected declines in
the price of certain livestock, while the Livestock Gross
Margin provides protection against unexpected declines in the
gross margin of the insured livestock product for certain
livestock, which includes milk.
Mr. Chairman and Members of the Subcommittee, Secretary
Vilsack and all of us at USDA recognize that volatility and
market uncertainty affect all producers to a certain extent.
Market fluctuations can be particularly dramatic in the dairy
industry, and we have been very diligent in exercising a broad
range of program authority to help dairy producers across
America. We look forward to continuing our work with Congress
on this important issue, providing information or technical
assistance wherever we can.
Mr. Chairman, this concludes my remarks and I would be
happy to answer any questions you may have. Thank you very
much.
[The prepared statement of Mr. Garcia follows:]

Prepared Statement of Juan M. Garcia, Acting Deputy Administrator for
Farm Programs, Farm Service Agency, U.S. Department of Agriculture,
Washington, D.C.
Mr. Chairman, Ranking Member, and Members of the Subcommittee,
thank you for the opportunity to discuss the dairy provisions
associated with the Food, Conservation, and Energy Act of 2008 (2008
Farm Bill). I will be covering not only the programs associated with
the Farm Service Agency (FSA), but also those associated with the
Foreign Agricultural Service (FAS) and the Risk Management Agency
(RMA). The programs of these agencies provide the backbone of the farm
safety net for dairy producers. This hearing provides an opportunity to
reflect on the performance of these programs under the 2008 Farm Bill,
while thinking ahead to the upcoming farm bill debate.
The dairy market situation has been extremely volatile in recent
years, which has greatly affected FSA programs, in particular. I will
start my discussion with those programs, intertwining information on
the dairy market situation to highlight our response to the very weak
economic climate faced by dairy producers in 2009.
Farm Service Agency Programs and the Dairy Crisis
Several events converged in early 2009 that caused a dramatic and
rapid decline in dairy prices, which averaged $12.93 per hundredweight
(cwt.) for the calendar year, the lowest level since 2003. The global
economic recession, the melamine scare in China, and increases in the
value of the dollar lowered the demand for U.S. dairy products in world
markets. In addition, more normal weather returned to the grass-fed
dairy industry in New Zealand and Australia, which had been plagued by
drought in the preceding years. And, at home, the economic crisis
weakened the demand for dairy products.
Meanwhile, feed costs remained relatively high in 2009, causing the
ratio between milk and feed prices to fall to its lowest level in more
than 25 years. Financial pressure led producers to cull additional
dairy cows and reduce milk production. The number of milk cows dropped
from 9.31 million head in January 2009 to 9.08 million head in December
2009. In 2009, milk production declined by 0.3 percent, the first year-
over-year decline since 2001.
Since April 2009, FSA has paid dairy producers more than $900
million under the Milk Income Loss Contract (MILC) program, which makes
payments when market prices are low relative to a level fixed in
statute. The 2008 Farm Bill kept the same basic countercyclical price
structure for the MILC program as in the 2002 Farm Bill, but also
included a ``feed cost adjuster,'' which increases the size of the
payment depending on ration costs.
Most of these MILC payments occurred in calendar year 2009,
although a payment of about $15 million was made for April production
in early June, 2010. Since enactment of the 2008 Farm Bill, MILC
payments have been made during 11 months; the feed cost adjuster had an
impact on the payment in 5 of those months.
The dairy crisis also affected producers' ability to receive
financing from commercial sources. In March 2009, FSA issued guidance
on assisting dairy producers with their credit needs. This notice
announced that FSA Farm Loan Programs (FLP) was authorizing the release
of milk sales proceeds for essential family living and farm operating
expenses and notified FLP borrowers of servicing options that could be
considered by FSA on a case-by-case basis, including extending
repayment terms for annual operating loans for dairy farmers,
rescheduling, consolidation, reamortization, and deferral for 1 to 5
years. We also contacted guaranteed lenders to discuss FSA policies for
dairy loans and remind them of loan servicing options available under
the Guaranteed Loan Program that could be considered for certain
producers.
USDA also expedited emergency non-farm bill aid to producers during
the dairy crisis. The Fiscal Year 2010 Agriculture Appropriations Act
authorized $290 million in additional direct payments to dairy
producers, as well as $60 million for the purchase of cheese and other
products. The $290 million was paid in near-record time--with payments
beginning within 60 days of legislative passage. Under the Dairy
Economic Loss Assistance Program, eligible farmers received a one-time
direct payment based on the amount of milk both produced and
commercially marketed by their operations during the months of February
through July 2009. A 100 cow dairy farm received payments of roughly
$6,000; a 200 cow dairy, about $12,000; and operations of 400 cows or
more, roughly $19,000. (Note that payments did not increase
proportionately for large operations because of the application of a 6
million pound production eligibility limitation.)
In addition, the Commodity Credit Corporation (CCC) stands ready to
buy certain dairy products at support levels under the Dairy Product
Price Support Program (DPPSP). By doing so, the DPPSP helps support
market prices. The acquired products are largely used to provide
assistance to needy families, both in the U.S. and overseas. In total
since October 2008, CCC has purchased nearly 270 million pounds of
nonfat dry milk (NDM) under the DPPSP at a cost of $227 million.
Expenditures for purchases, handling, transportation, and storage were
an additional $16 million, bringing total program expenditures to $243
million. No purchases have occurred since July 2009. Also during this
time period, CCC purchased about 4.6 million pounds of butter, much of
it during late 2008 and the first half of 2009. The Secretary announced
in March 2009 that about 200 million pounds of NDM would be processed
or bartered into value-added products, such as instantized nonfat dry
milk, ultra high temperature milk, cheese, and ready-to-eat milk-based
soups for the National School Lunch Program and the Emergency Food
Assistance Program. USDA also temporarily increased DPPSP purchase
prices for cheddar blocks, cheddar barrels, and NDM during August-
October 2009.
With the mid-point of the all-milk price forecast to average a
record of $20.40 per cwt. in calendar year 2011, no MILC payments are
expected during the remainder of the year, nor are purchases under the
DPPSP expected. While high feed costs are putting financial pressure on
dairy producers, milk prices are at high enough levels that MILC
payments will not be triggered in the foreseeable future. Indeed, no
payments have been made under MILC for milk produced since April 2010.
The current strong prices are in part due to strong world dairy
markets, which are supporting higher U.S. exports and lower U.S.
imports. Compared to the same period a year ago, March through May
exports of U.S. dairy products were 36.4 percent higher for cheese,
65.7 percent higher for butter and 13.7 percent higher for nonfat dry
milk.
Dairy Export Incentive Program
The Dairy Export Incentive Program (DEIP) was authorized under the
Food Security Act of 1985 and most recently reauthorized in the 2008
Farm Bill. This program, administered by the Foreign Agricultural
Service, provides a bonus or subsidy on a bid basis to exporters of
dairy products. By providing a subsidy on exports of dairy products,
Congress intended DEIP to bridge the gap between world market prices
and U.S. domestic prices. Commodities eligible under DEIP are milk
powder, NDM, butterfat, and various cheeses.
The authorizing legislation for DEIP provides that the subsidy may
be paid in cash or in commodities held by the CCC. As CCC inventories
diminished, DEIP evolved into the sole use of cash payments for the
subsidy. DEIP is subject to U.S. export subsidy reduction commitments
under the World Trade Organization's Uruguay Round Agreements, and is
therefore capped annually by both subsidy value and quantity in
accordance with those commitments. DEIP has helped to meet the needs of
U.S. exporters and expand markets for U.S. dairy products when world
prices are depressed due to the application of subsidies by other
nations, particularly the European Union. Agricultural economists at
FAS continuously monitor the world dairy situation and have the
responsibility for recommending issuing allocations under DEIP as world
dairy prices dictate.
Since 2002, world dairy prices have warranted issuing allocations
under DEIP five times. DEIP bonuses were last awarded in Fiscal Year
2010 in an amount of $2.37 million, including for sales of mozzarella
cheese to China and butter to Saudi Arabia.
Livestock Gross Margin-Dairy (LGM-Dairy) Program
While not contained in the farm bill, insurance is an important
part of the safety net for dairy producers. The Agricultural Risk
Protection Act of 2000 amended the Federal Crop Insurance Act (FCIA),
providing authority to RMA to offer insurance for livestock products.
It also provided $20 million in funding to cover administrative and
operating and premium subsidy costs for pilot livestock insurance plans
each fiscal year. RMA currently reinsures eight livestock products, all
of which were developed and submitted by private parties through
authorities contained in section 508(h) of the FCIA. There are two
basic insurance models used to provide livestock insurance--Livestock
Risk Protection (LRP) and Livestock Gross Margin (LGM). LRP provides
protection against unexpected declines in the price of feeder cattle,
fed cattle, lamb, and swine. LGM provides protection against unexpected
declines in the gross margin (difference between the price received and
feed costs) of the insured livestock product for cattle, dairy (milk),
and swine.
The LGM-Dairy insurance product provides protection to dairy
producers when the gross margin declines. LGM-Dairy uses futures prices
for corn, soybean meal, and milk to determine the expected gross margin
and the actual gross margin. LGM Dairy is a private sector pilot
program owned and maintained by Iowa Agricultural Insurance
Innovations, LLC (IAII). RMA works actively with this entity, and is
aware that IAII continues to evaluate areas for potential improvement
to make the product more effective and attractive for dairy farmers.
Prior to Fiscal Year 2011, total annual expenditures on all
livestock insurance products had never exceeded $5 million. For Fiscal
Year 2011, about $345,523 had been spent to support all livestock
products through mid-December, 2010, with LGM-Dairy accounting for
$66,117 of the total. In response to dairy producer concerns, the
Federal Crop Insurance Corporation (FCIC) Board of Directors approved
changes to LGM-Dairy, which became effective in December 2010,
including a shift in the premium due date to after the end of the
insurance period and the addition of graduated producer premium
subsidies. These changes, along with promotional efforts led by
industry groups, resulted in a dramatic and immediate increase in
sales. For the December 17, 2010 sales period, LGM-Dairy sales
increased by almost $1.4 million, compared to less than $70,000 during
all sales periods dating back to the beginning of the fiscal year.
Subsequently, RMA revised the funding allocation for LGM-Dairy and
added an additional $5 million to underwriting capacity, using funds
from other livestock products that, to date, had limited sales. Because
of continued strong sales of LGM-Dairy, further revisions to the
funding allocation occurred, and $16 million were eventually allocated
to LGM-Dairy and $4 million to the other seven livestock insurance
plans. The $16 million in underwriting capacity ran out during the
sales period in March 2011 and LGM Dairy sales for the remainder of
Fiscal Year 2011 ceased at that time.
As of August 8, 2011, less than $600,000 of funding remained for
the other livestock insurance products for the remainder of fiscal
2011. As funding is depleted for each insurance product, sales will
cease for that product until funds become available again beginning
with the 2012 Fiscal Year.
Dairy Industry Advisory Committee
In response to the dairy crisis, USDA announced in August 2009 that
nominations would be accepted to form a Dairy Industry Advisory
Committee. The Secretary of Agriculture appointed 17 representatives
from the dairy industry to serve in an advisory capacity, including
producers and producer organizations, processors and processor
organizations, handlers, consumers, academia, retailers, and others.
The Committee's charge was ``to review the issues of: (1) farm milk
price volatility and (2) dairy farmer profitability.'' USDA very much
appreciates the work of this Committee, which submitted its final
report to the Secretary in March 2011.
This final report includes 23 wide-ranging recommendations. USDA is
currently reviewing other recommendations and considering action as
appropriate. We look forward to working with Congress to develop
policies that provide the most efficient and cost-effective protection
to the dairy sector.
Working Toward the Next Farm Bill
Mr. Chairman, as we move forward toward development of the next
farm bill, it is important that we approach this new legislation with
an eye toward truly making a difference in the future of the lives of
millions of rural Americans, while at the same time using scare
resources wisely. In the coming months, I look forward to providing
answers to your questions and helping to better frame and push the
debate toward the topics and issues that are most important to our
constituents.
I am happy to respond to any questions. Thank you.

The Chairman. Thank you, Mr. Garcia.
The gentleman from California, Mr. Costa, is not a Member
of the Subcommittee but has joined us today. I have consulted
with the Ranking Member, and we are pleased to welcome him in
the questioning of the witnesses.
Now, we will move to the testimony of Ms. Coale.
Ms. Coale, please begin when you are ready.

STATEMENT OF DANA COALE, DEPUTY ADMINISTRATOR FOR DAIRY
PROGRAMS, AGRICULTURAL MARKETING SERVICE, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY LARRY SALATHE,
Ph.D., SENIOR
ECONOMIST, OFFICE OF THE CHIEF ECONOMIST, USDA

Ms. Coale. Chairman Rooney, Ranking Member Cardoza and
Members of the Subcommittee, thank you for inviting me to
appear before you today to review the dairy programs
administered by the Agricultural Marketing Service of the U.S.
Department of Agriculture.
I will provide you with an update on the activities
authorized in the 2008 Farm Bill that I hope will be helpful as
you examine dairy provisions for the 2012 Farm Bill.
AMS dairy programs conduct several activities to facilitate
the competitive and efficient marketing of milk and dairy
products. I am going to focus my oral statement on the three
areas specifically identified in the 2008 Farm Bill: Federal
Milk Marketing Orders; Research and Promotion Programs; and
Domestic and International Market News.
The Federal Milk Marketing Order Program has been in
existence since the 1930s when it was authorized by the
Agricultural Marketing Agreement Act of 1937. Currently, there
are ten Orders that represent nearly 65 percent of all milk
marketed in the United States. Federal Milk Marketing Orders
are designed to promote orderly marketing by classifying and
computing a minimum value of milk that is reflective of supply
and demand conditions. The Order program ensures that
processors pay producers this minimum value by verifying market
utilization, delivery weights and component tests.
Through this verification process, the Federal Order
program obtains and publishes extensive market information that
aids producers and processors with marketing decisions. During
2010, the Federal Order program ensured minimum payments to
nearly 46,000 producers, totaling approximately $20.4 billion.
Although Federal Milk Marketing Orders have been in
existence for over 70 years, they are continually updated
through the amendatory process. The 2008 Farm Bill made several
changes to the amendatory process designed to expedite the time
needed to implement changes. The new time-frames were
implemented August 20, 2008. These time-frames decrease the
rulemaking process from over 2 years to less than 12 months
from the date a hearing is held. USDA has held one national
proceeding utilizing the new process and successfully met the
mandated time-frame.
Based on the 2008 Farm Bill, AMS also established a Dairy
Forward Pricing Program that allows dairy farmers to enter into
forward price contracts with processors for non-fluid milk
uses. The milk under contract is exempt from receiving minimum
Federal Order prices. Participation in the program has been
minimal, approximately 300 producers of a possible 10,000 to
15,000. Low participation rates may be attributed to perceived
unfavorable price relationships and a limited number of
processors offering forward contracts.
Finally, the 2008 Farm Bill authorized the formation of a
commission to review the Federal Milk Marketing Order program.
Since this item was not funded, USDA did not appoint a
commission. However, Secretary Vilsack did appoint an advisory
committee that reviewed overall dairy policy, including a
review of Federal Milk Marketing Orders.
AMS also has oversight responsibility for various research
and promotion programs. The dairy industry has the two largest
such programs, both overseen by dairy programs, one funded by
producers at 15 cents per hundredweight and one funded by
processors at 20 cents per hundredweight. The 2008 Farm Bill
required expansion of the producer program to include a
15 cents assessment on production in Alaska, Hawaii, the
District of Columbia, and the Commonwealth of Puerto Rico. This
assessment became effective on April 1, 2011. In addition to
the expanded producer assessment, a 7.5 cents assessment was
mandated for imported dairy products. This assessment became
effective August 1, 2011.
AMS provides a wealth of market information to dairy
farmers through our voluntary Domestic and International Market
News Program. The 2008 Farm Bill directed USDA to establish an
electronic reporting system for price reporting of four dairy
commodities: cheddar cheese, butter, dry whey, and nonfat dry
milk. Since funding was not provided, USDA did not implement
these provisions. However, the Mandatory Price Reporting Act of
2010 mandated establishment of the program. AMS issued a
proposed rule on June 10, 2011, to implement this mandate.
Seven comments were filed in response to the proposal. A final
rule is being prepared to implement the program. In addition,
software programming has begun to develop the electronic format
that will accommodate the weekly reporting of these dairy
commodities.
I hope this testimony and the subsequent questions and
answers will prove useful to the Subcommittee as you undertake
your work on the next farm bill. Thank you.
[The prepared statement of Ms. Coale follows]

Prepared Statement of Dana Coale, Deputy Administrator for Dairy
Programs, Agricultural Marketing Service, U.S. Department of
Agriculture, Washington, D.C.
Chairman Rooney, Ranking Member Cardoza, and Members of the
Subcommittee, thank you for inviting me to appear before you today to
review the dairy programs administered by the U.S. Department of
Agriculture (USDA) and to provide a comprehensive picture of the dairy
activities authorized in the Food, Conservation, and Energy Act of 2008
(2008 Farm Bill). It is our hope that this examination of these dairy
provisions will prove helpful as you begin work on the next farm bill.
The Commodity Title (Title I) of the 2008 Farm Bill covered a wide
range of dairy issues. USDA's Agricultural Marketing Service (AMS) and
the Farm Service Agency (FSA) are the primary agencies with
responsibility for implementing Title I. Mr. Garcia of FSA is here with
me today to discuss their activities.
The economic vitality and quality of life in rural America, as well
as the U.S. economy at large, depend on a competitive, efficient, and
productive agricultural system. To increase prosperity and
sustainability in our nation's agricultural system and rural
communities, AMS conducts oversight activities to protect producers
from unfair business practices. To assist producers in management and
marketing, AMS develops and oversees national standards for the
production and handling of agricultural products. AMS also supports
producers by providing market information and marketing tools that
serve as the eyes and ears of American agriculture to cover numerous
commodities on a daily basis and provides information that impacts
billions of dollars in agricultural trading each year.
Federal Milk Marketing Orders
Federal Milk Marketing Orders (FMMO) are authorized by the
Agricultural Marketing Agreement Act of 1937, as amended. There are
currently ten FMMO areas, impacting about 65 percent of all milk
marketed in the U.S. These ten Orders are administered by eight market
administrators.
The objectives of the FMMO system are to stabilize market
conditions, to benefit producers and consumers by establishing and
maintaining orderly marketing conditions, and to assure consumers of
adequate supplies of pure and wholesome milk at all times. The FMMO
program guarantees dairy farmers a minimum price for their milk while
assuring that consumers have an adequate supply of milk to meet their
needs throughout the year.
FMMOs are initiated and amended based on industry requests that are
addressed through the formal rulemaking process. This involves
hearings, briefings, recommended decisions, public comments, final
decisions, farmer votes, and, ultimately, implementation by USDA.
Changes in FMMOs are approved by an affirmative vote of \2/3\ of the
eligible dairy farmers.
The 2008 Farm Bill had three provisions related to FMMOs. The first
directed USDA to establish supplemental rules to define guidelines and
time-frames to improve the timeliness of the Federal Milk Marketing
Order hearing process. AMS published this final rule on August 20,
2008.
Second, the 2008 Farm Bill directed AMS to establish a Dairy
Forward Pricing Program to allow milk producers and cooperative
associations to voluntarily enter into forward price contracts with
milk handlers for milk used for non-fluid purposes. The program exempts
handlers regulated under the Federal Milk Marketing Order from paying
producers and cooperative associations the minimum Federal Order price
for milk under forward contract. AMS published this final rule on
October 31, 2008.
Third, the 2008 Farm Bill authorized the Secretary to create a
Commission to conduct a comprehensive review and evaluation of the
current Federal Milk Marketing Order system and the other non-Federal
Milk Marketing Order systems such as California. As no funding was
provided, the commission was not established. However, on January 6,
2010, USDA announced the selection of 17 members to the Dairy Industry
Advisory Committee (DIAC). The activities of the DIAC will be discussed
by FSA.
Research and Promotion
Authorized by Federal legislation, research and promotion programs,
often referred to as ``checkoffs'', are designed to strengthen the
position of the industry in the marketplace and to maintain and expand
domestic and foreign markets. The programs are funded by industry
assessments. Board members are nominated by the industry and appointed
by the Secretary of Agriculture. AMS oversees the activities of the
boards and approves their budgets in order to assure compliance with
the legislation.
Dairy Programs oversees two dairy promotion and research programs.
The Fluid Milk Promotion Act of 1990, as amended (Fluid Milk Act) (7
U.S.C. 6401 et seq.), authorized the establishment of a national fluid
milk processor promotion program to develop and finance generic
advertising programs designed to maintain and expand markets and uses
for fluid milk products produced in the contiguous 48 states and the
District of Columbia. The Fluid Milk Order became effective December
10, 1993. The Secretary appointed the initial National Fluid Milk
Processor Promotion Board (Fluid Milk Board) on June 6, 1994.
Processors administer the Fluid Milk Processor Promotion Program
through the Fluid Milk Board.
Since August 2002, processors marketing more than 3 million pounds
of fluid milk per month, excluding those fluid milk products delivered
to the residence of a consumer, fund this program through a 20 cents
per hundredweight assessment on fluid milk processed and marketed in
consumer-type packages in the contiguous 48 states and the District of
Columbia.
The second dairy promotion and research program, authorized by the
Dairy Production Stabilization Act of 1983, is a national producer
program for dairy product promotion, research, and nutrition education
to increase human consumption of milk and dairy products. This self-
help program was funded by a mandatory 15 cents per hundredweight
assessment on all milk produced in the contiguous 48 states and
marketed commercially by dairy farmers and administered by the National
Dairy Promotion and Research Board (Dairy Board).
For this National Dairy Promotion and Research program, the 2008
Farm Bill required that dairy promotion and research assessments apply
to all states, the District of Columbia, the Commonwealth of Puerto
Rico and dairy product importers. The assessment rate was set at
15 cents per hundredweight for domestic milk and 7.5 cents per
hundredweight for imported dairy products. A final rule implementing
this provision was published March 18, 2011. All provisions became
effective April 1, 2011, except provisions regarding dairy importer
assessments which were effective August 1, 2011.
Market News
AMS' Dairy Market News provides dairy farmers and their
cooperatives, processors, buyers and sellers of dairy products, and
others with timely and accurate market information on milk and dairy
products that will help them in making current buying and selling
decisions and in future planning. This information is released through
reports issued daily, weekly, monthly and annually. These reports are
available free of charge and the information is easily accessible.
In collecting market information, reporters cover multiple markets
that results in over 65 reports by constantly interviewing buyers,
sellers, and brokers of fluid milk, cream, butter, cheese, condensed
milk, and dried milk products. Currently, the industry voluntarily
provides the information.
AMS and the National Agricultural Statistics Service (NASS) also
administer a Dairy Product Mandatory Reporting Program, which requires
persons engaged in manufacturing dairy products to report certain
information including the price, quantity, and moisture content where
applicable, of certain dairy products sold by the manufacturer. The
program also requires persons storing dairy products to report
information on the quantity of dairy products stored.
Currently, NASS collects information for the program and AMS
provides verification and enforcement functions for dairy product price
information. NASS publishes sales information for block cheddar cheese,
barrel cheese, butter, dry whey, and nonfat dry milk on a weekly basis.
Any manufacturer that markets less than 1 million pounds of these dairy
products per year is exempt from the price reporting requirements.
The 2008 Farm Bill directed USDA to establish an electronic
reporting system for price reporting of these dairy commodities. As no
funding was provided, AMS did not implement this provision. However, in
September 2010, Congress passed the Mandatory Price Reporting Act of
2010, mandating the establishment of this electronic reporting system
(again without funding) while directing AMS to publish the information
obtained for the preceding week not later than 3:00 p.m. Eastern Time
on Wednesday of each week, rather than on Friday.
On June 10, 2011, USDA issued a proposed rule to implement the
provisions contained in the Mandatory Price Reporting Act of 2010.
Under the proposed rule, AMS would develop the electronic system and
collect the data. The comment period closed August 9, 2011, and AMS is
currently reviewing the seven comments received.
Other AMS Dairy Activities
AMS undertakes a number of other activities not referenced in the
2008 Farm Bill that are of great importance to the dairy industry. AMS
grading services assist the dairy industry in marketing high-quality
dairy products by providing buyers and sellers with an impartial
appraisal of product quality and to provide the consumer confidence in
buying.
AMS also provides certification services to assist in the export of
dairy and related products. These certificates are issued to eligible
plants which include those dairy plants listed in the Interstate Milk
Shippers list (IMS list), the Food and Drug Administration maintained
European Union Dairy Plant Reference list (EU list), and Dairy Plants
Surveyed and Approved for USDA Grading Service (USDA Approved Plant
list).
Conclusion
AMS undertakes numerous activities to facilitate the competitive
and efficient marketing of U.S. agricultural products. These efforts
support the overall mission of USDA, which is to protect and promote
food, agriculture, natural resources and related issues. I hope that
this testimony and the subsequent questions and answers will prove
useful to the Subcommittee as you undertake your work on the next farm
bill.

The Chairman. Thank you, Ms. Coale.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of their arrival. I appreciate
Members understanding.
With that, I recognize the Ranking Member, Mr. Cardoza.
Mr. Cardoza. Thank you.
I have questions for Mr. Garcia.
I want to thank you for your work with USDA Industry
Advisory Committee. The committee recommends that USDA further
study raising minimum fluid milk nutrition standards
nationwide. A similar FAPRI study requested by the House Dairy
Farmer Caucus showed that such a move could return several
hundred million dollars to producers in just a few years, while
consumers would pay only about a penny more per glass for milk,
with up to a third more calcium and protein in that milk
supply.
One thing that the committee identified as an issue not
addressed in the FAPRI study was the potential startup costs to
processors. Is there a way for the Department to study what
those processor startup costs might be?
Mr. Garcia. Thank you, Mr. Cardoza.
I may have to refer that to Ms. Coale since she has been
doing some work with the advisory committee.
Mr. Cardoza. Thank you.
Ms. Coale.
Ms. Coale. Thank you, Mr. Cardoza.
As you know, the advisory committee submitted to the
Secretary 23 recommendations, one of which did look at adopting
the California milk solid standards. The Secretary, of those 23
proposals, has been reviewing them. Over half of them require
new or additional funding or additional legislative authority
for the Secretary to take action on that.
Currently, with regards to the California milk solid
standards, the Secretary has been reviewing this proposal and
is aware of an industry interest in looking at the startup
costs associated with that. At this time, it is still under
review by the Department.
Mr. Cardoza. I would like to encourage the Department. I
see great acceptance of the standards in California. The
product is more nutritious, and I am a huge fan of increased
standards.
To follow up, the MILC Program is a prime example of
government programs that pick between winners and losers, in my
opinion. In fact, a USDA study a few years back confirmed that
the program keeps farm milk prices lower than they would
otherwise be. Could any of you please tell us what the total
amount of money producers in each of the top five milk-
producing states have received from MILC under the farm bill,
along with the most recent annual milk production figure for
those states?
Mr. Garcia. Mr. Cardoza, I don't have that information
readily available, but we can provide that information as far
as the top five states under the MILC Program.
Mr. Cardoza. I would very much like to have that.
Mr. Garcia. Yes, sir, we can provide that.
[The information referred to is located on p. 971.]
Mr. Cardoza. In 2009, Congress appropriated $350 million in
emergency funds to help dairy farmers through what was then the
worst economic crisis in at least a generation. This crisis was
caused by significant decline in U.S. exports due to the
worldwide financial crisis. Some of us thought that the entire
$350 million should have gone to the purchase of cheddar cheese
to donate to food banks which were having trouble keeping up
with record demand in this country. In the end, only $60
million went to cheese donations.
Many have questioned the decision to purchase high-cost
items, like shredded cheese, with these funds instead of the
more reasonable and more widely available block cheese. Can you
tell me what products were purchased and how quickly these
donations were completed?
Mr. Garcia. I am going to have to look at that, Mr.
Cardoza. I think I have that information.
[The information referred to is located on p. 972.]
Mr. Cardoza. Please get back to me on that. I think that is
a very important piece of information the Committee is going to
need as we move forward not to make mistakes. As everybody
knows, there is a shortage of dollars available to do these
kinds of programs, and money is hard to come by, and we want to
make sure that we get the most bang for the buck.
Finally, for Ms. Coale, California producers have an
extensive history in using a small part of their checkoff to
educate consumers about how farmers care for their animals and
the environment. AMS has oversight over the dairy checkoff, and
I want to personally encourage you to continue to allow those
activities with the intent of Congress for the dairy checkoff.
Ms. Coale. Thank you. We will take that under advisement.
Mr. Cardoza. Thank you.
Thank you, Mr. Chairman. No further questions at this time.
The Chairman. Thank you, Mr. Cardoza.
The gentleman from Vermont, Mr. Welch, has also joined us
and is also not a Member of the Committee.
I have consulted with the Ranking Member, and without
objection, we are pleased to welcome him to join in the
questioning of the witnesses.
Mr. Welch. Thank you very much, Mr. Chairman.
The Chairman. With that, we will move to Mr. Conaway from
Texas.
Mr. Conaway. Thank you, Mr. Chairman.
The existing array of programs we have available for milk
from the 1930s; world distribution and world demand is
different than it was then. Can you walk us through how that
existing array helps and/or hurts the milk producers in this
country be competitive with products they could otherwise
produce and sell into the world market?
Dr. Salathe. I will take that question.
The dairy industry has changed a lot since the 1949 Act,
which supported the price of milk at parity levels and
supported milk prices at parity through the late 1970s, and
then we had a change in programs because our purchases became
burdensome under the Price Support Program. And after that,
Congress lowered the purchase price--support price for milk and
started instituting payment programs to producers to counter
some of the price volatility or income volatility that they
faced.
Back in the 1970s and early 1980s, we were basically a net
importer of dairy products. We also had import quotas on
imports of dairy products, and so we were pretty well insulated
from the international market. And as a result, if we increased
our prices, we supported the prices to dairy producers, we
didn't provide an incentive to expand world production of dairy
products.
That has changed, of course, under the WTO Uruguay round
agreement, our market is now pretty open to imports of dairy
products. We are also now a net exporter of dairy products. We
are competitive in the world price--world market. We compete
every day for markets outside our borders, and so it is very
important to have a dairy policy that reflects that change in
the market environment that producers and processors face.
Mr. Conaway. The line here is that we pay producers to
produce stuff that can't be sold in the world market, and if we
were to adjust the incentives--and I am just parroting more
than I understand really what is going on--this argument has
been made that there is a disconnect between what we incent to
be produced versus what could be sold to the world market. That
is what I am trying to get at.
Dr. Salathe. There has been an argument and continues to be
an argument that the amount of nonfat dry milk we produce in
this country has increased higher than it should because of the
Price Support Program we have. We have a support program for
nonfat dry milk, a Dairy Product Support Program for nonfat dry
milk, cheddar cheese, and butter. And so there may be an
incentive to produce more nonfat dry milk.
I think over time that incentive probably is being reduced,
other dairy products are being produced, value-added products,
whey products, more protein-concentrate products are being
produced in the U.S.
Mr. Conaway. Okay. Well, I think I understand. Let's talk a
little bit about the LGM Program, Ms. Coale, and that it looks
to be oversubscribed in terms of popularity. I think in
somebody's testimony or information we have, that we have about
$20 million appropriated for support of that program. Demand
looks like we are about $164 million a year versus the $20
million. Are those numbers anything you guys are familiar with?
Is the LGM----
Dr. Salathe. Yes.
Mr. Conaway.--popular enough that we should look at
expanding it?
Dr. Salathe. I think that is--we have a variety of tools to
help dairy producers through difficult times. That is one of
the tools we have right now. You are correct; it is limited in
terms of budget authority at $20 million. That is all risk
management products for livestock, including dairy are limited
by that, and that has prevented us from expanding the dairy
cattle product, Livestock Gross Margin for dairy cattle.
I think that is a difficult question. That is one that you
are going to have to wrestle with. It is one of the tools in
the tool bag we have to help dairy producers, and you have to
look at all those tools, which ones you want to expand and
which ones you want to reduce in terms of budget authority.
Mr. Conaway. Thank you, Mr. Chairman.
I yield back.
The Chairman. Thank you, Mr. Conaway.
The Committee would now like to recognize the Ranking
Member for the full Committee on Agriculture, Mr. Peterson.
Mr. Peterson. Thank you, Mr. Chairman. I don't know who
wants to answer this, but the dairy industry now has a safety
net that is based largely on price through the Price Support
Program, as you mentioned, and the MILC program. As you are
aware, there is significant discussion around moving towards a
margin-type program as opposed to price. Can you talk about
dairy farm margins in the past few years and where they are
likely to head with increased feed costs, and do you believe
that dairy producers would be better supported if we had a
safety net that focused on margin versus price?
Dr. Salathe. I will attempt to the answer that, Mr.
Peterson. Thank you for that question. It is a very good
question. I wish we knew where margins were going. I think if
you look at 2009, margins were very low compared to history. If
you look at 2010, your average, depending on how you exactly
calculate feed costs, but in the $8 range. Remember, it fell to
an average of $4 in 2009 and some of the months were much lower
than that.
In 2010, we came pretty close to the average, and so far
this year, we are pretty close to the historical average,
despite the high feed costs, because we have had record high
milk prices this year. Where it will go in the future is
difficult to say. Obviously there is going to be some
vulnerability. Over the long term, feed costs and milk prices
go together, but in the very short term, milk prices may go
down and feed costs may stay high.
So, as we look out, it is very difficult to say, but we are
going to have periods in which the milk margin is going to be
below average, no doubt about it, because we have seen these
cycles, and there is no doubt they are going to continue.
Mr. Peterson. There are some in the industry who are still
asking for daily price reporting. Can you talk about how much
that would cost for USDA to administer and if you believe daily
price reporting for the dairy industry would provide dairy
producers with better tools than they would have with
electronic reporting?
Ms. Coale. Certainly. We are currently in the process of
implementing weekly mandatory electronic reporting. At this
particular point in time, we do not have that program
implemented yet, and we only have estimated costs.
Mr. Peterson. That is one that we asked you to do in the
farm bill?
Ms. Coale. Yes, that is correct. That is the one that was
also mandated in the Mandatory Reporting Act of 2010. Currently
that program, the software development costs are in the
neighborhood of approximately $\1/2\ million. That is being
taken out of the Fiscal Year 2011 monies that AMS reprioritized
to be able to implement.
Looking forward into 2012 as we actually implement that, we
know that there will be costs associated with managing the
program, and we are not quite certain exactly what those costs
will be, although we are estimating them to be about in the
neighborhood of $500,000 as well in 2012.
When you look forward to daily reporting, this is an issue
that has been raised in a rulemaking process that we are
currently involved with in implementing the mandatory
reporting. What I can tell you is that in one of the comments
filed in response to that rulemaking, one of the reporters has
indicated that daily reporting would be very difficult for the
reporters to implement and would actually, instead of
increasing market transparency, could in fact result in more
misinformation being provided as the reporters would not be
able to report accurate prices on a daily basis and would be
submitting significant revisions to the numbers that they
submit.
Again, this is addressed in a comment that was filed and at
this time the Department is reviewing.
Mr. Peterson. You said a price reporter?
Ms. Coale. Yes.
Mr. Peterson. Who was that?
Ms. Coale. The price reporter issuing that comment was
Dairy America.
Mr. Peterson. Was that the only comment you had?
Ms. Coale. No. We received seven comments in regards to our
initial proposed rule. All of those comments are available for
the public on dairy program's website.
Mr. Peterson. When do you close the comment period and move
through the process?
Ms. Coale. Yes. The comment period on the proposed rule,
which in essence transfers the responsibility for mandatory
reporting that is currently held by NASS to the Agricultural
Marketing Service, the comment period ended the beginning--
first part of August. We are in review of those comments and
preparing a final rule. The Mandatory Act required we implement
the program within a year, and we are on schedule to hopefully
have the program up and running in the first part of 2012.
Mr. Peterson. Thank you.
Thank you, Mr. Chairman.
The Chairman. The chair thanks the Ranking Member.
We will now move to Mr. Huelskamp.
Mr. Huelskamp. Thank you, Mr. Chairman.
I appreciate the opportunity to ask a few questions here,
and I would like the general thoughts of the witnesses in
reference to a reform proposal entitled, Foundation for the
Future, and general thoughts of you all as far as its possible
effectiveness and what it might do for the dairy industry, and
so if you could each respond, I would appreciate it.
Ms. Coale. First and foremost, Secretary Vilsack is on
record as stating that the draft legislation that has been
presented, which is based primarily off of Foundation for the
Future is a good start and it identifies issues that need to be
addressed by the dairy industry.
We recognize at the Department that there are numerous
proposals under consideration, both here at Congress and by the
industry itself. We look forward to working with you here and
to working with the industry to provide technical assistance
and any analysis that would be requested or needed to be able
to examine and further determine how those programs might be
implemented and what the effects of those implementations might
be.
Mr. Huelskamp. And beyond the administrative issues, what
do we expect the Administration or the Department to have a
particular proposal or simply just to provide technical
expertise as we talk about these changes?
Ms. Coale. At this particular point in time, the Department
is more than happy to provide any technical assistance that
would be needed by you as you are reviewing the farm bill
proposals and the legislative options that are presented. We do
not have any intentions at this point of submitting any type of
legislative language.
Mr. Huelskamp. Okay. Are there any particular parts of the
current programs that you would suggest are most effective or
least effective when we are looking at proposed changes?
Mr. Garcia. Thank you, Congressman.
What I would like to do is comment somewhat on the Milk
Income Loss Contract, the MILC. After the enactment of the 2008
Farm Bill, it provided for, if I can call it, an improved
safety net for producers because it included a feed cost
adjuster to the $16.94 per hundredweight baseline. So if that--
if that feed cost adjuster did trigger, it would essentially
add that amount to the $16.94 baseline for the program, thus
providing additional payments for producers that qualified for
the payment. So that was an improvement with the 2008 Farm Bill
that we were able to administer.
Mr. Huelskamp. And you think the MILC is a successful
program or those that you would suggest, ``Hey, these are not
working as we anticipated and could be improved or replaced?''
Mr. Garcia. Well, as far as our producers are concerned, we
did pay over $940 million under the MILC Program, especially
during 2009. Now, there have been some concerns regarding the
2,985,000 pound cap that is under the program. Now, we also
have to recognize that as of September 1, 2012, there will be
some changes in the program. The amount of cap will be reduced
to 2.4 million pounds, plus other adjustments that will occur
after September 1, 2012.
Mr. Huelskamp. I appreciate that. One last question in
reference to just trying to get to the heart of how we might
improve the programs. My understanding is New Zealand and other
countries have been more innovative in new products and the
suggestion has been perhaps our policies have not promoted that
innovation. Are there any particular changes that would allow
us to compete more effectively in international markets or in
domestic markets with innovative products?
Dr. Salathe. Well, there are two programs that have been
pointed to as affecting what we produce here in the United
States and whether they reduce the incentives to develop new
products. One is the Price Support Program, which we talked
about earlier in reference to nonfat dry milk and whether that
program provides an incentive to produce nonfat dry milk rather
than other products that would be perhaps sold abroad as well
as developing new products. There is also some concern about
the Federal Milk Marketing Order Program doing a similar thing.
I have not personally, despite being a dairy economist for
probably 30 years, seen any quantitative assessment of those
concerns, and so it is hard to say whether those are large,
small, or medium effects that we should be concerned about.
Nevertheless, I think those have been concerns that have been
raised by a variety of people, and they are probably--for that
reason, there may be legitimate concerns.
Mr. Huelskamp. Thank you, Mr. Chairman.
The Chairman. Next we move to Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman.
Let me ask the first question to you, Mr. Garcia.
I am worried that the expansion of the Livestock Gross
Margin Dairy Program would be extremely limited, especially
given the tight budgets we are dealing with right now here in
Congress. Congress simply doesn't have the money to increase
participation numbers at the current premium subsidy level. So,
in your opinion, what effect would lowering the premium support
level have on participation?
Dr. Salathe. Well, under the program that was offered this
past year in 2011, with the premium subsidy, we enrolled about
2.4 percent of total milk production in the U.S. Prior to that,
the program was very, very small, and we enrolled \1/10\ of 1
percent of total milk production, in that range, and so if you
reduce the premium subsidy, we would get, I would say, it is
likely that you would get something in between that, between .1
and 2 percent of total milk production would be enrolled in the
program, so it would still be very small.
Mr. Scott. So what is the current level, the bare minimum a
producer or a private insurance company needs in order to
participate?
Dr. Salathe. Well, there is--the program that was offered,
like I said, in 2010, when only very small numbers of producers
were participating, and so it would--this is a guess on my
part--that it was still possible to offer the program, even
though participation was fairly low.
Mr. Scott. So the current level is the bare minimum?
Dr. Salathe. The current level of participation, about 2-
2.5 percent of total milk production enrolled in the program is
kind of the maximum, kind of the maximum that is allowed under
the current budget cap on livestock products offered by the
Risk Management Agency.
Mr. Scott. Ms. Coale, let me ask you this with respect to
the Federal Milk Marketing Orders. I think they play a crucial
role in another risk management tool, and that is hedging, but
because of their structure, they produce a highly variable
basis where a more stable basis is needed for accurate and
useful hedging.
So let me ask you what changes do you think could be made
to the Federal Milk Marketing Order pricing system that would
allow producers to make use of what is a valuable private
sector risk management tool, hedging?
Ms. Coale. Thank you. I think there are two areas that I
would like to explore in response to this question. First and
foremost, with regards to the Federal Order Program, as you are
looking forward, one of the areas that the Department have seen
great consensus in the industry with has to do with the way the
minimum prices are established under the program. Currently,
the Department uses a product price formula to establish the
minimum prices that are used to pay producers for the milk that
is marketed and pooled within a Federal Marketing Order.
One of the other areas that the 2008 Farm Bill expanded was
implementation of the Forward Contracting Program. What we have
seen upon implementation of the program, that it is available
to producers for all non-fluid milk that they market, but we
have seen low participation rates. Primarily, while we have not
completed any surveys since the pilot program was put in place
back in 2004, what we believe from the information we obtained
is that processors have not been offering contracts to their
producers, and producers are somewhat hesitant to enter into a
contract with a processor for what they perceive--and it is
their perception, as it is a voluntary program--that it doesn't
make economic sense for them to sign a forward contract.
One of the interesting things to note is that while the
program in 2009 only had 75 participants, currently there are
about 300 participants who have signed contracts. So we are
seeing a slight uptick in the amount that the program is
utilized.
Mr. Scott. Mr. Chairman, I did want to be able to ask one
more.
The Chairman. Absolutely.
Mr. Scott. I wanted to ask you about tax liability real
quickly--thank you, Mr. Chairman--because I know that producers
like to reinvest their profits into their businesses in order
to avoid tax liabilities. But, this can lead to an increase in
supply when, in fact, demand is falling, and that is what has
exasperated lag time between aligning supply and demand, and
that has produced in the past a crisis as we have seen in the
last few years. So if you could each very quickly--do each of
you think that tax-deferred farm savings accounts are a viable
method to both avoid tax liability and artificial bumps in
production?
Dr. Salathe. Farm savings account, of course, are a way
to--I don't know if the word ``avoid'' is right--I mean, it is
a short-run avoidance of tax liability. Obviously, when you
take the money out, supposedly if there is no reduction in tax
rate, when you take the money out, supposedly then you are
going to pay tax when you take the money out. Maybe your income
is lower, though, so your average tax rate would be lower on
average.
I think the question becomes, how many producers and what
is their demographic makeup of those farmers that actually pay
taxes? We know a number of farmers don't pay taxes for the
reasons you indicate. You know, they might put it into their
business, which may be a great long-term decision for them. For
those that do that, there are some who would not change that
decision because they want to expand and want to maintain their
business. I think it is difficult at this point to say how many
producers would benefit and what the response, market response,
would be.
Mr. Scott. Well, thank you very much.
Thank you for your generosity, Mr. Chairman.
The Chairman. Okay. We will move to Mr. Ribble.
Mr. Ribble. Thank you, Mr. Chairman.
Mr. Garcia, good afternoon. Thanks for being here today.
I am from Wisconsin, and some of our smaller producers,
actually quite a few of our small producers, participate in the
Milk Income Loss Contract Program, and as Mr. Peterson's line
of questioning implied, there are some proposals on the table
to shift to a margin insurance component type of program. What
is currently the average size of a dairy operation
participating in the MILC Program, and how much do you expect
the program to pay out this year?
Mr. Garcia. If I can address your latter question, we have
not issued any MILC Programs all year long since the prices
have remained high. Of course, right now, the prices of milk
are relatively high. Of course, it is predicted that with
higher feed costs, we could see lower milk prices toward the
end of this year or early next year. So there is a possibility
that the MILC payments could trigger in either late December or
early January.
Now, as far as the average herd size of the producers that
participate in this program, it is hard to tell because, of
course, this program is available to your--if you would
categorize your smaller producers in the neighborhood of 300
cow dairy or your larger producers which--and I am from Texas.
We have some of both. You know, we have the 160 cow dairy up to
the 10,000 cow dairy. So, of course, all the producers can
participate in that particular program.
Now, the issue is that with the larger producers, that they
can reach their cap limit of 2.985 million pounds in a month's
time, where your smaller dairies will have--will take more time
to reach that cap. So it is hard to come up with an average
size of dairy producers that participate.
Mr. Ribble. Is there statistical data available on the size
of the producers that are using the program? Especially when
you look back like 2009, when things were pretty rough, is
there some statistical data that shows how that money was
distributed by size?
Dr. Salathe. Yes, I believe so. We have information in
terms of the size of producers who got payments. All producers
are eligible for the program. It is whether they hit the
production limit or not, and so--but we probably do have data
on the size of producers and what they received or whether they
participated and got a payment or not.
[The information referred to is located on p. 972.]
Mr. Ribble. That would be interesting information for me,
and if you could get that for me, I would appreciate it.
Going along, I understand that many stakeholders within the
dairy industry support the elimination of the Dairy Product
Price Support Program. I have also talked with several
operators in Wisconsin about the increasing importance of
export markets to their farms. I have heard repeatedly from
producers that they would like to sell their products on the
world markets without obstacles in the way. What in your view
should we be doing to expand export opportunities?
Dr. Salathe. I guess I will take a shot at it by default.
Honestly, we want to make sure our programs are conducive to us
exporting abroad, so we want to look at our programs very
carefully and make sure that they do allow us to export. I
think free trade agreements are very important. We need to
reduce the barriers abroad to our dairy products that exist
now. We need to break those barriers down. There are sanitary
types of restrictions. There are quotas on imports and things
of that sort. We need to address those country by country as we
can. I think those are the most important.
I strongly agree and I agree with dairy farmers in
Wisconsin, and I strongly think that our dairy industry is
competitive and can be very competitive. There are producers in
Australia we have to compete with. I think the market is big
enough that we can, and we can have a significant share of the
world market along with them. I think the future is very bright
for the dairy industry in terms of expanding the export market.
I think breaking down barriers is probably the number one thing
and making our programs, being sure our programs do not
interfere with us making good, quality dairy products for the
export market.
Mr. Ribble. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Mr. Courtney.
Mr. Courtney. Thank you, Mr. Chairman, for holding this
hearing.
And actually before asking my question, I just want to take
a point of personal privilege in recognizing in the back of the
room Ms. Marsha Jette, who is the Connecticut FSA
Administrator. She is in town for a meeting in Washington. She
has had a pretty amazing year with the record snowstorms that
destroyed a lot of livestock and dairy buildings in Connecticut
and, obviously, Hurricane Irene last week, which wiped out a
lot of silage. And her team is doing a great job helping
Connecticut farmers deal with those disasters.
I have to say, when Mr. Huelskamp asked the question about
where the Administration's position was going to be on the
Foundation for the Future, that your answer was that you are
going to supply us with information, I was disappointed with
that because, Secretary Vilsack when he established the Dairy
Advisory Committee, I mean, that was a stroke of genius, after
the agony of 2009, to get people feeling engaged in terms of
the administration. And they have made a lot of
recommendations. They have worked hard.
It is my understanding over 20 recommendations, a lot of
which are certainly relative to Mr. Peterson's proposal, and
you know, we could use a little help here. I just feel like you
have gone to all that extent of soliciting input, and I would
hope that the Department is going to be more of an engaged
partner in terms of this Committee trying to come up with a
solution for this industry. And I just wondered if you could
maybe give us a little more insight about what you are doing to
do with the advisory committee's suggestions.
Ms. Coale. Certainly, I will be happy to provide some more
information on that.
As you mentioned, the advisory committee was formed. It
consisted of 17 individuals that were highly diverse, and they
represented all facets of the dairy industry. Those individuals
met and did an extensive amount of work in a very short period
of time to develop 23 recommendations that they presented to
the Secretary last spring. The Secretary did not put any
qualifiers around the recommendations that the advisory
committee could come forward with. So, therefore, he did not
put any indicators on budgetary constraints or legislative
authorities that would need to be considered when they were
developing the recommendations.
Consequently, of the 23 recommendations that were presented
to the Secretary, over half of them requested either new
funding or higher levels of funding, or requested or would
require the Secretary to have new legislative authority in
order to enact those particular recommendations.
Of the remaining recommendations that exist, the Department
has been actively working on five of those or has completed
five of those recommendations. The Department also has three of
the recommendations that we are working closely with you up
here on as they do relate to various provisions contained in
the draft legislation of Congressman Peterson, as well as other
legislative proposals that have been presented up here.
So we have taken what the advisory committee, the work that
they have done, we have been reviewing it, analyzing it,
providing information up here to help with the technical
assistance that might be needed when it comes to actually
determining what policy you want to implement with regards to
that.
Mr. Courtney. Well, I appreciate that, and I would hope, at
some point, the Department would also maybe talk about what
policy you would like to see implemented as well. I am not
trying to be a wise guy here, but the purpose of this, is to
have a dialogue and collaboration to come up with--these are
tough issues.
I mean, let me ask one, for example, I know Mr. Peterson's
draft proposal explores expanding that crop insurance, the risk
insurance program for dairy.
What I hear back home is it is too complicated. As a
product, it is just too unimaginable, particularly for smaller
guys, let alone cost issues, which Mr. Scott mentioned earlier.
Is the Department looking at issues like that? Are they trying
to see if there is a better way to design the product so that
it becomes more workable, particularly for smaller farmers?
Dr. Salathe. I guess I am a little bit confused by your
question. Are you talking about the Peterson draft bill, or are
you talking about LGM-Dairy?
Mr. Courtney. Well, obviously, the LGM-Dairy is what is out
there right now.
Dr. Salathe. Correct.
Mr. Courtney. To some degree, the bill sort of tries to
adopt that model a little bit but doesn't necessarily
incorporate that specific program, but to me, we are going to
run into that same issue if the Peterson bill passed, for
example.
Dr. Salathe. I think it is safe to say that the Secretary
is very interested in having a dialogue. He is not interested
in putting out a very specific proposal that then competes with
some other proposal. He is not interested in that. The
Secretary is very interested in dairy policy. I think he wants
to come to some compromise or conclusion, and he feels very
strongly that the safety net needs to be improved for dairy
producers.
I think, on the other hand, he recognizes that it is very
difficult to get consensus in the dairy industry, and he also
recognizes that we are in a very difficult budget situation. So
he is interested in coming to some conclusion.
Mr. Courtney. Again, hopefully, he will be an active
participant in that.
So I thank you, Mr. Chairman.
The Chairman. Thank you, Mr. Courtney.
We move to Mr. DesJarlais.
Mr. DesJarlais. Thank you, Mr. Chairman.
And I thank the panel for being here today.
I had the opportunity to speak with some of our dairy
farmers in Tennessee's Fourth District over the August recess,
and they sent me armed with several specific questions, but
after listening to the testimony today, I agree with Mr.
Courtney. I think that maybe it is premature to ask some of
those, considering where we are at in this process, but not
wanting them to be left out, let me just ask a very broad
general question, tapping upon your expertise.
What risk management programs do you feel are particularly
successful and which ones not so much, and what do we do with
those, moving forward, as we write the farm bill in Fiscal Year
2012 to keep the dairy market strong and competitive?
Dr. Salathe. Very good question. I wish had I an answer.
I guess, risk management--I assume you are talking broadly
about dairy programs in general, not about the risk management
programs in particular?
Mr. DesJarlais. More narrowly related to risk, go ahead and
take a shot at either one.
Dr. Salathe. Okay, thank you. Thank you very much.
Basically, on dairy, we have four programs. As I see it, we
have the MILC, Milk Income Loss Contract, program. It is a
direct payment program. It pays when milk prices are low and
feed prices are high. We have the Dairy Product Price Support
Program, if you look at current price levels, milk prices would
have to fall by about 50 percent before anything would kick in.
I think most producers say that is too much; it doesn't provide
enough of a safety net. And we have the Dairy Export Incentive
Program, which nobody has addressed, which provides an export
subsidy in certain instances when the world price is above the
U.S. price. We haven't operated that program very often. We did
operate all three of those programs in 2009.
And then you have LGM-Dairy, which has a real problem in
terms of its budget. The amount of outlays or amount of money
provided for that program just doesn't, at this point, provide
for a whole lot of participation.
So you have--the main driver in this program, set of
programs that we have, if you look at 2009, was the MILC
program, which provided over $900 million in direct payments to
producers. The next most important program was the Dairy
Product Price Support Program, in which we purchased 276
million pounds of nonfat dry milk and about 5 million pounds of
butter in late 2008 and 2009. And DEIP we operated, but the
quantities were fairly small.
So that leaves, really, two programs--MILC and DPPSP. And
those two programs--the National Milk's Foundation for the
Future will eliminate those two programs and replace it with a
margin insurance program.
That is kind of a nutshell. There are, of course--farmers
can and should think about using the futures market to lock in
prices, to provide a safety net that way. Obviously, there are
private-market tools that they can use, from forward
contracting to some extent, futures markets as well.
Mr. DesJarlais. Okay. I appreciate that.
Does anybody have anything to add specifically on the dairy
programs, the DPPSP or the MILC program, as far as its success
or failure, moving forward?
Dr. Salathe. The other thing that I would point out, being
a trained economist--maybe not so trained, but anyway--that any
program you put in place has both positive and negative
impacts. If you provide payments to producers, direct payments
to offset lower returns, that may keep more producers in
business and may mitigate the signal to reduce production when
production should be reduced. And so, on the other hand, it
does allow some producers to stay in business.
So there are these positive and negative consequences of
any type of intervention, and it is very important to be
cognizant of those.
Mr. DesJarlais. Okay. Well, thank you for that. And then
maybe next time around, we will get more into the specific
questions. But I appreciate your thoughts.
And I yield back.
The Chairman. Mr. Costa?
Mr. Costa. Thank you very much, Mr. Chairman, for allowing
me to sit in on the Subcommittee hearing.
My family has been involved in the dairy business for three
generations, and I guess if I didn't have this job I could get
a job somewhere milking cows. I do have some redeemable skills
in that area.
While you are correct to say in the last 6 months the
prices have gotten better within the dairy industry, we are
rebounding from perhaps the most difficult period the industry
has been in in decades. As a matter of fact, if you look at the
cycles, in 2000, 2003, 2006, and 2009, some estimate that the
period between 2008 and 2010, that the industry, nationwide,
lost anywhere between $15 billion and $20 billion in equity. I
am talking about the dairy producers.
And yet, part of it is obvious, why the size of the dairies
continue to shrink and a growing number of large farms, large
dairy farms, are still--that is the trend. What factors do you
think are creating that trend?
Dr. Salathe. Well, that is a very good question. But, the
bottom line is that there is just--it is new technology for
farmers.
Mr. Costa. Marginal costs.
Dr. Salathe. Marginal costs. Adoption of new technology
allows farmers to produce milk at a lower cost. And so, if you
have----
Mr. Costa. Do you have the total number--you were taking
about the MILC program to producers--how much was paid out in
2009?
Mr. Garcia?
Mr. Garcia. It was about $940 million.
Mr. Costa. And how many producers went out of business in
2009?
Mr. Garcia. The information that we have, Congressman,
based on statistical data from the National Agricultural
Statistics Service is, between 2008 and 2009, we had around
three percent of producers that went out of business.
Mr. Costa. Obviously, the MILC, then, therefore, isn't a
very effective safety net in that instance, if that is the
purpose and part for what it is done.
The last time the Dairy Product Price Support Program
purchased product, when was that?
Mr. Garcia. It was in summer of 2009, August of 2009.
Mr. Costa. How much product did it purchase?
Mr. Garcia. It bought--really, it was one small purchase
for back test purposes--well, I am sorry.
Dr. Salathe, maybe you can help me with that one.
Dr. Salathe. Well, under the Dairy Product Price Support
Program, in late 2008 and through about August 2009, we
purchased 276 million pounds of nonfat dry milk and 5 million
pounds of butter.
Mr. Costa. Some of my producers think that the Price
Support Program takes the U.S. out of the export market and the
margins based upon per hundredweight on whether or not we are
in a surplus condition or below. Do you think that is the case?
Dr. Salathe. Well, when we are purchasing product, we are
supporting the world price on nonfat dry milk. So, by doing
that, we are supporting prices to producers in----
Mr. Costa. Do you think some companies or some co-ops are
producing nonfat dry milk because of the program that is in
place and they have a guaranteed purchaser?
Dr. Salathe. I think you would have to ask them. I really
don't have----
Mr. Costa. Not going to tread in that water?
Dr. Salathe. No.
Mr. Costa. How much powder does the government currently
have in storage today?
Dr. Salathe. I don't believe we have any nonfat dry milk in
storage.
Mr. Costa. None?
Mr. Garcia. I don't believe so. I don't believe there is
any right now.
Mr. Costa. Ms. Coale, the AMS has been studying
alternatives, and you spoke of that, toward pricing formulas.
What are some of the alternatives are you considering?
Ms. Coale. We have been actively working with the industry
to further develop and provide analysis on a different array of
competitive pay prices that the industry is trying to
establish. These are looking at primarily what cheese
manufacturers are paying for their milk. And depending on the
various proposals, there are different aspects that----
Mr. Costa. Before my time expires, do you think the current
four class system curtails market innovation?
Ms. Coale. I do not believe that it curtails market
innovation. We have seen that there are new products
continually entering into the marketplace.
Mr. Costa. Well, Mr. Chairman, I have other questions. I
will submit them in writing.
My time has expired. I appreciate your allowing me to sit
on the Committee.
I think that your efforts with the Subcommittee, given the
volatile nature and the cycles that I referenced--if they
continue in that pattern, 2000, 2003, 2006, 2009, it will mean
that the next cycle will be next year. And with all the equity
that has been lost in the dairy industry in recent years, I am
not so sure we can survive another cycle as we did the last
one. And I hope that we will all try to work together on behalf
of dairy producers in America to avoid a crash, as we have just
had over the last 2 year cycle, the last bust cycle.
Thank you.
The Chairman. Thank you, Mr. Costa. You are very welcome.
Mr. Gibson?
Mr. Gibson. Well, thanks, Mr. Chairman.
And I thank the panelists for being here today.
So, a comment and then a question, and if there is time,
perhaps a second question.
The comment: I want to begin by associating myself with the
remarks of Mr. Courtney. You know, both of our districts, as
well as Peter Welch's district, our districts have been hit
very hard by Hurricane Irene and then the remnants of Lee. And,
it is clear that the insurance program, the risk management
tools are just not effective for us, with too many farmers, as
Mr. Courtney mentioned finding it too complicated to sort
through. And for other reasons, those risk management tools are
just not revalent for us.
And then there are other programs that seem to have a track
record of effectiveness but yet have no money in them, like the
Emergency Conservation Program, which helps with debris and
other removal and replacing of fences and, certainly, trying to
bring back the farm. From a conservation standpoint, in the
watershed dimension of the program, helps us get into
streambeds and not only remediate but also take us to a better
level where we wouldn't be subject to future floods.
So I guess that is a comment and perhaps a bit of
frustration. And, certainly, I am new here, and we are going to
have to work on this going forward. I look to the farm bill to
try to do some reforms in insurance. But I guess I would pause
and see if there is any reaction to that.
Ms. Coale. If I could take a moment to comment on that.
The Secretary is very attuned to what has happened in the
Northeast----
Mr. Gibson. Yes, he is.
Ms. Coale.--with regards to Hurricane Irene. And just
today, earlier this afternoon, he issued a press release on
some actions that the Department has taken to help alleviate
the distress that has been caused by the natural disaster.
One such action that is being taken under the Federal Milk
Marketing Order program, for those dairy producers whose milk
has not been able to be picked up by their cooperative due to
infrastructure damage, the Secretary has determined that we
will allow that milk to be associated with the Federal Order
pool as if it had been delivered to the marketplace. That will
aid those producers in getting the benefit of receiving the
Federal Order blend price for that amount of milk that they did
dump.
So the Secretary is very, very concerned about what is
happening in the Northeast. And he has also outlined other
programs, which he has mentioned in the press release, that are
available to those producers.
Mr. Gibson. I agree. And, I had a chance to meet with him
just a few days ago, and I find him very concerned and vigilant
and diligent to try to help us.
I think that there is some work on this side that we are
going to need to do, going forward. And, taking up his advice,
Senator Gillibrand and I have a bill we just introduced
yesterday that is looking to put money into those programs,
those conservation programs, which will be helpful.
But thank you for the dialogue on that.
The question: Earlier in the dialogue here with Mr.
Peterson, you were giving some initial feedback on the weekly
electronic reporting. I am curious--and you were raising some
concerns about that, about the potential counterproductive
nature of it.
I am curious--no doubt you have policy wonks down there.
What is the latest thinking in the agency on how we might be
able to get more dynamic price discovery in a manner that more
accurately reflects supply and demand dynamics?
Ms. Coale. To make certain that the record is clear, the
Department is very supportive of weekly reporting, as is
currently conducted by the National Agricultural Statistics
Service, as well as what will be transferred to AMS with the
Mandatory Price Reporting Act.
The concerns that we have been hearing with regards to
daily reporting are ones that the industry has expressed in
relationship to how accurate that price information will be.
And while you may be providing data out to producers, is that
data really accurate and does that provide the information that
they need to make marketing decisions?
It is important to note that the dairy industry does
operate differently than other commodities within agriculture,
in that producers are paid based off of a monthly price. So
receiving a daily report of what commodities are trading at
does not translate directly into a pay price for those
producers.
Recognizing that the current system for determining minimum
prices is based off of product price formulas that use the
commodities in which we actually report on, we are very open to
looking at returning to some type of a competitive pay price.
And the Department did use a competitive pay price within the
Federal Order system for a number of years, and it worked very
effectively up until the milk that was being used to determine
that competitive pay price basically disappeared.
So there are challenges with how best to return to a
competitive pay price that is truly going to reflect that value
for the milk used in manufacturing, and is not going to over-
inflate the value but be reflective of what is needed to
maintain supply and demand for the marketplace.
Mr. Gibson. Interesting. Thank you very much for that
response.
I yield back.
The Chairman. Thank you, Mr. Gibson.
Mr. Welch?
Mr. Welch. Again, thank you, Mr. Chairman.
I have a couple of questions for Mr. Garcia about the Dairy
Product Price Support Program. It is quite important,
obviously, to Vermont farmers as well as others.
You know, my understanding is the floor price for dairy
created in the program is about $9.90 per farm--the farm gate
price. And in the last 5 years, has that floor price ever been
utilized as the actual floor price for dairy products? Or is it
really fair to say that the floor price is just out of date and
ineffective?
Mr. Garcia. Dr. Salathe, can you help me out with that?
I am sorry, I am going to have to defer to my economist.
Mr. Welch. All right.
Dr. Salathe. Well, under the 2008 Farm Bill, we no longer
support the price of milk. There is no longer a support price
designated in the farm bill.
What is designated is minimum purchase prices for butter,
cheddar cheese in barrels and blocks, and nonfat dry milk.
Those can be actually reduced if purchases exceed certain
levels. And there is flexibility, of course, to increase since
they are minimums to increase purchase prices. But we did--like
I said, we did buy nonfat dry milk in late 2008 and 2009 to the
tune of 276 million pounds of nonfat dry milk and 5 million
pounds of butter.
Like I said, there is no floor price on milk. There is a
floor price on the products themselves.
Mr. Welch. All right. Let me ask my next question.
In 2009, the Congressional Dairy Caucus, of which many of
us are Members, asked Secretary Vilsack to raise the floor
price for dairy products under the program. Secretary Vilsack
responded and did raise the price, and we obviously thanked him
for that action.
However, the increase in the DPPS price support didn't have
any positive change on the price paid to farmers. From the
perspective of a Vermont dairy farmer, does the dairy price
support provide literally any protection in today's market?
Dr. Salathe. Well, if you go back and you look at when the
Secretary made those changes--he increased the nonfat dry milk
purchase price by 12 cents and, I believe, cheddar cheese by
18 cents. If you look at when that occurred and the immediate
response, in terms of what happened in terms of wholesale
prices for those products, you did see an immediate change even
though no purchases were made.
So it is a little bit difficult to say that there was no
effect when there was some effect, immediate effect, on
wholesale prices when that announcement was made.
Mr. Welch. All right. Let me ask my last question. I thank
you.
I have heard some concerns that the DPPSP price undercuts
our export abilities. For example, the industry's ability to
innovate new products, such as MPCs, has been hampered by the
price support system, or so some people believe.
Can you speak to that issue? Is there truth to the claim
that the DPPSP price hinders our dairy exports?
Dr. Salathe. Well, I think that we are competitive on the
world market, we are competitive in terms of our dairy
products. And so, when we do purchase dairy products under the
Price Support Program, that does stabilize the price here as
well as abroad. And I do think it probably does undercut our
exports somewhat. However, I would say it was an important tool
for us in 2008 and 2009 when milk prices collapsed. Like I
indicated, we did purchase significant amounts of nonfat dry
milk during that time.
And I will reiterate another comment I made earlier, that
when you intervene in the markets, no matter how you intervene
in markets, it does have positive and negative ramifications.
So you have to weigh those positive and negative ramifications.
Mr. Welch. I yield back.
The Chairman. Thank you, Mr. Welch.
I wanted to take this opportunity to thank the witnesses
for their testimony and for answering the questions from our
Members; and all the Members that showed up, including a couple
of special guests.
I also want to thank the staff for all their hard work in
preparing this hearing today on the USDA dairy program. We are
going to look forward to arranging and organizing more meetings
to continue to work toward solutions for this and all the other
issues on the Subcommittee.
So, with that, under the rules of the Committee, the record
of today's hearing will remain open for 10 calendar days to
receive additional material and supplementary written responses
from the witnesses to any question posed by a Member.
This hearing of the Subcommittee on Livestock, Dairy, and
Poultry is adjourned.
[Whereupon, at 3:35 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Supplementary Material Submitted by U.S. Department of Agriculture
During the September 8, 2011 hearing entitled, Agricultural Program
Audit: Examination of USDA Dairy Programs, requests for information
were made to the U.S. Department of Agriculture. The following are
their information submissions for the record.
Insert 1
Mr. Cardoza. I would like to encourage the Department. I see
great acceptance of the standards in California. The product is
more nutritious, and I am a huge fan of increased standards.
To follow up, the MILC Program is a prime example of
government programs that pick between winners and losers, in my
opinion. In fact, a USDA study a few years back confirmed that
the program keeps farm milk prices lower than they would
otherwise be. Could any of you please tell us what the total
amount of money producers in each of the top five milk-
producing states have received from MILC under the farm bill,
along with the most recent annual milk production figure for
those states?
Mr. Garcia. Mr. Cardoza, I don't have that information
readily available, but we can provide that information as far
as the top five states under the MILC Program.
Mr. Cardoza. I would very much like to have that.
Mr. Garcia. Yes, sir, we can provide that.

See following tables:

Milk Income Loss Contract (MILC) Program
Top Producers' Payments and Production
by State/Fiscal Year
as of 01/25/2012
------------------------------------------------------------------------
Row Labels Values Payment Totals Paid Production Totals
------------------------------------------------------------------------
California $104,400,571.98 12,480,259,870
2009.................. $85,814,553.72 6,959,242,651
2010.................. $18,586,018.26 5,521,017,219
------------------------------------------------------------------------
Idaho $22,351,849.09 2,825,504,576
2009.................. $18,713,813.32 1,602,963,230
2010.................. $3,638,035.77 1,222,541,346
------------------------------------------------------------------------
New York $82,550,499.76 7,549,547,304
2009.................. $73,500,545.34 5,065,859,188
2010.................. $9,049,954.42 2,483,688,116
------------------------------------------------------------------------
Pennsylvania $76,248,956.41 6,301,537,139
2009.................. $69,319,102.01 4,476,854,732
2010.................. $6,929,854.40 1,824,682,407
------------------------------------------------------------------------
Wisconsin $195,565,282.93 19,859,501,257
2009.................. $175,742,332.01 13,671,012,480
2010.................. $19,822,950.92 6,188,488,177
------------------------------------------------------------------------
Grand Total......... $481,117,160.17 49,016,350,146
------------------------------------------------------------------------

Milk Income Loss Contract (MILC) Program
Top Producers' Payments and Production
by Fiscal Year/State
as of 01/25/2012
------------------------------------------------------------------------
Row Labels Values Payment Totals Paid Production Totals
------------------------------------------------------------------------
2009 $423,090,346.40 31,775,932,281
California............ $85,814,553.72 6,959,242,651
Idaho................. $18,713,813.32 1,602,963,230
New York.............. $73,500,545.34 5,065,859,188
Pennsylvania.......... $69,319,102.01 4,476,854,732
Wisconsin............. $175,742,332.01 13,671,012,480
------------------------------------------------------------------------
2010 $58,026,813.77 17,240,417,865
California............ $18,586,018.26 5,521,017,219
Idaho................. $3,638,035.77 1,222,541,346
New York.............. $9,049,954.42 2,483,688,116
Pennsylvania.......... $6,929,854.40 1,824,682,407
Wisconsin............. $19,822,950.92 6,188,488,777
------------------------------------------------------------------------
Grand Total......... $481,117,160.17 49,016,350,146
------------------------------------------------------------------------

Insert 2
Mr. Cardoza. In 2009, Congress appropriated $350 million in
emergency funds to help dairy farmers through what was then the
worst economic crisis in at least a generation. This crisis was
caused by significant decline in U.S. exports due to the
worldwide financial crisis. Some of us thought that the entire
$350 million should have gone to the purchase of cheddar cheese
to donate to food banks which were having trouble keeping up
with record demand in this country. In the end, only $60
million went to cheese donations.
Many have questioned the decision to purchase high-cost
items, like shredded cheese, with these funds instead of the
more reasonable and more widely available block cheese. Can you
tell me what products were purchased and how quickly these
donations were completed?
Mr. Garcia. I am going to have to look at that, Mr. Cardoza.
I think I have that information.

The Fiscal Year 2010 Agriculture Appropriations Act authorized $60
million for the purchase of cheese and other products. USDA purchased
approximately 10.2 million pounds of mozzarella cheese and 17.4 million
pounds of cheddar cheese, at a cost just under $60 million. USDA held
back just over $200,000 to cover offshore transportation and contract
administration.
Based on recipient needs, purchases were made for 10.2 million
pounds of mozzarella (5.3 million pounds loaves/blocks, 4.9 million
pounds shreds), and 17.4 million pounds of cheddar (8.8 million pounds
loaves/blocks, 8.6 million pounds shreds).
The contract awards were made for $48 million in January 2010, as
responsive bids were not received for all recipient delivery locations.
Contract awards for the remaining $12 million were issued in February
2010. While there was a substantial time lag between the announcement
of purchases and when donations were made, USDA schedules deliveries
based on recipient needs and does not make payment to the vendor until
the cheese is actually delivered, in accordance with procurement
guidelines.
Insert 3
Mr. Ribble. Is there statistical data available on the size
of the producers that are using the program? Especially when
you look back like 2009, when things were pretty rough, is
there some statistical data that shows how that money was
distributed by size?
Dr. Salathe. Yes, I believe so. We have information in terms
of the size of producers who got payments. All producers are
eligible for the program. It is whether they hit the production
limit or not, and so--but we probably do have data on the size
of producers and what they received or whether they
participated and got a payment or not.

The Milk Income Loss Contract (MILC) Program is designed to provide
a direct payment to producers when milk prices fall below an
established level adjusted for feed costs. Information on herd size is
not collected by the Farm Service Agency when operations sign contracts
for the program. Milk sales information is collected only during months
when there is a payment rate for the program and operations are
requesting payment, thus information on operation size is not available
through the data collected under this program. However, data collected
annually by the National Agricultural Statistics Service (NASS) on the
distribution of dairy herds by size can be used to provide an
indication of the distribution of MILC payments during Fiscal Year 2009
by size of herd. Based on the herd size distribution data collected by
NASS, we estimate that about 35-40 percent of FY 2009 MILC payments
were paid to producers with less than 100 cows and 70-75 percent of
payments were paid to producers with less than 200 cows.
Distribution of MILC Payments by Herd Size

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

______

Submitted Questions
Questions Submitted by Hon. Reid J. Ribble, a Representative in
Congress from Wisconsin
Response from Juan M. Garcia, Acting Deputy Administrator for Farm
Programs, U.S. Department of Agriculture, Farm Service Agency
Question. Mr. Garcia, do you believe that elimination of the Dairy
Export Incentive Program would significantly impact our participation
in world markets?
Answer. The Dairy Export Incentive Program (DEIP) helps exporters
of U.S. dairy products meet prevailing world prices for targeted dairy
products and destinations. Under the program and in conformity with
U.S. obligations under the World Trade Organization, the U.S.
Department of Agriculture pays cash to exporters as bonuses, allowing
them to sell certain U.S. dairy products at prices lower than the
exporter's costs of acquiring them. The major objective of the program
is to develop export markets for dairy products where U.S. products are
not competitive due to the use of export subsidies by other countries.
The United States is currently competitive in world dairy markets
without the need for the DEIP. At present, no nation--including the
European Union (EU)--is using export subsidies for dairy products. The
EU does not have significant stocks of surplus dairy products and is
not expected to use export subsidies during 2011 or 2012.
The United States is projected to be a major participant in world
dairy markets in FY 2011 and FY 2012. Exports from the U.S. for 2011
are forecast at over 400,000 metric tons of skim milk powder, over
200,000 metric tons of cheese and over 60,000 metric tons of butter.
The value of U.S. dairy exports is estimated at a record $4.2 billion
in FY 2011. For FY 2012, U.S. dairy exports are forecast to remain
strong at a value of $4.0 billion.
Response from Dana Coale, Deputy Administrator for Dairy Programs, U.S.
Department of Agriculture, Agricultural Marketing Service
Question 1. Ms. Coale, as you are likely aware, several proposals
are on the table for modifying the Federal Milk Marketing Order system.
Is it your sense that we in Congress should legislate specific reforms,
or would the process best be left to USDA with some broad parameters
from Congress? If the latter, what sort of consensus would you need
from us? How much agreement do we need to find here in Congress before
USDA could begin its work?
Answer. There are several industry proposals that are designed to
make changes to the Federal Milk Marketing Order program. These
proposals are focused primarily on making changes to the method
utilized to establish minimum prices within the Federal Milk Marketing
Order system. Typically, changes of this significance are determined
utilizing the administrative formal rulemaking process, a transparent
process that enhances participation by all interested persons. USDA
recognizes the desire for Congress to provide specific guidance on how
these minimum prices are established. We would suggest that Congress
provide specific parameters on proposals that should be considered as
alternatives for establishing minimum prices under Federal Milk
Marketing Orders.

Question 2. Ms. Coale, I understand that the FMMO system places the
highest value on fluid milk. In the Upper Midwest, most of our milk is
used for cheese. Consequently, many producers have talked with me about
the need to modify this disparity. If we address this as part of the
dairy reform process, how, in your view, can we push forward this kind
of change through broad parameters?
Answer. The Federal Milk Order program establishes minimum prices
for milk based on the classification of milk according to its use and
then these values are averaged together based on the individual
utilization of these milk values. Milk utilized to produce Class I
products receives the highest value because of the additional costs
associated with servicing the fluid market. This higher price is
established utilizing the highest price for manufacturing uses plus a
Class I differential. These differentials vary from $1.60 per
hundredweight in the Upper Midwest and Western United States to $6.00
per hundredweight in Southern Florida. A change to how these values are
determined could be directed by Congress by providing direction such as
was provided in the 1996 Farm Bill. In the 1996 Farm Bill, Congress
authorized the Secretary to review the Class I price structure as part
of the consolidation of the orders, including the consideration of
utilization rates and multiple basing points for developing a pricing
system.
______

Submitted Report by National Milk Producers Federation
National Milk Producers Federation
Foundation for the Future: Detailed Program Description
August 2011
Table of Contents
Background
Executive Summary
Detailed Descriptions of Individual Program Elements

Replace Current Federal Safety Net Programs
Dairy Producer Margin Protection Program
Federal Milk Marketing Order Reform
Dairy Market Stabilization Program
Conclusion

Attachment 1
Attachment 2
Attachment 3
Attachment 4
Background
The National Milk Producers Federation (NMPF) created a new roadmap
for U.S. dairy policy called Foundation for the Future. In June 2009,
NMPF Chairman Randy Mooney formed the NMPF Strategic Planning Task
Force aimed at exploring different approaches to dairy policy,
including options that would work to achieve more effective protection
for producer margins and stabilization of dairy markets.
Task force members (Attachment 1) came from within the NMPF and/or
Cooperatives Working Together (CWT) membership and were charged with
making policy recommendations to the NMPF Board of Directors for
further deliberation and subsequent action. The task force was designed
to include viewpoints from all segments of the NMPF and CWT membership
and the participants reflected a broad spectrum of demographics and
affiliations. The task force was further broken down into three
subcommittees (Attachment 2), each focusing on a specific aspect of
dairy policy. The subcommittees carried out their specific assignments
by drawing upon the best professional expertise and informational
resources available to the industry from both private and public
sources. Finally, in order to make certain that the demand-building
programs of Dairy Management, Inc. and the U.S. Dairy Export Council
were recognized in this important planning process, Tom Gallagher and
Tom Suber, the respective leaders of these organizations also served as
advisory members of the task force.
The overriding purpose of the task force was to build consensus
across the dairy producer community by identifying the underlying
factors affecting producer income and examining the ways in which the
producer community could realistically work to address those factors
for the betterment of the industry. The specific goal of the task force
was to analyze and develop a long-term strategic plan for consideration
by the NMPF Board of Directors, which would have a positive impact on
the various factors influencing both supply and demand for milk and
dairy products.
Through an initial round of listening sessions, the task force
brought in a number of producer groups (Attachment 3) representing
different industry segments and dairy producer constituencies all
across the country to obtain widespread input and access to the best
ideas circulating throughout the industry. Individual cooperatives were
also invited to provide proposals to the task force for consideration.
Following its meetings with the various dairy producer organizations,
the task force began internal deliberations, to analyze and discuss the
many proposals and options presented, and develop recommendations for
the NMPF Board of Directors.
As a result of this valuable exchange with various dairy
organizations, NMPF developed Foundation for the Future. As envisioned
by NMPF, Foundation for the Future offers much-needed change to many
aspects of current dairy programs, some of which were designed in an
earlier time to operate in a relatively closed domestic market. Today's
market for U.S. dairy farmers' milk, however, is influenced to a much
greater degree by global demand and supply, as the record prices of
2008--and their disastrous plunge in 2009--have clearly demonstrated.
Executive Summary
This Executive Summary provides an overview of the policy changes
proposed by NMPF. Detailed descriptions of each of the elements
comprising the Foundation for the Future program are also contained in
this document. While each element of Foundation for the Future is
identified separately, they were designed to work together to ensure
the best possible result for U.S. dairy producers and the U.S. dairy
industry, in general. It should be emphasized that each element of
Foundation for the Future interlinks with one or more of the other
elements to obtain maximum effect. It is therefore imperative that the
entire package of Foundation for the Future be considered for the
totality of its impact.
Just as multiple problems contributed to an unprofitable situation
for U.S. dairy farms recently, multiple solutions are required to
achieve a more prosperous future. To meet this need, Foundation for the
Future offers a multi-faceted approach by: (1) replacing existing
Federal safety net programs; (2) creating a new Dairy Producer Margin
Protection Program to protect against both severe and unsustainable
loss of margin; (3) reforming the Federal Milk Marketing Order system;
and (4) establishing a Dairy Market Stabilization Program to help
address periodic imbalances in dairy supply and demand.
1. Replace Current Federal Safety Net Programs
Foundation for the Future recommends discontinuing the Dairy
Product Price Support Program (DPPSP) and the Milk Income Loss Contract
(MILC) program in the next Farm Bill. Instead, Foundation for the
Future proposes to convert the budgetary savings in the Federal dairy
baseline to establish the Dairy Producer Margin Protection Program, as
described further in this document.

The Dairy Product Price Support Program (DPPSP) and the Milk Income
Loss Contract (MILC) program deliver inadequate protection against
periodic low milk prices and destructively-low margins that occur when
input costs, especially feed prices, rise rapidly. The DPPSP is
ineffective as a safety net because it hinders U.S. and world markets
to adjust to supply-demand signals. It also stifles product innovation.
The MILC program fails to assist farmers when they need it the most,
often providing payments to producers when margins were in fact,
relatively good. The feed cost adjustor in MILC assists only when feed
costs are very high. In 2008, when producers were severely impacted by
high feed costs, these programs didn't help them until after the milk
price crashed at the end of the year.
2. Dairy Producer Margin Protection Program
Foundation for the Future recommends establishing a new program
entitled the Dairy Producer Margin Protection Program (DPMPP) which is
intended to support producer margins, not prices. DPMPP is a program
that is designed to address both catastrophic conditions, which can
result in the severe loss of equity for dairy farmers, such as those
witnessed in 2009, as well as long periods of low margins, such as
those in 2002. Under this program, ``margin'' is simply defined as the
All-Milk Price minus feed costs. Feed costs are determined using a new
feed ration that has been developed to more realistically reflect those
costs associated with feeding the entire dairy farm enterprise,
including milking cows, heifers, etc. The DPMPP operates on the premise
of providing a basic level of protection (i.e., insurance coverage) for
all producers and a voluntary supplemental coverage. The basic coverage
is fully-subsidized by the Federal Government (as was the case with the
DPPSP and MILC), while the supplemental coverage is voluntary and
premiums are partially subsidized by the government, but in a manner in
which the level of subsidization decreases as the level of coverage per
hundredweight increases. Consequently, dairy farmers electing to insure
their operations beyond the fully-subsidized basic level coverage would
pay the non-subsidized portion of the premium associated with the
supplemental coverage. The DPMPP is intended to be a Title I program
operated by the Farm Service Agency (FSA). Since DPMPP is a margin
insurance program, it is proposed to have no payment limitations based
on income and/or size of herd.

In the future, the solvency of dairy farms will depend ultimately
on margins (the difference between milk prices and overall costs--in
particular, feed costs) rather than just the milk price alone. The
economic hardship of 2009 revealed that relatively high prices do not
guarantee profitability when accompanied by high input costs. A program
that helps provide income insurance coverage for dairy farmers during
periods when their margins are low, or even negative, is a key element
of Foundation for the Future.
In developing the DPMPP, the following important principles were
observed:

(1) Losses caused by either low milk prices or high feed costs need
to be covered;

(2) A dairy farmer's cost for the basic level of protection must be
subsidized by the Federal Government since the DPPSP and MILC
are being replaced by the DPMPP;

(3) The level of voluntary supplemental protection should be
flexible, and producers should be able to purchase additional
protection to complement the nature of their operations;

(4) The program should be voluntary, national in scope, and open to
all dairy farmers, regardless of size without payment
limitations;

(5) The program should address both catastrophic conditions and
long periods of relatively low margins, yet not provide
incentives to create artificial over-production; and

(6) The program must be easily accessed by all producers through a
simple application process or through the assistance of their
cooperative.
3. Federal Milk Marketing Order Reform
Foundation for the Future's revisions to the Federal Milk Marketing
Order (FMMO) Program address the following fundamental issues
associated with the current milk pricing system that are of concern to
both dairy producers and processors. The proposal:

Replaces end product pricing formulas with a competitive
milk pricing system

Incorporates a pricing system for two classes of milk: fluid
(Class I) and manufacturing (formerly Class II, III and IV
product uses)

Maintains the ``higher of'' for establishing the fluid use
(Class I) minimum base price

Maintains current Class I differentials

Maintains the number and basic structure and provisions of
Federal Orders

FMMOs have provided an important support system for dairy farmers
and cooperatives for many years. They have worked to establish
consistent pricing mechanisms for milk for all uses, provide audited
data on marketed milk, and help maintain supplies for bottlers and to
compensate their suppliers. In recent years, however, dairy markets
have become more complex and current Federal Order provisions have
experienced difficulty accommodating them. Markets have evolved--from
regional, to national, and now global. Pricing has become complex and
linked to markets--including unregulated areas, state marketing orders,
and international, which are not under the control of FMMO regulation.
The current end-product pricing formulas set minimum milk prices
for dairy farmers by fixing a maximum gross margin for manufacturers of
the benchmark products. This creates winners and losers between
producers and processors, and even among cooperatives, and has strained
commercial relationships and distracted from other potentially
constructive reform efforts. When the end-product pricing formulas
require adjustment, it is done through a lengthy and, most often,
divisive FMMO formal rulemaking process. The goal of NMPF's effort is
to develop a pricing system that compensates producers fairly, reduces
price volatility, and creates a more dynamic dairy industry. The key in
doing so is to eliminate the present end-product pricing formulas that
have been troublesome since their establishment. Another goal is to
create a timelier and more transparent system in order to avoid
distorting market signals sent both to producers and processors.
4. Dairy Market Stabilization Program
Foundation for the Future is recommending the establishment of a
Dairy Market Stabilization Program (DMSP) in order to address extreme
volatility in dairy producer margins by sending strong and timely
signals to producers that temporarily reducing milk production by a
small percentage will have a positive impact on their overall margins.
As the U.S. dairy industry increases its global participation, exposure
to greater price volatility is more likely. The DMSP is intended to
absorb some of the market shocks that this volatility may cause. The
DMSP is designed to act swiftly, but infrequently, to address brief
imbalances in the market. The program is also designed to work in
conjunction with the Dairy Producer Margin Protection Program (DPMPP).

Key principles of the DMSP include:

(1) Allow for production growth--The program is intended solely to
intervene in the market to address temporary imbalances between
supply and demand. The program will send clear and timely
economic signals to producers that there is an imbalance in the
marketplace;

(2) Reduce margin volatility--The program's ultimate objective is
to prevent acute imbalances in the marketplace that negatively
impact producer margins. By encouraging producers to lower
their milk marketings at appropriate times, prices should rise,
thus improving margins;

(3) Minimize government intervention--The legislation will set the
parameters that trigger the program and USDA's role will be
limited to calculating the actual margin on a monthly basis
using data from CME and NASS information; and

(4) Not encourage imports or discourage exports--Global and U.S.
markets must maintain a strong correlation. Such correlation
will allow domestic inventories to clear faster, encourage
exports, discourage imports, and help assure that market
downturns are of shorter duration.

The program will only go into effect when the actual margin
(determined using the same calculations of the DPMPP) falls below a set
margin trigger level for two consecutive months. Once DMSP is
triggered, producers will receive payment for only a certain percentage
of their base milk marketings. The percentage of milk marketings upon
which payment will be based shall be determined according to the
severity of the margin loss. A maximum reduction in milk marketings
upon which payment will be based will also be established according to
a predetermined formula. Producers whose milk marketings in a month
when the program is in effect are less than the set percentage of their
base milk marketings upon which payment will be based would not be
subject to a reduction in payment. The program would cease once the
margin trigger level has been exceeded for two consecutive months. The
DMSP will cover all producers in all markets. Monies resulting from
reductions in producer payments will be collected by the Agricultural
Marketing Service (AMS) using the same framework used to collect the
dairy promotion monies and will apply to all milk marketed with no
exemptions. The USDA will announce that the DMSP is being implemented
30 days in advance of the month in which the program goes into effect.
Although not effectuate through any decision-making on the part of AMS,
the DMSP is intended to be a government program administered by that
agency. The purpose of the monies collected through the DMSP is to
effectively stimulate the domestic consumption of dairy products
through contributions to food assistance programs.
Conclusion
All of these recommendations and proposed changes will ultimately
require a new way of thinking about U.S. dairy policy, milk pricing
systems, and the impact of margin on individual dairy operations. NMPF
is not underestimating the size of the shift in attitude necessary on
the part of producers and other sectors of the industry to give these
proposed programs a fair evaluation. We realize it will take a great
deal of education and communication as we proceed to gain industry
consensus on Foundation for the Future. However, if there is a lesson
to be learned from 2009, it is that the present safety nets are
inadequate, the present pricing system is not serving the industry
well, and that change is needed. Foundation for the Future represents
the timeliest opportunity for changing the direction of dairy policy
for the future of our dairy farmers by assisting the entry of new
generations of dairy farmers and helping the entire industry meet the
challenges of a new global marketplace.
For more detailed information on Foundation for the Future,
including video and PowerPoint presentations, go to
www.futurefordairy.com.
Detailed Descriptions of Individual Program Elements
1. Replace Current Federal Safety Net Programs
Discontinuing the Dairy Product Price Support Program
(DPPSP) would allow greater flexibility to meet increased
global demand and shorten periods of low prices by reducing
foreign competition.

Shifting resources from the DPPSP and Milk Income Loss
Contract (MILC) Program towards the new Dairy Producer Margin
Protection Program (DPMPP) would provide farmers with a more
effective safety net.

Discontinuing the Dairy Product Price Support Program

The DPPSP was created in 1949 as a means to help provide government
support for farm-level milk prices. During most of its lifespan, the
program targeted a set milk price, and then established pricing targets
for key products, such as cheese, butter and non-fat milk powder, that
would help support that price.
In the 2008 Farm Bill, the program was altered to support specific
products, ending its focus on a singular milk price, and targeting
specific product price levels. Regardless of its function, however,
NMPF believes it is now time to end the DPPSP and shift resources
toward a new Federal safety net. Here's why:

1. It supports dairy farmers all around the world and disadvantages
U.S. dairy farmers.

The current program helps balance world supplies by encouraging the
periodic global surplus of milk products to be purchased by U.S.
taxpayers. As a result, dairy farmers in other countries, particularly
the Oceania region, enjoy as much price protection from the DPPSP as
our own U.S. farmers. Without the USDA's Commodity Credit Corporation
(CCC), buying up occasional surpluses of dairy proteins in the form of
nonfat dry milk, a temporarily lower world price would affect America's
competitors, all of whom would be forced to adjust their production
downward and ultimately hasten a global recovery in prices.

2. It reduces total demand for U.S. dairy products and dampens our
ability to export, while encouraging more foreign imports into
the U.S.

The price support program effectively reduces U.S. exports, by
diverting some of the U.S. milk flow into government warehouses, rather
than to commercial buyers in other nations. It creates a dynamic where
it is more difficult for the U.S. to be a consistent supplier of many
products, since sometimes the domestic industry has products to export,
and at other times, the domestic industry just sells to the government.

3. It acts as a disincentive to product innovation.

The DPPSP distorts what the U.S. produces--for example, too much
nonfat dry milk, and not enough protein-standardized skim milk powder,
as well as specialty milk proteins, such as milk protein concentrates--
that are in demand both domestically and internationally.
Because the price support program is a blunt instrument that will
buy only nonfat dry milk and because some plants have been specifically
built to produce nonfat dry milk, it puts the U.S. at a competitive
disadvantage with respect to other global dairy vendors.

4. It isn't effectively managed to fulfill its objectives.

Although the DPPSP has a standing offer to purchase butter, cheese
and nonfat dry milk, during the past 12 years, only the last of that
trio has been sold to the USDA in any significant quantity. In essence,
the product that the DPPSP really supports is nonfat dry milk. Even at
times when the cheese price has sagged well beneath the price support
target, cheese makers have chosen not to sell to the government for a
variety of logistical and marketing-related reasons. NMPF has tried to
address these problems, but the USDA shows no inclination toward
facilitating greater purchases of product by recognizing the additional
costs required to sell to government specifications. Once purchased,
powder returning back to the market from government storage also
presents challenges, dampening the recovery of prices as evidenced in
Chart 1.
Chart 1
U.S. and World Prices--SMP/NFDM

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

5. It seeks to achieve price levels that are no longer relevant to
farmers.

Even though the $9.90 per hundredweight target was eliminated in
the last Farm Bill, the individual price support targets--$1.13 per
pound for block cheese, $0.85 for powder, and $1.05 for butter--will
essentially return Class III and IV prices around $10 per
hundredweight. In an era of higher costs of production, that minimal
price isn't acceptable in any way, shape or form as the following chart
so clearly demonstrates. As shown on Chart 2, the effective price
support level has been considerably less than the cost of production
for many years. The government is not at all likely to raise the
support prices (which would have negative consequences both for the
burgeoning Federal deficit, as well as our trade treaty limitations),
and even if it did, the industry would likely experience continued
delays in the recovery of prices when the program is most needed.
Chart 2
Price Support Level and Costs of Production, 2006-2011

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Source: USDA Economic Research Service.

In summary, discontinuing the DPPSP would eventually result in
higher milk prices for U.S. dairy farmers. By focusing on indemnifying
against poor margins, rather than on a milk price target that is
clearly inadequate, the industry can create a more relevant safety net
that allows for quicker price adjustments, reduces imports and
facilitates exports. As a result of the present DPPSP, the U.S. has, in
effect, become the world's balancing plant. As time marches on, so,
too, must our approach to helping U.S. dairy farmers.

Discontinuing the Milk Income Loss Contract (MILC) Program

MILC is a price-based safety net, which is as ineffective for
today's dairy producers as the Dairy Product Price Support Program. In
2008 and 2009, MILC proved to be an inconsistent safety net program for
dairy farmers facing very low, or even negative, operating margins.
MILC, despite its feed cost adjustor, does not adequately offset high
feed costs and its price target does not track national farm milk
prices.
MILC payments depend on a low milk price. If milk prices are at
average levels and feed costs are high, farmers can suffer substantial
losses and still not receive any assistance from MILC. Although a feed
cost adjustor was added in the 2008 Farm Bill, this program does not go
into effect until the price of the National Agricultural Statistics
Service (NASS) standard feed ration reaches $147 per ton (equivalent,
for example, to $3.75 per bushel of corn, $9.50 per bushel of soybeans,
and $130 per ton of alfalfa). It also only covers about 30 percent of
the feed price increase above this high level. This was clearly
inadequate through most of 2008, when high feed costs overwhelmed
average milk prices and put most farmers into a deep hole without the
help of any MILC payments. The current feed ration utilized in the MILC
has not been sufficiently updated to reflect today's current dairy farm
feeding practices. On the other hand, the Dairy Producer Margin
Protection Program recommends utilizing a new feed ration reflective of
the entire dairy feeding enterprise at the farm level.
The MILC target price is a Class I price. Class I is currently
based on the ``higher of'' Class III or IV prices, so when the Class IV
(butter powder) price or the Class III (cheese) price is high, MILC
payments can be low or zero, even if producers are facing low margins.
That is why the whole premise of the Foundation for the Future is
changing the focus of dairy farmers from price targets to margins.
The MILC program is inequitable in its treatment of dairy farmers
and, therefore, ineffective in its objective of providing economic
relief to dairy farmers in time of need. Requiring producers who market
more than 2.985 million pounds of milk a year to guess in which of the
coming twelve months they will most need economic assistance is why it
is ineffective. Limiting the level of protection to a maximum of 2.985
million pounds of milk a year provides protection for less than 30
percent of the total milk produced in the U.S. A basic principle of
Foundation for the Future is that all farmers should be treated equally
regardless of size or region.
As dairy farmers face growing volatility in both their feed costs
and their milk prices, the milk price-based dairy producer programs are
no longer adequate or efficient. As evidenced significantly in 2009,
the MILC program does not provide an effective safety net for dairy
producers. It is for these reasons that Foundation for the Future
recommends discontinuing the Dairy Product Price Support Program
(DPPSP) and the Milk Income Loss Contract (MILC) program in the next
Farm Bill and using the budgetary savings in the Federal dairy baseline
to establish the new Dairy Producer Margin Protection Program as
described next in this document.
2. Dairy Producer Margin Protection Program
Foundation for the Future recommends establishing a new program
entitled the Dairy Producer Margin Protection Program (DPMPP), which is
intended to support producer margins, not prices. DPMPP is a program
that is designed to address both catastrophic conditions, which can
result in the severe loss of equity for dairy farmers, such as those
witnessed in 2009 as well as long periods of low margins, such as those
experienced in 2002. Under this program, ``margin'' is simply defined
as the All-Milk Price minus feed costs. Feed costs are determined using
a new feed ration that has been developed to more realistically reflect
those costs associated with feeding the entire dairy farm enterprise
including milking cows, heifers, etc. The DPMPP operates on the premise
of providing a basic level of protection (i.e., insurance coverage) for
all producers and a voluntary supplemental coverage. The basic coverage
is fully-subsidized by the Federal Government (as was the case with the
DPPSP and MILC), while the supplemental coverage is voluntary and
premiums are partially subsidized by the government, but in a manner in
which the level of subsidization decreases as the level of coverage per
hundredweight increases. Consequently, dairy farmers electing to insure
their operations beyond the fully-subsidized basic level coverage would
pay the non-subsidized portion of the premium associated with the
supplemental coverage. The DPMPP is intended to be a Title I program
operated by the Farm Service Agency (FSA). In terms of U.S. obligations
as a member of the World Trade Organization (WTO), the program has also
been designed to fit within the permitted provisions for agricultural
policies, as well as within the subsidy limits permitted for U.S.
agriculture. Finally, since DPMPP is a margin insurance program, it is
proposed to have no payment limitations based on income and/or size of
herd.

Background

Increased volatility in milk and feed markets has driven interest
in developing a new approach to providing a Federal safety net for milk
producers. Development of a new margin insurance program for milk
producers will provide dairy farmers the support they need when their
margins fall because of low milk prices or high feed costs. The program
would enable producers to protect or insure their margin (All-Milk
Price minus feed cost) by enrolling in a margin insurance/protection
program. The DPMPP will help dairy farmers survive financially
difficult times by paying them an insurance indemnity (payout) when
catastrophic or significant losses occur in their dairy operations.

The New Measure of Feed Costs

DPMPP requires calculating the margin over feed costs on a dollar
per hundredweight of milk basis. This is equal to the price received
per hundredweight of milk minus the total cost of purchased feed needed
to produce a hundredweight of milk. Other production cost components
such as labor, energy, depreciation, capital, veterinary services, and
nutritional supplements vary greatly across individual operations and
will need to be addressed by producers when determining their desired
level of coverage. To determine feed costs, DPMPP uses a new measure
based on a daily ration for lactating cows shown in Table 1. The new
feed ration was developed by NMPF with the support of a number of
experts and prominent animal nutritionists (Attachment 4) from all
across the country. This ration, which is for a cow producing the
national average of 68.85 pounds of milk per day, uses the four feed
ingredients shown in that table to capture the changes in dairy
farmers' feed costs that result from volatile prices in the feed
commodities markets.

Table 1--Daily Quantities of Feed Ingredients for a Lactating Cow
----------------------------------------------------------------------------------------------------------------
Quantity of
Quantity of Dry Commercial Quantity in Commercial
Ingredient Ingredient (lbs/day) Moisture Content Ingredient (lbs/ Units (units/day)
day)
----------------------------------------------------------------------------------------------------------------
Shelled Corn 15.4 14% 17.9 0.319803 bushels
Corn Silage 16.0 65% 45.7 0.02286 tons
Soybean Meal 5.7 12% 6.5 0.003238 tons
Alfalfa Hay 10.0 15% 11.8 0.00588 tons
----------------------------------------------------------------------------------------------------------------

The DPMPP feed cost measure also includes daily rations for all
milk cows and replacement heifers on a model dairy farm enterprise that
are not producing milk sold on a given day, but are necessary for the
milk production enterprise. These include hospital cows, dry cows, and
replacement calves and heifers of all ages, as shown in Table 2. The
specific rations for these animals are also based on the same four feed
ingredients, as shown in that table.

Table 2--Daily Quantities of Feed Ingredients for the Entire Herd
----------------------------------------------------------------------------------------------------------------
Quantity in Commercial Units (units/day)
Dry Matter ---------------------------------------------------
Cow Type Proportion Consumed Shelled Soybean
of Herd (lbs/day) Corn (bu/ Corn Silage Meal (tons/ Alfalfa Hay
day) (tons/day) day) (tons/day)
----------------------------------------------------------------------------------------------------------------
Milking Cows 52.49% 47.1 0.3198 0.0229 0.0032 0.0059
Hospital Cows 1.05% 47.1 0.3198 0.0229 0.0032 0.0059
Dry Cows 8.82% 24.0 0.0249 0.0172 0.0020 0.0042
Replacements Heifers:

Calving within 1 year 18.53% 23.0 0.0239 0.0164 0.0020 0.0041
500 lbs. and over 9.55% 15.0 0.0311 0.0107 0.0013 0.0022
Less than 500 lbs. 9.55% 7.0 0.0363 0.0045 0.0006 0.0006
----------------------------------------------------------------------------------------------------------------

The total cost of feed per hundredweight of milk is determined by
adding the total daily cost of purchasing the four feed ingredients
used in the amounts shown in Table 2 and dividing the result by the
daily volume of milk marketed, which is 0.6885 hundredweights for each
milking cow. Because this feed cost measure is on a per hundredweight
of milk basis, its calculated value for any set of prices for the four
ingredients is the same regardless of the actual number of animals that
make up the model dairy farm enterprise, as long as the animals of the
various categories are in the proportions shown in Table 2. And because
the feed cost used in the DPMPP margin calculation captures the total
cost of feed purchased, it uses a shrink factor of 10 percent between
the volumes of all feed ingredients purchased and the volumes of those
ingredients actually consumed by animals.
Although the new feed cost measure is derived from an analysis of
daily feed rations, it has the same calculated value for any set of
prices for the four ingredients regardless of the period of time used.
For administering the DPMPP, this calculation will be done monthly
using monthly prices for the four basic feed ingredients. The DPMPP
feed cost for corn for a particular month will be calculated using the
Chicago Mercantile Exchange (CME) average daily settlement price for
every trading day during that month for the corn futures contract
closest to expiration. The feed cost for soybean meal will be computed
using the same methodology. The monthly price paid for alfalfa hay, per
ton, will be the monthly price received by farmers in the U.S. reported
by USDA's National Agricultural Statistics Service (NASS). The monthly
price paid for corn silage, per ton, is determined using the monthly
price paid for corn, as described above, by the formula:

Price of corn silage, per ton = 10.1 Price of corn, per bushel.

The DPMPP feed cost measure can therefore be calculated using just
three prices, for corn, soybean meal and alfalfa hay. The formula for
this calculation is:

Feed cost per cwt. of milk = 1.192 Price of corn, per bushel +
0.00817 Price of soybean meal, per ton + 0.0152 Price of
alfalfa hay, per ton.

Historical monthly feed costs since 2000 are shown in Chart 3
below.
Chart 3
Feed Costs Per Cwt, 2000-2011

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

The role that feed costs play in the DPMPP is to capture the
volatility of feed costs paid by dairy farmers, relative to an average
or expected level. For this purpose, it is important that the measure
used to calculate feed costs is adequately sensitive to the volatility
or variability in the markets for feed components, as opposed to the
actual level of these costs. For the period since 2000, the new DPMPP
feed cost shows exactly the same level of variability as does the cost
of feed to produce milk reported by USDA's Economic Research Service
based on periodic farm survey data.
The DPMPP milk-feed margin is then determined for each month as the
difference between the monthly price received by farmers for all milk
sold in the U.S., the All-Milk Price, reported by USDA/NASS minus the
monthly feed cost, as determined above. The resulting monthly margins
are shown in Chart 4 below for the period since 2000, together with the
monthly All-Milk Price and the feed costs used to determine them.
Chart 4
Milk Price, Feed Costs, and Margins, 2000-2011

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Operation of the DPMPP

The DPMPP will provide two levels of coverage: a Basic Plan and a
Supplemental Plan (both described below). The DPMPP has been created to
protect producers from catastrophic or significant losses due to low
margins, not to set milk prices. Since it is an insurance program, the
DPMPP is designed to cover all producers regardless of size or region.
The DPMPP is intended to be a Federal Farm Program run by local Farm
Services Agencies (FSA), not by private insurance companies. The DPMPP
will not encourage or provide support for expanded production. Support
will only be provided based on the producer's historical milk
production, except for new entrants.
Under the program, USDA will use historical data to project future
margins (defined as All-Milk Price minus feed costs). The levels of
protection under the program will be $4.00 for the Basic Plan and the
maximum level of coverage under the Supplemental Plan will be the
lesser of USDA's projected margin or $8.00.
Producers will sign up for the Basic Plan at no cost. In addition,
they will have an option to purchase Supplemental margin protection by
paying a premium that is inversely subsidized as the level of requested
level margin coverage increases. In other words, as the level of
requested coverage increases, the percentage of the premium subsidized
by the Federal Government decreases. The margin guarantees will be
fixed for the duration of the Farm Bill once the producer has signed
up.
USDA will calculate, on a monthly basis, the margin (i.e., the
actual All-Milk Price for that month minus the feed costs) by using:
(1) the current formula for determining the All-Milk Price, and (2) the
feed costs calculated on the basis of the new NMPF ration described on
p. 16 [sic] in this document. USDA will calculate the average margin
for each consecutive two month period and compare it to the Basic
margin which will be set at $4.00 by the authorizing legislation at the
start of the program, as well as the Supplemental margins for each
individual producer (determined at the time the producer signed up) and
calculate whether an insurance payment is necessary to the individual
producer.

The Basic Plan

The Basic Plan is voluntary and is intended to address catastrophic
losses only. It is, therefore, expected to be triggered rarely. As
proposed, the Basic Plan margin guarantee will be $4.00 per
hundredweight for 75 percent of their historic production. Producers
will have the ability to sign up for the Basic Plan throughout the
first year of implementation of the next Farm Bill.

The Supplemental Plan

The Supplemental Plan is also voluntary and is intended to provide
additional margin protection beyond the Basic Plan's margin guarantee.
However, producers will only be able to sign up for additional coverage
up to an additional $4.00 per hundredweight unless USDA projects the
average margin for the duration of the Farm Bill less than $8.00.
Unlike the Basic Plan, producers will be able to cover up to 90 percent
of their production history under this Supplemental Margin Protection
Plan. The cost of this optional coverage for an individual producer
will depend on the level of margin guarantee per hundredweight selected
by the producer and the volume of milk production to be protected.
Since this is a new concept, the producer will have a choice under
the Supplemental Plan to purchase additional coverage throughout the
first year. The producer will pay a prorated premium for the first year
based on the date on which the producer purchases the coverage. Once
the producer signs up, the terms of coverage, the level of additional
coverage per hundredweight, and the percentage of the production
history, will be fixed for the duration of the Farm Bill.
As mentioned previously, the level of subsidy available to help pay
for the premium under the Supplemental Plan will depend on the level of
coverage per hundredweight selected by the producer. The higher the
margin guarantee selected (i.e., the closer to the maximum level
allowed), the lower the subsidized rate for the coverage.
Under the Supplemental Plan, a producer will be able to guarantee a
margin above the Basic Plan (minimum), but only up to the lesser of the
$8.00 margin level or USDA's projected margin for the duration of the
Farm Bill. As an example, Table 3 describes the premium rate per
hundredweight above the margin guarantee under the Basic Plan (at
$4.00) up to the maximum level of protection of $8.00 per
hundredweight.

Table 3--Premium Rates for Supplemental Coverage
------------------------------------------------------------------------
Additional Additional
Supplemental Supplemental Premium Per
Protection Per Premium Per Cwt. Protection Per Cwt.
Cwt. Cwt.
------------------------------------------------------------------------
$0.50 $0.015 $2.50 $0.230
$1.00 $0.036 $3.00 $0.434
$1.50 $0.081 $3.50 $0.590
$2.00 $0.155 $4.00 $0.922
------------------------------------------------------------------------

Table 4 is an example of how the premiums for supplemental coverage
would be calculated using examples of projected margins, feed costs,
and milk prices. In Example A below, a producer with 200 cows and a
production history of 4.115 million pounds purchased an additional
$2.00 of supplemental coverage on 90 percent of his/her production
history. Under the Basic Plan with a margin guarantee of $4.00, the
producer would have received ``no-cost'' coverage at a margin of $4.00
on up to 75 percent of the amount of milk produced.
The premium for supplemental coverage in this example is $0.155 per
hundredweight and results in an annual premium of $5,760.00 each year
for the life of the Farm Bill.

Table 4--Premium Calculator (Example A)

-------------------------------------------------------------------------
8Farm Data:0

200 cow dairy

20,576 lbs./cow

4.129 million lb. production history

Wants $2/cwt supplemental on 90% of production history

Annual Premium Rate 15.5 cents/cwt

Annual Premium $5,760 per year

82009 DPMPP Payout:0

Basic Protection = $27,357

Net Supplemental Protection = $47,136

Total Net Payout = $74,492 or Average $1.81/cwt. for the year
------------------------------------------------------------------------

Based on actual market conditions for 2009, the producer in this
example would have received a payment of $27,357.00 from the Basic
Plan. In addition, since the producer purchased $2.00 of supplemental
coverage on 90 percent of his/her production history, the producer
would have received an additional net payment of $47,136.00 in
supplemental coverage and his/her total net payment for 2009 would have
been $74,492.00 or $1.81 per hundredweight. The annual premium payment
for this producer would have been only $5,760.00.
Table 5 is an example of the same farm, but in this situation, the
producer purchased additional margin protection under the Supplemental
Plan at a $4.00 per hundredweight on 90 percent of his/her production
history). This example would have a premium of $0.922 per
hundredweight. and resulted in an annual premium of $34,022.00 each
year for the life of the Farm Bill.

Table 5--Premium Calculator (Example B)

-------------------------------------------------------------------------
8Farm Data:0

200 cow dairy

20,576 lbs./cow

4.115 million lb. production history

Wants $4.00/cwt supplemental on 90% of production history

Annual Premium Rate 92.2 cents/cwt

Annual Premium $34,265 per year

82009 DPMPP Payout:0

Basic Protection = $27,357

Net Supplemental Protection = $80,571

Total Net Payout = $107,928 or $2.62/cwt. for the year
------------------------------------------------------------------------

The Dairy Producer Margin Protection Calculator available at
www.futurefordairy.com can help farmers calculate base and supplemental
coverage options on his/her own dairy operations, based on their annual
milk production.

Other Important DPMPP Specifics

Dairy Producer Production History

The DPMPP will not support new production. Under the DPMPP, farmers
will be able to insure a percentage of their milk production history.
Each producer signing up for the program will have a production
history, which is defined as the year of highest milk production from
among the 3 years preceding implementation of DPMPP. Any producer
without at least one year of production history will be allowed to use
the latest monthly data, extrapolated to a full 12 months prior to the
implementation of the program.
The production history is transferable solely with the farm or
stays with the farmer. If the farm (installation) is sold, the
production history will be transferable with the farm to the new owner.
In special situations, where the farmer is moving his entire operation,
the farmer will be able to keep the production history (with the old
facility no longer having a production history). Additional parameters
must be in place to avoid abuses of the ``farm sale/move'' option. The
production history will be updated every new Farm Bill or 5 years,
whichever comes first.

Penalties (for Supplemental Buyers)

Penalties must be severe to prevent farmers from opting out of the
program if it is economically convenient to do so. Farmers not
complying with their obligations will not be eligible to join the
program again and will be required to pay back any payment received
during the previous years. Exemptions will include farmer's death or
full retirement (out of business for at least 7 years).

New Farmers (Entries)

Farmers will be allowed to enter the DPMPP only if they have no
ownership interest in other dairy farms. USDA will use a Tax ID system
(similar to other government programs) to verify this requirement. New
entries will have to apply for coverage within 6 months after
establishing the farm. New farms will be eligible to receive coverage
under both the Basic Plan and the Supplemental Plan option.

Economic Analysis of the Dairy Producer Margin Protection Program

Two separate analyses of the impact the DPMPP program would have
had on dairy farmer income in 2009--one by Dr. Peter Vitaliano, NMPF
Vice President of Economic Policy and Market Research, and the other by
Dr. Scott Brown of the University of Missouri and the Food and
Agriculture Policy Research Institute (FAPRI)--yielded very similar
results. Chart 5 below clearly shows the positive impact the DPMPP
Basic Plan would have had on dairy farmer revenue had it been in place
in 2009.
Chart 5
2009 DPMPP Basic Coverage Payments on 90% of Production History

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Prepared by: National Milk Producers Federation.
3. Federal Milk Marketing Order Reform
Based upon extensive deliberation and analysis during the past 12
months, a proposal for Federal Milk Marketing Order (FMMO) reform has
been developed for inclusion in Foundation for the Future. This
proposal addresses the fundamental issues associated with the current
milk pricing system that are of concern to both dairy producers and
processors. The proposal:

Replaces end-product pricing formulas with a competitive
milk pricing system.

Incorporates a pricing system for two classes of milk: fluid
(Class I) and manufacturing (formerly Class II, III and IV
product uses).

Maintains the higher of for establishing the fluid use
(Class I) minimum base price.

Maintains current Class I differentials.

Maintains the number and basic structure and provisions of
Federal Orders.

The proposed reform program is focused on basic pricing and changes
in pooling that follow from the suggested revisions to the pricing
system and recommends the consideration of additional and reformed
balancing programs. The basic framework of FMMOs--including marketing
areas, Class I differentials, producer location differentials and plant
and producer pooling qualifications--are left intact by the proposal.
That is, it does not propose to review or revise the myriad of Federal
Order details that have been designed to serve many specific and
regional needs.

Introduction

The Federal Milk Marketing Order system provides substantial
benefits to producers. These include the equitable pooling of minimum
Class I revenues, the dissemination of important market information,
and the third-party audit of milk use in plants.
Unfortunately, the current end-product pricing formulas used to
calculate minimum manufacturing milk prices have had some unintended
consequences since they replaced competitive milk price surveys in
2000. The make allowances and yield factors built into these formulas
have become a source of conflict within the industry and have created
winners and losers. Producers believe that make allowances unfairly
guarantee a profit to processors and processors insist that the
formulas don't allow them to capture a fair return on their investment.
There is also concern that the make allowances negatively impact the
Dairy Product Price Support Program and put Federal Order processors at
a competitive disadvantage with unregulated areas and state milk
marketing orders.
In addition, the inflexibility of minimum prices based on specific
product prices can create risk for processors who produce other
products, when the government requires them to pay a price that doesn't
match the value of their products.
There is also concern by both producers and processors that the
Federal Orders don't adequately address the difficulty and expense of
balancing fluid milk supplies.
Consequently, the primary objectives of the Foundation for the
Future Federal Order Reform proposal, are to:

(1) Address the inequities and the inadequacies of end-product
pricing formulas;

(2) Encourage manufacturers to produce new products resulting in
higher returns both to themselves and dairy producers; and

(3) Provide more equitable rewards producers and handlers for
balancing milk supplies.

The resulting proposal focuses on adopting competitive pricing for
manufacturing milk, while maintaining minimum price protection for
fluid milk, and pursuing new balancing programs in markets where
needed. Many other elements of the Federal Orders developed over the
years for many specific reasons, are left as they are, including Class
I differentials, marketing areas, pool plant definitions, and producer
pooling qualifications.
The proposed reform program is more market-oriented while
preserving the most valuable elements of Federal Orders. The use of a
competitive pay price as the fundamental basis for pricing milk will
enhance price discovery and facilitate the ability to export offering
greater opportunities for U.S. dairy products in the global
marketplace.

Two Classes

This Federal Order reform proposal will improve price discovery and
the transparency of milk pricing. The key element of the proposal is
the elimination of the end-product pricing formulas for manufacturing
milk, including make allowances. All milk used in manufactured dairy
products will be competitively priced. Consequently, there will be no
minimum prices manufacturers are required to pay for milk used to
produce these products.
There will, in effect, be two classes of milk use:

Class I_Fluid milk products. Milk used to produce fluid milk
products will be subject to minimum pricing, plus market-based
premiums.

Class II_Manufactured products. Milk used for manufacturing
(under the current system Class II, III and IV products) will
be competitively priced in the market.

Fluid milk (Class I) Price

Each month, USDA's Agricultural Marketing Service will carry out a
survey of the competitive price paid by proprietary cheese plants to
cooperatives and individual producers for milk used to make cheese.
Proprietary plants (including those with 50 percent cooperative
ownership or less and managed by the proprietary partner) producing all
types of cheese will be surveyed if they process a daily average of at
least 250,000 pounds of milk and are not subject to minimum pricing for
that milk (under a state order, for instance).
The data collected by USDA in the survey will include pounds of
milk and pounds of butterfat, all premiums, component values, hauling
subsidies, and lab and field service costs where applicable. Forward
contracted milk would not be included.
USDA will publish the results of this survey for each of the five
regions. These regions will correspond to, and expand upon, the current
Federal Order markets, but are defined for reporting purposes only.
There will be fewer reporting regions than Federal Order markets to
ensure that each region has a sufficient volume of manufacturing milk
use to result in a robust competitive pay price. California would be
excluded from the survey so long as it continues to set a minimum price
for cheese milk.
The basic price determinant or ``price mover'' for fluid milk
(Class I) nationally will be the higher of the national weighted
average competitive cheese milk price survey, or the current Class IV
formula butter powder milk value. The price mover will be announced in
advance. For example, the Class I mover for April would be the higher
of: (1) February's national average cheese milk competitive price,
adjusted with weighted average NASS block and barrel cheese prices for
the first 2 weeks of March; or (2) an advanced Class IV price as
currently calculated. The April Class I price mover would be announced
by the 23rd of March. The minimum price for Class I milk would be this
national mover plus the current Class I differential at the plant.

Manufacturing Milk Price

The price producers are paid for milk in manufactured dairy product
uses (as currently defined for Class II, III and IV) will be a
competitive price. There will be no minimum price for manufacturing
milk.
Each region's competitive price for milk used to produce cheese, in
addition to being used in establishing the Class I base price, as
described above, will be used to determine the butter powder plant pool
credit and the lowest of the regional competitive cheese milk prices
will enter into the calculation of the Class I pool contribution. (See
Pooling below.)

Pooling

In order to stabilize pooled values and eliminate most plant de-
pooling, the Federal Order pool would be a modified pooling of
differentials, resulting in a producer price differential. That is,
instead of pooling four class prices, relatively stable price
differentials and balancing credits would be paid into and out of a
differential pool, as follows:

Since the concept of a ``blend price'' will no longer apply,
individual handlers of Class I milk would contribute to the
pool the lagged difference between their Class I price and the
lowest regional competitive price. Both the Class I price and
the lowest regional competitive price would be announced in
advance and lagged in the same way. The Class I pool
contribution would be consistently positive from month to
month, because it would not depend on a pooling of old and new
prices, but would only depend on the fixed Class I differential
and a consistently positive difference between the national
mover and the lowest regional cheese milk price. In fact, the
full contribution to the pool per hundredweight of Class I milk
would be known by the 23rd of the month before.

Handlers of a subclass of perishable manufacturing milk
(generally products now in Class II) would contribute a fixed
differential of $0.30 per hundredweight in the pool.

Handlers of milk used to make cheese would have no
contribution or draw.

Handlers of milk used to produce butter and milk powders
would receive a payment from the pool when the national value
of milk used to make powder and butter as calculated using the
current Class IV formula adjusted for energy costs is less than
the regional competitive cheese milk price. When the Class IV
formula is higher than the regional competitive cheese price,
the Class IV handler shall pay the difference into the pool.
The payment to those who manufacture butter and milk powders
will not exceed the funds available in the pool. The blended
result after the distribution would be a producer price
differential for all pooled producer milk that would be paid
directly from the Market Administrator to producers and
producer cooperatives.

Balancing and Transportation Credits Addendum

USDA will be required to hold hearings, either at the national
level or for individual orders, when requested for the purpose of
considering and implementing proposals to compensate handlers that
truly perform balancing services for the Class I market. These hearings
are to include but not be limited to:

A plant balancing credit to manufacturing plants that
provide balancing services to the market.

Intramarket transportation credits for markets in which
balancing is based on long shipments of milk from within the
marketing area.

How Foundation for the Future's Federal Order Reform Works

Class I Price Mover and Minimum Price

The Class I price mover for any given month is the higher of the
weighted average national competitive cheese milk price from two months
prior (the base month), or the advance Class IV formula price per
hundredweight. The competitive cheese milk price will be updated using
the change in the NASS cheddar cheese price from the first two weeks in
the base month compared to the price for the first two weeks of the
month immediately prior to the month for which the Class I price mover
would be effective. The advance Class IV price is calculated using the
current formula and the NASS butter and nonfat powder prices for the
first two weeks of the month immediately prior to the month for which
the Class I price mover would be effective.
For example, the Class I price mover for June 2011 would be
calculated as follows:

April competitive cheese price = $17.57

NASS Cheddar Price

First two weeks April = $1.6768

First two weeks May = $1.6413

NASS Butter Price

First two weeks April = $1.9869

First two weeks May = $2.0460

NASS Dry Whey Price

First two weeks April = $0.4775

First two weeks May = $0.4915

NASS NFDM Price

First two weeks May = $1.6065

Adjusted April competitive cheese milk price = $17.57 ^ $0.23 = $17.34

Advanced Class IV Formula Price = $20.32

June 2011 Class I Price mover (higher of) = $20.32

Class I handlers must pay their producers a minimum price equal to
the lowest regional competitive cheese milk pay price in the country,
adjusted as the mover is above and pay the difference between Class I
price and the lowest regional competitive cheese milk price into the
pool. The producer price differential (PPD) will be paid directly to
producers and cooperatives by the Market Administrator.

Class II Product Processor Milk Price and Pool Contribution

Processors of products formerly categorized as Class II will pay
their producers a competitive price. That is, it is what the processor
must pay producers to secure a milk supply. There is no minimum price.
However, the processors of these products shall pay $0.30 per
hundredweight of milk processed into the Federal Order pool with which
they are associated. Plant pooling and producer qualification
requirements are unchanged.

Cheese and Butter Powder Processors

Class III and Class IV product processors price to their producers
will be a competitive price. That is, it is what the processor must pay
producers to secure a milk supply. There is no minimum price. Plant
pooling and producer qualification requirements are unchanged. These
plants make no pool contribution.

Distribution of the Pool

The funds in each order's pool shall consist of:

From Class I handlers:

The applicable Class I differential.

The difference between the Class I price mover and the
lowest regional competitive advanced Class III survey price
adjusted as described above.

From soft dairy product (Class II in the current system)
pool handlers/processors:

The $0.30 differential.

From butter powder milk pool handlers:

Any amount that the butter powder (Class IV in the
current system) formula price (adjusted for energy costs of
processing) is above the region's competitive cheese milk
price.

If the butter/powder formula price is below the region's
competitive cheese milk price, the first distribution from an order's
pool will be to handlers of butter powder milk up to a maximum of the
total funds available in the pool.
The remaining pool balance is paid to producers in the Producer
Price Differential (PPD), subject to location adjustments and other
pool balancing adjustments, as of today. So that the PPD cannot be
negative, the draw for butter powder pool handlers cannot exceed the
available pool balance. The PPD is paid directly to producers and to
producer cooperative associations, to keep it separate from the
competitive prices paid to producers by handlers/manufacturers.

NMPF Five Year Analysis Summary

The table shows the impact of the proposed Federal Order reforms as
described above on the producer price differential in each order using
actual pooled volumes and underlying market values.

Table 6--Producer Price Differentials, 2006-2010
------------------------------------------------------------------------
Current FFTF Difference
------------------------------------------------------------------------
Northeast 1 $1.75 $2.01 +$0.26
Appalachian 5 $2.62 $2.94 +$0.32
Florida 6 $4.32 $4.72 +$0.40
Southeast 7 $2.72 $3.03 +$0.31
Upper 30 $0.29 $0.40 +$0.11
Midwest
Central 32 $0.48 $0.71 +$0.24
Mid-east 33 $0.80 $1.09 +$0.29
Pacific 124 $0.33 $0.74 +$0.41
Northwest
Southwest 126 $1.41 $1.87 +$0.47
Arizona 131 $0.78 $1.01 +$0.23
------------------------------------------------------------------------
Based on pooling Class IV, snubbed to total value in the pool.

In Summary

Foundation for the Future's proposal to revise Federal Milk
Marketing Orders will provide a number benefits:

Discover a true market price for milk used in manufactured
products rather than a price generated by a formula using
thinly-traded product values and contentious make allowances.

Reduce price volatility--analysis shows that a competitive
pricing system results in less volatility than product price-
driven formulas.

Encourage product innovation by not locking manufacturers
into a minimum price based on the value of a dissimilar
product.

Provide more equitable compensation to the cooperatives and
other handlers who do the hard work of balancing fluid markets.

Maintain the core framework of Federal Milk Marketing
Orders.

Federal Orders provide an important support system for processors,
dairy farmers, and cooperatives through pooling of Class I values,
providing third-party audits to verify market pricing, and helping to
maintain supplies for fluid processors by compensating their suppliers.
Without reform, Federal Orders will be strained to the point that their
existence comes into question, to the producer's loss.
The reforms proposed as part of Foundation for the Future will
accommodate the growing complexity of U.S. and international dairy
markets while maintaining the basic framework of the FMMO system and
preserving the elements of the orders that are most important to
producers and processors. These reforms will promote a milk pricing
system that compensates producers fairly, reduces price volatility, and
creates a more dynamic dairy industry.
4. Dairy Market Stabilization Program
b Foundation for the Future is recommending the establishment of a
Dairy Market Stabilization Program (DMSP) to address and
prevent extreme margin volatility for dairy producers by
sending strong and timely signals to producers that a small
percentage of additional milk production may have significant
consequences on their overall margins. The DMSP is intended to
absorb some of the market shocks that this volatility may
cause. The DMSP has been designed to act swiftly, but
infrequently, to address brief imbalances in the market. The
program will work in conjunction with the Dairy Producer Margin
Protection Program (DPMPP). DMSP is compatible with the United
State's WTO obligations.

The U.S. dairy industry has been actively increasing its global
participation. This increased interaction with global markets, will
likely create more exposure to greater price volatility. Some of the
key principles that guided the development of the DMSP include:

Allow for production growth. The program is intended solely
to intervene in the market to address temporary imbalances
between supply and demand. The program will send clear economic
signals to producers that there is an imbalance in the
marketplace.

Reduce margin volatility. The program's ultimate objective
is to restore balance between supply and demand in the
marketplace for milk. By encouraging producers to lower their
milk marketings at appropriate times, prices should rise, thus
improving margins.

Keep government intervention at a minimum. The legislation
establishing the program will set the parameters that put it
into effect. USDA's role will be limited to determine the
actual monthly margin and to collect potential farmers'
contributions. It does not require a producer advisory board to
determine when the program would ``trigger in'' and to what
extent.

Not encourage imports or discourage exports. Global and U.S.
markets must maintain a strong correlation. Such correlation
will allow domestic inventories to clear faster, encourage
exports, discourage imports, and help ensure that market
downturns are of shorter duration.

Margin as the Trigger Mechanism for DMSP

As in the case of the DPMPP, the DMSP will be based on margin (All-
Milk Price minus feed costs). After extensive analysis and review of
state, regional and national data, it has been determined that the All-
Milk Price is the most appropriate and accurate measure for use in
development of the margin. The new feed cost ration developed for the
DPMPP will also be used in the feed cost formula for this program;
hence the actual margin will be determined each month using the same
methodology as the Dairy Producer Margin Protection Program.

Program Operation

USDA will calculate the monthly margin for both the DPMPP and the
DMSP using identical methodology. The margin trigger levels for the
DMSP will be set as follows:

When the actual national margin is $6.00 or less for 2
consecutive months, producers will be paid the higher of 98
percent of their base milk marketings (definition follows) or
94 percent of their current milk marketing (definition
follows);

When the actual national margin is $5.00 or less for 2
consecutive months, producers will be paid the higher of 97
percent of their base milk marketings or 93 percent of their
current milk marketing;

When the actual national margin is $4.00 or less in a single
month, producers will be paid the higher of 96 percent of their
base milk marketings or 92 percent of their current milk
marketing.

As noted above, the DMSP would only take effect when the actual
margin is equal to or below the margin trigger level for 2 consecutive
months, except that the program would go into effect if the national
margin is equal to or below $4.00 per hundredweight in a single month.
Conversely, when the DMSP is in effect, if the actual national margin
exceeds the $6.00 trigger level margin for 2 consecutive months, the
DMSP will be suspended.

Producers whose milk marketings in a given month are less than the
required percentage of their base milk marketings serving as the basis
of payment when the program is in effect would not be subject to a
reduction in payment. (See examples below.)

Bases to be Used in the DMSP

The specified percentage of base milk marketings which will serve
as the basis of payment when the program is in effect will be
calculated off the producer's base. The producer's base is defined as
the 3 month average of the most recent of milk marketings prior to the
notification from USDA that the margin trigger level has been reached.
An example of a 3 month average would include the average of marketings
for January, February, and March for a program to be implemented in
May. This base would remain fixed at that level until the margin
exceeds the $6.00 trigger level for 2 consecutive months. To address
any conditions specific to individual operations (e.g., seasonality or
grazing), a producer will have the option of choosing the same month in
the previous year as his/her base for each month the DMSP is in effect,
making the selection annually.

Preventing an Influx of Dairy Product Imports

When domestic prices are significantly higher than world prices,
conditions are ripe for an influx of imported dairy products.
Therefore, if either of the U.S. prices for cheddar cheese or skim milk
powder (SMP) is 20 percent higher than the world price for the
applicable commodity, DMSP will be discontinued unless the national
average margin is below $4.00. In this case, conditions would be such
that even if the world prices for cheddar cheese or SMP are 20 percent
below the U.S. price, the implementation of the DMSP would continue.
The following examples explain how the program is intended to work:
Scenario--The average margin for 2 months, February and March, is
below the set margin trigger level of $6.00. As a result of the margin
falling below $6.00 for 2 consecutive months, producers will be
notified in early April that beginning with the milk marketings for the
month of May, they will receive payment for the greater of 98 percent
of their base milk marketings (in this example the average of their
January through March monthly marketings) or 94 percent of their milk
marketings for May. For purposes of this example, it is assumed the pay
price for the month of May is $14.00 per hundredweight.

Producer A whose 3 month average base milk marketings is
1,000,000 pounds and markets 1,010,000 pounds in May will be
paid for 980,000 pounds of milk (1,000,000 pounds 98
percent). The DMSP deduction from his/her milk check for May is
30,000 pounds (1,010,000 pounds minus 980,000 pounds) $14.00
per hundredweight = $4,200.00.

Producer B whose 3 month average base milk marketings is
1,000,000 pounds and markets 1,200,000 pounds of milk in May.
In this example, 98 percent of his/her base is 980,000 pounds.
However, 94 percent of his/her current (May) milk marketings is
1,128,000 pounds. Therefore, the quantity of milk Producer B is
not paid for is 1,200,000 pounds ^ 1,128,000 = 72,000 pounds.
The deduction from his/her milk check would be 72,000 pounds
$14.00 per hundredweight = $10,080.00.

Producer C also has a 3 month average base of 1,000,000
pounds and his/her milk marketings are 979,000 pounds in May.
This producer would have nothing deducted from his/her milk
check since milk production in May is below the required 98
percent of his/her base (980,000 pounds), serving as the basis
of payment. However, if this producer's June marketings were to
increase to 989,000 pounds, he/she would incur a reduction in
his/her milk check of $1260.00 (9000 pounds $14.00 per
hundredweight), since his/her June marketings exceeded the 98
percent of base serving as the basis of payment.

Producer D chooses the option of the same month in the
previous year. His/her base milk marketings were 1,000,000
pounds in May of the previous year and 1,010,000 pounds were
marketed in May of the current year. He/she will be paid for
980,000 pounds of milk (1,000,000 pounds 98 percent). The
DMSP deduction from his/her milk check for May is 30,000 pounds
(1,010,000 pounds ^ 980,000 pounds) $14.00 per hundredweight
= $4,200.00.

Administration of the Program

The DMSP will cover all producers in all markets and is intended to
be a government program administered by the Agricultural Marketing
Service (AMS) of USDA. Monies will be collected by the AMS using the
same framework as the dairy promotion checkoff monies and will apply to
all milk marketed with no exceptions. The USDA will announce that the
DMSP is being implemented 30 days in advance of the month in which the
reduction in milk payments goes into effect. The trigger mechanism will
be statutorily mandated to go into effect without USDA sanction when
certain pre-determined economic conditions occur.

How the Monies will be Collected and Managed

The purpose of the monies collected via milk check deductions under
the DMSP is to effectively stimulate the consumption of dairy products
domestically. Foundation for the Future proposes that a DMSP board be
established to oversee and direct the utilization of these producer
monies into programs that will effectively work to increase the
consumption of U.S. dairy products.
The DMSP board shall be appointed by the USDA Secretary. It will
consist of 24 directors representing the diverse dairy producer
community throughout the U.S. All board decisions will require a \2/3\
affirmative vote.
Utilizing the funds collected through the program, the DMSP board
will have the authority to direct the purchase of dairy products for
donations to food banks and other feeding or food aid programs.
The board will conduct performance reviews of DMSP every two years
and make recommendations to USDA Secretary for possible consideration
by the Congress.
The programs funded by the DMSP should be compatible with, but not
duplicative of, the programs established by the dairy checkoff program.
They should adhere to the principle of expanding consumption without
cannibalizing existing sales. The DMSP board would have the authority
to contract with a managing entity for execution and implementation of
its objectives.

Economic Analysis of the Impact of the Dairy Market Stabilization
Program

Dr. Scott Brown (FAPRI) also conducted an independent analysis of
the DMSP. The full analysis is available online (http://
www.fapri.missouri.edu/outreach/publications/2011/
FAPRI_MU_Report_04_11.pdf).
While the DMSP program does have a cost element to it for dairy
farmers, the FAPRI analysis clearly demonstrates that the return on
investment is ten-fold. The analysis assumes that when DMSP is in
effect, half of the milk produced over the production base will be
marketed. It also assumes that all producers select the same month in
the previous year as their base.
Chart 6 shows the impact the DMSP program would have had on dairy
farmer margins in 2009. The blue bars represent the actual margins and
the red bars indicate what the margins would have been with the DMSP in
effect.
Chart 7 quantifies the impact DMSP would have had on dairy farmer
revenue in 2009. It demonstrates that the program would have yielded an
increase in the average All-Milk Price in 2009 of $1.84 per
hundredweight. By coupling this program with the DPMPP Basic Plan
payment (that would have added another $0.10 per hundredweight), it is
clear that the loss of equity at the farm level would have been
significantly less severe during that period.
Chart 6
2009 Margins With/Without DMSP

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Prepared by: National Milk Producers Federation.
Chart 7
DMSP Would Have Raised the Average All-Milk Price $1.84/cwt. in 2009

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Prepared by: National Milk Producers Federation.

How Margin Protection and Market Stabilization Work Together

Foundation for the Future is a package of programs designed to work
together. This is evident when looking at the impact the combination of
the market stabilization program and the margin production program
would have had on producers in 2009.
This review uses the dairy operation in the example under the Dairy
Producer Margin Protection Program section of this paper: a 200 cow
dairy; 20,576 pounds per cow; 4,100,000 pounds production history; and
$2.00 per hundredweight supplemental on 90 percent of production
history. For this analysis, the producer selects the same month in the
previous year as his/her production history.
As seen in Chart 7 above, the DMSP program increases revenue. Chart
6 above shows that the DMSP program's impact on the margin level
reduces the duration of the margin protection program and the length of
time it would have been in effect.
The following examples using the 200 cow dairy described above. In
the first, the producer does not reduce production when the DMSP
program triggers in; in the second, the producer does make the
reduction.

Example--Producer 1: Does Not Reduce Production When DMSP Activates

-------------------------------------------------------------------------
82009 DMSP Milk Check Reductions:0

March-May = $7,010

September-November = $3,174

Total Taken Off Milk Checks = $10,184

8Impact on Farm Revenue:0

Net Increase in milk revenues = +$66,880

Net Revenue Increase per Hundredweight = $1.63 average for
the year
------------------------------------------------------------------------

Example--Producer 2: Reduces Production When DMSP Activates

-------------------------------------------------------------------------
82009 DMSP Milk Check Reductions:0

March-May = $0.00

September-November = $0.00

Total Taken Off Milk Checks = $0.00

8Impact on Farm Revenue:0

Net Increase in milk revenues = +$77,064

Net Revenue Increase per Hundredweight = $1.87 average for
the year
------------------------------------------------------------------------

Example: Impact on Total Revenue

-------------------------------------------------------------------------
82009 DPMMP Payout:0

$2.00/cwt supplemental on 90% of production history

Supplemental Premium $5,760 per year

Basic Protection Payment = $3,458

Net Supplemental Protection Payment = $19,490

Total DPMPP Net Payment = $22,951, $0.56/cwt.

Producer 1--No Reduction: DMSP $1.63 + DPMPP $0.56 = Ave.
+$2.19/cwt.

Producer 2--Reduced Output: DMSP $1.87 + DPMPP $0.56 = Ave.
+$2.43/cwt.
------------------------------------------------------------------------

Conclusion
Working together, the programs of Foundation for the Future protect
dairy farmer equity, create stability by reducing price and margin
volatility, and minimize growth restrictions in milk production that
are needed to provide U.S. dairy products to a growing global market.
All dairy producers need to do is Rethink What's Possible.
attachment 1

2009 NMPF Strategic Planning Task Force

Chairman: Randy Mooney*

Jim Baird, Lone Star Milk Producers Ralph McNall, St. Albans
Cooperative Creamery, Inc.
Adrian Boer, Northwest Dairy Keith Murfield, United Dairymen of
Association Arizona
Jay Bryant, MD & VA Milk Producers David Newhouse, Farmers Cooperative
Coop Assn., Inc. Creamery
Richard Cotta,** California Ken Nobis,* Michigan Milk Producers
Dairies, Inc. Association
* Denotes NMPF Officers.
** CWT Coop Member Only.
Rod DeJong,* Northwest Dairy Doug Nuttelman, Dairy Farmers of
Association America, Inc.
Clint Fall, First District Wayne Palla, Dairy Farmers of
Association America, Inc.
Dave Fuhrmann,* Foremost Farms USA Neal Rea, Agri-Mark
Thomas Gallagher, Dairy Management, Clyde Rutherford,* Dairylea
Inc. Cooperative, Inc.
Bobby Hall, Upstate Niagara Tom Suber, U.S. Dairy Export
Cooperative, Inc. Council
Pete Kappelman, Land O'Lakes, Inc. Paul Toft,* Associated Milk
Producers, Inc.
Cornell Kasbergen,* Land O'Lakes, John Wilson, Dairy Farmers of
Inc. America, Inc.
Mike McCloskey,* Select Milk Joe Wright, Southeast Milk
Producers, Inc.

attachment 2
Foundation for the Future Subcommittees
Dairy Market Stabilization--Chairman Wayne Palla, DFA

Adrian Boer, Northwest Dairy Association
Jay Bryant, MD & VA Milk Producers Coop
Richard Cotta, California Dairies, Inc.
Cornell Kasbergen, Land O'Lakes, Inc.
Gene Paul, National Farmers Organization
Neal Rea, Agri-Mark
David Scheevel, Foremost Farms USA
Tom Suber, U.S. Dairy Export Council

Dairy Producer Margin Protection--Chairman Ken Nobis, Michigan Milk
Producers Association

Clint Fall First District
Ed Gallagher Dairylea Cooperative, Inc.
Pete Kappelman Land O'Lakes, Inc.
Doug Nuttelman Dairy Farmers of America, Inc.
Tom Thompson United Dairymen of Arizona
Joe Wright Southeast Milk
Consultant: Bruce Babcock--Iowa State University

FMMO--Chairman Dave Fuhrmann, Foremost Farms

Jim Baird, Lone Star Milk Producers
Neil Gulden, Associated Milk Producers, Inc.
Mike McCloskey, Select Milk Producers
Keith Murfield, United Dairymen of Arizona
Jim Sleper, Land O'Lakes, Inc.
Rich Stammer, Agri-Mark
Jim Wegner, Northwest Dairy Association
Greg Wickham, Dairylea Cooperative, Inc.
John Wilson, Dairy Farmers of America, Inc.
attachment 3
Groups Presenting Proposals/Policy Statements at the NMPF Strategic
Planning Task Force on July 20-21, 2009 Meeting
American Farm Bureau Federation
Dairy Farmers Working Together
Holstein Association
Milk Producers Council
National Farmers Organization
National Farmers Union
Western United Dairymen
attachment 4
List of Industry Feed Ration Experts and Nutritionists
Development Team:

Steve Watrin, Land O'Lakes, Inc.
Ed Gallagher, Dairylea Cooperative, Inc.
Dr. Gordie Jones, Veterinarian, Farmer, Nutritionist

Reviewed by:

Dr. Mary Beth Hall, Ph.D., USDA Forage Center
Dr. Terry Howard, Ph.D., University of Wisconsin (retired)
Dr. Mike Hutjens, Ph.D., University of Illinois
Dr. Randy Shaver, Ph.D., University Of Wisconsin
National Milk Producers Federation
2101 Wilson Blvd., Suite 400
Arlington, VA 22201
Phone: 703-243-6111
Fax: 703-841-9328
info@nmpf.org
www.futurefordairy.com
______

House Committee on Agriculture Farm Bill Audit Questionnaire--Farm
Service Agency
1. Program Name
Dairy Export Incentive Program (DEIP).
2. Subprograms/Department Initiatives
None.
3. Brief History
Authorized by Congress under Sec. 153 of the Food Security Act of
1985, the program provides a bonus or subsidy on a bid basis to
exporters of eligible dairy products (butterfat, nonfat dry milk, whole
milk powder and various cheeses). The payments may be made in cash or
in commodities held by the Commodity Credit Corporation (CCC).
Initially, the program provided the bonuses ``in-kind'' from surplus
stocks of dairy products held by CCC. This, `in-kind' payment was
replaced by the issuance of ``generic certificates'' redeemable for any
inventory held by the CCC. As inventories diminished, the program
evolved into the sole use of cash payments for the subsidy. As this
program provides an export subsidy, it is subject to the subsidy
reduction commitments of the United States under the Uruguay Round
Agreements of the World Trade Organization (WTO). The program is
therefore subject to both budget and quantity limits in accordance with
those reduction commitments.
4. Purpose/Goals
By providing a subsidy on exports of eligible dairy products, an
amount intended to bridge the gap between world market prices and the
U.S. domestic price, DEIP enables exporters to meet the lower world
market prices, often influenced by the application of subsidies by
other exporting countries--primarily the European Union (EU).
5. Success in Meeting Programmatic Purpose/Goals
The program has been very successful in meeting the needs of
exporters and expanding markets for U.S. dairy products when world
prices are depressed due to the application of subsidies by other
countries. This was most evident leading up to and during the
implementation period of the Uruguay Round subsidy reduction
commitments. At that time, the EU was aggressively subsidizing dairy
exports. Almost 250,000 metric tons of dairy products were exported
under DEIP in Fiscal Year 1995 and $162 million in bonus payments were
committed under DEIP in Fiscal Year 1993.
6. Annual Budget Authority (FY 2002-FY 2011)
This is a mandatory program with spending capped by our commitments
under the WTO Uruguay Round Agreements. These are product specific and
follow:

------------------------------------------------------------------------
Dairy Product Budgetary Cap ($Mil) Quantity Cap (MT)
------------------------------------------------------------------------
Nonfat dry milk $82.46 68,201
Butterfat $30.49 21,097
Cheese $3.63 3,030
Other (whole milk $0.021 34
powder)
-----------------------------------------------
Total................. $116.601 N/A
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
Fiscal Year Subsidy Awarded ($Mil) Quantity (MT)
------------------------------------------------------------------------
2002 $54.62 86,473
2003 $32.52 86,155
2004 $2.68 48,498
2005 $0 0
2006 $0 0
2007 $0 0
2008 $0 0
2009 $18.89 50,886
2010 $2.37 4,811
2011 $0 0
------------------------------------------------------------------------

The budget authority is restricted to the budgetary limits of our
subsidy reduction commitments under the Uruguay Round Agreements. DEIP
is designed to meet, not set, world market prices. Years where there
has been limited use of DEIP reflect the United States' competitiveness
in the world market without the need for a subsidy. This condition
exists today.
8. Annual Delivery Cost (FY 2002-FY 2011)
Delivery costs are a function of collateral duty when the program
is operating. When not operating, program delivery costs are estimated
at 0.10 FTE--largely a function of closing outstanding performance
issues. When operational, USDA estimates that no more than two FTE
equivalents are utilized to operate the program. In fiscal 2010, the
program operated for 1 month and estimated delivery costs were under
$40,000. In 2011, estimated delivery costs are under $10,000. The
software costs for the program are under $1,000 per year.
9. Eligibility Criteria
All potential exporters of U.S. dairy products can participate
provided they have an agent in the United States and they are not
suspended, debarred or otherwise prohibited from participation in U.S.
Government programs.
10. Utilization (Participation) Data
To date, 115 exporters of dairy products have participated in DEIP
since inception.
The following is a list of the number of participants for the
period 2002-2011:

11. Duplication or Overlap with Other Programs
None.
12. Waste, Fraud and Abuse
USDA is proactive in reviewing this program and its participants.
Payments are not made until the exporters provide appropriate export
documentation that is reviewed for compliance with program
requirements. Where there is any indication of waste, fraud and abuse,
the Department is aggressive in investigating those incidents. At this
time we have no confirmed evidence of waste, fraud or abuse under DEIP.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Milk Income Loss Contract (MILC) Program.
2. Subprograms/Department Initiatives
Subprogram--The 2010 Agricultural Appropriations Bill authorized
$290 million for loss assistance payments under the Dairy Economic Loss
Assistance Payment (DELAP) Program for eligible producers to receive a
one-time payment based on the amount of milk both produced and
commercially marketed by their operation during the months of February
through July 2009.
3. Brief History
The National Dairy Market Loss Program, later named the Milk Income
Loss Contract Program, was initially authorized by Section 1502 of the
Farm Security and Rural Investment Act of 2002 (2002 Farm Bill). The
MILC program supports the dairy industry by providing direct
countercyclical style payments to milk producers on a monthly basis
when the Boston Federal Milk Marketing Order Class I price for fluid
milk falls below the benchmark of $16.94 per hundredweight (cwt.). For
production marketed during the authorized period, milk producers in
eligible dairy operations received a payment equal to 45 percent of the
difference between the benchmark and the Class I price, if this
difference was positive. This rate was decreased by the Deficit
Reduction Act of 2005 to 34 percent of the difference between $16.94
and the Boston Class I Federal Milk Marketing Order price for October
1, 2005 through August 31, 2007. The MILC program was amended further
by the Agriculture Reconciliation Act of 2005 to extend the program
through September 30, 2007, consistent with other farm bill programs
ending September 30, 2007. The MILC program was last authorized by the
2008 Farm Bill through September 30, 2012, and also introduced a feed
cost adjustment to the monthly payment rate calculation. Under the MILC
program, a dairy operation's monthly payment is based on the quantity
of milk sold in a month in which a payment rate is in effect, up to a
maximum of 2.985 million pounds per dairy operation, per fiscal year
for the period beginning October 1, 2008 and ending August 31, 2012.
Before October 1, 2008 the maximum eligible production had been 2.4
million pounds.
The MILC program replaces previous Dairy Market Loss Assistance
programs that provided payments to dairy producers from 1997 through
2000. MILC was implemented soon after authority for the Northeast Dairy
Compact expired.
4. Purpose/Goals
The purpose and goal of the MILC program is to stabilize milk
producer revenue by compensating dairy producers when domestic milk
prices fall below a specified level.
5. Success in Meeting Programmatic Purpose/Goals
The MILC program has paid out approximately $2.5 billion to dairy
operations over the first 5 initial years of program administration.
Annual expenditures when the program was re-authorized for 2006 and
2007 totaled over $510 million. Expenditures during the period
authorized by the 2008 Farm Bill, to date, total $938 million. Due to
the countercyclical nature of the program, the direct payments provide
a safety net to dairy producers at times when they may struggle most as
a result of low milk prices. The payments have reduced the financial
stress on U.S. dairy operations during periods of low milk prices
helping to sustain the domestic milk supply resulting in consumers
being able to buy dairy products at lower prices than if the program
was not operating.

6. Annual Budget Authority (FY 2007-FY 2011)
FY 2002 Through FY 2011 Budget Authority
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Milk Income Loss Contracts $0 $1,795,452 $221,126 $9,124 $351,586 $156.598 $2,153 $756,889 $181,527 $173,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Budget Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Milk Income Loss Contracts $0 $1,796,452 $221,126 $9,124 $351,586 $156.598 $2,153 $756,889 $181,527 $173,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
To be eligible for payments, dairy producers must have produced cow
milk in the U.S., and commercially marketed the milk produced anytime
during the authorized period. Dairy producers must also be in
compliance with Highly Erodible Land and Wetland conservation
provisions and Adjusted Gross Income limitations. Signup for the
program under the 2008 Farm Bill began December 22, 2008, and extends
through the conclusion of the program on September 30, 2012. Payments
are issued based on a start month selection by the producers in the
dairy operation and are subject to a maximum eligible production limit
of 2.985 million pounds per dairy operation per fiscal year. Payment
start month selections must be made on form CCC-580 and submitted to an
FSA Service Center on or before the 14th of the month before the month
the dairy operation wants to begin payments. Production evidence for
each applicable payment month must be provided to FSA before a MILC
payment can be issued.
10. Utilization (Participation) Data
51,975 dairy producers have participated in the MILC program from
2008 to present, as authorized under the 2008 Act.
11. Duplication or Overlap with Other Programs
No duplication or overlap with other programs.
12. Waste, Fraud and Abuse
There has been minimal to no waste, fraud, or abuse in the MILC
program because verifiable production evidence must be provided by the
producers in an eligible dairy operation to qualify for program
benefits. During the FY 2010 CORP review for improper payments for MILC
program, it was determined that MILC improper payment error rates
increased because of the lack of proper supporting documentation, such
as eligibility forms, before disbursing a MILC payment. FSA continues
to make eliminating improper payments a top priority and has
incorporated the priority into strategic planning and performance
measures.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Dairy Indemnity Payment Program (DIPP).
2. Subprograms/Department Initiatives
Subprogram--none.
Department Initiatives--none.
3. Brief History
The Dairy Indemnity Payment Program was originally authorized by
Public Law 90-484, the Act of August 13, 1968 (7 U.S.C. 4501), and has
been extended numerous times. The Food, Conservation, and Energy Act of
2008, Public Law 110-246, extended the program through 2012. Most
recently, funds were appropriated for DIPP by the Department of Defense
and Full-Year Continuing Appropriations Act of 2011, Public Law 112-10.
DIPP is available to dairy farmers for milk, or cows producing
milk, and manufacturers of dairy products who, through no fault of
their own, have been directed to remove their milk or dairy products
from commercial markets because of the presence of certain chemical or
toxic residue in the products. Under DIPP, payments are made to dairy
producers when a regulatory agency directs them to remove their raw
milk from the commercial market because it has been contaminated by
pesticides, nuclear radiation, or fallout, or toxic substances and
chemical residues other than pesticides. Payments are made to
manufacturers of dairy products only for products removed from the
market because of pesticide contamination. Dairy producers and
manufacturers are eligible for indemnification from the date the milk
was officially removed from the market by a public regulatory Agency
through the date the milk is officially reinstated to the market by a
public regulatory Agency, based on the fair market value determined for
the milk. To apply for DIPP benefits, affected producers and
manufacturers must meet all eligibility requirements and submit a
completed FSA-373 to their USDA Service Center or FSA Office no later
than December 31 following the fiscal year in which the loss occurred.
4. Purpose/Goals
The purpose and goal of DIPP is to indemnify dairy farmers and
manufacturers of dairy products who, through no fault of their own,
suffer income losses with respect to milk or milk products removed from
commercial markets because such milk or milk products contain certain
harmful residues.
5. Success in Meeting Programmatic Purpose/Goals
DIPP has successfully allowed dairy producers and manufacturers, to
recover financial losses suffered from being directed by a public
regulatory agency to remove their production from the commercial
market, when removal has been through no fault of their own. This
financial compensation allows producers to maintain business operations
and slows the exit of U.S. dairy operations from the dairy business.
This program also ensures a healthy milk supply for U.S. consumers.

6. Annual Budget Authority (FY 2007-FY 2011)
FY 2002 Through FY 2011 Budget Authority
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dairy Indemnity Payments $100 $100 $100 $100 $100 $100 $100 $876 $876 $100
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
FY 2002 Through FY 2011 Budget Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dairy Indemnity Payments $124 $393 $601 $349 $132 $181 $144 $651 $162 $200
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

9. Eligibility Criteria
To be eligible to receive DIPP payments, the producer must have
produced whole milk that was removed from the commercial market
pursuant to the direction of a public regulatory agency, not have been
responsible for the milk contamination, or not have been indemnified
for the same loss from another source.
In addition, the producer must certify to the compliance with
Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC)
provisions and submit a complete application to the county Farm Service
Agency office no later than December 31 following the end of the fiscal
year in which the loss occurred.
10. Utilization (Participation) Data
Participation in DIPP varies from one fiscal year to another. Since
2008, weather conditions in various regions within the United States
prompted regulatory agencies to remove dairy producers from marketing
milk because of aflatoxin found in their milk. Below are the number of
applications and total dollars paid for DIPP from FY 2008 through FY
2011.

FY 2008--14 applicants--$144,388

FY 2009--22 applicants--$650,788

FY 2010--18 applicants--$158,951

FY 2011--22 applicants--$261,256
11. Duplication or Overlap with Other Programs
No duplication or overlap with other programs.
12. Waste, Fraud and Abuse
Minimal to no waste, fraud, or abuse in the DIPP program because of
the many eligibility factors that require verifiable evidence from
official sources that must be provided by the producers in an eligible
dairy operation to qualify for program benefits. Applications for
benefits are verified by the County Committee, State Committee, and
National Office before payment is authorized to a producer.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Dairy Product Price Support Program (DPPSP).
2. Subprograms/Department Initiatives
Dairy Economic Loss Assistance Program (DELAP). The 2010
Agriculture Appropriations bill authorized the purchase of cheese worth
$60 million for donation to feeding programs.
2009 expansion of feeding programs--On March 26, 2009 Secretary
Vilsack announced a disposition plan for inventories of nonfat dry milk
(NDM) that totaled 232.9 million pounds, which had been purchased by
the CCC at the NDM support price. The plan was intended to help support
both low-income families, domestically and internationally, as well as
dairy farmers challenged by high feed and low dairy prices. Through
this initiative, CCC donated 30 million lbs of NDM to states for
further processing to acquire fortified fat-free fluid milk and
macaroni and cheese for use in the National School Lunch Program
(NSLP); 40 million lbs was fortified and instantized, placed into
consumer-sized packages and made available in domestic feeding
programs; 60 million lbs was bartered for 1% ultra high temperature
(UTH) milk for use in the Emergency Food Assistance Program (TEFAP); 50
million lbs were bartered for reduced fat and lite cheese for use in
the NSLP and TEFAP; and 20 million were bartered for ready-to-eat,
milk-based soups for use in TEFAP. In addition, 1 million lbs was
offered for sale on a competitive basis for the production of casein
and 1.5 million lbs were used to meet food assistance needs overseas.
3. Brief History
DPPSP, established by the Food, Conservation, and Energy Act of
2008 (2008 Farm Bill), is the latest iteration of the milk price
support program (MPSP) established by the Agricultural Act of 1949
(1949 Act). The DPPSP requires the CCC to offer to purchase unlimited
quantities, at fixed announced prices, of cheddar cheese, butter, and
nonfat dry milk. Since most wholesale milk is priced based on the price
of these three dairy products, providing a floor on these products
provides a floor for the farm milk price. Many versions of the support
to dairy have been tried since 1949 as the Federal Government has tried
to balance the need for a stable milk supply with the cost of the
support program. Some programs have tried to tie milk itself to a
particular price through the use of secondary purchases. Sometimes the
prices have been tied to parity or purchase levels. Other programs have
included voluntary supply control schemes--milk diversion programs or
herd buyouts. Still other programs to address dairy matters have
included milk assessments; and many surplus dairy product disposal
schemes.
For a long time, dairy support was controlled by the basic
provisions of the Agricultural Act of 1949, as amended, which required
that the price of milk paid to producers be supported at a level
between 75 and 90 percent parity to assure an adequate supply of milk,
reflect changes in the cost of production, and assure a level of farm
income to maintain productive capacity sufficient to meet future needs.
However, after October 21, 1981, the support price was established by
Congress either at specific price levels or by a formula related to
expected surplus, rather than parity levels. The 2008 legislation takes
a different approach and does not set a support price for milk, but
rather sets purchases prices for products.
The 1996 Federal Agriculture Improvement and Reform Act authorized
the Milk Price Support Program (MPSP) through December 31, 1999. Due to
low prices and concerns from the dairy industry, Congress extended the
MPSP into 2000, 2001, and until May 31, 2002 through the Agriculture,
Rural Development, Food and Drug Administration, and Related Agencies
Appropriations Acts of 2000 and 2001. After June 1, 2002, the Farm
Security and Rural Investment Act of 2002 (2002 Farm Bill) was passed
authorizing the MPSP program through December 31, 2007 at a rate of
$9.90 per hundredweight (cwt) for manufacturing milk. Under the old
program, milk prices were supported through purchases by the government
of dairy products. The Secretary could adjust the price of NDM or
butter twice within the calendar year. The DPPSP minimum purchase
prices in the 2008 Farm Bill were the dairy product prices USDA had
established under the 2002 Farm Bill. Under the DPPSP, the minimum
purchase prices can be lowered if CCC removals exceed certain levels.
4. Purpose/Goals
The goal of the DPPSP is to support dairy products by providing a
support price for those products. That support has beneficial effects
for milk producers.
5. Success in Meeting Programmatic Purpose/Goals
The DPPSP has been successful in providing economic support to
dairy producers when economic conditions have been challenging. This
program has kept some producers operating through times that would
otherwise force them out of business thus making industry transition
less dramatic. However, the industry does continue to adjust, with many
small operations going out of business and their milk production being
replaced by fewer and larger operations. Recently, significantly
increasing feed costs have become a challenge for dairy producers.
Dairy farm viability is determined by the margin between milk prices
and feed costs, the dairy farms most significant variable cost. Since
the DPPSP supports the price of products, and not the milk margin,
producers have increased their participation in the dairy gross margin
insurance program as a complement to the DPPSP.

6. Annual Budget Authority (FY 2002-FY 2011)

Budget outlays are made the same year that budget authority is granted.

FY 2002 Through FY 2011 Budget Authority
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Price Support Related $597,405 $650,102 $308,662 $29,315 $60,307 $2,389 $^2,211 $236,188 $153,011 $124,915
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)

Annual outlays averaged $216 million over the FY 2002-FY 2011 period, and included average outlays exceeding $600 million during FY 2002-03. Outlays
for the DPPSP totaled $236.2 million in FY 2009 and $153 million in FY 2010. No purchases have been made in FY 2011.

FY 2002 Through FY 2011 Budget Outlays
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Price Support Related $597,405 $650,102 $308,662 $29,315 $60,307 $2,389 $^2,211 $236,188 $153,011 $124,915
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:
Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating and economically thriving.

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

Commodity Operations
Cotton User Marketing Payments 9,518 0 0 0 0
ELS Cotton Competiveness 1,103 29,839 9,630 27,866 0
Payments
Upland Cotton Economic 0 0 74,661 75,635 65,504
Adjustment Assistance
Commodity Purchases and Sales 726,938 1,116,157 1,027,768 853,110 1,626,852
Storage, Handling, 133,213 36,329 67,740 73,100 77,475
Transportation, Processing,
and Packaging
CCC Interest Expenditures 70,070 15,660 3,173 791 2,226
Dairy Price Support 101 319 226,894 40,597 17,250
Administrative costs 33,724 21,340 39,728 24,087 24,364
(direct)
Indirect costs 2,153 49,458 33,697 18,728 18,943
-------------------------------------------------------------------------------
Total Costs 976,820 1,269,102 1,483,291 1,113,914 1,832,614
FTEs 458 254 263 256 256

9. Eligibility Criteria
All cheddar cheese, butter, and nonfat dry milk made of cow's milk
produced in the United States and which is located in the United States
when offered and not previously owned by the CCC is eligible if it
meets the standards for product quality and packaging as listed in the
Dairy Product Price Support Program Purchase Announcement Dairy 7 \1\
(Dairy 7). Further, the dairy product must be manufactured in dairy
plants in which USDA inspection and grading services are performed
under 7 CFR Part 58--Grading and Inspection, General Specifications for
Approved Plants and Standards for Grades of Dairy Products.
---------------------------------------------------------------------------
\1\ The Dairy 7, issued November 17, 2010, provides specific
contracting information for CCC price support purchases. This
announcement along with the Dairy Invitations provides the information
needed to offer and comply with the regulations. This includes
eligibility, submissions, provisions, product specifications,
instructions and compliance data.
---------------------------------------------------------------------------
10. Utilization (Participation) Data
During FY 2004, the CCC purchased a total of 2.911 billion pounds
of NDM, at costs totaling $2.7 billion or an annual average $536
million. Stocks exceeded 1 billion pounds for most of 2002 and 2003. In
2008 and 2009, net removals totaled 359 million pounds of NDM, 3
million pounds of cheese, and 30 million pounds of butter.
11. Duplication or Overlap with Other Programs
DPPSP supports prices received by dairy farmers through the
purchase of unlimited quantities, at fixed announced prices, of cheddar
cheese, butter, and nonfat dry milk. No other program supports the
price of milk in this manner. The MILC program provides countercyclical
support to dairy producers when the margin (difference between price
and feed costs) falls below specified levels.
12. Waste, Fraud and Abuse
There has been no waste, fraud, or abuse in the DPPSP that USDA is
aware of. The Farm Service Agency reviews applicant eligibility when
offers are made, and the Agriculture Marketing Service inspects all
products offered under DPPSP to ensure that grade and other
requirements of Dairy 7 are met before products are purchased.
13. Effect of Administrative PAYGO
There has been no impact from Administrative PAYGO on the operation
of DPPSP.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--
Agricultural Marketing Service
1. Program Name
Dairy Product Mandatory Reporting.
2. Subprograms/Department Initiatives
AMS Dairy Program.
3. Brief History
The Dairy Product Mandatory Reporting Program was established on
August 2, 2007, on an interim final basis, with final implementation
effective June 22, 2008. The program: (1) requires persons engaged in
manufacturing dairy products to provide to USDA certain information
including the price, quantity, and moisture content, where applicable,
for cheddar cheese, butter, dry whey, and nonfat dry milk (NFDM) sold
by a manufacturer on a weekly basis; and (2) requires manufacturers and
other persons storing dairy products to report to USDA information on
the quantity of dairy products stored. Any manufacturer that processes
and markets less than 1 million pounds of the applicable dairy products
per calendar year is exempt from these reporting requirements.
For the first requirement, the National Agricultural Statistics
Service (NASS) currently collects and publishes information for the
program. AMS provides verification and enforcement functions to ensure
accuracy of the price information reported to NASS. The second
requirement is solely a function of NASS. Prior to implementation of
the Dairy Product Mandatory Reporting Program information was collected
on a voluntary basis. NASS began publishing cheddar cheese sales
information in 1997 and began publishing butter, NFDM, and dry whey
sales information in 1998.
AMS has established a verification program to verify that sales
transactions match information reported to NASS and applicable sales
transactions are not excluded. AMS currently visits larger entities
accounting for 80 percent of yearly reported product volume of
specified dairy products at least once annually. AMS visits \1/2\ of
the entities accounting for the remaining 20 percent at least once
every other year. During each visit, AMS reviews applicable sales
transaction records for at least the 4 most recent weeks. In some
cases, AMS may review sales records for periods of up to 2 years. AMS
also conducts additional verification procedures on an as-needed basis
when price information may be questioned.
The 2008 Farm Bill requires that an electronic system be employed
to collect information for the Dairy Product Mandatory Reporting
Program on a more frequent basis subject to the availability of funds.
The farm bill also requires quarterly audits of program information.
Funds have not been made available for an electronic reporting system,
more frequent collection of data, or quarterly audits.
The Mandatory Price Reporting Act of 2010 requires that the
Secretary establish an electronic reporting system for manufacturers of
dairy products to report certain market information for the mandatory
dairy product reporting program. The amendment further states that the
Secretary shall publish the information obtained under this section for
the preceding week not later than 3 p.m. Eastern Time on Wednesday of
each week.
4. Purpose/Goals
The purpose of the program is to provide accurate and timely market
information for dairy industry participants. Widely available market
information provides transparency to assist markets in operating
competitively and fairly. Data collected through the program is used as
the price discovery mechanism to establish minimum prices for the
Federal Order system.
The program will continue reporting dairy commodity sales
information that is accurate but released a day and a half earlier. The
electronic system will be designed to minimize the burden on reporting
entities.
5. Success in Meeting Programmatic Purpose/Goals
As required in the 2008 Farm Bill, AMS has successfully implemented
a verification and enforcement program to ensure the accuracy of
information provided to NASS for the required dairy product prices. Due
to continual outreach and education, a significant decline has occurred
in reporting errors. In 2007, 35 discrepancies were discovered by AMS
on audit while to-date in 2011 only four discrepancies have been
discovered by AMS. Since inception of the verification program, a total
of 91 discrepancies have been found.
A proposed rule was published on June 10, 2011, which included
regulatory changes for implementing the provisions of the Mandatory
Price Reporting Act of 2010 and for transferring data collection
responsibilities from NASS to AMS. Seven comments were received by
August 9, 2011, and a final rule is being prepared. Following beta-
testing, mandatory electronic collection of dairy product prices is
expected to begin January 1, 2012.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
Additional budget authority has not been authorized for this
activity within the Dairy Marketing Agreements & Orders (MA&O) program.
AMS prioritized the available resource for MA&O in order to allow for
dairy price verification from 2007-2011. Additional one-time funding
within current resources was provided in FY 2011 to modify the Agency's
existing Livestock Mandatory Price Reporting System to accommodate
selected dairy products. The following legislative timeline identifies
the evolution of dairy mandatory reporting:

------------------------------------------------------------------------
Fiscal Year Legislative Reference
------------------------------------------------------------------------
2000-2001 Dairy Enhancement Act of 2000 (P.L. 106-532)--established
mandatory reporting for dairy products
2002-2007 2002 Farm Bill (P.L. 107-171)--amended above Act to modify
the definition of products
2008-2010 2008 Farm Bill (P.L. 110-246)--develop a system and
conduct quarterly audits
2011 2010 Mandatory Price Reporting Act (P.L. 111-239)--
required electronic reporting system and established a
publication schedule
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
Annual Outlays
FY 2002 Through FY 2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays $0 $0 $0 $0 $0 $300 $300 $300 $300 $858
--------------------------------------------------------------------------------------------------------------------------------------------------------
(This includes verification expenses 2007-2011 plus 1x IT expense in 2011 to modify the LMR System for DY reporting.)

8. Annual Delivery Cost (FY 2002-FY 2011)
Annual Delivery Costs
FY 2002 Through FY 2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Delivery Costs $0 $0 $0 $0 $0 $300 $300 $300 $300 $858
--------------------------------------------------------------------------------------------------------------------------------------------------------
(This includes verification expenses 2007-2011 plus 1x IT expense in 2011 to modify the LMR System for DY reporting.)

9. Eligibility Criteria
As required by law, dairy manufacturers producing and selling 1
million pounds or more of specific dairy products (cheddar cheese,
butter, nonfat dry milk and/or dry whey) per calendar year, are
required to participate in the weekly surveys.
10. Utilization (Participation) Data
In 2010, there were 88 dairy product plants that were subject to
mandatory reporting of sales data for one or more products. Fifty-two
entities reported data for one or more plants.
11. Duplication or Overlap with Other Programs
A final rule will implement the provisions of the Mandatory Price
Reporting Act of 2010 transfer applicable data collection
responsibilities from NASS to AMS. During voluntary software beta
testing NASS and AMS will run parallel programs for about 2 months to
ensure system is fully operation before eliminating NASS's
responsibilities.
12. Waste, Fraud and Abuse
Not applicable.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Dairy Import Assessment.
2. Subprograms/Department Initiatives
AMS Dairy Program.
3. Brief History
The U.S. Department of Agriculture has announced a Final Rule that
amends the Dairy Promotion and Research Order (Dairy Order) and
implements a dairy import assessment program as required by the Dairy
Production Stabilization Act of 1983, as amended. The program
implements the equivalent of 7.5 cents per hundredweight of milk
assessment on imported dairy products; adds two importer members to the
National Dairy Promotion and Research board; amends the term ``United
States'' to mean all states (adding Alaska and Hawaii), the District of
Columbia and the Commonwealth of Puerto Rico; and extends the mandatory
15 cents per hundredweight of milk assessment to dairy farmers in
Alaska, Hawaii, and the Commonwealth of Puerto Rico.
4. Purpose/Goals
The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill)
mandates that the Dairy Order be amended to implement an assessment on
imported dairy products to fund promotion and research. The Food,
Conservation, and Energy Act of 2008 (2008 Farm Bill) specifies a
mandatory assessment rate of 7.5 cents per hundredweight of milk, or
equivalent thereof, on dairy products imported into the United States.
5. Success in Meeting Programmatic Purpose/Goals
All provisions were effective April 1, 2011, with the exception of
those regarding importer assessments. Importer assessment provisions
became effective on August 1, 2011. Importer payments are made directly
to the U.S. Customs and Border Patrol and are forwarded to the Dairy
Promotion and Research Board.
6. Annual Budget Authority (FY 2002-FY 2011)
Not applicable.
7. Annual Outlays (FY 2002-FY 2011)
Not applicable.
8. Annual Delivery Cost (FY 2002-FY 2011)
Not applicable.
9. Eligibility Criteria
An applicant must be an importer of dairy products into the United
States as a principle or as an agent, broker, or consignee of any
person who produces or handles dairy products outside of the United
States, and who is listed as the importer of record for such dairy
products. A producer is defined as any person engaged in the production
of milk for commercial use.
10. Utilization (Participation) Data
There are an estimated 2,600 dairy importers that are affected by
the dairy import assessment and an estimated 350 producers in the added
areas of Alaska, Hawaii, the District of Columbia and the Commonwealth
of Puerto Rico.
11. Duplication or Overlap with Other Programs
Not applicable.
12. Waste, Fraud and Abuse
Not applicable.
13. Effect of Administrative PAYGO
Not applicable.
______

1. Program Name
Federal Milk Marketing Orders including Forward Contracting and the
Formal Rulemaking Process.
2. Subprograms/Department Initiatives
AMS Dairy Program.
3. Brief History
Federal milk marketing orders (FMMO) are authorized by the
Agricultural Marketing Agreement Act of 1937, as amended. There are
currently 10 FMMO areas, impacting about 65 percent of all milk
marketed in the U.S. These 10 orders are administered by 8 market
administrators.
FMMOs are initiated and amended through industry requests that are
addressed through the formal rulemaking process. This includes
hearings, briefings, recommended decisions, public comments, final
decisions, farmer votes, and, ultimately, implementation by USDA.
Changes in FMMOs are approved by an affirmative vote of \2/3\ of the
eligible dairy farmers.
The 2008 Farm Bill directed USDA to establish supplemental rules to
define guidelines and timeframes to improve the timeliness of the
Federal Milk Order hearing process. AMS published this final rule on
August 20, 2008 (73 FR 49085).
The 2008 Farm Bill also directed AMS to establish a Dairy Forward
Pricing Program to allow milk producers and cooperative associations to
voluntarily enter into forward price contracts with milk handlers for
milk used for non-fluid purposes. The program exempts handlers
regulated under the Federal Milk Order program from paying producers
and cooperative associations the minimum Federal Order price for milk
under a forward contract. AMS published this final rule on October 31,
2008 (73 FR 64868).
4. Purpose/Goals
The objectives of the FMMO system are to stabilize market
conditions, to benefit producers and consumers by establishing and
maintaining orderly marketing conditions, and to assure consumers of
adequate supplies of pure and wholesome milk at all times. The FMMO
program assures dairy farmers a minimum price for their milk while
assuring that consumers have an adequate supply of milk to meet their
needs throughout the year.
5. Success in Meeting Programmatic Purpose/Goals
Forward Contracting--Handlers that enter into forward contracts
with producers are required under 7 CFR Part 1145 to file a copy of the
contract with a Market Administrator's office. Less than 100 dairy
farmers have utilized the forward contracting program since 2008.
Rulemaking Process--Only one hearing has been initiated and
completed under the new timeframes outlined in the supplemental rules
of practice for Milk Marketing Orders (see 7 CFR 900.20 through
900.33). In June 2011, USDA received a request for a hearing to
consider changes to the Mideast Marketing Area. USDA subsequently held
a hearing on October 4-5, 2011, in Cincinnati, OH, to consider and take
evidence on proposed changes to that order (76 FR 55608). The deadline
for filling corrections to the transcript is October 31, 2011 and the
deadline for filing post-hearing briefs is November 30, 2011.

6. Annual Budget Authority (FY 2002-FY 2011)
Annual Budget Authority
FY 2002 Through FY 2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget Authority $5,132 $5,528 $5,434 $5,541 $5,736 $6,076 $6,131 $6,301 $6,965 $6,814
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
Annual Outlays
FY 2002 Through FY 2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays $4,716 $4,663 $4,660 $5,204 $5,428 $5,546 $5,477 $5,837 $6,846 $6,400
--------------------------------------------------------------------------------------------------------------------------------------------------------
Explanation: The budget authority may be different from outlays due to timing of payments and the accounting process.

8. Annual Delivery Cost (FY 2002-FY 2011)
Annual Delivery Costs
FY 2002 Through FY 2011
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Costs $4,275 $4,165 $4,454 $4,797 $4,699 $4,962 $5,202 $5,299 $5,799 $5,703
Indirect Costs $483 $453 $474 $474 $516 $527 $584 $599 $710 $697
-----------------------------------------------------------------------------------------------------------------------
Total Costs $4,758 $4,618 $4,928 $5,271 $5,215 $5,489 $5,786 $5,898 $6,509 $6,400
--------------------------------------------------------------------------------------------------------------------------------------------------------
There have been no additional delivery costs in implementation of the expedited rulemaking process.
The costs associated with the forward contracting program are minimal due to the low participation rate.

9. Eligibility Criteria
During 2010, nearly 127 billion pounds of milk was pooled from
45,918 producers on Federal Milk Marketing Orders. This represents
about 65 percent of all milk produced in the United States.
10. Utilization (Participation) Data
Fewer than 100 farmers have utilized the forward contracting
program.
11. Duplication or Overlap with Other Programs
Not applicable.
12. Waste, Fraud and Abuse
Not applicable.
13. Effect of Administrative PAYGO
Not applicable.

AGRICULTURAL PROGRAM AUDIT

(EXAMINATION OF USDA RURAL DEVELOPMENT PROGRAMS)

----------

TUESDAY, SEPTEMBER 13, 2011

Subcommittee on Rural Development,
Research, Biotechnology, and Foreign
Agriculture,
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Timothy
V. Johnson [Chairman of the Subcommittee] presiding.
Members present: Representatives Johnson, Thompson,
Stutzman, Scott, Hartzler, Lucas (ex officio), Costa, Welch,
Sewell, Kissell, and Peterson (ex officio).
Staff present: Mike Dunlap, Tamara Hinton, DaNita Murray,
Mary Nowak, Lauren Sturgeon, Suzanne Watson, Andy Baker, Liz
Friedlander, John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE
IN CONGRESS FROM ILLINOIS

The Chairman. The Subcommittee on Rural Development,
Research, Biotechnology, and Foreign Agriculture hearing,
entitled Agricultural Program Audit: Examination of USDA Rural
Development Programs, will come to order.
Let us see. We have a quorum, so we are prepared to
proceed.
Welcome to this audit hearing of the USDA's Rural
Development Programs. This is the third such hearing by this
Subcommittee and the eleventh overall that the Agriculture
Committee Subcommittees have held to closely review all the
programs under our jurisdiction. The continuing discussions in
Congress on spending, and the budget, will add impetus to what
we will be discussing today. Through this series of hearings,
we are assessing how USDA is utilizing the authorities provided
through this Committee and where scarce resources are being
allocated. As we approach the next farm bill, it is important
that we have a clear idea of how programs are being implemented
as we look for opportunities to streamline and improve those
programs.
Rural communities rely on a variety of industries,
including mining, fishing, forestry, manufacturing, and of
course farming. The programs we will be discussing today are
designed to spur innovation and investment and, through the
provision of farm credits, advancement. The goal of these
programs is greater economic opportunity to help our rural
communities to compete in the global market.
Of particular interest to this Subcommittee is the
Broadband Loan Program. Reauthorized in the 2008 Farm Bill,
this program is intended to reach those rural areas without
access to the economic, education, and healthcare opportunities
which broadband access can bring rural America. Unfortunately,
it was only this summer--nearly 3 years after the farm bill was
signed into law--that USDA finally began accepting applications
for loans. I hope that the Rural Utilities Service has an
update for us on how the applications are progressing and what
we might hope to learn from the program before we begin writing
the next farm bill.
The current farm bill also requires USDA to report on the
various definitions of rural and how those definitions have
impacted their programs. This report was due 2 years after the
enactment of the farm bill, and yet we still haven't received
the report. In February of this year, Deputy Under Secretary
for Rural Development, Cheryl Cook assured the Committee that
we would have a finished report in June of 2011, over 3 months
ago. I hope the USDA can provide an explanation this morning as
to why this report is not finished, and how long it is expected
to be delayed.
Almost a year ago, USDA was required to allocate all the
remaining funds received through the stimulus bill. We hope the
analysis provided by the testimony today will have a clear
picture of how those funds have been disbursed. The stimulus
bill was an imperfect approach to economic policy, which
resulted in a mass expansion of government spending. I hope
that in spite of the rush to spend taxpayer dollars, USDA can
demonstrate that the benefits to rural communities have
exceeded the cost.
With tight budgets, it is incumbent upon our agencies to
reduce costs and provide the maximum impact possible with
limited dollars. This morning, we hope to hear how the agencies
are already streamlining their mission areas and where we can
work together to streamline our process.
With us this morning are the Administrators of the USDA's
three rural development agencies: Jonathan Adelstein with the
Rural Utilities Service, Judith Canales with the Rural
Business-Cooperative Service, and Tammye Trevino from the Rural
Housing Service. I would like to thank each one of you for
being here this morning. We look forward to your testimony.
[The prepared statement of Mr. Johnson follows:]

Prepared Statement of Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Good morning and welcome to this hearing to audit USDA's rural
development programs. This is the third such hearing by this
Subcommittee, and the eleventh overall that the Agriculture Committee
has held to closely review all the programs under our jurisdiction.
The continuing discussions in Congress on spending and the budget
have added impetus to what we will be talking about today. Through this
series of hearings we are assessing how USDA is utilizing the
authorities provided through this Committee, and where scarce funds are
being allocated. As we approach the next farm bill, it is important
that we have a clear idea of how programs are being implemented as we
look for opportunities to streamline and improve them.
Rural communities rely on a variety of industries, including
mining, fishing, forestry, manufacturing, and of course, farming. The
programs we will be discussing today are designed to spur innovation
and investment. Through the provision of credit and financing, the goal
of these programs is greater economic opportunity and to help our rural
communities compete in a global market.
Of particular interest to this Subcommittee is the broadband loan
program. Reauthorized in the 2008 Farm Bill, this program was intended
to reach those rural areas without access to the economic, education,
and healthcare opportunities which broadband access can bring to rural
America. Unfortunately, it was only this summer, nearly 3 years after
the farm bill was signed into law, that USDA finally began accepting
applications for rural broadband loans. I hope that the Rural Utilities
Service has an update for us on how the applications are progressing
and what we might hope to learn from the program before we begin
writing the next farm bill.
The current farm bill also required USDA to report on the various
definitions of `rural' and how those definitions have impacted our
programs. This report was due 2 years after enactment of the farm bill,
yet we still have not received the report. In February of this year,
Deputy Under Secretary Cook assured the Committee that we would have
the finished report in June 2011--over 3 months ago. I hope that USDA
can provide an explanation this morning for why this report is still
not finished and how long it is expected to be delayed.
Almost a year ago USDA was required to obligate all the remaining
funds received through the stimulus bill. We hope that in the analysis
provided by the testimony today will have a clear picture for how those
funds have been disbursed. The stimulus bill was an imperfect approach
to economic policy which resulted in a massive expansion of government
and spending. I hope that in spite of the rush to spend taxpayer
dollars USDA can demonstrate that the benefits to rural communities
have exceeded the cost.
With tight budgets, it is incumbent upon our agencies to reduce
costs and provide the maximum impact possible with the funds provided.
This morning we hope to hear how the agencies are already accomplishing
this mission, and where we can work together to streamline our
programs.
With us this morning are the Administrators from USDA's three Rural
Development agencies: Jonathan Adelstein with the Rural Utilities
Service, Judith Canales with the Rural Business-Cooperative Service,
and Tammye Trevino from the Rural Housing Service. I would like to
thank each of you for being here this morning, and we look forward to
your testimony.

The Chairman. I would turn the floor over to the
distinguished Ranking Member, the gentleman from California,
Mr. Costa.

OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA

Mr. Costa. Thank you, Mr. Chairman, for calling this
hearing today. It is the third and final hearing of the audits
that this Subcommittee is doing to review the U.S. Department
of Agriculture and setting the stage for the reauthorization of
the 2012 Farm Bill. The audit hearings are an important
opportunity for Members of the Subcommittee to reexamine what
has worked to our satisfaction and, more importantly, what we
think could be improved or hasn't worked, as we look at tight
budgets and a farm bill that will be less than the 2008 bill.
Today's topic, as you noted, is dealing with the Title VI
of the farm bill. In one form or another, there has been a
partnership between Washington and rural families and
communities going back to the Great Depression for various
purposes. Over the course of those 80 years, the landscape of
rural America has dramatically changed. We have gone from, at
the turn of the 19th, 20th century, more of an agrarian society
to much more of an urbanized and suburbanized society. Yet, our
rural areas are still, I believe, a vital component of America.
Manufacturing and service sectors have replaced agriculture in
many areas as the dominant economic force. As we look towards
the 21st century with approximately 6.4 billion people on the
planet and an estimation of over nine billion by the middle of
this century, we want to maintain our ability to produce the
food and fiber not only to serve our own domestic needs but
also to be able to continue to be competitive--which we are--in
agricultural markets.
But as we keep those goals in mind, it is important to note
that in fact there are changes that have occurred. Most of you
probably think from a person that represents part of California
that you think of Silicon Valley, you think of Hollywood, you
think of aerospace, and all of those things are part and parcel
of California's economy along with tourism. But, for 54 years,
we have been the number one agricultural state in the nation,
over $38 billion a year at the farm gate.
And I have the great honor to serve, along with four of my
other colleagues, the San Joaquin Valley, which is among the
richest and most productive agricultural regions in the
country. The number one agricultural county and number three
are in my district: Fresno County and Kern County. And while by
any plain evidence--and I hope to have colleagues of the
Subcommittee there in my district--you would see it as rural.
We don't qualify under a lot of our programs in Washington
under the various rural definitions because we have larger
urban cities within those Valley counties--the City of Fresno,
City of Bakersfield, City of Modesto. If you go 45 minutes
outside of Fresno it is very rural, services are very limited,
and it is the land of many contrasts. There is a lot of poverty
that exists in those communities.
I think that all of our districts, whether you are in the
Midwest, whether you are in the Northeast, whether you are in
the South, have similar stories to tell. You have wonderful
rural areas where Americans do their very best to work hard and
to contribute, whether it is the agricultural community or
whether it is other rural industries. But oftentimes, they are
the part of America that is not well understood or taken into
account with regards to some of these programs that are no
longer applicable.
I think that it is important that we consider, Mr.
Chairman, as we look at the 2012 Farm Bill the definitions of
rural and how they are applied to communities through all
corners of the nation. I think everyone here, and our United
States Department of Agriculture witnesses included, would be
hard-pressed to come up with a singular definition that
accurately portrays what rural is in each state. We think we
know but we have the practical experience of living in our
communities and having the honor to represent those
communities.
Recent farm bills have tweaked the definitions of rural,
and so I look forward to hearing our witnesses' thoughts on
whether or not further reforms should be considered in the next
farm bill. We have looked at some notions as to whether or not
we look at an application as opposed to counties' Census tracks
so that it would take into account those of you who represent
multiple counties. I know some of you represent 10, 20, and 30
counties in your respective districts. I represent parts of two
and one entire county. Our counties are different sizes and
shapes throughout the country. But maybe we ought to consider
thinking outside the box as we look toward the application of
rural definitions. Would they be better served with a different
set of criteria, different regionally based approach as it
relates to some things we ought to consider, Mr. Chairman, in
this Subcommittee for next year's farm bill? I would be
interested in hearing that testimony.
So I look forward to hearing our witnesses today from the
Rural Development agencies, the different benefits that they
provide, whether we are talking about housing, whether we are
talking about outreach for rural development, whether we are
talking about the other challenges that we face with regards to
infrastructure.
So with that, I thank you for my opportunity and look
forward to hearing the witnesses testify this morning.
The Chairman. Thank you, Congressman Costa. With that, we
will proceed with the first witness.

STATEMENT OF HON. JONATHAN S. ADELSTEIN,
ADMINISTRATOR, RURAL UTILITIES SERVICE, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

Mr. Adelstein. Thank you, Mr. Chairman, Ranking Member
Costa, and Members of the Committee for the opportunity to
testify this morning.
USDA's Rural Utilities Service has a long-proven history of
financing electric, water, and telecom infrastructure in rural
America dating back to 75 years ago, when the RUS began. We
have been a model of public-private partnerships, we have
succeeding in bringing modern utilities to some of America's
most remote and hard-to-serve areas. We have done so prudently
while creating jobs and improving the rural quality of life.
Meeting today's needs, a successful rural electrification model
is working to provide access to 21st century broadband,
telemedicine, distance learning, smart grid, renewable energy,
and safe, clean water to areas that would otherwise be left
being.
The RUS programs represent true investments. Our limited
grant dollars target those areas most in need, but most of what
we do are loans, and the capital provided for loans are repaid
by our borrowers. So a very small amount of budget authority
leverages much greater lending authority to meet the massive
unmet needs of rural America. For example, $1 budget authority
could be stretched to $16 of loan investment or even more. Our
U.S. loan programs have a repayment rate that any private
banker would envy. Our U.S. portfolio is over $56 billion and
the current delinquency rate is .21 percent.
Our agency has achieved record levels of investment over
the last couple of years. We have successfully obligated the
Broadband and Water Projects under the Recovery Act, and at the
same time, we have set consecutive records of investments in
rural electric infrastructure. In March, the RUS published new
regulations for the farm bill broadband program. Mr. Chairman,
as you noted, the new regs streamline the application process
and target funding toward the most rural areas. This marks the
first time, under the current Administration, the program is
open to new applications. We wanted to wait and make sure that
we had it right. We learned the lessons from the Recovery Act
program. The new regulations, along with additional steps we
have taken, fully address concerns raised by USDA's Inspector
General about the previous administration of the program.
The traditional Telecommunications Loan Program, which
originates back from 1949, has achieved enormous success in
connecting rural America. While much has changed in
telecommunications technology in the last 60 years, the need
for a public-private partnership to spur investment in rural
areas has not. The tremendous number of applications we
received for the Recovery Act is a real testament to the hunger
out there for bandwidth in rural areas. We are just as excited
by the rapid technological change in the electric sector. We
are working on renewable energy, smart grid technologies,
energy conservation, as well as generating, transmitting, and
distributing clean, reliable, affordable power. It makes our
electric program every bit as relevant to America today as it
was in the 1930s.
With affordable financing from RUS, America's rural
communities are at the forefront of the renewable energy
movement. Renewable power is a new crop for rural America which
can help feed the nation's need for clean, affordable,
homegrown electricity. Due to the strong performance of our
electric program, no budget authority or taxpayer dollars are
necessary to deliver about $6 billion in funding annually. As a
matter of fact, we generate for the taxpayers $100 million.
The 2008 Farm Bill provided new authority for energy
efficiency programs, renewable energy and direct lending
authority for loans that we are now implementing. RUS set a
goal to finance $250 million for grid modernization during this
fiscal year. Smart grid technologies give consumers greater
control to keep their electric bills low and help utilities
better manage the grid to improve efficiencies.
When it comes to rural quality of life, few things are as
fundamental as water. Since 2009, RUS's Water and Waste
Disposal Program has invested nearly $6 billion in 4,500 water
and wastewater infrastructure loans and grants to safeguard the
health of nearly nine million rural residents. These funds
build upon the $11.5 billion portfolio of investments that we
have made over the years to help rural communities replace
aging infrastructure, make necessary repairs, and extend
service to areas without access to public water and waste
services.
RUS's water program maintains a delinquency rate of .24
percent. Facilitating reliable and affordable access to water
is necessary for business development. It creates jobs and
builds the economy. Our water program is the only one
exclusively focused on rural needs. It safeguards the health of
rural residents and the environment while ensuring that rural
water systems can meet growing demands. Projects funding during
FY 2010 will result in a 28 percent reduction in rural
residents' exposure to water-borne illnesses.
The RUS portfolio remains very strong. Thank you for your
support. I thank the Committee today for the opportunity to
testify, and I look forward to any questions or comments that
you have.
[The prepared statement of Mr. Adelstein follows:]

Prepared Statement of Hon. Jonathan S. Adelstein, Administrator, Rural
Utilities Service, U.S. Department of Agriculture, Washington, D.C.
Chairman Johnson, Ranking Member Costa, and Members of the
Subcommittee, thank you for the opportunity to provide to you a review
and accomplishments of the Rural Development's (RD) Rural Utilities
Service (RUS) authorized through the Food, Conservation, and Energy Act
of 2008 (2008 Farm Bill).
Overview
The Department of Agriculture's RUS is the only Federal agency that
funds electric, telecommunications, and water and wastewater
infrastructure for rural areas. Because of RUS investments, many rural
communities nationwide have reliable, affordable electric power, safe
water and wastewater facilities, essential telecommunications, and
broadband capability.
RUS investments provide more than basic infrastructure services.
RUS is one of three RD agencies with a mission to facilitate rural
economic development, foster sustainable job creation, and revitalize
rural areas.
RUS achieves its goals by funding projects to help rebuild
America's infrastructure which is essential to stronger American
economic growth. Beginning with the creation of the Rural
Electrification Administration in 1935, RUS has and continues to be a
prominent lender for rural utility investment.
Today's RUS portfolio includes Federal financing for electric,
telecommunications, broadband, and water and wastewater projects. These
investments enhance community resources, including health care and
education, and increase the need for skilled labor to meet the needs of
growing and emerging industries in rural areas. We use the term
``investment'' because the capital provided for loans is repaid and
delivers additional returns in the form of jobs and the types of
services with the capability of delivering more jobs in our nation's
rural communities.
The RUS portfolio is over $56 billion and the current delinquency
rate is 0.21 percent. We are very proud of our customers' repayment
history.
Broadband and Telecommunications Programs
The broadband program, created under the Farm Security and Rural
Investment Act of 2002 (2002 Farm Bill) and revised by the 2008 Farm
Bill, has provided more than $1 billion in financing to improve
telecommunications by delivering broadband services to rural areas for
nearly a decade.
Broadband availability allows business owners to increase
distribution channels and enables a new generation of entrepreneurs to
thrive in rural areas. Broadband helps America's farmers and ranchers
monitor prices, obtain weather forecasts, and find new markets for
their produce and livestock.
New regulations published in March 2011 streamlined the application
process and allowed the program to focus investment to reach rural
areas with three or fewer broadband service providers. These new
regulations, along with additional steps RUS has taken, fully address
USDA's Office of Inspector General findings previously raised about the
program. The Telecommunications Infrastructure Loan Program is
authorized under the Rural Electrification Act of 1936, as amended
(REA), and is the only Federal program that has funded
telecommunications services for over 60 years. This program funds
improvements to existing and new broadband infrastructure for rural
telecommunications service providers or REA Title II borrowers.
RUS Telecommunications Programs also administers the Community
Connect Grant Program, which provides funding to establish broadband
service in rural communities that currently do not have service. Awards
of $13.4 million in available funding are expected to be announced by
the end of FY 2011.
RUS' Distance Learning and Telemedicine Program fund equipment to
enhance educational and health care services in rural areas. RUS has
$24.9 million available and expects to announce awards by the end of
FY2011.
Electric Programs
America`s rural communities are on the forefront of the renewable
energy movement. By increasing the supply of home-grown renewable
energy, we can meet the growing demands for renewable sources of both
fuel and power.
The RUS Electric Program portfolio has over 650 borrowers with an
outstanding balance of over $41 billion. The Rural Electrification
Direct and Guaranteed Loan and High Energy Cost Grant Programs are
authorized under the Rural Electrification Act of 1936; however, the
2008 Farm Bill provided new program authority, including authorization
for energy efficiency programs, renewable energy, and direct lending
authority for loans.
RUS loan funds may be used to finance generating, transmission, and
distribution facilities. RUS also finances environmental upgrades,
energy efficiency, smart grid, demand management and energy
conservation programs. In FY 2010, RUS approved over $313.3 million in
loan guarantees for new projects for renewable electric generation.
RUS has a goal to finance $250 million for grid modernization
during FY2012. Smart grid technologies give consumers greater control
over their electric costs and help utilities better manage the electric
grid to improve operational efficiencies. These investments help rural
utilities improve their delivery and storage of renewable energy to
generate electricity and help ensure sustainable economic growth in
rural communities. For example, in North Carolina and Tennessee, French
Broad Electric Membership Corporation received a loan guarantee of $20
million, of which more than $2.4 million is to be used for advanced
meter infrastructure upgrades that can help utility providers better
control the use and production of electric energy.
The demand for electricity in rural areas is growing at two percent
annually, according to the Energy Information Administration in the
Department of Energy. During FY 2010, RUS funded $7.1 billion for
electric system improvements for over nine million rural residents. The
electric program serves 667 active rural borrowers and grantees in 46
states, Puerto Rico, American Samoa, and the Republic of the Marshall
Islands. No other agency funds rural electric infrastructure projects.
Meeting the growth in demand for electric power generation is
capital intensive and takes significant time from concept to
completion. RUS will continue to work to ensure that our projects are
good for the environment, good for the economy, and good for electric
consumers.
Water and Wastewater Funding
Since 2009, over $6.7 billion invested by the Obama Administration
in 4,565 water and waste water community infrastructure loans and
grants has helped safeguard the health of nearly nine million rural
residents through access to a safe water supply and sanitary sewer
system. The loans and grants are also expected to create or save
143,507 jobs in the communities where projects are underway. Almost 4.8
million customers are being helped through new or improved systems that
will deliver safe, clean drinking water, or will clean up existing
waste removal environmental hazards
These funds will build upon the $11.5 billion portfolio of
investments that help rural communities replace aging infrastructure,
make necessary repairs and extend service to areas without access to
public water and waste service.
Facilitating reliable and affordable access to water is necessary
for business development which in turn creates jobs and builds the
economy. Lack of adequate water and wastewater facilities kept Turrell,
Arkansas, from competing for a large retail distribution facility that
would have brought jobs to the rural community. RUS is now working with
Turrell to build a water and waste plant. Lack of jobs has caused their
population to drop from 1,000 in 2,000 to 615 today.
Reliable access to water is essential for rural communities to
prosper. RUS water programs--the only program exclusively focused on
rural needs--which safeguard the health of rural residents and the
environment and ensure that rural water systems meet growing demands.
Projects funded during FY 2010 will result in a nearly 28 percent
reduction in rural residents' exposure to water-borne illness. RUS-
funded circuit riders responded to over 111,000 requests to assist
rural water systems during FY 2010.
Conclusion
The RUS loan portfolio remains very strong. We constantly strive to
improve program delivery, working with local leaders to deliver funds
to address critical infrastructure needs which are fundamental to the
quality of life and economic future of rural America. In closing, I
would like to thank the Committee for the opportunity to appear before
you today and look forward to responding to your questions.

The Chairman. Thank you. Now, we turn to Judith Canales.

STATEMENT OF JUDITH A. CANALES, ADMINISTRATOR, RURAL BUSINESS-
COOPERATIVE SERVICE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.

Ms. Canales. Thank you, Chairman Johnson, Ranking Member
Costa, and Members of the Subcommittee for the opportunity to
discuss the success of Rural Development's Rural Business-
Cooperative Service programs impacted by the 2008 Farm Bill.
As you are well aware, the American people are facing
challenging economic times. However, in the midst of these
troubling conditions, since 2009, the programs and services of
the Rural Business-Cooperative Service have or will create and
save nearly 250,000 jobs, thus directly improving the economic
climate of rural America.
The mission of Rural Development's Rural Business-
Cooperative Service programs is to improve rural economies by
providing financial and technical assistance to rural
businesses and cooperatives. Through our national office, and
our network of 47 state offices, and through our local offices
located in the heartland of rural America, we have established
strategic alliances and partnerships that leverage public,
private, and cooperative resources to create jobs and stimulate
rural economic activity.
The Rural Business-Cooperative Service mission is unique in
the Federal Government. There is no other Federal agency that
focuses solely on rural businesses. The people who staff our 47
state offices as well as our local offices live in these rural
communities. This makes them uniquely qualified to support the
most rural communities in America providing access to capital
and credit in areas otherwise ignored.
Rural Business-Cooperative Service is responsible for five
Title VI programs that are designed to assist people in rural
communities in addition to our four Title IX energy programs
that have provided over $700 million in support since 2009. For
example, in late 2010, southern Illinois Coal Belt received a
Rural Microentrepreneur Assistance Program loan of $500,000.
Since March of this year, they have made loans totaling
$306,000 assisting seven microenterprises and creating 21 new
jobs. Six of these seven businesses are startup businesses.
The Guaranteed Business and Industry Loan Program is our
flagship program. The B&I Program provides credit support to
establish, expand, or modernize rural businesses. Since 2009,
the B&I Program has provided $5.5 billion in loan guarantees to
community banks at a cost of $3,000 per job and supporting over
3,000 businesses.
Rural Business Opportunity Grant Program was authorized
under Title VI of the farm bill. This program provides training
and technical assistance for business development,
entrepreneurs, and assists with economic development planning.
The Rural Microentrepreneur Assistance Program provides capital
access and funding for business-based training and technical
assistance to local micro-development organizations to support
very small businesses with less than ten employees. The Value-
Added Producer Grant Program, the lead source in rural
development for promoting local foods in rural America,
provides funding for planning activities and working capital,
for marketing value-added agriculture products, and for farm-
based renewable energy. We look forward to announcing awards
very soon of $37 million.
The Rural Development Cooperative Development Grant Program
and the Small and Socially Disadvantaged Producer Grant Program
provides funding to centers and cooperatives to develop new or
improve existing cooperatives. These business cooperatives in
turn grow and expand their operations in rural America.
Mr. Chairman and Members of the Subcommittee, thank you for
your time. The Rural Business-Cooperative Service is committed
and, with your help, will continue to promote economic
prosperity in rural America. Thank you.
[The prepared statement of Ms. Canales follows:]

Prepared Statement of Judith A. Canales, Rural Business-Cooperative
Service, U.S. Department of Agriculture, Washington, D.C.
Chairman Johnson, Ranking Member Costa, and Members of the
Subcommittee, thank you for the opportunity to provide a review and
highlight the accomplishments of Rural Development's (RD) Rural
Business-Cooperative Service (RBS) programs authorized through Title VI
of the 2008 Farm Bill. We are still in challenging economic times but
the programs and services of RBS, in partnership with other public and
private sector funding, are improving the economic climate of rural
areas. I appreciate the opportunity to discuss the successes of the
business programs today.
Overview
The mission of RBS programs is to create economic opportunities for
rural Americans by supporting the creation and growth of viable
businesses, including cooperatives, that can compete and prosper in the
global marketplace.
We meet these goals by investing financial resources and providing
technical assistance to businesses and cooperatives located in rural
communities, and establishing strategic alliances and partnerships that
leverage public, private, and cooperative resources to create jobs and
stimulate rural economic activity.
RBS currently operates five programs authorized under the
Consolidated Farm and Rural Development Act (CONACT) or the
Agricultural Risk Protection Act of 2000 (ARPA) which were either added
or amended by Title VI of the Food, Conservation, and Energy Act of
2008 (2008 Farm Bill). These programs include: the new Rural
Microentrepreneur Assistance Program (RMAP), Rural Business Opportunity
Grants (RBOG), the Value-Added Producer Grant (VAPG) Program, the Rural
Cooperative Development Grant (RCDG) Program, and the Small Socially-
Disadvantaged Producer Grant (SSDPG) Program. These programs are
designed to assist people in rural communities and increase economic
opportunities by improving community infrastructure, environmental
health, and the sustainability of agricultural production.
RBS also implements numerous other programs which provide job
training and business development opportunities for rural residents,
including cooperative business development, community economic
development and strategic community planning and faith-based and self-
help initiatives. While these programs were not amended by the 2008
Farm Bill they will be included in this testimony to provide the
Committee a complete picture of the scope of RBS investment in the
economic opportunities in rural America.
The RBS mission is unique in the Federal Government. There is no
other Federal agency that focuses only on promoting rural communities
and businesses. Our field offices reach out to rural America, including
the poorest, most rural counties in America, providing Federal support
to businesses that find it impossible to receive financial aid from any
other source.
Administration Priorities
Secretary Vilsack has directed RBS to expand our reach in rural
communities. USDA will continue to engage public and private partners
to revitalize rural communities by expanding economic opportunities and
creating jobs for rural residents. Administration priorities include:
capital markets, local and regional food systems, and regional
innovation.
Capital Markets
To increase economic prosperity in rural communities, capital is
needed to spur business expansion and promote new businesses. RBS
administers several loan and grant programs that can be used to attract
investment capital, including loan guarantee programs such as Business
and Industry loans.
Our employees are also key tools in creating capital markets,
providing the skills and expertise to review business plans, identify
tax incentives, and put together viable loan and grant combinations
that can be used to spur capital investment in rural areas.
Local and Regional Food Systems
RBS actively promotes local- and regionally-produced agricultural
food products through existing authorities and programs. We have worked
to elevate the visibility of local foods, identifying and utilizing
2008 Farm Bill authority that can be used to support this important
initiative through local and regional food projects, such as the five
percent reserve in the Business and Industry Guaranteed Loan program
for projects that support local and regional food systems. We have
provided approximately $200 million of support for local and regional
food projects in 2010.
Regional Innovation
The key to creating economic growth for many communities is to
encourage better collaboration on a regional scale. RBS looks for
opportunities to assist rural communities in breaking down the barriers
in accessing multi-jurisdictional opportunities and to cut across the
bureaucratic silos that prevent investment in good ideas. This approach
increases the prosperity of rural communities by supporting locally-
led, regional economic strategies. The focus creates strong local and
regional economies in emerging opportunities such as food systems,
renewable energy, broadband-based economies, rural recreation, and the
creation and preservation of wealth in rural America.
Business Programs
Business development and job creation are at the foundation of our
agency mission. This foundation, along with the targeted programmatic
approach of the Administration's Priorities, makes RBS programs an
essential tool for rural America.
In 2010, we invested about $3 billion to ensure America's rural
businesses maintain a competitive edge in today's global marketplace.
The vast majority of this funding was provided through guaranteed
loans. These guarantees leverage funding provided by the commercial
lending community along with other private sector funding.
The remaining text discusses our RBS programs and how they impact
rural America.
Guaranteed Business and Industry Loans (B&I)
The B&I program, authorized under section 310B of the CONACT, is
the largest of the RBS programs and provides protection against loan
losses so that lenders are willing to extend credit to establish,
expand, or modernize rural businesses.
Capital is the lifeline of rural businesses to maintain and create
rural jobs. The President's Fiscal Year (FY) 2012 Budget requests $53
million in budget authority to support $823 million in loan guarantees
for B&I. We will fund $1.387 billion in guarantees this fiscal year; we
have already obligated $995.36 million though 373 loans. In FY 2010, we
obligated 1,030 loans totaling over $2.9 billion.
This program has had proven results and supports a holistic
economic approach. For example, in 2010 the Brattleboro Food Co-op
received a $4.2 million guarantee from the RBS B&I program. This
cooperative has grown from a warehouse storefront in 1979 with a
volunteer staff into a $17 million operation with 100 employees. The
cooperative now supplies local and organic food choices to its 5,000
members located throughout southeastern Vermont.
To support its long term viability and expand choices for its
growing consumer membership, the cooperative embarked upon an expansion
plan. The cost of doubling its space in its downtown location would
cost $8.8 million. The cooperative raised more than $1 million from its
members and leveraged those funds with a $4.2 million B&I guaranteed
loan from Peoples United Bank. The remaining financing came from
nonprofit, private, and borrower equity. As a result, the cooperative
is expanding from 17,200 square foot building into an energy efficient
33,847 square foot building serving as an anchor business in downtown
Brattleboro.
The expanded store will add market capacity for the 146 local
farmers and 46 food producers that it currently supports. Additionally,
the project will develop 24 units of affordable housing that will be
owned and operated by the Windham Housing Trust and Housing Vermont.
The cutting edge, environmentally-friendly building will even recycle
the grocery store's waste heat from its refrigeration and reuse it to
heat water for the entire facility.
Rural Business Opportunity Grant (RBOG)
Authorized under the CONACT, the 2008 Farm Bill extended the RBOG
program through FY 2012. The RBOG program promotes sustainable economic
development in rural communities with exceptional needs through
provision of training and technical assistance for business
development, entrepreneurs, and economic development officials and to
assist with economic development planning. In FY 2010, the RBOG program
provided funding to seven regions to develop plans focused on
supporting local food systems, renewable energy, and the utilization of
natural resources to promote economic development through regional
planning among Federal, state, local, and private entities. By creating
a regional focus and increasing collaboration with other Federal
agencies, and other partners, our resources will have a larger impact,
enabling greater wealth creation, quality of life improvements, and
sustainability.
Leveraging is an essential tool of the RBOG program. For example,
Ecotrust in Oregon, was awarded a $249,340 grant in FY 2010. Using the
RBOG funds along with over $1 million in leveraged funds, Ecotrust will
be able to increase recruitment of producers and buyers in rural
communities throughout the Pacific Northwest and provide the training
and assistance necessary to ensure FoodHub, a project of Ecotrust,
supports their business, procurement, and marketing goals.
FoodHub (http://food-hub.org/) is an on-line directory and
marketplace designed to help wholesale food buyers and sellers find
each other, connect, and do business. FoodHub will help agri-producers
tap into the consumer demand for local food, help forge more direct
connections between food buyers and producers, and shorten the supply
chain between producers and wholesalers. FoodHub has 550 members signed
up as of June 2010, and schools, bakeries, restaurants, processed
product manufacturers, hospitals, grocers and wholesalers have already
reported success in finding new regional suppliers through FoodHub. We
were pleased to see that Fast Company's included EcoTrust' FoodHub on
their top ten list of innovative food companies.
Rural Microentrepreneur Assistance Program (RMAP)
Newly created in the 2008 Farm Bill, RMAP is authorized under the
CONACT. RMAP provides capital access, business-based training and
technical assistance to the smallest of small businesses, employing
less than ten people. The RMAP purpose is to support the development
and ongoing success of rural microentrepreneurs and microenterprises.
Direct loans and grants are made to approved Microenterprise
Development Organizations (MDO's). The 2008 Farm Bill provided
mandatory funding of $4 million per year for FY 2009-2011 and $3
million for FY 2012. In addition, the 2008 Farm Bill authorized further
discretionary appropriations of up to $40 million per year for FY 2009-
2012.
In FY 2010, RBS utilized the mandatory funding available for FY
2009-10 to provided 73 grants totaling $6.6 million for technical
assistance. Additionally, 63 rural microloans were made totaling $24.9
million. In FY 2011 the $4 million in mandatory funding provided by the
2008 Farm Bill is expected to support 160 businesses through $10.7
million in grants and loans. To further support this important program,
the President's FY 2012 Budget requests $5.7 million in discretionary
funds. This funding request is in addition to the $3.0 million in
mandatory funds that was provided by the 2008 Farm Bill.
Though new, this program is already showing results. The Valley
Small Business Development Corporation located in Fresno, California,
is preparing to close on their first RMAP loan. The recipient of the
$50,000 loan will be a custom farm operator in Hanford, California.
Loan funds will be used to purchase farm equipment and expand this
micro business.
Those eligible to apply are MDO's that are located in any area
outside the boundaries of a city or town with a population of 50,000,
or more, and the urbanized area contiguous and adjacent to such city or
town.
Value-Added Producer Grant (VAPG) Program
Authorized under ARPA, the VAPG program provides grants for
planning activities and for working capital for marketing value-added
agricultural products and for farm-based renewable energy. The program
encourages farmers and ranchers to add value to the commodities and
products they produce allowing them to capture a greater percentage of
the consumer's dollar. Eligible applicants are independent producers,
farmer and rancher cooperatives, agricultural producer groups, and
majority-controlled producer-based business ventures. The grants can be
used for two purposes. The first is for planning activities such as
conducting feasibility studies and developing business plans. Or,
grants can be used to establish working capital accounts to pay
salaries, utilities and other operating costs; to finance inventories;
and to purchase office equipment, computers, and supplies. The value-
added program is highly successful and has contributed to the creation
of more jobs and business opportunities in rural America. The
President's FY 2012 Budget requests funding VAPG at $20.4 million. This
level of funding allows RBS to maintain this important program to
encourage producers to refine or enhance their products thereby
increasing their value and their returns to producers. During the last
funding cycle, awards were made to 45 states and Puerto Rico, the
broadest distribution of awards in the history of this nationally
competitive program. On June, 28, 2011, $37 million in funds were
announced through a Notice of Funding Availability which is scheduled
to close on August 29, 2011. We estimate that this funding will support
350 businesses.
On February 23, 2011, a final rule was published in the Federal
Register incorporating changes made by the 2008 Farm Bill and expanding
the types of eligible applicants. The programmatic changes associated
with the regulation provide additional opportunities to beginning and
socially disadvantaged producers by helping owners of small and medium-
sized family farms sell their products in local and regional markets
and reserving ten percent of the total funds available for projects to
benefit beginning and socially disadvantaged farmers and mid-tier value
chains.
Those eligible to apply are independent agricultural producers,
producer groups, agriculture cooperatives, or majority-controlled
producer-based business ventures. The revised regulatory language
reserves ten percent of funds for beginning and socially disadvantaged
farmers and ten percent for projects that support the use of a mid-tier
value chain. The eligible area is within the United States.
Rural Cooperatives
Cooperatives are an important form of business model that is the
cornerstone for business development in some rural communities.
Cooperatives provide rural residents with new job opportunities,
enhanced educational and healthcare services, and products that enable
them to compete with their urban and suburban counterparts.
Opportunities are created locally and revenues are maintained and re-
circulated locally. The RBS cooperative services staff conducts basic
research on the cooperative form of business, collect statistics and
financial data pertaining to cooperatives, and provides technical
assistance to farmer groups interested in starting a cooperative or
improve existing cooperatives. In addition, the cooperative services
staff manage a number of RBS grant programs.
Rural Cooperative Development Grant (RCDG) Program
The RCDG program assists nonprofit organizations and institutions
of higher education to establish and operate cooperative development
centers to start and establish cooperatives who improve the economic
condition of rural areas. This program provides support to centers to
develop new cooperatives and improve existing cooperatives. This
program complements our national and state office technical assistance
efforts by increasing outreach and developing feasibility studies and
business plans for new cooperatives and assisting existing cooperatives
in meeting the demands of today's ever-changing global economy. Those
eligible to apply are nonprofit corporations or institutions of higher
learning. The eligible area is rural areas of 50,000 or less in the
United States.
Small Socially-Disadvantaged Producer Grant (SSDPG) Program
The SSDPG program supports cooperatives or associations of
cooperatives whose primary focus is to provide assistance to small,
minority producers and whose governing board and/or membership is
comprised of at least 75 percent small, socially disadvantaged
producers. In 2010, awards were made to groups representing African
American, Asian, Hispanic, Hmong, Native American, Native Hawaiian,
Pacific Islander, and women producers.
For example, the Hillside Farmers Co-op of Northfield, Minnesota,
assists Latino farmers by partnering with established farmers who,
together, are committed to producing sustainable foods and building
healthier communities. The cooperative pairs immigrant families with
established farmers in the area who rent out their land for gardening
and poultry production. The SSDPG grant awarded in 2010 is helping the
cooperative conduct a feasibility study, develop a business plan,
provide training, and help pay for other related expenses in developing
a coordinated network of local businesses in the free-range poultry
industry.
Those eligible to apply for the SSDPG are minority cooperatives or
minority associations of cooperatives. Eligible areas include areas
outside towns having a population greater than 50,000 and any adjacent
urbanized area, or an urbanized area that is nevertheless rural in
character.
Other RBS Programs
In addition to the programs described above, RBS has a number of
other programs that are not authorized under Title VI of the 2008 Farm
Bill but are essential programs in the RBS portfolio. These programs
include: the Intermediary Relending Program, the Rural Business
Enterprise Grant Program, the Rural Economic Development Loan and Grant
program, the Biorefinery Assistance program, the Repowering Assistance
Program, the Advanced Biofuel Payment Program, and the Rural Energy for
America Program.
Backlog
Our RD programs are oversubscribed and in high demand. The B&I
guaranteed loan program currently has 255 eligible pending
applications/preapplications totaling $983 million that would receive
funding if it were available.
The RMAP program has currently received 78 eligible loan and grant
applications totaling $12.4 million in funding requests but was only
provided $4 million for FY 2011, which will support 160 businesses
through $10.7 million in grants and loans.
The Rural Business Opportunity Grant program had 424 eligible
applications totaling $60 million apply in 2010. Only 27 awards could
be funded totaling $2.6 million.
The last time funding for the Value-Added Grant Program was
announced, there were 300 eligible applicants requesting $32.7 million,
but only 196 projects totaling $22.7 million were awarded.
Uniqueness
All of the RBS programs are unique by virtue of their singular
focus on rural America. Though some of the goals of these programs may
be similar to SBA, the implementation, technical support, and outreach
for the programs, eligibility requirements, loan limitations, and
project expansion are tailored to support rural businesses and
residents to expand their local economies. In Government Accountability
Office comparisons of RD programs to the programs of other Federal
agencies, they found that while similarities exist, RD is the only
Federal agency with a broad experience base for implementing rural
programs.
Unfunded Programs
There were numerous programs included under Title VI of the 2008
Farm Bill which no longer receive funding or never received funding.
These programs include: the Appropriate Technology Transfer for Rural
Areas program, the Rural Business Investment Program, the Rural
Collaborative Investment Program, Grants for the Expansion of
Employment Opportunities for Individuals with Disabilities in Rural
Areas, and the Agriculture Innovation Center Demonstration Program.
Councils
In addition to the RBS programs, we also work as liaisons along
with the Rural Utilities Service and Rural Housing Service to support
businesses in the following communities: Rural Economic Area
partnership zones, Delta Regional Authority, and the Northern Great
Plains Regional Authority.
Conclusion
RBS is committed to promoting economic prosperity in rural
communities through our grant, loan, and loan guarantee programs. In
partnership with other public and private sector businesses, RBS
continues to improve the economic climate of rural areas through the
creation or preservation of sustainable business opportunities and jobs
and by helping to close the gap in opportunity for the underserved
rural areas and populations. With your help, we will continue working
to bridge the opportunity gap between rural and urban areas. In
closing, I would like to thank the Subcommittee for the opportunity to
appear before you today and look forward to responding to your
questions.

The Chairman. Thank you for your comments.
And last on the panel, we have Tammye Trevino of the Rural
Housing Service. You can go ahead and proceed.

STATEMENT OF TAMMYE H. TREVINO, ADMINISTRATOR, RURAL HOUSING
SERVICE, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, D.C.

Ms. Trevino. Good morning, Mr. Chairman, Ranking Member
Costa, and Members of the Committee, it is a privilege to
provide a brief overview of the United States Department of
Agriculture's Rural Development Rural Housing Service
activities.
For over 60 years, the Rural Housing Service, part of the
Department of Agriculture's Rural Development mission area,
along with Rural Utilities Service and the Rural Business-
Cooperative Service has been working to help rural America
thrive by supporting the housing needs of these communities.
Rural Development is a collaborative agency. Our programs build
upon one another ultimately creating efficiencies for the
taxpayer and the communities that we serve. As part of the
Rural Development mission area, Rural Housing Service provides
Single-Family Homeownership Programs, Multi-Family Housing
Programs, housing loans and grants for repair and
rehabilitation, and community programs. All are integrated into
a more holistic approach at rural community and economic
development.
We have exceptional staff in local offices across the rural
landscape working closely with dedicated partners in the for-
profit and nonprofit sectors. This same staff delivers programs
for all three agencies across the mission area. By being
located in rural communities, we are able to cultivate
important relationship with lenders, realtors, community-based
organizations, redevelopment authorities, and others. Our
efficiency is noted in the strategic centralization of a
significant portion of core operations while leveraging the
community knowledge of our field structure across all programs.
For example, staff delivering Rural Housing Services Community
Facilities Programs to eligible municipalities, tribes, and
nonprofit organizations also work with these same partners on
the Rural Utilities Service's Water and Waste Disposal Program.
The importance of our local staffers cannot be overemphasized.
They know the needs of their neighbors and their rural
communities and provide critical support both effectively and
efficiently.
In the wake of natural disasters Rural Development programs
have worked in concert to build communities from the ground up.
No other department in the Federal family offers rural
communities the range of financial services available from USDA
Rural Development and the staff nearby to provide the technical
assistance.
At the Rural Housing Service, our mission is to help
families, individuals, and businesses in rural communities
thrive by ensuring access to capital for housing and community
facilities. Utilizing a total budget authority of $1.03
billion, the Rural Housing Service leveraged a program level of
approximately $26.3 billion in loans, loan guarantees, grants,
and technical assistance in Fiscal Year 2010. Our programs are
provided through the Housing Act of 1949 in combination with
the consolidated Farm and Rural Development Act.
Rural Housing Service is a big part of Rural Development's
overall success and effective program operations. Despite
doubling our borrowers' numbers over the last 2 years, Rural
Housing Service's direct and guaranteed loan portfolios
continue to perform well thanks in large part to our state-of-
the-art call center, the Centralized Servicing Center in St.
Louis, Missouri. Rural Housing Service also provides funding
for essential community facilities. Since the Rural Community
Programs were authorized by the CONACT in 1972, more than $12.7
billion has been invested in facilities equipment for
healthcare, education, public safety, and other services
essential to the healthy economic and civic environment in
rural America.
For Fiscal Year 2012, the CF Direct Loan Program has a
negative subsidy rate that enabled Rural Development to request
zero budget authority for a program level of $1 billion, more
than triple our current level. In the essence of saving time,
information about delinquencies and accomplishments in the
Rural Housing Service Program has been provided in written
form. As stated in the CONACT, rural America has complex needs,
and at Rural Development, we share an important commitment with
you to meet those needs. We believe that the mission and
delivery of programs that Rural Development affords us the
flexibility to respond to current and changing needs across the
rural landscape; and lead other public sector and private
sector, for-profit and nonprofit partners to invest
strategically in rural people and rural places, particularly
those who are traditionally underserved by conventional
financial models and at times where the private sector is
unable to step in. Rural communities have a unique set of
challenges that Rural Development is well-suited to address.
Thank you for the opportunity to appear before you today,
and I welcome any questions or comments.
[The prepared statement of Ms. Trevino follows:]

Prepared Statement of Tammye H. Trevino, Administrator, Rural Housing
Service, U.S. Department of Agriculture, Washington, D.C.
Chairman Johnson, Ranking Member Costa, and Members of the
Committee, it is my privilege today to provide to you a review of the
United States Department of Agriculture (USDA) Rural Development's (RD)
Rural Housing Service (RHS) programs and activities. The core mission
of RHS is to create vibrant, thriving rural communities, a strong
housing stock, access to safe, decent and affordable rental housing and
access to high quality essential community infrastructure. RHS
accomplishes its mission through a number of housing programs
authorized under the Housing Act of 1949 and the Community Facilities
(CF) programs authorized under the Consolidated Farm and Rural
Development Act (CONACT) and amended through farm bill legislation. In
addition, through the Rural Community Development Initiative (RCDI) RD
provides technical assistance and training funds to qualified
intermediary organizations to develop their capacity to undertake
housing, community facilities, and community and economic development
projects in rural areas.
Overview
The RHS programs are a systematic part of RD's community and
economic development structure which works to improve the quality of
life in rural America. We work to improve infrastructure, sustain and
create jobs, and create economic wealth in rural communities. RD
programs are locally-led and they work together in a cohesive manner to
provide all of the necessary services and activities to have
sustainable and prosperous communities. Housing, community development,
and technical assistance are at the foundation of our agency's mission.
This foundation, along with the targeted programmatic approach, makes
RHS programs an essential tool for rural America.
In Fiscal Year (FY) 2010, utilizing budget authority of about $1
billion, RHS supported a program level of approximately $26.3 billion
in loans, loan guarantees, grants, and technical assistance. The budget
targeted resources to programs that are most needed and most effective
in rural communities. RHS programs continually assist USDA's efforts to
help rural America out-build, out-educate, and out-innovate our global
competitors while making the tough choices necessary to address
responsibly the nation's budget deficit. In 2010, RHS assisted nearly
161,000 rural American families to buy or repair their homes, provided
safe, decent affordable rental housing to 460,000 individuals, and
provided financing to assist over 1,000 small communities develop
essential community buildings and equipment. The remaining text
discusses our RHS programs, and how they impact rural America.
CF Program
The CF program was authorized in 1972 under the CONACT to provide
funding necessary for the installation or improvement of essential
community facilities in rural America. Since that time, the CF program
has provided over $12.7 billion in funding for health care,
educational, public safety, and other essential community facilities
and more than 40 percent of the CF program investments have been made
in rural health care facilities. The local hospital, school system, or
public safety district is often the largest employer in a rural
community or region. By providing low-interest loan and grant funding
for these organizations through the CF program, we directly support
economic development and job creation.
The current CF program portfolio consists of about $5.2 billion in
outstanding loans and grants that have been made to 11,197 facilities
that received either individually, or in combination, a direct loan,
guaranteed loan, or grant. Since FY 2009, the CF programs have invested
over $3.1 billion in 4,207 essential community facilities, estimated to
directly create 9,996 jobs and save 22,384 jobs. Of that amount, over
$1.66 billion was invested in 464 rural health care facilities and is
estimated to create 4,124 jobs and save 10,319 jobs.
CF Loan Programs
RHS offers both guaranteed and direct CF loan programs. Direct
loans are available to those who are unable to obtain commercial
financing. The maximum term for all loans is limited to the lesser of
the useful life of the facility, any state law limitation on loan
terms, or 40 years. Interest rates for direct loans are based on
current market yields for municipal obligations, although loans for
facilities impacting prime or unique farmland may require a slightly
higher rate. Certain other direct loans may qualify for a lower
interest rate, depending upon the median household income of the
residents of the community to be served. Guaranteed loans are made and
serviced by commercial lenders such as banks, savings and loans,
mortgage companies which are part of bank holding companies, the Farm
Credit System, or insurance companies. CF programs may guarantee up to
90 percent of any loss of interest or principal on the loan. The
entities eligible to apply for loans are public bodies, nonprofits, and
federally-recognized Indian tribes. The eligible area for both direct
and guaranteed loans is rural communities with a population up to
20,000.
The President's FY 2012 Budget proposes to fund the CF direct loan
program at $1 billion, more than triple the historic funding level. In
addition, the budget proposes to eliminate funding for the CF
guaranteed loan program. The CF guaranteed loan program originated as
an inexpensive alternative to the direct loan program, designed to
stimulate additional assistance to moderate income communities in rural
areas. However, the defaults in the CF guaranteed program have been
much higher than originally projected, making it more expensive than
the direct loan program. The CF direct loan program has a negative
subsidy rate in FY 2012. This means that the $1 billion in CF direct
loan assistance can be provided without the need to request subsidy
budget authority. The proposed increase in the CF direct loan program
will mitigate any effects of ending the guaranteed loan program. This
is a win-win for taxpayers and rural residents working to strengthen
their rural communities.
CF Grant Program
The entities eligible to apply for grants are public bodies,
nonprofits, and federally-recognized Indian tribes. The eligible area
for the program is rural communities with a population up to 20,000.
The amount of grant assistance depends upon the median household income
and the population in the community where the project is located. Grant
assistance may be available for up to 75 percent of project costs.
Housing Programs
Title V of the Housing Act of 1949 authorizes loans and grants to
assist rural families in becoming homeowners and to provide safe,
decent and affordable rental housing. The major housing programs under
this legislation are single family housing (Section 502), single family
housing repair and rehabilitation (Section 504), rural rental housing
(Section 515), and self-help technical assistance grants (Section
523),. These programs were carried out by the Farmers Home
Administration prior to reorganization of the Department in 1994 and
creation of the Rural Housing Service.
In 1968, an amendment to Title V of the Housing Act of 1949
established the interest-credit housing loan program. It enabled some
low-income families to pay as little as one percent interest and
provided for subsidized loans to developers of low-priced rental
housing for low-income families and senior citizens. New programs also
were enacted in 1968 for rural homesite development loans and for
grants toward support of ``self-help'' homebuilding group projects.
Grants of up to 90 percent, as well as loans, were authorized for farm
labor housing projects.
Single-Family Housing Programs
The Single-Family Housing (SFH) programs provide homeownership
opportunities for rural Americans with very low-to moderate incomes to
purchase and improve homes through several loan, grant, and loan
guarantee programs. The programs also make funding available to
individuals to finance vital improvements necessary to make their homes
decent, safe, and sanitary. Thus far in FY 2011, USDA through the RHS
Single Family Housing programs has provided $11.7 billion in direct and
guaranteed loans to assist 92,786 families to purchase or refinance a
home, strengthening our rural communities and neighborhoods and helping
families build equity in their future. In FY 2010, the SFH programs
provided $18.9 billion to 150,693 families to purchase or refinance a
home, helping boost rural economies and creating thousands of new jobs
in rural communities.
The 2012 budget proposed a $24 billion program level for the SFH
Section 502 loan guarantees which is anticipated to fully meet demand.
For FY 2011 and FY 2012, the program has a negative subsidy rate
because of a low and stable default rate coupled with increased program
fees. The 2012 fee structure will be a two percent up-front fee and an
annual fee of 0.3 percent. Single-family housing direct loans and
housing repair grants are both funded at reduced levels for 2012,
reflecting the efforts of this Administration to ``tighten our belts''.
The shift from direct loans and grants to guaranteed loans allows us to
significantly increase our investment in rural America while
simultaneously decreasing the burden on taxpayers. The $24 billion
guaranteed loan level allows RHS to provide the highest level of
assistance for single family housing in rural areas that has ever been
provided--and without needing to request subsidy budget authority.
The collapse in the housing market caused a reduction in lender
confidence, which has increased demand for the SFH guaranteed program.
Currently, approximately 2,000 lenders participate in the program. The
low home mortgage interest rate environment has enabled the guaranteed
rural housing program to serve low-income families who may have
previously looked to our SFH direct loan program for assistance.
However, recognizing that an unserved need may continue to exist for
very low-income families, the single-family direct loan program's
reduced funding level will be $211 million and will be targeted to very
low-income applicants.
Multi-Family Housing Programs
The Multi-Family Housing (MFH) budget continues RD's commitment to
providing affordable housing options to the poorest of the poor in
rural America. Our existing portfolio provides decent, safe, sanitary,
and affordable residences for the 460,000 tenant households. The MFH
Program offers Rural Rental Housing Loans to provide affordable multi-
family rental housing for very low-, low-, and moderate-income
families; the elderly; and persons with disabilities. This is primarily
a direct mortgage program, but funds may also be used to buy and
improve land and to provide necessary facilities such as water and
waste disposal systems. In addition, rental assistance is available to
eligible families.
The total program level request for MFH programs is $1.06 billion
of which $907 million is allotted for the MFH Rental Assistance
contract renewals. The requested rental assistance is sufficient to
accommodate the renewal of 204,503 expiring rental assistance
contracts. While the FY 2012 budget request proposes to terminate
funding for the MFH Revitalization Demonstration Program, it proposes
to increase the MFH direct loan program from a program level of $69.5
million to $95 million, ensuring that more affordable rental housing
opportunities are created for the very-low income tenant base in rural
America. The direct loan program can be used for repair and
rehabilitation as well as new construction. So the increase in funding
should allow property owners to continue to finance revitalization
efforts even without the demonstration program.
The FY 2012 budget request proposes $16 million for the Rural
Housing Voucher Program. The voucher funding will be used to offset
some of the reductions in rental assistance. If a MFH property offering
rental assistance leaves the portfolio, vouchers will be offered to all
low-income tenants that presently receive rental assistance.
The FY 2012 budget request for MFH Section 514/516 Farm Labor
Housing is approximately $37.2 million in program level funding.
Farm Labor Housing
Funding was not proposed for FY 2012 for the Farm Labor Housing
program. The program provides loans and grants to build affordable
rental housing and related facilities for both migrant and year-round
farm workers. Units may be off-farm housing available to eligible farm
workers of any farming operation or on-farm housing for farm employees.
Funds for this program may also be used for repairs of existing program
units.
Housing Loans and Grants for Rehabilitation and Repair
The FY 2012 budget limits or eliminates funding to some very small
loan and grant programs to allow the agency to focus on the programs
that most effectively achieve USDA's housing goals through higher loan
volumes. USDA will provide approximately 2,000 grants to very-low
income, elderly, rural homeowners in order to make essential repairs to
their homes to make them safe and to remove health hazards through the
SFH Housing Repair grant program. This program is designed to help the
most vulnerable residents in rural America.
Smaller and more labor intensive programs that are not proposed for
funding include housing repair loans, self-help housing grants, housing
assistance grants, and loans to deal with inventory property referred
to as ``credit sales.'' This shift in the focus of program delivery
will make USDA leaner, more efficient and will help the agency
streamline operations and deliver results at a lower cost for the
American people.
Technical Assistance
The RCDI provides technical assistance and training funds to
qualified intermediary organizations to develop their capacity to
undertake housing, community facilities, and community and economic
development projects in rural areas.
Technical assistance promotes partnerships at the local, regional,
and state levels to assist communities in advancing their strategic or
economic development plans. It also encourages coordinated planning
among RD programs to address specific projects within the context of a
community or regional strategic plan.
The entities eligible to apply for RCDI funds are public bodies,
for profits, private nonprofits and Indian Tribes. Eligible areas
include outside the boundaries of a city with a population of 50,000 or
more and its immediately adjacent urbanized area.
Conclusion
RHS implements rural housing and CF programs to assist rural
communities to create a healthy, safe, and prosperous place in which to
live and work. Rural housing direct and guaranteed loans and grants
assist rural families in becoming homeowners and provide safe, decent
and affordable rental housing. CF direct and guaranteed loans and
grants create jobs in rural America through the development of
essential community facilities such as hospitals, libraries, day-care
facilities, fire halls, community centers, and more. In closing, I
would like to thank the Subcommittee for the opportunity to appear
before you today and look forward to responding to your questions.

The Chairman. Thanks to the three of you for your direct
remarks. They are gratefully received by the Members of the
Committee.
Let me start with this question for all three of you. The
existing farm bill, which we are in the course of actively
working on a new version, required USDA to report on the
various definitions of rural and how those definitions impact
our programs. Obviously, as Ranking Member Costa alluded to in
his opening remarks, and as I can tell you and Members of the
Committee on both sides can tell you, this is a critical
determination in terms of your services and the services to the
agricultural sector. The report was due 2 years after the
enactment of the farm bill, and we still haven't received the
report. I believe in the second or third month of this year,
Deputy Under Secretary Cook assured the Committee that we would
have the finished report by June of 2011, over 3 months ago. We
still haven't received it. Why not?
Ms. Canales. Mr. Chairman and Ranking Member Costa, both of
you have a strong interest and of course the entire
Subcommittee, indeed Deputy Under Secretary Cook did make that
statement. I do want to say to you that the report is at Rural
Development. It is a report, as you can well imagine, given
that the three agencies that are represented here all have
different standards and different population limits and
different criteria for how we operate, each one of the programs
that we are responsible for, given the authorization language
from these different agencies. So I will say to you that in
response to your question that the report is being worked on.
There is a draft. The Deputy did state to us that this is
something that is very important to provide to the Congress.
I do want to say to you that certainly within my agency, we
have had a tremendous amount of experience utilizing the very
specific criteria that you all authorized regarding the
definitions of rural and characterizations, which were able to
utilize them. And those were able to, therefore, gain more
rural areas. That is a petition that a local community can make
to Rural Development in order to get a review of their area. So
the report----
The Chairman. If I could--I appreciate it. Back to the
question. I don't mean to be adversarial. I am just asking the
question. But it has been 3 months and you indicated it is
under review. Now, when can we expect that? Not generally, in
the real near future, but specifically when can we expect that
report. I know the Ranking Member, several others on this
Committee, and I are going to be in a field hearing where that
definition in terms of rural broadband has particular
significance. That is actually in a couple weeks. We would love
to be able to have some parameters for a variety of reasons so
we know what way we are operating. Can you, between the three
of you, give me a date? Like next week?
Ms. Canales. I could not state that it will be next week.
You know, we could give you a date----
The Chairman. When could you say to us that it will be? And
again I am not trying to be unkind. This is an important
concept and it was promised a long time ago. I think we can
legitimately ask the Department to give us a date. So can you
give us a date? We need to know what we are operating with. Mr.
Costa has pointed out the tremendous significance in his
counties, likewise with mine and the Members of the Committee.
You know, Congressman Schilling's district is very similar to
mine in terms of limited access to facilities and how the
definitions affect that. I mean rural America in many parts of
the country is on the decline. This is critical, critical to
maintaining or increasing the viability of rural America. And
we can't just have generic promises. We need to know.
Ms. Canales. Well, certainly, we agree with you in the
sense of the need to focus on rural America and each one of our
agencies has our own definitions that we utilize. But I mean I
could not give you a date----
The Chairman. Well, I am going to ask you to anyway. Let me
ask each one of you to give me a date by which we can expect
that report. You, sir?
Mr. Adelstein. I have been told by the Under Secretary's
office that the report is imminent. If it is possible if I
could get back to you by the end of today with a date-certain
that we can get that to you, we will do that.
The Chairman. Yes, ma'am, you? No, I am asking you, Ms.
Canales.
Ms. Canales. The information that I have received in
regards to the report is as my colleague stated that it is
imminent, which I reported to you. And so we can respond back
today and give you more certainty.
The Chairman. Yes, ma'am?
Ms. Trevino. I have nothing to add, Mr. Chairman.
The Chairman. I think if the three members of the panel
would be willing to communicate with the office of the Ranking
Member and myself either in writing or otherwise to tell us--
rather than the end of the day, let's just do it by the end of
the week, to give you time to deal with it more effectively,
and give us a date by which we can expect that. I think we can
make a lot of plans accordingly. But without reiterating the
obvious, this is a really critical determination and it is a
lynchpin to a lot of programs.
Ms. Canales. Absolutely.
Mr. Adelstein. We will do it, Mr. Chairman. One of the
reasons that this is so difficult is the importance of it and
the complexity of it. We have significant impact on communities
we serve based on that definition.
The Chairman. That I understand, but if it is difficult,
then if we were told a year ago that it is difficult, so we
would not be expecting it and have expectations built around
June of this year. This isn't a partisan issue. This is just a
government layer of bureaucracy issue and we need to uncover
the layers. I think we would all agree with that. All right.
And I now turn to the distinguished Ranking Member, the
gentleman from California, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. I couldn't
agree with you more. Ms. Canales, your response was nice but it
was filled with a lot of ``bureaucratic-ese;'' and it is not to
be necessarily a reflection on you or the United States
Department of Agriculture. So much of what frustrates many of
us and our constituents is the bureaucratic difficulty in
responding in a fashion that seems to be clear cut and one that
is expedited. Yes, it is difficult. As the gentleman who just
responded, Mr. Adelstein, said, ``Look, we are working on this.
It is taking more time than we thought. We are having problems
in this area and that area.'' If it is difficult, then you owe
the Subcommittee, the Members of the Committee a response. But
I would hope that in the sense of cooperation and collaboration
that you would get back to the Chairman and myself later today
and give us a timeline that you think you can follow. And if
there is a problem with it, let us know, because this is vital
not only to the field hearing we are holding in 2 weeks in
Illinois but to a lot of the work the Subcommittee is doing.
So let me get into a couple questions here. I think it has
been underlined enough I hope. I talked about the definition
of, and flexibility to, address the nation's rural communities.
After all, these are taxpayers' dollars in which our rural
communities pay to Washington. We want to ensure that we get an
appropriate share of those taxpayers dollars back to those
rural communities. Have you thought about utilizing Census
tracts, Ms. Canales or any of the other two witnesses, and
would you care to comment as a way of redefining rural?
Ms. Canales. Ranking Member Costa, absolutely. Census
tracts has been a point that has been raised among our western
state directors. You know, going back to----
Mr. Costa. I have worked with them.
Ms. Canales. Yes.
Mr. Costa. Have you considered it?
Ms. Canales. Yes.
Mr. Costa. What are the details?
Ms. Canales. The answer is yes.
Mr. Costa. What do you think the problems are? Where are
you on that?
Ms. Canales. The answer is yes, we are considering Census
tracts.
Mr. Costa. Will you get that in terms of response in this
report or will it not be included? Do you know?
Ms. Canales. I believe that it will be included, yes, sir,
as part of the report.
Mr. Costa. Yes. There is also an announcement by the White
House, an Executive Order for a Rural Council. I have been
critical. In previous Administrations they have designated a
person within the White House to handle rural areas. My friend
who is on the mend right now, God bless him, Marion Barry from
Arkansas played that role at the Clinton White House. What has
happened with this Executive Order? Has the council been named?
Do you know? Can you add some meat on that bone?
Mr. Adelstein. The council has been named. The lead of the
council is Secretary Vilsack. The council is working across the
Federal Government family to meet the needs of rural America
and to coordinate between different agencies. So it is similar
to the function that was previously handled by staff in the
White House, but now there has been a more formalized way of
ensuring proper coordination across the Federal Government.
Mr. Costa. Coordination is fine but stakeholders have to
understand that they are playing a role and they are
participating and their comments are going to be taken into
account. I mean otherwise it just becomes another council for
illustrative purposes. You have to get by it in a way that
makes sense.
Ms. Trevino, you talked about housing and I am very
concerned. I think we all see the housing crisis around the
country but it is just as serious in our rural areas. My
colleague Congressman Cardoza has tried to get the
Administration's attention on it. Notwithstanding the best of
intentions, and your intentions are laudable, it seems most of
the efforts have been ham-fisted and not successful. What about
Section 502 Single-Family Housing Guaranteed Loan Programs?
Many private lenders still aren't lending for reasons that we
are aware of--regulatory means and other situations--can you
comment on the success of that or where you are at on that?
Ms. Trevino. Yes, thank you for the question, Congressman.
The Rural Housing Section 502 Single-Family Guaranteed Program
has been very successful. We have increased our numbers in the
last 3 to 4 years by three and four times as much as we were
producing years ago. Our portfolio has remained stable in terms
of its performance on delinquencies and foreclosures and so we
continue to monitor what the lenders are doing. Currently,
those programs are not as high in terms of numbers as we had
seen at this time last year in terms of demand, but we are
continuing to work with our lenders and try to----
Mr. Costa. My time has expired, but I would like to
understand how you define success?
Ms. Trevino. We measure ourselves with the private sector
and other government-sponsored entities, and currently our
delinquency and foreclosure rates are below other government-
sponsored entities.
Mr. Costa. Thank you, Mr. Chairman, for your time.
The Chairman. The gentleman from Georgia, Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman and Ranking Member. To
those of you on the panel I would just start with a comment. I
am one of those that is a freshman in Congress and 8 months ago
I was in the private business sector. I wonder what would have
happened had I looked at a government agency and said it is
important, it is complex, I don't know when I will get it to
you even though it was due 2 years ago. I am not quite sure if
they would have executed my business with a shotgun or a
sledgehammer, but I feel quite confident, coming from the
private sector, that dealing with a government agency had I
been negligent in providing an audit or some other form or, God
forbid, miss dotting an ``i'' or crossing a ``t,'' they would
have been there to shut my business down.
With that said, I want to go back to USDA Housing, and I
understand that the President has proposed to move this to HUD.
Is that correct, the housing aspect of USDA to HUD?
Ms. Trevino. No, sir, that is not proposal by the
President.
Mr. Scott. Who is it a proposal by?
Ms. Trevino. It is currently a draft discussion by the
House Financial Services Subcommittee.
Mr. Scott. What are your thoughts on that?
Ms. Trevino. We strongly oppose that move.
Mr. Scott. Okay.
Ms. Trevino. At Rural Development, as I stated earlier, we
are a collaborative effort. We believe that we need to look at
the entire needs of rural America because they are very complex
as you stated. And every rural American has interrelated needs.
The communities have other needs, and for us to be able to
address just the housing needs by moving over to HUD would
negate all the work that we have done working in synergy with
our other partners in Business and Utilities. We believe that
we create efficiencies and cost-effectiveness because of the
way we operate currently.
Mr. Scott. Okay. Thank you for that. So it is the House
Financial Services Committee, and I would just hope that you
would continue to argue on behalf of the rural communities
because I know that my housing authorities, even in my
metropolitan areas, had suggested to me that HUD has indicated
to them that if they have been run well and have actually
accumulated reserves, some operating reserves, that HUD has
some intent of having those housing authorities that are well-
run turn those monies back over so that they can be
redistributed to other housing authorities that haven't been
run as well. So certainly HUD is one of those agencies that I
do not think is well run in Washington, and there is certainly
a long list of those. But thank you for continuing to stand up
for rural America.
Administrator Adelstein, I would like to speak with you
about the broadband briefly, and I have about 2 minutes left.
But what steps are you doing to make sure that when we do
expand the broadband that we are not overbuilding? In other
words, are we giving loans to develop broadband in areas where
there already is access to broadband versus making sure that
the loans go to areas where there is no access to broadband? I
would also like for you to speak to that in regard to the
report that came out about how much money was spent to develop
broadband to a select few families and whether or not you think
that those investments going forward with satellite technology
and other things that are going to make faster communications
available in the rural areas or good use of taxpayers' dollars?
Mr. Adelstein. Congressman, our goal is to serve the most
remote rural areas, to get the funds to those places that have
no service or inadequate service. And the 2008 Farm Bill is
designed so we don't finance broadband in areas with service.
But broadband doesn't always follow neat lines. It doesn't
shape itself along lines, you can say we are going to serve
here and not serve there. To bolster the financial feasibility
of some of these proposals to serve the most difficult-to-serve
areas, occasionally there is some overlap, but we do focus on
ensuring that we close the digital divide between those
underserved and unserved areas. The statute recognizes that.
When it comes to satellite service, we are technologically
neutral. We want rural businesses and residents to have first-
class broadband service no matter where it comes from. We did
provide for satellite service as part of the Recovery Act, an
initiative for those who didn't have broadband through any
other of our awards, that they would have access to low-cost
satellite service. For some businesses, they have issues that
satellite is not adequate to their needs, so we try to maximize
the amount of bandwidth that we can get to rural areas.
Mr. Scott. My time has expired.
The Chairman. Thank you, Mr. Scott. That is I guess a good
segue for the fact that we do have the first field hearing of
2011, Mr. Costa and I. Other Members of the Committee are
invited. In fact, we have at least five coming already. I
realize there are some conflicts along the schedule, but that
is scheduled for Saturday, the 24th of this month, University
of Illinois-Springfield specifically on the subject of rural
broadband services and the future of rural America.
Let me also mention to all three of you--because I have
ascertained the names in the meantime--you had indicated you
would by the end of the week let us know a date by which we can
expect that definition. In Ranking Member Costa's office, the
gentleman's name is Nick Choate, and in my office, the
gentleman's name is Sam Pfister, and we would eagerly await
your response and hope that you will get that to us and then
obviously the implementation thereafter.
I would recognize the distinguished gentlelady from
Alabama, Ms. Sewell.
Ms. Sewell. Thank you, Mr. Chairman. I would like to thank
all of our panelists for being here today and for your
testimony.
My question is actually to Mr. Adelstein. I represent a
very rural part of Alabama, and I, too, am very concerned about
broadband and access to areas in my district that just don't
have access. Frankly, my mother and father--they live in Selma,
Alabama, and it was only last year that we got away from dial-
up. So it is really important that I reiterate what Congressman
Scott said as well, that it is very, very important to get it
to remote areas, broadband access.
My question is many of the entities that you lend to are
dealing with regulations and settlements under Federal law,
including the Clean Air and Clean Water Acts. Have you seen an
impact on systems that serve rural residents and their ability
to deal with these regulations?
Mr. Adelstein. Yes. First, on the broadband, I was thrilled
we were able to get a Recovery Act award to your district, to
Butler Telephone Company, and we will continue to work in rural
Alabama and across the country to get broadband to the most
remote areas. In terms of impact on our programs, yes, we have
seen that certainly regulatory requirements do impose costs
that we need to deal with, and we do deal with as part of our
efforts to ensure that rural areas can meet requirements for
the health and safety of their residents. I mean those are
consistent with what we do. Rural areas do incur costs. The
impact depends--in the Water Program, for example--on the size
and type of the treatment facility, on the quality of water
service and what the regulatory standard might be. It increases
demand for RUS Loan and Grant Programs. Right now, we have a
$3.2 billion backlog in our Water Program, and these
requirements certainly do have an impact.
We do work with our colleagues in other agencies of the
government to make sure that they are aware of the impact on
rural America of the different departments that they do have,
but we will work with the communities affected to help them
comply.
Ms. Sewell. Very good. What programs have been most
beneficial under your tenure in providing reliable and
affordable electric power, water, broadband? What programs do
you think have been the most effective under your agency and
what programs have yielded disappointing results?
Mr. Adelstein. Well, we have really been thrilled at the
impact of our major flagship programs, the Electric Program,
again $6 billion of investment this past year with no
requirement of taxpayer dollars to get that done. We have had
great success with our traditional telecommunications program,
as well as the Recovery Act broadband programs and getting
these rural systems up to date.
I mentioned just briefly that the Water Program is
oversubscribed. We have some $3 billion backlog attesting to
the demand. That is after we did over $3 billion in new
programs under the Recovery Act to deal with the backlog that
we had.
There are some small programs we don't think are that
important. We have a Household Water Well Program that, for
example, is very small and doesn't do that much. I mean it is
for individuals to get their own wells improved and with a
couple million dollars for the whole country, it doesn't really
have the kind of global impact that our major Water
Environmental Program has. So there are some programs that we
can do without in this difficult budget environment, but the
major programs have done a remarkable job of meeting the needs
of rural America.
Ms. Sewell. Thank you.
The Chairman. I recognize the gentlelady from Missouri,
Mrs. Hartzler.
Mrs. Hartzler. Thank you, Mr. Chairman. I wanted to follow
up some more on the broadband questions. How much total is
dedicated right now to the broadband program?
Mr. Adelstein. Right now, the traditional broadband program
has been authorized by Congress to provide $690 million in
loans, and we have sufficient funding under the broadband
program for about $300 million in loans. And then we have a
couple of smaller grant programs, the Distance Learning
Telemedicine Program, around $25 million; and the Community
Connect Grant Program, which provides grants to areas with no
service, very small, remote, rural communities, about $13
million.
Mrs. Hartzler. Okay. Out of that total amount, how much is
going to the end-of-the-line customers specifically to help
people who don't have any other access or any other service to
high-speed versus how much is going to people who already have
service?
Mr. Adelstein. Well, all of it is going to either improve
or provide service to people that don't have it today. So
generally speaking, we do focus, as I said, our resources on
areas that have no service, but in many cases what we have, for
example, in the Telecommunications Loan Program is our existing
telephone company will be providing improvements to--they may
be providing broadband to customers today, but they want to
improve that. They want to, say, go from 1 megabyte per second
or 768 kilobytes per second to fiber right to the home. So this
would be the same provider that is upgrading its system. So
they had broadband under one definition, but that
telecommunications company, in order to meet the needs of the
future to provide video, to provide all the current needs of
rural consumers will upgrade. And again, that program is no
cost to the taxpayer because they pay us back and our default
rate is very low.
Mrs. Hartzler. So do you have an indication of how much is
upgrade versus how much is new?
Mr. Adelstein. I don't have an exact number. I mean it is
very hard to see because broadband doesn't follow neat lines.
We have requirements in our broadband loan program, which we
just created that ensures the funds go to the most rural areas
that don't have adequate broadband as defined by the statute.
We don't provide funds for overbuilding ourselves under the
traditional, the $690 million program, but we are finding that
many of those are upgrades. They are going from old, slow DSL
to fiber to the farm or to the ranch, which is what a lot of
rural consumers need, a lot of rural businesses need to compete
in the 21st century.
Mrs. Hartzler. How long have these grants been available,
these loans, and what is the percentage of payback at this
time?
Mr. Adelstein. Well, the traditional program has been
operating since 1949, so we have been doing this for 60 years.
Mrs. Hartzler. Sure, but I am talking about broadband, not
rural electric.
Mr. Adelstein. The broadband program was initiated in the
Farm Bill of 2002. There were some pilots that had been done
before that, so over the last decade, we have invested about $1
billion in broadband infrastructure through the broadband loan
program, of which we are repaid the vast bulk of that. There is
a very small default rate. Right now, the Office of Management
and Budget is giving us a subsidy rate assuming defaults of
2.58 percent I believe.
Mrs. Hartzler. Okay, great. I want to switch gears real
fast with the EPA. And Mr. Adelstein, they have placed a
significant burden on a lot of small, rural communities with
new and increasingly stringent regulations. I know I have a
couple of towns in my district that we have been visiting with
trying to help. Anyway, many of these cases, these communities
are faced with no choice but to attempt to take on significant
debt to finance new water and wastewater systems for homes
which were previously served by wells, individual drain
systems. In your view, is the EPA requiring too much from these
small communities?
Mr. Adelstein. Well, as I mentioned in the previous
question, we do see that requirements do incur cost on rural
systems and we are trying to meet those needs. Some of those
requirements are for the health and safety of the community.
For example, in your district I visited Gravois Mills--or
actually it was Gravois Arm Sewer District----
Mrs. Hartzler. Yes.
Mr. Adelstein.--and you are probably familiar with the
problem there. It is on the Lake of the Ozarks and people had
built their own septic systems right along the lake and those
were draining into the lake. And the lifeblood of that
community, as you know better than I----
Mrs. Hartzler. Yes.
Mr. Adelstein.--is the tourism of that lake. And there was
a time when it has been shut down from swimming and use.
Mrs. Hartzler. Right.
Mr. Adelstein. So we provided funding to improve that water
system. Sometimes EPA will require that these communities come
up to snuff and not be dumping sewage--sometimes raw sewage
into a lake that is shared by the entire community like Lake of
the Ozarks. But we work with the EPA in terms of those
requirements to make sure that they are understanding what the
impact is on our program and one of the reasons we have such a
large backlog.
Mrs. Hartzler. What is the backlog real quickly?
Mr. Adelstein. It is $3.2 billion backlog for rural water
applications.
Mrs. Hartzler. Okay. My time has expired. Thank you, Mr.
Chairman.
The Chairman. The gentleman from Vermont, Mr. Welch.
Mr. Welch. Thank you very much, Mr. Chairman. I appreciate
being here. We are pretty proud of the work that you all do in
Vermont. Molly Lambert has been in charge there and she has a
lot of experience both in that job and other important jobs
that she has had in Vermont. And we have had, as you know, this
terrible flooding in Vermont that is the worst natural disaster
that we have had since 1927. And roads and bridges, houses,
small businesses have been destroyed. So we have an immense
amount of rebuilding to do and we are really going to be
needing some help to be able to do that. And I just wanted to
ask a few questions.
This challenge in Vermont is going to be a long-term
challenge, and I just want to generally ask Ms. Trevino, is the
USDA Office of Rural Development in a position to handle the
long-term effects of the hurricane after FEMA leaves? I mean
what we have been learning, of course, is that FEMA is there.
They have been doing a fabulous job, incidentally. The Governor
is very pleased; people are pleased. But FEMA is not the one-
stop shop that a lot of people who are under siege think it is.
We really need you to provide the help that only you can
provide.
So this is an open-ended question about whether you have
the resources you need, what additional resources either
financial or in waivers or flexibility in order to do your job
under emergency circumstances would be helpful? And, this would
affect some of my colleagues, certainly Mr. Owens from New York
where his folks have been similarly hit. So maybe you could
respond to that.
Ms. Trevino. Thank you very much. And we sympathize with
all the natural disasters that you have had that have affected
your area. We certainly are ready and prepared to help as much
as we can. Ms. Lambert has been made aware of the areas that
are designated as FEMA disaster areas. And once that
designation is in place, we are able to come in and provide,
for instance, moratoria on CF facilities and on housing
homeownership that we currently have financed through our
systems.
In addition, we are getting towards the end of our fiscal
year, so we are running across funding issues when it comes to
rehabilitation and repair of affected homes, but in terms of
refinancing and being able to use our Direct Program and
Guarantee Program in Single-Family Housing, we still have funds
available for that and we are ready to help wherever we can.
Mr. Welch. Well, I appreciate that.
Let me ask a little bit about homeownership. The Rural
Development Guarantee Program has been extremely helpful in
Vermont for low- and moderate-income homeownership
opportunities. We think in Vermont it is crucial that the
program be continued and fully authorized. The new fee
structure, as you know, is intended to cover costs of the
program, but I have heard from some Vermont lenders that it may
be administratively very difficult for them to collect some of
these fees. Do you have any thoughts on how we can address
that? We don't want to make it a hassle for the folks that need
to be our partners.
Ms. Trevino. I understand and, again, it has been an issue
that we have been working on for about a year. One of the
things that we realized around January of this year was that
our authority to collect in that front fee is 3.5 percent. In
order to continue to have a program come October 1, our subsidy
rate is going to 3.8 percent. Since we do not have the
authority to go higher than 3.5 percent in an up-front fee, we
have had to instigate an annual fee to make up the difference
so that we can continue to have a program at all, because it is
a subsidy-rate-neutral program----
Mr. Welch. Yes.
Ms. Trevino.--therefore, we do not get budget authority to
run that guarantee.
Mr. Welch. Okay. And there has been some discussion as
well--thank you--that Rural Housing Programs could be moved out
of the jurisdiction of USDA to management by HUD. I wonder
whether given USDA's unique understanding of the rural issues,
can you give us some information on how such a move would occur
while preserving safeguards that are put in place to ensure
that the rural nature of this program is preserved?
Ms. Trevino. What I can tell you about the discussion draft
is that it does not outline how it will do that. We certainly
believe that it is not a good idea and we believe that it is a
very premature discussion draft at this time. No studies have
been made as to the cost-savings for such a move. Simply
picking up a chess piece and moving it across the board is not
going to give you a cost-savings. Some of the things that have
not been considered are the IT needs. We at USDA Rural
Development run on totally different information technology
than does HUD, and so that would be, we believe, a significant
investment. And it would, frankly, upset the synergy with how
we offer programs in rural America. We are a collaborative
agency and we work in tandem by looking at the holistic needs
of the entire community, not just the business needs, not just
residential needs.
Mr. Welch. Thank you very much. I yield back.
Ms. Trevino. You are welcome.
The Chairman. Thank you, Mr. Welch. The gentleman from
Indiana, Mr. Stutzman.
Mr. Stutzman. Thank you, Mr. Chairman. And thank you to the
panel for being here today.
I would like to start with Mr. Adelstein, a question
regarding broadband again. There is a wide range of definitions
of what constitutes an area which is served by broadband
access. These definitions can include everything from the
advertised connection speed, the actual connection speed,
consumer price, or simply proximity to the nearest connection.
Could you please clarify for the Committee what you think the
minimum connection speed should be to justify Federal
investments, and then how are you monitoring providers to
ensure the advertised speed matches actual connection speeds
over these systems built with Federal dollars?
Mr. Adelstein. Thank you, Congressman. Great question. We
spent a lot of time considering that and we determined that 5
megabytes per second combined was what was needed for rural
economic development. That provides for video streaming. That
would be, for example, 4 megabytes down, 1 megabyte up. We
combine both down speed and up. That is one that we put in a
flexible definition for in the Farm Bill Broadband Loan Program
because we expect that will continue to go up. As urban areas
see increases, we want rural areas to be able to keep pace.
We are not looking at advertised speeds; we are looking at
actual speeds. We want our borrowers to be able to deliver
those speeds on the ground. The way we monitor that is we look
at the application and we have engineers on staff that evaluate
whether or not the proposed technology actually will deliver
the actual speeds that are being promised in the application,
and if they are not, we will not approve the application until
such time as we are satisfied the technical requirements are
satisfied. And then as the program is being built out, we have
in the field general field representatives that are often
engineers that watch the construction of the project. We have
the contracts coming in being reviewed by engineers in
Washington. So as they are building the project, we are
evaluating them step-by-step, contract-by-contract to make sure
that it complies with what they put in the loan application
that it can deliver the levels of speed that they told us that
they were going to provide.
Mr. Stutzman. Thank you. I would like to switch gears a
little bit. The EPA has placed a significant burden on small,
rural communities with new and increasingly stringent
regulations. In many cases, those communities are faced with
very few choices, if any, but to attempt to take on significant
debt to finance new water and sewer wastewater systems for
homes which were previously served by wells and individual
drain systems. In your view, is the EPA requiring too much from
these small communities?
Mr. Adelstein. Well, rural communities do incur costs as a
result of EPA rules and the impact depends on the type and size
of the treatment plant, the quality of the existing water
source that they are dealing with depending on the regulatory
standard. This certainly does increase demand for our programs
and one of the reasons that we have, as I indicated, a $3.2
billion backlog are these requirements. We do work with our
colleagues in EPA and others. I met with EPA to make sure that
they understand the impact of these proposals on rural areas.
They are, of course, the expert agency on determining the
health and safety needs of the public, and we defer to them.
And in response, we have to deal with financing the
improvements that are required to comply with EPA rules.
Mr. Stutzman. What was the backlog number again for water
and wastewater applications?
Mr. Adelstein. For water and wastewater applications we
have a backlog of around $3.2 billion.
Mr. Stutzman. Billion with a ``b,'' okay.
Mr. Adelstein. Right.
Mr. Stutzman. Thank you. All right. And then with 1 minute
left I would like to ask Ms. Trevino, could you elaborate on
how funds through the Community Facilities Program are
dispersed around the country? Just, for instance, if you
received an application for first responders versus an
application for a daycare center, how do you decide which to
fund and which not?
Ms. Trevino. That is a good question. Thank you,
Congressman. We have eligibility criteria that is written by
statute and reinforced in our regulation. We emphasize public
safety, education, and healthcare. So those applications that
address those three areas are weighted by score. The
applications, when they are received in a state office, are
then scored and funded based on that score. We do hold some
reserve money in the national office, and at the end of the
year, any applications that weren't funded in that state then
are referred to the national office to compete for the reserve
and we score them, again, the exact same way based on that
criteria.
Mr. Stutzman. Okay. Thank you. I yield back, Mr. Chairman.
The Chairman. The gentleman from Pennsylvania, Mr.
Thompson.
Mr. Thompson. Thank you, Chairman. Thanks to the panelists
for your testimony today.
Ms. Trevino, I wanted to talk about housing specifically
with USDA. It looks like a lot of good programs are out there
that we do. Specifically, I was interested under the farm bill
and the title that is there, I have a mixed blessing in my
Congressional district because of the success of natural gas,
which has been really good for the economy. Unemployment is
down and prosperity is up for the first time in a very long
time in parts of the district. We have an affordable housing
crisis. It is not one that we are used to in rural America.
Normally, we have plenty of places available and we don't have
that today. Are there specific programs under the 2008 Farm
Bill that would assist--as a result, we see property values
being pushed up, people on a limited or fixed income can't
afford the rent anymore. Their rent is being increased
exponentially, which is great for the property owners. I have
no criticism of that. So are there programs out there in the
existing farm bill to assist in a situation like that in any
way?
Ms. Trevino. They don't currently exist--Congressman, thank
you--in the CONACT they are given to us through the Housing Act
of 1949. We have rental assistance for low-income individuals
who can't find housing, and that rental assistance allows them
to live in apartments that would be market-rent and we pay the
difference, anything they pay based on their income. So as long
as they don't contribute more than 30 percent of their income
towards their housing needs, we pay the difference to make up
for it. It is our largest-funded program, the Rental Assistance
Program. I believe that in your communities what you are
finding is an absence of housing and not just the market cost.
Again, one of the things that we have tried to do is work with
the communities and encourage them to take these companies and
to ask them to partner with us and to invest in the communities
either by building temporary housing or by taking existing
structures and turning them into single-room occupancy homes.
So we are trying to be creative in working with our state
directors to determine how we can best meet any lack of the
housing that we are seeing in those areas.
Mr. Thompson. Very good. Thank you.
Ms. Trevino. You are welcome.
Mr. Thompson. And I look forward to talking more with you
about that. And actually I put together a work group in the
Congressional district to bring all the partners to the table,
the industry and kind of a public-private partnership to
address that.
Ms. Trevino. I look forward to it.
Mr. Thompson. You mention in your written testimony that
the Community Facilities Program has provided over $12.7
billion in funding for healthcare, education, public safety,
and other essential community services, and more than 40
percent of the Community Facilities Program investments have
been made in rural healthcare facilities. Can you further
elaborate on how these dollars have been spent specifically on
rural healthcare?
Ms. Trevino. Yes, sir. Mostly what we do is provide money
for bricks and mortar and equipment. We do not provide money
for operational cost, so one of the things that we have been
very good at is collaborating with Health and Human Services
and with the HRSA Programs in helping critical access hospitals
access equipment that they need. So we fund their equipment and
any type of buildings that they need.
One of the mandates that HHS has right now is that all
critical access hospitals in rural America must be tied to
electronic medical records. And in rural America that is a huge
need to be able to overhaul your IT needs. And we are providing
the funding that is needed to partner with them.
Mr. Thompson. All right. Thank you.
Ms. Trevino. Yes.
Mr. Thompson. Now, Mr. Adelstein, there was a lot of
questions on broadband and it is obviously something everybody
is very interested in. I appreciate the USDA and the agency's
work in that area. I wasn't familiar with the numbers that we
had spent a billion dollars, and frankly we have a billion
dollars over a number of different funds looking to invest. And
I know the approach that we are taking as sort of looking at
different vendors who have different proposals, that type of
thing. Was there ever any consideration of--because I looked at
the broadband issue in rural America almost similar to the
electrification of rural America, and the rural electric
cooperatives are a great model. They are public-based because
of the constituency that drives it, those volunteer board. Was
there ever any consideration of perhaps taking that kind of an
approach or even partnering with the rural electric
cooperatives who, frankly, have right-of-ways to the end-user,
the last mile? All those miles are covered with electricity and
right-of-ways. Was that ever considered in our looking at how
we address the broadband issue?
Mr. Adelstein. Yes, we thought about that a lot. As a
matter of fact, we went to the National Rural Electric
Cooperative Association and encouraged them to apply for
broadband. As a matter of fact, a number of them did when
Consolidated Electric and Ohio's building--they are using smart
grid, and down in New Mexico the Electric Cooperative, Kit
Carson is using it. And again, when they do it, they provide
smart grid also to their consumers. A number of our awardees
are telephone cooperatives, real old telecommunications
cooperatives that we have worked with many of them for 60
years, 50 years that are some of our most reliable borrowers.
They pay us back year after year, they know what they are
doing, they are technically on top of it, and we love working
with our cooperative borrowers because of their competence,
their dedication to the community. The model really does work
for rural America. I agree with you.
Mr. Thompson. Glad to hear that. Thank you. Thank you, Mr.
Chairman.
The Chairman. The chair would recognize the distinguished
Ranking Member, Mr. Costa, for follow-up questions.
Mr. Costa. Thank you very much. Very quickly here, just to
get back to that White House Rural Council and the Executive
Order. Is it simply going to be Federal officials on this or
are you going to give an opportunity for local and state
officials and people of expertise to participate in this?
Ms. Canales. Ranking Member Costa, the opportunity for
stakeholders is already underway and also has been a strong
aspect of the outreach that is occurring to date----
Mr. Costa. Ma'am, I think the work product is going to be
better if it is from the bottom up as opposed to the top down.
Ms. Canales. As I was going to state----
Mr. Costa. And I would like you to provide some information
to the chair and myself and other Members of the Subcommittee
on how that is going to take place, okay?
Ms. Canales. We have held 100 rural roundtables, meaning
100 locations throughout the United States with stakeholders
and have reports based on that.
Mr. Costa. Give a little brief summary on that. I am not
talking about War and Peace. I would like a brief, two page
memo, on what those 100 meetings have done, where they are
around the country, and who has participated. I would like to
know, for example, how many have taken place in California and
whether any of them have taken place in the San Joaquin Valley.
Somehow if that has taken place, it has missed me.
[The information referred to is located on p. 1056.]
Mr. Costa. Mr. Adelstein, you mentioned that the new
authorization was provided in the farm bill for lending energy
efficient programs as well as renewable energy. Now, this is a
question not only of my own but Ranking Member Peterson has an
interest in this. Can you tell what activities or agencies have
been lending under for these authorities? And I have two other
quick questions, so please be brief.
Mr. Adelstein. Yes. Primarily, for retrofitting, we have an
initiative that we are working on to have rural electric
cooperatives work with their members to retrofit their homes to
save electricity, and they----
Mr. Costa. Could you give us some facts on that later on
and submit that for Congressman Peterson and myself and other
Members so that we know the specifics on it?
Mr. Adelstein. Will do.
Mr. Costa. Okay. Many of the entities that you lend to are
dealing with regulations and settlements under various laws,
and of course, this Administration and many of us have been
critical of a lot of the regulations being burdensome and
unnecessary. Those are included but not limited to the Clean
Air and Clean Water Acts. Have you in your review seen the
impact on these symptoms as they serve rural residents and
their ability to deal with these regulatory requirements? And
does it impact your ability to lend because of the repayment
concerns?
Mr. Adelstein. Well, certainly, both our water and electric
programs have seen a number of regulatory requirements that
have required compliance that have resulted in major loans
being committed. Sometimes it is hard to see which upgrades
they are doing and ones they are doing just for EPA
requirements, for example, but they do impact our programs.
They impact our borrowers.
Mr. Costa. Well, maybe if you were to highlight those and
suggest where those are problematic, maybe we might work
together. Although, frankly, these are things that you don't
need, I think in many cases, Congressional changes. You can do
it administratively. I would hope there is a review going on
there as to what is burdensome, what is working, what is not
working, and why don't we change it?
Mr. Adelstein. Well, we do work with our colleagues in
other agencies on regulatory requirements and let them know
what impact they are having on our programs. They do increase
demand for our loan programs in both electric and water.
Mr. Costa. On the electric, do you have any interactions
with FERC or various ISOs that regulate the grid?
Mr. Adelstein. Yes, we do. As a matter of fact, there is an
interagency working group that we are a part of with the White
House and the Council on Environmental Quality to accelerate
citing of transmission and the agency has been very involved
in----
Mr. Costa. I know Congressman Peterson and I both have
concerns--I suspect many of our other colleagues as we are
looking toward generation of wind power and other types of
energy production--whether or not landowner-controlled wind
projects have access to transmission lines? Obviously, those
are oftentimes opposed by utilities in terms of the generation
of the electrical power in rural areas.
Mr. Adelstein. Well, we would like to see distributed
generation happen. You know, our rural electric co-ops are very
open to it. Of course, they need to upgrade their systems to be
capable of having the grids smarter in order to be able to take
those inputs of electricity. I think it can be a really great
domestic source of energy, something that we are eager to see
and we have financed a lot of upgrades in the grid--and in
smart grid that I think could eventually lead towards
distributed generation.
Mr. Costa. Is the Department proposing to make
recommendations to the Congress on changes that might be made?
Mr. Adelstein. Well, we are working on an interagency basis
on this. We have worked on an interagency basis on the smart
grid. There was a report that was issued by the White House on
the smart grid that would enable distributed generation in
terms of transmission and the delicate balance between state
and local governments. Again, we are not the lead agency
necessarily but we have been involved with DOI and DOE and FERC
in these discussions in talking about how it impacts rural
consumers. We want to make sure that USDA is the voice of these
rural consumers and rural electric cooperatives in these
interagency discussions.
Mr. Costa. Thank you very much, Mr. Chairman, and look
forward to your follow-through on that additional information I
requested.
Mr. Adelstein. Will do.
The Chairman. One concluding question from the chair and
then we will conclude the hearing. And thanks to all three of
you and the Members of the Committee for being here.
I don't remember which one of you made the estimate.
Regardless, one of the three of you estimated that there have
been a quarter of a million jobs created as a result of your
programs. I guess my question is this. According to a recent
report of the Government Accountability Office, your
department, the USDA has indicated that agency staff is now
required to count the actual numbers of jobs created through
Rural Development Programs rather than the estimation methods
that you previously used. When you came up with that specific
figure for us that you created 250,000 jobs, which system did
you use? The estimation system? Just try to give me a direct
answer. I mean it is either one or the other. Or the new system
that the GAO has indicated that your agency is going to be
using?
Ms. Canales. Yes, Mr. Chairman. First of all, I want to
reaffirm with you created and saved. So saved means jobs
retention. That is in my testimony.
The Chairman. Again, that goes back to awfully difficult to
know that, but regardless, that is a political debate we are
not going to have.
Ms. Canales. Okay.
The Chairman. The issue is which of these two systems, the
old system or the new system did you use in the save or create
category?
Ms. Canales. The system that we are using in regards to
that is a system that is within every single application that--
it is based on our loan guarantees that we are making with the
banks----
The Chairman. Let me be very specific, okay. I am going to
be as specific as I can be and if you could be specific with me
in response, I would be really grateful for that. The GAO
recently reported in their report on duplication among economic
development programs, they cited a need to count job creation
more precisely. In that regard, according to that report, the
USDA indicated that agency staff is now required to count the
actual number of jobs created--I guess or saved--through Rural
Development Programs rather than the estimation methods
previously used. My specific question is when you gave us that
figure--\1/4\ of a million jobs created or saved--which system
were you using? The estimation system or the required specific
count.
Ms. Canales. We used both.
The Chairman. So you interpret the GAO's report and USDA's
implementation to be that they are not required to use one
versus the other? You continue to use both?
Ms. Canales. When an application is made with a bank, you
use both information. You use what is estimated to be created
but then you also will have jobs that will be saved as well,
too.
The Chairman. I don't mean to be argumentative and I won't
because I don't think it is the appropriate position of the
chair, but if you would be willing to provide for us your
specific area, your department, and USDA provide for Mr.
Dunlap, who is the Subcommittee Staff Director and his
counterpart on the Democratic side, let us know specifically
how you came up with those figures and how that juxtaposes with
the estimates versus the actuality count that I have made
reference to and GAO made reference to. That would be very,
very helpful to us.
Ms. Canales. We will do so, Mr. Chairman.
[The information referred to is located on p. 1055.]
The Chairman. With that, I would invite all the Members of
the Committee to our field hearing on the 24th of September
focusing on rural broadband in Springfield, Illinois, at the
University of Illinois. We have already had a number of Members
say they are going to attend and we certainly welcome your
attendance at that meeting.
So under the rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive both
opening statements and additional material and supplementary
written responses from any witness to any questions posed by a
Member. Therefore, this hearing of the Subcommittee on Rural
Development, Research, Biotechnology, and Foreign Agriculture
is adjourned. Thank you all for attending, and we appreciate
your input.
[Whereupon, at 11:25 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Supplementary Material Submitted by Judith A. Canales, Administrator,
Rural Business-Cooperative Service, U.S. Department of Agriculture
During the September 13, 2011 hearing entitled, Agricultural
Program Audit: Examination of USDA Rural Development Programs, a
request for information was made to Judith A. Canales, Administrator,
Rural Business-Cooperative Service, U.S. Department of Agriculture. The
following is the information submission for the record.
Insert
The Chairman. Let me be very specific, okay. I am going to be
as specific as I can be and if you could be specific with me in
response, I would be really grateful for that. The GAO recently
reported in their report on duplication among economic
development programs, they cited a need to count job creation
more precisely. In that regard, according to that report, the
USDA indicated that agency staff is now required to count the
actual number of jobs created--I guess or saved--through Rural
Development Programs rather than the estimation methods
previously used. My specific question is when you gave us that
figure--\1/4\ of a million jobs created or saved--which system
were you using? The estimation system or the required specific
count.
Ms. Canales. We used both.
The Chairman. So you interpret the GAO's report and USDA's
implementation to be that they are not required to use one
versus the other? You continue to use both?
Ms. Canales. When an application is made with a bank, you use
both information. You use what is estimated to be created but
then you also will have jobs that will be saved as well, too.
The Chairman. I don't mean to be argumentative and I won't
because I don't think it is the appropriate position of the
chair, but if you would be willing to provide for us your
specific area, your department, and USDA provide for Mr.
Dunlap, who is the Subcommittee Staff Director and his
counterpart on the Democratic side, let us know specifically
how you came up with those figures and how that juxtaposes with
the estimates versus the actuality count that I have made
reference to and GAO made reference to. That would be very,
very helpful to us.
Ms. Canales. We will do so, Mr. Chairman.

Since 2009, the programs and services of the Rural Business-
Cooperative Service (RBS) have or will create or save nearly 250,000
jobs. The Government Accountability Office (GAO) report, Efficiency and
Effectiveness of Fragmented Economic Development Programs Are Unclear,
GAO-11-477R, May 19, 2011, refers to two different methods for
reporting jobs created/save. One method relies on determining actual
jobs created/saved once an award has been made. The other method is an
estimation method based on dollars invested.
RBS is in the process of moving from the ``estimation'' method to
the ``actual'' method. Because this transition has been occurring since
2009 and is still underway, the number of jobs indicated in
Administrator Canales' testimony represents a combination of these two
different methods for reporting jobs created/saved.
The ``estimation'' methodology utilized by RBS includes: (1)
applying our professional judgment as to the number of jobs created or
saved reported based on the specific project, including any
observations during a site visit, (2) applying a formula that is based
on the dollar amount of the project, and (3) applying a formula that
estimates direct and indirect employment and other socioeconomic
benefits.
In the ``actual'' methodology: upon processing the award of a loan,
grant, or loan guarantee the projected number of jobs to be created or
saved is obtained from the applicant or borrower and recorded as actual
jobs in the agency's database.
RBS is implementing job verification processes to validate
applicant or borrower job projections. After closing of the loan or
grant, and completion of the project, the actual numbers of jobs
created or saved by the business is verified by the agency and recorded
in our database. Note that in some instances significant time can
elapse between the job projections at the time of the award of a loan
or grant and actual job verifications after the completion of the
project, start-up or expansion of a business and ramp-up to full
operations. Agency verifications can be 1-2 years after the loan or
grant is awarded.
RBS continues to implement and refine its verification process.
With the exception of the Agency's Intermediary Relending Program RBS
is using the ``actual'' methodology, described above, for the balance
of its programs.
______

Submitted Report by Judith A. Canales, Administrator, Rural Business-
Cooperative Service, U.S. Department of Agriculture
White House Rural Council
Feedback from Rural America
Summer 2011
``. . . Getting out of Washington and meeting all of you, and
seeing how hard you're working, how creative you are, how
resourceful you are, how determined you are, that just makes me
that much more determined to serve you as best I can as
President of the United States.''

--President Barack Obama
August 16, 2011
Peosta, Iowa
White House Rural Economic Forum
Contents
Letter from the Secretary of Agriculture
Introduction
A Note About the Numbers
Most Important Issues
Breakdown of Issues Discussed
Rural Economic Forum--Peosta, Iowa
List of Visits
Additional Resources
Letter from the Secretary of Agriculture
On June 9, 2011, President Obama signed an Executive Order
establishing the White House Rural Council. Over the past few months,
the Council has had the opportunity to hear from rural communities
through roundtable discussions and visits across the country. By
engaging in open dialogue, top Administration officials have been
hearing about the most important issues on the minds of rural Americans
and bringing that message back to Washington.
Since the establishment of the White House Rural Council, President
Obama, members of his Cabinet, and others senior Administration
officials have made nearly 200 visits to rural communities. Through
these visits, the Council has been listening to the voice of rural
Americans--to their concerns and aspirations, to what they see as the
challenges that lay ahead and the opportunities open to them.
This report provides an overview of what we heard during these
visits. I look forward to working with the Council on addressing these
issues and ensuring that rural America moves toward a prosperous and
thriving future.
Finally, I would like to thank all of those who hosted and attended
these visits. Your help and participation is truly appreciated as we
all work together for rural America.
Sincerely,

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Thomas J. Vilsack,
Secretary of Agriculture & Chair of the White House Rural Council.
Introduction
On June 9, 2011, President Obama established the White House Rural
Council to address challenges in rural America and to build on the
administration's rural economic strategy. Since the establishment of
the Council, administration officials have traveled to rural
communities across the country to discuss the important issues facing
rural Americans.
Administration officials traveled to rural communities in 46 states
and met with rural Americans to hear about the unique challenges they
are facing and the ways in which the Council can most effectively focus
its efforts. Officials reported back on what they heard during these
visits and their feedback is shared in this report.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

President Barack Obama, accompanied by Agriculture Secretary
Tom Vilsack, holds a breakout session at the White House Rural
Economic Forum at Northeast Iowa Community College in Peosta,
Iowa, Aug. 16, 2011, as part of his three-day economic bus tour
of the Midwest. (Official White House Photo by Pete Souza)

This report begins with a pie chart we developed based upon the
information shared with us. It is not a scientific poll, but it
provides a sense of the most important issues that rural Americans are
facing.
A Note About the Numbers:
These discussions and visits were designed as an opportunity to
facilitate a candid and direct conversation between rural Americans and
the Obama administration. The numbers presented here were all reported
by administration officials moderating discussions and are not designed
to reflect a scientific survey or poll. The numbers we have compiled
are not designed to be reflective of all rural Americans--just those
who participated in these conversations and visits. The views presented
here are representative of those attending the events and do not
constitute an endorsement by the White House or the President of the
United States.
Map of the Rural Visit Locations

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Most Important Issues
A breakdown of the issues discussed in our conversations in rural
America:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Breakdown of Issues Discussed:
Education

Encourage vocational training

Improve rural education

Costs of higher education/improve financial assistance

Focus on research

Reform No Child Left Behind

Brain-drain: educated individuals moving out of rural
communities

Focus on science & technology

Focus on education geared toward entrepreneurship

Government programs and regulations

Increase certainty and flexibility on regulations for
rural industry and small businesses

More timely application processing for contracting

Streamline reporting requirements and applications

Increase technical assistance for loans and grants

Infrastructure

Improve broadband access in rural areas, including in
tribal communities

Improve federal assistance in road infrastructure

Support water storage projects, levees, rivers, locks,
and dams

Support water and wastewater treatment facilities

Access to capital/business incentives

Improve access to capital for businesses

Support small business tax credits and/or financial
support, including micro loan programs and financial
support for farmers

Establish a Rural Community Development Fund where
rural areas can invest in their own communities and have
government match any private dollars

Increased access to early stage and growth capital for
rural entrepreneurs

Renewable Energy

Support for biofuels, including woody biomass

Encourage local wind energy development

Streamline and ease regulations for green energy
development

Economy & Workforce Concerns

Focus more on domestic manufacturing

Immigration and workforce concerns

Rising cost of living and declining income

Reform unemployment compensation

Improve immigration policies to encourage highly-
skilled students to stay in U.S.

Focus on economic development opportunities in tribal
communities

Agriculture

Improve resources for new and beginning farmers

Role of agriculture in our national security,
including natural disasters

Healthcare

Need solutions to lower current/projected costs and
burden on businesses/families

Support broadband and telemedicine programs for rural
healthcare

Targeted substance abuse policy to address challenges
of rural communities

Trade

Improve trade policy and make U.S. competitive in a
global market

Quality of Life

Improve quality of life in rural communities for
economic growth and job creation

Continued support for rural public safety

Conservation and Environmental Concerns

Rewards for smart farming and land conservation

Environmental quality of water sources Importance of
soil conservation

Growing the outdoor recreation economy

Collaboration in advancing sustainable natural
resource economies

Other issues

Farm Bill

Government spending

Housing market

Tourism in rural America

Auto-industry

Regional cooperation in rural communities
Rural Economic Forum--Peosta, Iowa
August 16, 2011
In August, President Obama embarked on a three-day, three state bus
tour of the Midwest that included stops in five communities. The Rural
Forum itself was held at the Northeast Iowa Community College in
Peosta, Iowa on August 16, 2011. During the Forum, five breakout group
discussions were moderated by Cabinet members focusing on key issues
facing rural America. President Obama participated in the first two
breakout sessions.

Growing Rural Small Business

Moderated by Karen Mills, Administrator of the Small Business
Administration

Promoting Agricultural Innovation and Renewable Energy Jobs

Moderated by Tom Vilsack, Secretary of Agriculture

Strengthening the Middle Class in Rural America

Moderated by Shaun Donovan, Secretary of Housing and Urban
Development and Melody Barnes, Chair of the Domestic Policy
Council

Creating Jobs through Conservation, Outdoor Recreation, and Tourism

Moderated by Ken Salazar, Secretary of Interior and Nancy Sutley,
Chair of the Council on Environmental Quality

Building Economic Opportunity for Rural Business through Infrastructure
Investments

Moderated by Ray LaHood, Secretary of Transportation

Key Themes and Issues:

Importance of rural America in contributing to the economic
health of the country

Need to attract capital and increase available credit for
rural communities

Importance of small business support for rural communities

Regional planning and development has been successful and
should continue to be supported

Importance of continuing to support the innovation occurring
in renewable energy

Increased certainty and flexibility on regulations

Important to attract new, young farmers--reduce barriers to
getting into farming.

Broadband is key to providing economic opportunities. The
ability to telecommute or have access to distance learning and
telemedicine is extremely important to rural communities.

Need for increased opportunities and incentives for
physicians to provide service in rural areas

Technical assistance on accessing Federal programs is
important to small, rural communities.

Modernization of existing federal agriculture subsidies

Importance of easements in mitigating future flood impacts
on both private and public lands

Rewards and incentives for farmers that use good
conservation practices
List of Visits:
Below is the full list of visits that Obama Administration
officials made to rural America during the summer of 2011. These visits
included tours of rural communities, businesses and farms as well as
roundtable discussions with rural Americans.

June 9, SBA Regional Administrator John Shoraka, Clarksburg, West
Virginia

June 10, USDA State Directors Dan Steinkruger and Maxine Moul, Ceresco,
Nebraska

June 17, USDA Deputy Secretary Kathleen Merrigan, York, Pennsylvania

June 20, USDA Under Secretary Dallas Tonsager, Salt Lake City, Utah

June 22, USDA Deputy Under Secretary Cheryl Cook, Dubuque, Iowa

June 23, HUD Assistant Secretary Mercedes Marquez and USDA State
Director Vicki Walker, Redmond, Oregon

June 24, SBA Regional Administrator Dan Hannaher and USDA State
Director Derrel Carruth, Casper, Wyoming

June 26, USDA Under Secretary Ed Avalos, Denver, Colorado

June 27, White House ONDCP Director Gil Kerlikowske and ARC Co-Chair
Earl Gohl, Johnson City, Tennessee

June 28, GSA Regional Administrator Sue Damour, Lower Brule Sioux
Tribe, SD

June 29, SBA Regional Administrator Dan Hannaher, Fargo, North Dakota

June 30, SBA Regional Administrator Calvin Goings, Puyallup, Washington

July 5, VA Secretary Eric Shinseki, Bismarck, North Dakota

July 7, VA Secretary Eric Shinseki, Bozeman, Montana

July 7, VA Secretary Eric Shinseki, Helena, Montana

July 7, VA Secretary Eric Shinseki, Billings, Montana

July 8, VA Secretary Eric Shinseki, Billings, Montana

July 8, USDA Under Secretary Ed Avalos, Billings, Montana

July 11, USDA Deputy Secretary Kathleen Merrigan, Richmond, Virginia

July 11, ARC Co-Chair Earl Gohl, Kingsport, Tennessee

July 12, USDA Administrator Judy Canales, Hidalgo, Texas

July 12, USDA Under Secretary Michael Scuse, Springfield, Illinois

July 13, GSA Regional Administrator Sue Damour, Billings, Montana

July 14, DOI Secretary Ken Salazar, Madison, Wisconsin

July 14, SBA Administrator Karen Mills, Fairmont, West Virginia

July 15, DOI Secretary Ken Salazar, Crow Reservation, Montana

July 15, DOI Secretary Ken Salazar, Ovando, Montana

July 15, DOI Secretary Ken Salazar, Kalispell, Montana

July 18, ED Deputy Assistant Secretary John White, Greenville,
Tennessee

July 18, USDA Administrator Jonathan Adelstein, Nelsonville, Ohio

July 18, DOC Under Secretary David Kappos and USDA State Director
Virginia Manuel, Bangor, Maine

July 18, State Department Senior Advisor for Innovation Alec Ross,
Cumberland, Maryland

July 20, USDA Secretary Tom Vilsack, Annapolis, Maryland

July 22, ARC Co-Chair Earl Gohl, Oak Ridge, Tennessee

July 22, HHS Regional Director Joanne Grossi, Wise, Virginia

July 22, EPA Regional Administrator Jared Blumenfeld, Ibapah, Utah

July 23, ARC Co-Chair Earl Gohl, Abingdon, Virginia

July 25, DOE Secretary Steven Chu, Concord, North Carolina

July 25, GSA Regional Administrator Sue Damour, Jamestown, North Dakota

July 26, ARC Co-Chair Earl Gohl, Spartanburg, South Carolina

July 26, USDA Administrator Jonathan Adelstein, Charles City, Iowa

July 27, SBA Regional Administrator John Shoraka, Lancaster,
Pennsylvania

July 27, USDA Under Secretary Harris Sherman, Murfreesboro, Tennessee

July 28, ARC Co-Chair Earl Gohl and Commerce Deputy Under Secretary
Nancy Potok, Lewisburg, Pennsylvania

July 29, ARC Co-Chair Earl Gohl and USDA State Directors Bill Wehry and
Tom Williams, Williamsport, Pennsylvania

July 31, HHS Regional Director Herb Schultz, Flagstaff, Arizona

August 1, HHS Secretary Kathleen Sebelius, Aurora, Missouri

August 1, HHS Secretary Kathleen Sebelius, Joplin, Missouri

August 1, USDA Deputy Under Secretary Ann Mills, Thibodaux, Louisiana

August 1-3, EPA Regional Administrator Karl Brooks, Kansas

August 2, DOT Deputy Secretary John Porcari and USDA Under Secretary Ed
Avalos, Groves City, Ohio

August 2, GSA Regional Administrator Ann Kalayil, Princeton, IL

August 2, DOT Secretary John Porcari and USDA Under Secretary Ed
Avalos, Columbus, Ohio

August 2, HHS Regional Director Herb Schultz, Litchfield, Arizona

August 2, EPA Regional Administrator Jared Blumenfeld, Loleta,
California

August 3, USDA Under Secretary Michael Scuse, Berlin, Vermont

August 3, SBA Assistant Administrator Ana Harvey, Newton, Iowa

August 3, EPA Regional Administrator Al Armendariz, Irving, Texas

August 3, SBA Regional Administrator Calvin Goings and USDA State
Director Mario Villanueva, Elma, Washington

August 3, ARC Co-Chair Earl Gohl, Greeneville, Tennessee

August 3, DRA Federal-Chairman Chris Masingill and USDA State Director
Bobby Goode, Union City, Tennessee

August 3, EPA Administrator Lisa Jackson, Lititz, Pennsylvania

August 3, HHS Regional Director Joanne Grossi, Wheeling, West Virginia

August 3, HHS Regional Director Susan Johnson, Anchorage, Alaska

August 4, White House Senior Policy Advisor for Native American Affairs
Kimberly Teehee and federal agency colleagues, Washington, DC

August 4, HHS Regional Director Herb Schultz, Fresno, California

August 4, USDA Secretary Tom Vilsack, West Allis, Wisconsin

August 4, DOT Deputy Administrator Greg Nadeau, Wilmington, Ohio

August 4, HUD Assistant Secretary John Trasvina, Lampeter, Pennsylvania

August 4, ARC Co-Chair Earl Gohl, Morristown, Tennessee

August 4, DRA Federal-Chairman Chris Masingill, Mayfield, Kentucky

August 4, FCC Chairman Julius Genachowski, Jeffersonville, Indiana

August 5, GSA Regional Administrator George Northcroft, Ketchikan,
Alaska

August 5, White House OSTP Aneesh Kopra, Blacksburg, Virginia

August 6, HHS Regional Director Herb Schultz, Pomona, California

August 8, ED Linda Hall, Spokane, Washington

August 9, CEQ Chair Nancy Sutley, Grant County, Oregon

August 9, EPA Regional Administrator Judith Enck and USDA State
Director Paul Hlubik, Augusta, New Jersey

August 9, ARC Co-Chair Earl Gohl, London, Kentucky

August 9, GSA Administrator Sue Damour, Cheyenne, Wyoming

August 9, ED Linda Hall, Spokane, Washington

August 10, GSA Administrator Sue Damour, Salt Lake City, Utah

August 10, ED Secretary Arne Duncan, Nashville, Tennessee

August 10, HHS Regional Director Christie Hager, Dexter, Maine

August 10, HHS Regional Director Jaime Torres, Buffalo, New York

August 10, DOT Administrator Peter Appel, Ames, Iowa

August 10, CEQ Chair Nancy Sutley, Deschutes County, Oregon

August 10, ED Deputy Assistant Secretary John White, St. Peters,
Minnesota

August 10, SBA Regional Administrator Calvin Goings and USDA State
Directors Richard Rush and Wally Hedrick, Middleton, Idaho

August 11, HHS Regional Director Christie Hager, Machais, Maine

August 11, HHS Regional Director Christie Hager, Lubec, Maine

August 11, SBA Regional Administrator Calvin Goings, Boise, Idaho

August 11, DRA Federal-Chairman Chris Masingill and USDA State Director
Trina George, Clarksdale, Mississippi

August 11, DOT Administrator Peter Appel, Park City, Utah

August 11, EPA Regional Administrator Karl Brooks, St. Joseph, Missouri

August 11, HHS Regional Director Marguerite Salazar, Denver, Colorado

August 11, HHS Regional Director Herb Schultz, Fresno, California

August 12, ARC Co-Chair Earl Gohl, Sylva, North Carolina

August 12, USDA Deputy Under Secretary Karis Gutter, Helena, Arkansas

August 12, USDA Under Secretary Cathy Woteki, Wamego, Kansas

August 12, SBA Regional Administrator Jorge Silva-Puras, DOT
Administrator Karen Rae, USDA State Directors James Barber and Jill
Harvey, Troy, New York

August 12, DOT Administrator, David Strickland, Waxahatchie, Texas

August 12, HHS Regional Director Joanne Grossi, Huntington, West
Virginia

August 12, HHS Regional Director Herb Schultz, Petaluma, California

August 15, President Obama, Cannon Falls, Minnesota

August 15, President Obama, Decorah, Iowa

August 15, USDA Deputy Under Secretary Ann Wright and USDA Senior
Advisor Brandon Willis, Brainerd, Minnesota

August 15, USDA Administrator Judy Canales, Covington, Louisiana

August 15, USDA Deputy Under Secretary Janey Thornton, Frankfort,
Kentucky

August 16, President Obama, Peosta, Iowa

August 16, USDA Under Secretary Ed Avalos, Dothan, Alabama

August 16, USDA Administrator Judy Canales, Marianna, Florida

August 16, USDA Administrator Audrey Rowe, Newton, Georgia

August 16, SBA Regional Administrator Dan Hannaher and USDA State
Director Matt Jones, Kalispell, Montana

August 16, HHS Regional Director Susan Johnson, Squaxin, Washington

August 16, USDA Faith Based Director Max Finberg, Dubuque, Iowa

August 17, President Obama, Atkinson, Illinois

August 17, President Obama, Alpha, Illinois

August 17, ARC Co-Chair Earl Gohl, Florence, Alabama

August 17, VA Secretary Eric Shinseki, Las Vegas, Nevada

August 17, EPA Regional Administrator Karl Brooks, Des Moines, Iowa

August 17, EPA Regional Administrator Shawn Garvin and HUD Regional
Administrator Jane Vincent, Lincoln, Delaware

August 17, HHS Regional Director Joanne Grossi, Charleston, West
Virginia

August 18, ARC Co-Chair Earl Gohl, Walton, New York

August 18, HHS Regional Director Marjorie Petty, Albuquerque, New
Mexico

August 18, HHS Regional Director Marjorie Petty, Los Luna, New Mexico

August 18, HHS Regional Director Susan Johnson, Bethel, Alaska

August 18, USDA Under Secretary Dallas Tonsager, Howard, South Dakota

August 18, DRA Co-Chairman Chris Masingill, Selma, Alabama

August 18, USDA Administrator Judy Canales, Sedalia, Missouri

August 19, ARC Co-Chair Earl Gohl, Cortland, New York

August 19, ED Director Karen Cator, Mooresville, North Carolina

August 19, HHS Regional Director Marjorie Petty, Espanola, New Mexico

August 19, HHS Regional Director Marjorie Petty, Moriaty, New Mexico

August 19, DOI Assistant Secretary Marcilynn Burke, Fairbanks, Alaska

August 19, USDA Secretary Tom Vilsack, Des Moines, Iowa

August 19, DOC Under Secretary Jane Lubchenco, Morro Bay, California

August 19, EPA Regional Administrator Judith Enck, Sanarac Lake, New
York

August 19, GSA Regional Administrator Sue Damour, Rapid City, South
Dakota

August 19, DOT Secretary Ray LaHood, Springfield, Illinois

August 19, VA Secretary Eric Shinseki, Omaha, Nebraska

August 19, EPA Regional Administrator Jim Martin, Douglas, Wyoming

August 20, DOC Under Secretary Jane Lubchenco, Newport, Oregon

August 21, USDA Secretary Tom Vilsack, Brooklyn, Michigan

August 21, USDA Under Secretary Harris Sherman, Sitka, Alaska

August 22, USDA Secretary Tom Vilsack, Lansing, Michigan

August 22, USDA Secretary Tom Vilsack, Battle Creek, Michigan

August 22, USDA Secretary Tom Vilsack, Sparta, Michigan

August 22, DOI Assistant Secretary Gail Adams, Flat Rock, North
Carolina

August 22, HUD Secretary Shaun Donovan, Albuquerque, New Mexico

August 22, USDA Senior Advisor Janie Hipp, Oklahoma City, Oklahoma

August 22, DOI BLM Director Bob Abbey, Elko, Nevada

August 23, DOI Assistant Secretary Anne Castle and USDA State Director
Alan Stephens, Maricopa, Arizona

August 23, DOC Under Secretary Jane Lubchenco, Homer, Alaska

August 23, DOT Administrator David Strickland, Aiken, South Carolina

August 23, USDA Under Secretary Harris Sherman, Ketchikan, Alaska

August 23, EPA Regional Administrator Gwen Fleming, Pasco County,
Florida

August 23, SBA Regional Administrator John Shoraka, Lewisburg, West
Virginia

August 23, USDA Under Secretary Dallas Tonsager and SBA Regional
Administrator Patricia Brown-Dixon, Grinnell, Iowa

August 23, USDA State Director Bill Menning, West Union, Iowa

August 23, DRA Co-Chairman Chris Masingill and USDA Deputy Under
Secretary Doug O'Brien, Bastrop, Louisiana

August 23, USDA Under Secretary Cathy Woteki, Greenville, South
Carolina

August 23, SBA Regional Administrator Jeanne Hulit and USDA State
Director Donovan Todd, Orono, Maine

August 23, SBA Regional Administrator Dan Hannaher, Windsor, Colorado

August 23, GSA Regional Administrator Shyam Reddy, SBA Regional
Administrator Cassius Butts and USDA State Directors Vernita Dore
and Laurie Lawson, Columbia, South Carolina

August 24, GSA Regional Administrator Martha Johnson, Montpelier,
Vermont

August 24, USDA Administrator Jonathan Adelstein, Fairbanks, Alaska

August 24, SBA Regional Administrator Jeanne Hulit, Exeter, New
Hampshire

August 24, DRA Co-Chairman Chris Masingill, USDA Deputy Under Secretary
Doug O'Brien, DOC Assistant Secretary John Fernandez, Pine Bluff,
Arkansas

August 24, SBA Regional Administrator Elizabeth Echols, Fernley, Nevada

August 24, HHS Regional Director Joanne Grossi, Harrisburg,
Pennsylvania

August 25, HUD Chief of Staff Laurel Blatchford, Berkeley Springs, West
Virginia

August 25, ARC Co-Chair Earl Gohl, Holly Springs, Mississippi

August 25, EPA Regional Administrator Al Armendariz, Falcon Heights,
Minnesota

August 25, DOC Under Secretary Jane Lubchenco, Barrow, Alaska

August 25, DOC Under Secretary Jane Lubchenco, Wainwright, Alaska

August 26, HHS Regional Director Marguerite Salazar, Rifle, Colorado

August 27, HHS Regional Director Marguerite Salazar, Grand Junction,
Colorado

August 29, HHS Regional Director Anton Gunn, Marrianna, Florida

August 29, HHS Acting Regional Director James Galloway, Lawrence,
Michigan

August 29, SBA Regional Administrator Jorge Silva-Puras, Ponce, Puerto
Rico

August 30, SBA Regional Administrator Dan Hannaher, Dickinson, North
Dakota

August 30, DOT Administrator Anne Ferro, Bismarck, North Dakota

August 30, DOT Administrator David Strickland, East Liberty, Ohio

August 30-September 1, EPA Regional Administrator Curt Spaulding and
USDA State Director Virginia Manuel, Maine

August 30, GSA Regional Administrator Shyam Reddy, Oxford, Mississippi

August 31, VA Secretary Eric Shinseki, St. Paul, Minnesota

September 1, VA Secretary Eric Shinseki and USDA State Director John
Whitaker, Indianola, Iowa

September 1, EPA Regional Administrator Shawn Garvin, Timonium,
Maryland

September 1, EPA Regional Administrator Jim Martin, Utah

September 1, USDA Acting Deputy Under Secretary Rebecca Blue, Huron,
South Dakota

September 1, USDA Acting Deputy Under Secretary Rebecca Blue,
Brookings, South Dakota

September 1, HHS Regional Director Marguerite Salazar, Alamosa,
Colorado

September 6, EPA Regional Administrator Dennis McLerran, Yakima,
Washington

September 6, ARC Co-Chair Earl Gohl, Prestonsburg, Kentucky

September 8, EPA Regional Administrator Al Armendariz, Dallas, Texas

September 9, HHS Administrator Mary Wakefield HHS Administrator Judy
Baker and USDA State Director Bill Menner, Atlantic, Iowa

Department References:

ARC--Appalachian Regional GSA--General Services
Commission Administration
CEQ--Council on Environmental HHS--Department of Health and Human
Quality Services
DOC--Department of Commerce HUD--Department of Housing and
Urban Development
DOE--Department of Energy ONDCP--White House Office of
DOI--Department of Interior National Drug Control Policy
DOT--Department of Transportation OSTP--White House Office of Science
DRA--Delta Regional Authority and Technology Policy
ED--Department of Education SBA--Small Business Administration
EPA--Environmental Protection USDA--U.S. Department of
Agency Agriculture
FCC--Federal Communications VA--Veterans Affairs
Commission

Additional Resources:
White House Rural Council
Stay updated on upcoming announcements and work by the
Council

http://www.whitehouse.gov/administration/eop/rural-
council

Sign-up for email updates and continue to provide us with
feedback

http://www.whitehouse.gov/administration/eop/rural-
council/about/email
Rural America and the President's Jobs Plan:
http://www.whitehouse.gov/blog/2011/09/09/rural-america-and-
presidents-jobs-plan
President Obama's Rural Tour:
http://www.whitehouse.gov/administration/eop/rural-council/
rural-tour-2011
______

Submitted Questions
Response from Hon. Jonathan S. Adelstein, Administrator, Rural
Utilities Service, U.S. Department of Agriculture
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. Mr. Adelstein, you highlighted the Community Connect
Grant Program which provides funding to establish broadband service
where none exists. Why are you not focusing on completely un-served
area in ALL of our programs?
Answer. The Community Connect grant program has been highly
successful in bringing broadband to single communities where no
broadband exists. These communities are unserved because private
companies are unable to make a business case to expand service into
these areas.
Our loan programs target such unserved areas, but even with lower
interest rates, applicants generally cannot develop a business case
based on the loan product alone. This is why the Recovery Act Broadband
Initiatives Program (BIP) was so successful--the statute provided RUS
with the authority to fund projects with grants, loans and loan/grant
combinations. Through this flexibility, Rural Development could tailor
a financing package that best serves the needs of the area. This model
is successfully used in other Rural Development areas such as our Water
and Environmental programs. This flexibility allows us to customize a
financing package consistent with the needs and financial resources of
the community.

Question 2. Mr. Adelstein, there are several distinct programs
mentioned today which provide broadband funding. In your view, are
these programs utilized to achieve basically the same goal? What are
the most common elements among the programs? How do they specifically
differ?
Answer. Our telecommunication programs have differing statutory
mandates and goals. For example, Community Connect brings broadband to
a single community that has no broadband service. Our Distance Learning
and Telemedicine (DLT) finances end-user equipment in rural areas that
already have broadband, but need assistance to expand education and
health resources. Our traditional infrastructure loan program
(authorized under Title II of the Rural Electrification Act) and the
broadband program (authorized in the Farm Bill) do have similar goals;
however, they have starkly different statutory requirements. Since the
same staff administers both programs and shares forms, Information
Technology (IT) systems, etc., the Agency has already streamlined
processes to the extent possible.

Question 3. Mr. Adelstein, would you agree that the importance of
broadband is to create coverage for all un-served individuals in the
United States? With the increased budget pressures we are facing, do
you feel it is in good practice to continue to allow RUS to fund
broadband services in areas that are already covered? Do you think it
be more important to invest the tax-payers dollars into areas where
broadband does not exist, as opposed to continuing to allow funding in
places that have already achieved the primary goal of broadband access?
Answer. I believe that rural America deserves the same quality of
broadband service that is deployed in urban America. Broadband creates
jobs today and builds the foundation for future economic development
and job creation.
The term broadband means different things to different people. Some
define broadband to include any community with dial-up Internet
service. Some say a community has broadband where it is available
within the town limits, but not to the anchor institutions and families
outside the community's corporate limits. Our broadband programs are
designed to help communities access the quality of service that meets
21st Century needs of modern businesses, health care providers,
emergency responders, educational institutions and others.
Rural America cannot afford a further deepening of the digital
divides. Businesses and good-paying jobs will not grow in rural America
without true high-speed broadband. Further, recent studies report that
young Americans will leave communities that do not have access to
broadband.
Questions Submitted By Hon. Glenn Thompson, a Representative in
Congress from Pennsylvania
Question 1. Over the history of the REDLG program, how many total
loans and grants have been made?
Answer. Since inception of the program:

494 REDLG loans totaling $235,205,564

491 REDLG grants totaling $139,527,701

Question 2. There are several eligible applicants for REDLG funds.
To what types of organizations have those grants and loans been made,
and what are the relative award totals in each category? What is the
total amount awarded by state?
Answer. Telephone and electric utilities that serve customers in
rural areas and that are organized as not-for-profit cooperatives, for-
profit corporations and public bodies are eligible for Rural Economic
Development Loans and Grants (REDLGs).
Total number and amount of loans and grants by Category:

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Telephone
----------------------------------------------------------------------------------------------------------------
Loans
Grants
Total
----------------------------------------------------------------------------------------------------------------
Number Amount Number Amount Number Amount
----------------------------------------------------------------------------------------------------------------
Cooperatives 50 $22,462,492 40 $9,974,099 90 $32,436,591
Corporations 30 $12,032,806 22 $5,657,000 52 $17,689,806
Other 3 $993,000 1 $300,000 4 $1,293,000
--------------------------------------------------------------------------------------
Subtotal 83 $35,488,298 63 $15,931,099 146 $51,419,397
----------------------------------------------------------------------------------------------------------------
Electric
----------------------------------------------------------------------------------------------------------------
Cooperatives 300 $148,101,635 320 $94,270,299 620 $242,371,934
Corporations 92 $44,078,944 85 $22,856,303 177 $66,935,247
Other 16 $6,836,687 11 $3,020,000 27 $9,856,687
Public Body 3 $700,000 12 $3,450,000 15 $4,150,000
Subtotal 411 $199,717,266 428 $123,596,602 839 $323,313,868
--------------------------------------------------------------------------------------
Total 494 $235,205,564 491 $139,527,701 985 $374,733,265
----------------------------------------------------------------------------------------------------------------

The Total number and amount of loans and grants by State:

------------------------------------------------------------------------
State Number Amount
------------------------------------------------------------------------
Alabama 41 $14,915,400
Arizona 7 $1,894,300
Colorado 6 $2,620,000
Florida 6 $1,801,660
Georgia 26 $13,710,000
Hawaii 3 $900,000
Iowa 193 $61,372,207
Illinois 20 $10,410,000
Indiana 4 $1,590,000
Kansas 104 $40,201,030
Kentucky 35 $15,076,469
Louisiana 3 $1,640,000
Michigan 8 $3,221,203
Minnesota 113 $39,599,568
Missouri 38 $16,916,100
Mississippi 21 $12,371,687
Montana 12 $4,294,805
North Carolina 36 $12,060,000
North Dakota 36 $12,341,850
Nebraska 20 $6,638,000
New Hampshire 1 $300,000
New Mexico 10 $3,950,000
New York 1 $281,666
Ohio 5 $1,316,600
Oklahoma 24 $6,745,537
Oregon 5 $2,000,000
Pennsylvania 6 $3,020,000
South Carolina 25 $14,732,360
South Dakota 64 $20,946,000
Tennessee 57 $23,356,481
Texas 4 $1,245,000
Virginia 7 $9,860,000
Vermont 1 $600,000
Washington 3 $604,000
Wisconsin 36 $11,101,342
Wyoming 4 $1,100,000
-----------------------------------------------
Total................. 985 $374,733,265
------------------------------------------------------------------------

Question Submitted By Hon. Randy Hultgren, a Representative in Congress
from Illinois
Question. I understand that the RUS will not lend its money to
overbuild an area where there is an existing RUS borrower because doing
so would put the RUS' investment at risk. Doesn't that same logic apply
to the use of RUS money to overbuild an existing broadband provider
financed by a local bank? Should the government really be in the
business of putting private investment at risk?
Answer. Our goal at Rural Development is to finance broadband
deployments that create jobs today and lay the foundation for economic
development and job creation in the future. The last farm bill, enacted
in 2008, required that 25 percent of the proposed service territory be
unserved and the remaining 75 percent be served by not more than three
competitors. The farm bill recognized that competition is healthy and
often necessary to extend broadband to the most unserved areas in rural
America. Our regulations implementing the 2008 Farm Bill codified these
statutory requirements. Further, the new regulations allow for RUS to
help an existing borrower expand services if the incumbent is not
providing broadband at enough capacity or speed to meet the needs of
business.
Questions Submitted By Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. You mentioned the new authorization that was provided
in the 2008 Farm Bill to lend for energy efficiency programs as well as
renewable energy. Can you tell us what activities your agency is
lending for under these authorities?
Answer. Our current obligations (under existing statute and
regulation) for renewable energy in fiscal year 2011 total $294 million
in new loans for electric generation and distribution and $7.28 million
for energy efficiency improvements through RUS programs. This is in
addition to the significant funding support for energy efficiency and
renewable energy through Rural Development's suite of Business and
Cooperative Programs.
Though minor compared to RUS's total loan portfolio, RUS is working
to support energy efficiency projects authorized under the 2008 Farm
Bill. RUS has drafted a regulation proposing a comprehensive retail
energy efficiency initiative. This regulation is in the final stages of
internal clearance. The Agency anticipates implementation of this
regulation in Fiscal Year 2012.
Since the early 1980's the Rural Utilities Service has allowed
borrowers (rural electric cooperatives) to defer principal payments for
up to 84 months and use the funds to assist consumers in implementation
of energy efficiency improvements to their homes. As of the end of
August, 2011, 365 rural electric borrowers have used $206 million in
deferred principal to assist their consumers.
Last year in support the White House initiative on Recovery through
Retrofit, USDA Rural Development created the Rural Economic Development
Energy Efficiency Effort which combines the efforts of the Rural
Utilities Service, Rural Business-Cooperative Service and the Rural
Housing Service, working in concert with the electric cooperatives and
using existing authorities and funding. Under this effort Rural
Development makes a Rural Economic Development Loan to an electric
utility, typically a cooperative, which in turn passes the funds to a
for profit or nonprofit entity to use as working capital to assist
consumers in making energy efficiency improvements.

Question 2. Many of the entities that you lend to are dealing with
regulations and settlements under various Federal laws, including the
Clean Air and Clean Water Acts. Have you seen an impact on systems that
serve rural residents, and their ability to deal with these regulatory
requirements? Does it impact your ability to lend to them because of
repayment concerns?
Answer. When rural communities incur costs associated with
compliance with new and existing regulatory standards, the level of
financial impact depends on a number of factors.
For the Water and Environmental Programs (WEP), these factors
include the type and size of existing treatment facilities and
infrastructure, the quality of the current water source and the
regulatory standard itself. As most rural systems are operated on a
not-for-profit basis by municipalities and water associations, many
rural communities do not have the additional financial resources needed
to fully address the systems' needs, including needs related to
compliance.
As a result, changes in regulatory standards can be one variable in
the demand for RD funding. We do our best to work with applicants to
find a loan/grant package that works for the community, makes the best
use of RD and leveraged funds, and keeps payments affordable while
addressing environmental and regulatory requirements.
RD is also working with our colleagues in regulatory agencies to
improve their understanding of the impact of new requirements on rural
systems.

Question 3. Do you have any interactions with FERC and the various
ISOs that regulate the movement of electricity on to the grid? Do you
feel that these entities could be doing more to ensure that distributed
energy production such as landowner controlled wind projects have
access to transmission lines as opposed to the large, often out of
state, utilities?
Answer. We have had discussions with FERC and serve on committees
examining these issues. Constantly balancing supply and demand within a
regional transmission system and attempting to integrate small,
intermittent loads such as wind resources is challenging, but all
parties are encouraged that it can be done as the capacity of the grid
is improved and planning models become more sophisticated.
Response from Judith A. Canales, Administrator, Rural Business-
Cooperative Service, U.S. Department of Agriculture

Question 1. Ms. Canales, RBS administers Rural Cooperative
Development Grants which are used to provide funds for value-added
agricultural market development projects (VAPG), small and socially-
disadvantaged producer grants, and other subprograms and initiatives.
For those grants which are primarily given to start or expand a
business, are there other lending or re-lending programs which might be
suitable to assist farmers? Do you think there may be some
administrative savings in combining similar programs to reduce overhead
and confusion among applicants?
Answer. There are three grant programs funded under the Rural
Cooperative Development Grant umbrella:

Value-Added Producer Grant (VAPG),

Rural Cooperative Development Grant (RCDG), and

Small, Socially-Disadvantaged Producer Grant (SSDPG).

VAPG is unique within USDA in that it awards grants to independent
producers of agricultural commodities for planning activities, such as
feasibility studies and business plans; and for working capital
expenses, such as labor, inventory, and advertising. The planning
grants often provide incentive for producers to find innovative ways to
market value-added agricultural products and the working capital grants
provide much-needed cash during the first few years of operation of a
venture, helping to ensure the venture's success. This program has been
instrumental in launching numerous new, and often innovative, rural
businesses and assisting others with expansion. Since its inception,
VAPG has funded 1,440 projects throughout rural America. In 2010, VAPG
funded 196 projects across 45 states and Puerto Rico. Over 60 percent
of awards made in 2010 were made beginning or socially-disadvantaged
farmers or ranchers and small to medium-sized family farms. Awards for
project planning activities--feasibility studies, business and
marketing plans--were made to 72 applicants. Funding for working
capital--operating costs associated with processing and marketing
value-added products--was awarded to 124 applicants. Projects included
local food initiatives linking farmers directly to consumers and local
institutional buyers such as schools and hospitals; innovative
technologies for on-farm generation of energy and by-products, as well
as development of niche markets for specialty products which bring a
larger share of the consumer dollar back to agricultural producers.
RCDG and SSDPG are similar in that both focus on providing funding
for technical assistance and training for rural producers and business,
rather than direct financial assistance. Specifically, RCDG funds
centers of cooperative development, which provide assistance related to
the start-up, expansion and operational improvement of rural
businesses, especially cooperatives and other mutually-owned
businesses. The SSDPG program funds technical assistance and training
specifically for socially-disadvantaged agricultural producers via
existing cooperatives or associations of cooperatives.
We do see complementary relationships with some of our lending and
re-lending programs. Programs like VAPG, RCDG, and SSDPG emphasize
financing and technical support during the initial stages of new
business ventures begun by farmers (or other applicants). However,
grantees cannot use awards made under the Rural Cooperative Grant
umbrella for purchasing or improving buildings, facilities or
equipment. Thus, they may need additional project capital as the
business evolves or expands. Other RBS programs can provide capital for
facilities and equipment to the applicant's new business venture. We
strongly encourage all applicants to explore all potential funding
opportunities available throughout Rural Development.
RBS staff believes our continuing efforts to streamline programs
provide the best opportunity to achieve administrative savings and
deliver support to our stakeholders. If similar programs were combined,
there may be an opportunity to achieve some incremental savings in
overhead and administration for the combined programs. In addition, a
combined program could reduce potential confusion that may exist with
separate programs.

Question 2. Ms. Canales, the Rural Micro-entrepreneur Assistance
Program (RMAP) provides funds to organizations who then relend those
funds to small businesses. Your supplemental testimony indicated that
this and two other programs could be combined into existing authorities
to gain administrative efficiencies. Could you elaborate on where you
think these programs could be combined? Could you provide more details
on what savings could be expected from such a move?
Answer. Combining programs into one comprehensive program and
regulation will benefit applicants and grantees who utilize more than
one of the programs reducing their administrative cost as a result of
time savings because they will not need to learn and understand
different program regulations, program policies and reporting
procedures
The RMAP, Intermediary Relending Program (IRP), and revolving loan
fund component of the Rural Business Enterprise Grant (RBEG) program
could be combined into a comprehensive Intermediary program, while
retaining the intended purposes of each through funds administration.
By implementing one comprehensive revolving loan fund program
rather than three separate ones, we would expect to realize incremental
administrative efficiencies and savings. For example, training staff on
one program rather than three marginally reduces training costs.
Incremental savings may also be realized through the maintaining and
updating of one set of regulations and utilization of fewer forms. Once
a comprehensive Intermediary program is in place, such savings are
expected to be relatively small and would be realized over a period of
time.

Question 3. Ms. Canales, the Rural Micro-entrepreneur Assistance
Program (RMAP) provides training for small businesses. Could you give
the Committee an idea of how many of the training grants have been
utilized by community colleges and universities?
Answer. Ten training grants were awarded in FY 2010 of which two
were made to universities: Ohio State University and Saint Francis
University, PA. An additional loan and grant was made to Lane Community
College, OR, to provide microloans and technical assistance to
borrowers. The FY 2011 awards are not finalized as of 09-20-2011.

Question 4. Ms. Canales, your supplemental testimony indicated that
more than $13 million, or 30 percent, for the Rural Micro-entrepreneur
Assistance Program (RMAP) was not utilized in FY10. Do you have an
explanation for why so little of the program was utilized in FY10? What
is your estimate for participation in the program in FY11?
Answer. RMAP is a new program. In order to get this program
implemented, we had to (1) address administrative requirements, (2)
address numerous and detailed public comments, including stakeholders,
on the proposed rule, and (3) train our State office personnel and
field staff. As soon as these requirements could be addressed, which
took a substantial amount of time, the program was implemented in June
2010 and stakeholders are now fully engaged in the program.
Funding available in FY 2011 consisted of FY 2010 carryover and FY
2011 funding, together totaling $7.5 million in budget authority for a
program level of $20.2 million. We are projecting that $13.5 million in
loans and $3.6 million in grants will be awarded in FY 2011.
Joint Response from Mr. Adelstein, Ms. Canales, and Ms. Trevino
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. Many counties and development organizations have
highlighted regional coordination as a way to more effectively utilize
Federal funds. Could you please describe what your agency is already
doing to coordinate regional development efforts? What is the role of
other agencies outside of USDA in your regional efforts?
Answer. In order to provide better investments and coordination and
alignment with other agencies, Rural Development is providing support
to local communities who come together on a multi-county regional basis
to develop a thoughtful regional economic development strategy. We are
working to position our programs to support specific eligible project
applications that are consistent with and supportive of the region's
comprehensive strategy. This will allow us to direct our limited
resources toward projects that will support the region's top priorities
as delineated in its regional economic development strategy. We also
encourage other Federal agencies to follow our lead in making
investments in specific projects that will support each region's
economic development strategy. To support rural regions, we are
exploring how to better coordinate Rural Development's programs so that
they can better support regional strategies. For example, we have
amended NOFA's (including RBOG and RCDI) to make clear Rural
Development's interest in innovative regional approaches. We are
considering how to effectively review various grant and loan
applications so that they can be viewed in light of regional
strategies.
As part of an Administration-wide effort, USDA is a supporting
agency to the Jobs and Innovation Accelerator Challenge, a multi-agency
effort to support regional innovation clusters. While USDA is not one
of the funding agencies, we have worked closely with our rural
constituencies to ensure they knew about the $34 million in funds
available from the Departments of Commerce and Labor, as well as the
Small Business Administration. Several of the 20 funded regions include
substantial rural components (e.g., a regional cluster in northern
Maine is focused on renewable energy and a cluster in the Finger Lakes
region of upstate New York concentrates on food processing); USDA will
support this work in some of these regions. In addition, USDA is
partnering with the Economic Development Administration in developing a
second round of the Jobs and Innovation Accelerator Challenge grants;
this second round will target predominantly rural regions, enabling
them to take viable economic clusters and make them stronger.
USDA is also a supporting partner on another key Administration-
wide initiative: the Partnership for Sustainable Communities, which is
a collaborative effort among the Departments of Transportation and
Housing and Urban Development, as well as the Environmental Protection
Agency. For instance, under this initiative, HUD has funded many
regions with planning grants; some of these regions include rural
areas; USDA may be in a good position to fund some projects that will
be needed for successful plan implementation in such regions.
In one more example of the work USDA is doing on regional
strategies, Rural Development and the National Institute of Food and
Agriculture are working jointly on a pilot initiative called the
Stronger Economies Together (SET) program. USDA RD is working
collaboratively with the Extension Service and the four Rural Regional
Development Centers to design and deliver SET to 30+ regions across the
country. Under SET, the participating multi-county regions engage in a
several-month training program where each region explores its assets
and comparative economic advantages prior to preparing a regional
economic development strategy. A critical component of SET is the
provision of expert economic analysis to describe the region's current
and emerging economic clusters; this targeted information can be used
by the region to help craft a practical economic development plan.
USDA believes that the approach described here will help establish
a locally-driven economic development framework that can enable more
effective Federal investments, not only by RD, but by all Federal
agencies.

Question 2. Technical assistance is almost a necessity for
applicants in many programs throughout Rural Development. In your view,
could this be due to the complexity of the application process for
grants and loans? Does your agency see a need to reorganize or rethink
the process as a whole? Do you think consolidating and streamlining
such application processes could address some of the overlap of
programs within Rural Development?
Answer. One of RD's major focus is to minimize burdens on
individuals, businesses, and communities attempting to access programs
that promote economic growth, create jobs, and protect the health and
safety of the American people.
We are developing creative ways to conduct business and make
changes in structure, program delivery, staffing, or responsibilities
to improve our efficiency or quality of service.
Our application process may be challenging to applicants in rural
areas, which often lack the resources commonly available in urban
areas. Providing technical assistance to rural applicants has helped
protect the taxpayers' investment while ensuring that rural utility
systems are designed to provide affordable reliable service for rural
residents and businesses.
RD is interested in more flexible authorities that would provide us
the ability to serve rural communities with the same types of
assistance, but with much fewer than the forty programs we now have. We
are considering merging some of our programs to reach better
administrative efficiencies and reduce confusion for our customers.
The following are some examples of our current efforts to
streamline, simplify and improve program efficiencies, reduce
administrative and operating costs, and reduce barriers for entry and
access to USDA programs:

Regulatory Program Review:

Rural Development recently began a new retrospective review of
existing regulations to determine whether any such regulations should
be modified, streamlined, expanded, or repealed, as called for by
President Obama in Executive Order 13563. The purpose of this review is
to make the mission area's regulatory program more effective and
efficient in order to enhance program administration and delivery.
Rural Development analyzes and evaluates its existing rules based
on review and input from internal and external customers, including
National and State Office staff, lenders, Office of Inspector General
(OIG), and other stakeholders and partners. Rural Development's
existing oversight activities include conducting thorough reviews of
program administration and delivery, and coordinating internal and
external audits at both the National and State Offices. Through these
efforts the mission area collects and analyzes data on overall program
performance/effectiveness and regulatory compliance.
Both the internal and external reviews provide information that the
mission area uses when determining the regulatory changes that are
necessary to minimize risk and enhance program utilization.

Stakeholder Outreach:

From July 2011 through September 2011, Rural Development hosted
webinar based listening sessions and stakeholder meetings in rural
areas.
On July 7th, 2011, USEC hosted a webinar with 180 national
stakeholders to receive public input on our mission area priorities for
the upcoming fiscal year. Under Secretary Tonsager provided the opening
presentation and the Administrators from Rural Business Services, Rural
Housing Services, and Rural Utilities Services discussed their agency's
role in achieving the objectives of President Obama's Executive Order.
On July 21st, 2011, USEC hosted a webinar with 82 tribes and tribal
leaders that included introduction and explanation of our regulatory
priorities and opening remarks from the Under Secretary and all three
administrators. There was a productive 90 minute discussion that took
place that focused primarily on the need for more technical assistance
and infrastructure challenges unique to tribes.
On July 14th, 2011, Rural Development launched a website to inform
stakeholders of the process and to give them the opportunity to submit
comments. A separate e-mail box was created (rdreform@osec.usda.gov) to
receive all public comments.
State Directors hosted webinars and stakeholder meetings across the
country. Rural Development has received over 100 written comments from
a broad range of stakeholders, including individuals, regulated
entities, and trade groups.
Rural Development will review and reference the public comments
received in the preamble of our regulations.

Diversity Hiring and Recruiting:

In response to the USDA Jackson Lewis study, RD is working to
improve its hiring diversity. USDA awarded a competitive contract to
the Jackson Lewis LLP Corporate Diversity Counseling Group to conduct
an Independent Assessment of the USDA Delivery of Technical and
Financial Assistance to all Americans. In order to respond to the
ninety-four recommendations that pertain to RD, we are actively engaged
with Department and other agencies to take action where appropriate.

Comprehensive Loan Program (CLP):

Rural Development continues to transition to a new computing
environment that provides greater flexibility for management and
business development. The CLP retires legacy accounting systems and
replaces them with upgraded accounting systems that can be utilized to
support business needs of today. Replacing these systems makes it
easier to maintain, modify and meet new requirements, improves the use
for internal and external customers, improves the integrity of the
entire loan portfolio, and improves management reporting and analyzing
capabilities. No new funding has been requested for this transition and
all savings realized from reducing infrastructure costs are being used
to continue the transition. The CLP will enable RD to implement new
statutory or regulatory provisions in a more timely and effective
manner

Question 3. Due to the continuing budget constraints faced by
Federal, state, and local governments and the consensus to reform and
consolidate many programs, does your agency have the necessary
authorities to streamline some of these programs. How is your agency
working with stakeholders to address the needs of small rural
communities while addressing budget realities?
Answer. At USDA, we are focusing on actions to better coordinate
and streamline Federal program efforts in rural America, and to better
leverage Federal investments. The collaboration will result in better
programs and services in rural communities and maximize the benefits of
those programs.
As stated earlier, RD is conducting a regulatory review of its
regulations to determine which application procedures for Business
Programs, Community Facilities Programs, Energy Programs, and Water and
Environmental Programs can be streamlined and requirements
synchronized. RD is approaching this exercise from the perspective of
the people it serves, specifically by communicating with stakeholders
on two common areas of regulation that would provide the basis of
reform. This process will look to have similar requirements for
programs that are focused on a similar applicant base, such as
nonprofit, Native American Tribes, and public bodies such as Community
Facilities and Water and Environmental programs will make an effort to
have similar requirements.
To the extent practicable, each reform effort will consist of a
common application and uniform documentation requirements making it
easier for constituency groups to apply for multiple programs. In
addition, there will be associated regulations for each program that
will contain information specific to each program.
RD's State and national offices hosted a number of webinars with
stakeholders from across the nation to discuss existing regulations and
processes, and seek input on potential changes that would make them
more customer-friendly and effective.
We will continue to provide the best service possible to our
stakeholders by seeking implementable efficiencies to meet this
commitment and to ensure that awards are made to the highest priority
projects for which we can obtain the best results for the funds
expended.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--Rural
Utilities Service
1. Program Name
Water and Environmental Programs (WEP).
2. Subprograms/Department Initiatives
Rural Development's (RD) Rural Utilities Service (RUS) provides
loans, grants, and loan guarantees for drinking water, sanitary sewer,
solid waste, and storm drainage facilities in rural areas and cities
and towns of 10,000 or less. Public bodies, nonprofit organizations,
and federally-recognized Indian tribes may qualify for assistance. WEP
also makes grants to nonprofit organizations to provide technical
assistance and training to assist rural communities with their water,
wastewater, and solid waste problems. WEP subprograms include:

------------------------------------------------------------------------
2008 Farm
Subprograms Bill CONACT Section U.S. Code 7
Section U.S.C.
------------------------------------------------------------------------
Water and Waste Loan 6001 306 1926
and Grant Program
(Direct)
Special Evaluation 6002 306(a)(2) (a)(2)(C)
Assistance for Rural
Communities and
Households Program
(SEARCH)
Rural Water and 6006 306(a)(22) 1926(a)(22)
Wastewater Circuit
Rider Program
Water and Waste 306(a)(24) 1926
Disposal Programs
Guaranteed Loans
Emergency Community 6008 306A 1926(a)
Water Assistance
Grants
Water Systems for 6009 306D 1926(d)
Rural and Native
Villages in Alaska
Household Water Well 6010 306E 1926(e)
System (HWWS) Grant
Program
Interest Rates for 6011 307(a)(3) 1927(a)(3)
Water and Waste
Disposal Facilities
Loans (Direct)
------------------------------------------------------------------------

WEP initiatives include:

------------------------------------------------------------------------
2008 Farm
Subprograms Bill CONACT Section U.S. Code 7
Section U.S.C.
------------------------------------------------------------------------
Water, Waste Disposal, 6001 306(a)(2)(B)(vii 1926(a)(2)(B)(vii
and Wastewater ) )
Facility Grants
(Revolving Funds for
Financing Water and
Wastewater Projects)
Technical Assistance 6001 306(a)(14)(A) 1926(a)(14)
and Training Grant
(TAT) Program
Water and Waste 6001 306C 1926(c)
Facility Loans and
Grants to Alleviate
Health Risks (applied
to Colonias and
Native American
tribes)
Solid Waste Management 6001 310B(b) 1932(b)
Grant (SWM) Program
------------------------------------------------------------------------
Note: Initiatives are funded through set-asides in the annual
appropriation for the Water and Waste Loan and Grant Program (Direct).

3. Brief History
The origins of the Water and Environmental Programs date to the
1937 Resettlement Administration. These provisions were later included
in section 306 of the CONACT (Farm Bill), 7 U.S.C. 1926.
4. Purpose/Goals
The purpose and goals of WEP's subprograms include:

Water and Waste Disposal Direct Loans and Grants Program

WEP provides loans, grants and loan guarantees for drinking water,
sanitary sewer, solid waste and storm drainage facilities in rural
areas and cities and towns with populations of 10,000 or less.

Water, Waste Disposal, and Wastewater Facility Grants
(Revolving Funds for Financing Water and Wastewater Projects):
The WEP Revolving Fund Program (RFP) provides grants to private
nonprofit organizations to establish a lending program for
entities eligible under the Water and Waste Disposal Loans
(direct and guaranteed). As grant recipients, the nonprofit
organizations set up a revolving loan fund to provide loans to
finance predevelopment costs of water or wastewater projects,
or short-term small capital projects not part of the regular
operation and maintenance of current water and wastewater
systems.

Technical Assistance and Training Grant (TAT) Program: The
TAT Program provides grants to nonprofit organizations to
provide technical assistance and/or training to associations on
a wide range of issues relating to delivery of water and waste
disposal service.

Section 306C Water and Waste Facility Loans and Grants to
Alleviate Health Risks: Section 306C loans and grants provide
water and waste disposal facilities and services to low income
rural communities whose residents face significant health
risks. These funds have been set aside for eligible projects
that benefit members of Federally Recognized Native American
Tribes and the Colonias area.

Solid Waste Management Grant (SWM) Program: SWM grants are
available to both public and private nonprofit organizations to
help communities identify threats to water resources and reduce
the solid waste stream. Communities receive assistance from
eligible organizations to reduce or eliminate pollution of
water resources, improve planning and management of solid waste
disposal facilities in rural areas, and enhance operator skills
in operations and maintenance.

SEARCH Grants Program

To provide grants to public bodies, nonprofits, and federally-
recognized Indian tribes for feasibility studies, design, technical and
direct or guaranteed water and waste disposal loan application
assistance. Grants are limited to financially-distressed communities in
rural areas with populations of 2,500 or fewer inhabitants for water
and waste disposal projects. Grants are limited to $30,000 per project.

Circuit Rider--Technical Assistance for Rural Water Systems Program

Providing technical assistance for the operations of rural water
systems, RUS contracts with the National Rural Water Association (NRWA)
to assist rural water systems with day-to-day operational, financial,
and management support. The assistance may be requested by officials of
rural water systems or RUS. The program complements RUS's loan
supervision responsibilities. The NRWA's State Affiliates do the work
in their states.

Water and Waste Disposal Programs Guaranteed Loans

The Water and Waste Disposal Programs Guaranteed Loans provide a
loan guarantee for the construction or improvement of water and waste
disposal projects serving the financially needy communities in rural
areas. This purpose is achieved through bolstering the existing private
credit structure through the guarantee of quality loans which will
provide lasting benefits.

Emergency Community Water Assistance Grants Program

Assists rural communities that have experienced a significant
decline in quantity or quality of drinking water due to an emergency or
when such decline is considered imminent, to obtain or maintain
adequate quantities of water that meets the standards set by the Safe
Drinking Water Act. This emergency includes, for example, drought,
earthquake, flood, tornado, hurricane, disease outbreak or chemical
spill, leakage, or seepage.

Section 306E Grants for the Construction, Refurbishment, and
Servicing of Low or Moderate Income Individual Household Water Well
Systems

Provides funds to nonprofit organizations to assist them in
establishing loan programs from which individuals may borrow money for
household water well systems.
5. Success in Meeting Programmatic Purpose/Goals
In Fiscal Year (FY) 2010, RD invested $1.67 billion in direct and
guaranteed loans and grants to help rural communities develop water and
waste disposal facilities.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Water and Environmental 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of program borrowers' subscribers Target $557,000 $1,380,000 $1,418,000 $1,457,000 $1,394,000
receiving new improved service from Agency's Actual $1,332,063 $4,361,872 $3,388,089 $3,961,166 $4,292,318
funded water facilities.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Water and Environmental ARRA 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of program borrowers' subscribers Target (1) (1) $1,900,000 (1)
receiving new improved service from Agency's
funded water facilities.
--------------------------------
Actual (1) (1) 769,559 949,646
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 ARRA funding was only available for FY 2009 and 2010.

In addition to the regular appropriated funding, RD invested $300
million in funding provided by the 2008 Farm Bill and a total of $1.8
billion in American Recovery and Reinvestment Act (ARRA) funding for
water and waste disposal infrastructure and technical assistance across
Rural America in FY 2009 and FY 2010.
The RUS WEP's:

Brings modern, reliable and affordable water and waste
services to rural America.

5.7 million rural customers will benefit from RUS FY
2010 regular and ARRA investments in water and waste
disposal infrastructure.

As a result, rural communities are able to provide
clean, reliable services at reasonable costs, more
efficiently manage how and how much water they use, and
reduce their impact on our nation's waterways through
improved compliance with regulatory requirements and
reduced discharge of waste byproducts.

Reduces health risks to rural residents and protects our
nation's waterways.

FY 2010 funded projects will result in a nearly 28
percent reduction in rural resident's exposure to water-
borne illnesses.

Provides access to a public water system to residents
who obtain their water from contaminated or unreliable
drinking water wells, or untreated surface sources improves
public health.

Replacing failing individual septic tanks reduces
harmful discharges into lakes, rivers, and other waterways.

Facilitates sustainable communities.

With reliable water and waste infrastructure, the
establishment of core community services is made possible,
supporting existing residents and attracting new ones. USDA
helps to ensure the safety, health, and education of rural
residents by financing the construction of new and improved
hospitals, schools, fire stations, and other essential
community facilities--all of which rely on water and waste
services to operate.

The presence of reliable water and waste infrastructure
facilitates business development in rural America, helps
create jobs, strengthen our nation's economy, and our
ability to compete in the global marketplace.

Assists rural water and waste systems with technical issues
and emergency recovery.

In FY 2010, circuit riders made more than 111,000
technical assistance calls to rural systems.

RUS contract circuit riders provided critical support
and emergency equipment to rural operators in the aftermath
of the tornados across the south and the flooding along the
Missouri and Mississippi Rivers in 2011.

6. Annual Budget Authority (FY 2007-FY 2011)
FY 2007 through FY 2011 Budget Authority (Enacted)
(Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
Program 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Water and Environmental $494,043 $538,767 $538,768 $551,230 $515,968
Water and Environmental ARRA (1) (1) $734,881 $655,675 (1)
----------------------------------------------------------------------------------------------------------------
1 ARRA funding was only available for FY 2009 and 2010.

7. Annual Outlays (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
Account Name 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual
----------------------------------------------------------------------------------------------------------------
Water and Waste Disposal Program 1 2 $650,383 $604,033 $746,706 $980,000 $1,086,000
----------------------------------------------------------------------------------------------------------------
1 Outlays are not a one to one correlation with obligations. Programs disburse over numerous years. Undisbursed
balances are carried forward for future year outlays.
2 Outlayed through RCAP.

8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
2007 Amount 2008 Amount 2009 Amount 2010 Amount 2011 Amount
Program ($000) ($000) ($000) ($000) ($000)
----------------------------------------------------------------------------------------------------------------
Direct Water & Waste Disposal Loans, Guaranteed Water & Waste Disposal Loans, Water & Disposal Grants,
Individually-Owned Water Well System Grants, Grants for Water and Wastewater Revolving Funds, Solid Waste
Management Grants, and Emergency & Imminent Community Water Asst. Grants.
----------------------------------------------------------------------------------------------------------------
Program Items:
Program Level $1,579,948 $1,822,949 $886,873 $1,660,647 $1,447,422
Budget Authority $564,174 $666,367 $411,792 $770,362 $551,230
S&E $59,323 $57,610 $21,716 $65,322 $65,322
----------------------------------------------------------------
Total Costs $549,721 $723,977 $433,508 $835,684 $616,552
FTEs 542 514 192 551 551
----------------------------------------------------------------------------------------------------------------
Direct Water and Waste Disposal Loan 2008 Disasters Emer. Supp., Water and Waste Disp. Grants May 6, 2007 Emer.
Supp., Water and Waste Disp. Grants 2008 Disasters Emergency Supplemental, Water and Waste Disp. Grants 2003/
2004 Hurricanes Emer. Supp., Water and Waste Disp. Grants 2005 Hurricanes Emer. Suppl., Emer. And Imminent Comm.
Waster Asst. Grants--Emer. Supp., Emer. and Imminent Comm. Water Asst. Grants--2005 Hurricanes.
----------------------------------------------------------------------------------------------------------------
Program Items:
Program Level $13,010 $0 $34,203 $10,406 $0
Budget Authority $13,010 $0 $19,068 $7,054 $0
S&E $0 $0 $0 $0 $0
----------------------------------------------------------------
Total Costs $13,010 $0 $19,068 $7,054 $0
FTEs 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------
Direct Water and Waste Disposal Loans--Stimulus, Water and Waste Disposal Grants--Stimulus, Circuit Rider--
Tech. Assist. Grants for Rural Water Systems--Stimulus.
----------------------------------------------------------------------------------------------------------------
Program Items:
Program Level N/A N/A $1,581,548 $1,828,627 $0
Budget Authority N/A N/A $734,881 $650,675 $0
S&E N/A N/A $41,363 $0 $0
Total Costs N/A N/A $776,244 $650,675 $0
FTEs N/A N/A 364 0 0
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eligible Areas Funding Limits Per
Program Eligibility (Entities) (Populations) Eligible Purpose Request Loan Terms
--------------------------------------------------------------------------------------------------------------------------------------------------------
Water and Waste Disposal Public body, not-for- Rural areas and towns Construct and improve None 40 years
Direct Loans and Grants profit organization, and with a population of water and waste
Indian tribes 10,000 or less. facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Water and Waste Disposal Public body, not-for- Rural areas and towns Construct and improve None 40 years
Guaranteed Loans profit organization, and with a population of water and waste
Indian tribes 10,000 or less. facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Technical Assistance and Public, private, and Rural areas and towns Provide technical Pre-determined N/A
Training Grant (TAT) nonprofit organizations with population of assistance and training percentages of annual
Program 10,000 or less. allocation
Circuit Rider--Technical Public, private, and Rural areas and towns Provide technical No Cost N/A
Assistance for Rural nonprofit organizations with population of assistance and training
Water Systems 10,000 or less.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Water and Waste Facility Colonias and Native Colonias and tribal lands Construct or improve $1 M--Native American 40 years for
Loans and Grants to American Indian tribes water and waste Indian tribes (none for loans
Alleviate Health Risks facilities Colonias)
(applied to Colonias and
Native American tribes)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Solid Waste Management Public body, private Rural areas and towns Technical assistance to None N/A
Grant (SWM) Program nonprofit organizations with a population of local and regional
and Indian tribes 10,000 or less. governments for reducing
or eliminating water
pollution and planning
or mgmt of solid waste
disposal facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Predevelopment and Rural communities that do Rural area must be either Costs associated with the $15,000 or 75 percent of N/A
Planning Grants not have resources to pay below the poverty line development of a the project costs
predevelopment expenses or below 80 percent of complete application (whichever is smaller)
the statewide non-
metropolitan median
house-hold income.
--------------------------------------------------------------------------------------------------------------------------------------------------------
SEARCH Grants Rural communities that do Rural area must be either Costs associated with the $30,000 or 75 percent of N/A
not have resources to pay below the poverty line development of a the project costs
predevelopment expenses or below 80 percent of complete application (whichever is smaller)
the statewide non-
metropolitan median
house-hold income.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emergency Community Water Public body such as a Rural areas with To fund pre-development May fund up to 100 N/A
Assistance Grants municipal, county, population of 2,500 or planning grants for percent of eligible
district, authority, fewer inhabitants and feasibility studies, costs, not to exceed
state or commonwealth, must also be financially design assistance & tech $30,000
Not for profit stressed as well as assistance for water &
organization, and Native rural waste disposal projects
American Tribe
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 306D Water and State of Alaska for rural Rural or native Alaskan Development and None, however 25 percent N/A
Waste system Grants for or native villages villages construction of water in matching funds from
Alaskan Villages, incl. and waste facilities to State of Alaska from non-
technical assistance improve health and Federal sources
sanitation conditions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 306E Grants for Private, nonprofit Projects must be located Development of revolving Organization must N/A
the Construction, organizations that are in rural areas with loan funds for contribute ten percent
Refurbishment and tax exempt. population of 50,000 or construction, of grant amount to
Servicing of Low or less. refurbishing, and capitalize the fund and
Moderate Income Household servicing of individual individual homeowner
Water Well Systems household water well loans capped at $11,000
systems in eligible
rural areas.
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. Utilization (Participation) Data
From 2007-present the Water and Waste Disposal Loan and Grant
Program has obligated 9,152 loans and grants to rural communities in
all 50 states.

------------------------------------------------------------------------
Fiscal Year Number of Loans Number of Grants
------------------------------------------------------------------------
2007 810 957
2008 895 926
2009 909 1,604
2010 1,045 1,037
2011 * 498 471
-----------------------------------------------
Total................. 4,157 4,995
------------------------------------------------------------------------
* As of July 29, 2011.

Approximately 115 Circuit riders have been funded annually since
2008 through the program and have made 311,509 technical assistance
calls to rural water and waste systems.
11. Duplication or Overlap with Other Programs
RD's Water and Waste Disposal Loan and Grant program provides
funding for construction of water and waste facilities in rural
communities of 10,000 or less in population.
While the GAO report on duplicative programs did not specifically
address water and waste funding at USDA, there are a number of Federal
programs that provide financing for water and waste infrastructure.
Other federally-funded programs that fund water and waste
infrastructure in rural areas include:

State Revolving Funds (Environmental Protection Agency (EPA)
pass-through funding-Clean Water State Revolving Fund and
Drinking Water State Revolving Fund);

EPA (State and Tribal Assistance Grants, United States-
Mexico border, Tribal);

Department of Commerce--Economic Development Agency can
assist in financing infrastructure when tied to jobs and
economic development;

Department of Housing and Urban Development community
development block grants (CDBG), Community Investment Funds
(CIF), Colonias, and Tribal);

Appalachian Regional Commission (ARC) which is implemented
through RD;

Indian Health Service; and

Delta Regional Authority.

What sets USDA Apart from other programs?

WEP is the only program that is exclusively focused on rural
water and waste infrastructure needs, working only with rural
areas with populations of 10,000 or less.

Most RD projects serve areas well below 10,000 in
population. The average RD project serves fewer than 2000
equivalent dwelling units.

In FY 2010, 80 percent of funded projects served
populations of 5,000 or less;

65 percent serve communities of 2,500 or less;

51 percent serve populations below 1,500; and

43 percent were for projects serving less than 1,000
people.

Applicants must demonstrate that they need Federal
assistance because they cannot obtain credit from commercial
lenders or investors, and they have urgent needs for water or
wastewater improvements.

The program is a needs-based program, where loan and grant
are combined based on strict underwriting process to keep rates
reasonable for rural residents.

Other Federal programs serve both large and small systems.
Small rural communities must compete with larger projects for
limited funding.

For example, in 2009, while 77 percent of the loans
made by EPA State Revolving Funds for wastewater
infrastructure upgrades went to communities less than
10,000 in population, those loans represented only 23
percent of the total funding available.

State Administered HUD/CDBG grants are available to
communities of 50,000 or less population and counties up to
200,000.

The program has been recognized by OMB as one of the most
effective lending programs in the Federal Government.

Regarding Circuit Rider, there is no overlap with RD programs which
provide support grants and loans for water and wastewater treatment,
distribution, and collection systems.
12. Waste, Fraud and Abuse
RD's Water and Waste Disposal Loan and Grant programs have
standardized procedures and guidance, as well as strong internal
controls to prevent fraud waste and abuse. Vulnerability Assessments
are conducted annually. In addition, management control reviews and
State Program reviews are conducted to identify and correct potential
problem with underwriting and servicing activities. The regular program
and ARRA funding have been audited twice over the last 2 years by the
USDA's Office of Inspector General (OIG). No findings of fraud, waste
or abuse were made in either audit.
The September 2010 USDA OIG report (OIG Audit Report 09601-1-At,
Rural Utilities Service Controls Over Water and Waste Disposal Loans
and Grants) on program delivery stated, ``Generally, we found RUS'
internal controls to be adequately designed and operating for the
locations we reviewed.'' Where recommended by OIG, the program enhanced
guidance to employees to better clarify program regulations.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Distance Learning, Telemedicine, and Broadband Program.
2. Subprograms/Department Initiatives

------------------------------------------------------------------------
Federal
2008 Farm Agricultural
Description Bill Improvement and U.S. Code 7
Section Reform Act of U.S.C.
1996 Section
------------------------------------------------------------------------
Distance Learning and 6201 704 950aaa et seq.
Telemedicine Loans
Distance Learning and 6201 704 950aaa et seq.
Telemedicine Grant
Program
Distance Learning and 6201 704 950aaa et seq.
Telemedicine
Combination Loan-Grant
Program
Public Television 6014 CONACT 2005, P.L. 108-447
Digital Transition Title III
Grant Program
Delta Health Care 6025 CONACT 379G 2008u
Services Grant Program
Rural Broadband Access 6110 RE Act 601 950bb
Loan and Loan Guarantee
Program
Broadband Initiatives ARRA P.L. 111-5
Program (STIMULUS)
Weather Radio 6021 CONACT 379B P.L. 108-119
Transmitter Grant
Program
Community Connect Grant 6005 (*)
Program
------------------------------------------------------------------------
Note: CONACT is the Consolidated Farm and Rural Development Act.
* Historically appeared as an annual earmark in appropriations bills.

3. Brief History
The Rural Broadband Access Loan and Loan Guarantee Program was
established by the 2002 Farm Bill; the Distance Learning and
Telemedicine Programs were established by the Federal Agriculture
Improvement Act of 1996. The farm bill has made changes to these
provisions.
4. Purpose/Goals
Community Connect Grant Program

This program provides grants to rural communities with populations
of 20,000 or less that do not currently have access to broadband
services. The grant provides funding for a Community Center open to the
public and broadband infrastructure provided to critical facilities in
the community such as public safety, local government, and educational
institutions.

Public Television Digital Transition Grant Program

This program provides grants to assist public television stations
serving rural populations in transitioning to digital broadcast
television transmission. Funds may be used to acquire and install
facilities and software necessary for the transition. Grant funds may
also be used for associated engineering and environmental studies.

Weather Radio Transmitter Grant Program

This program provides grant funds to finance the installation of
new transmitters to extend the coverage of the National Oceanic and
Atmospheric Administration's Weather Radio system (NOAA Weather Radio)
in rural America. Grant funds are available to facilitate the expansion
of NOAA Weather Radio system coverage into rural areas that are not
covered or are poorly covered.

Delta Health Care Services Grant Program

The Delta Health Care Services Grant Program is authorized under
Section 379G of the Consolidated Farm and Rural Development Act to
provide financial assistance to address the continued unmet health
needs in the Delta region through cooperation among health care
professionals, institutions of higher education, research institutions,
and other individuals and entities in the Delta Region. Grants are
available to eligible entities in the Delta region serving communities
of no more than 50,000 inhabitants.

Rural Broadband Access Program

This program is designed to provide loans for funding, on a
technology neutral basis, for the costs of construction, improvement,
and acquisition of facilities and equipment to provide broadband
service to eligible rural communities.

Distance Learning and Telemedicine Program (DLT)

DLT is designed to bring educational and health care services to
rural America. Through loans, grants, and loan/grant combinations, RUS
provides financial assistance for end-user equipment to provide
enhanced learning and health care opportunities for rural residents.

5. Success in Meeting Programmatic Purpose/Goals

Performance measures have been developed for DLT and Farm Bill Broadband Programs as indicators of programmatic success.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Distance Learning and Telemedicine 2007 2008 2009 2010 2011
-------------------------------------------------------------------------------
Counties Served
--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of counties served by entities Target 380 695 400 380 380
receiving distance learning and telemedicine Actual 392 586 754 633 N/A
funding
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 Actual is from FY 2010 funds obligated in FY 2011.

The 2008 Farm Bill required changes to the Rural Broadband Access loan program which was authorized under the 2002 Farm Bill, last revised in 2008.
An Interim Rule was published on March 14, 2011. The Rural Broadband Access loan program provides funding for broadband infrastructure in communities
with a population of 20,000 or less.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural Broadband Access 2007 2008 2009 2010 2011
-------------------------------------------------------------------------------
Borrowers' Subscribers Served
--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of borrowers' subscribers receiving new Target 190,000 240,000 230,000 350,000 300,000
or improved service Actual 356,440 775,341 187,399 136,694 N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 Funding provided under ARRA was flexible (loans, grants and loan/grant combos) and therefore more conducive to bringing broadband to rural America;
therefore, regular program loans funds were not requested during ARRA. Telecommunications Program data also includes broadband funding under
traditional infrastructure program authorized by REA.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural Broadband Access ARRA 2007 2008 2009 2010 2011
-------------------------------------------------------------------------------
Borrowers' Subscribers Served
--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of borrowers' subscribers receiving new Target (1) (1) (1) N/A (1)
or improved service Actual (1) (1) (1) 847,239
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 ARRA funding was not available for these years.

Note: See section at end with all REA Title II programs (Electric and Telecom).

6. Annual Budget Authority (FY 2007-FY 2011)
----------------------------------------------------------------------------------------------------------------
Program 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Distance Learning a$44,486-medicine$54,565 $63,780 $84,691 $68,090
and Broadband
Broadband ARRA (1) (1) $0 $2,423,536 (1)
----------------------------------------------------------------------------------------------------------------
1 ARRA funding was not available for these years.

Note: See section at end with all REA Title II programs (Electric and Telecom).

7. Annual Outlays (FY 2002-FY 2011)
(Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Distance Learning a$46,428medicine $48,542 $134,694 $69,164 $305,143
and Broadband Pro-
gram
----------------------------------------------------------------------------------------------------------------
Note: Outlays are not a one to one correlation with obligations. Programs disburse over numerous years.
Undisbursed balances are carried forward for future year outlays.

Note: See section at end with all REA Title II programs (Electric and Telecom).

8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
2007 Amount 2008 Amount 2009 Amount 2010 Amount 2011 Amount
Program ($000) ($000) ($000) ($000) ($000)
----------------------------------------------------------------------------------------------------------------
Treasury Distance Learning Loans, Distance Learning and Telemedicine Grants.
----------------------------------------------------------------------------------------------------------------
Program Items:
Program Level $59,400 $43,242 $54,741 $0 $30,255
Budget Authority $27,691 $30,429 $33,366 $0 $30,255
S&E $1,930 $1,875 $2,048 $2,125 $2,125
----------------------------------------------------------------
Total Costs $29,621 $32,304 $35,414 $2,125 $26,974
FTEs 17 17 18 18 18
----------------------------------------------------------------------------------------------------------------
Con Farm & RD Act, Sec 379G Health Care Services Grant.
----------------------------------------------------------------------------------------------------------------
Program Items:
Program Level $0 $2,994
Budget Authority $0 $2,994
S&E $0 $0
----------------------------------------------------------------
Total Costs $0 $2,994
FTEs 0 0
----------------------------------------------------------------------------------------------------------------
Broadband Telecommunication Loans and Grants, and Public Broadcasting System Grants.
----------------------------------------------------------------------------------------------------------------
Program Items:
Program Level $266,252 $459,124 $425,069 $78,924 $343,533
Budget Authority $20,689 $30,076 $34,681 $10,006 $40,145
S&E $7,618 $7,398 $8,85 $8,387 $8,387
----------------------------------------------------------------
Total Costs $28,307 $37,474 $42,766 $18,393 $48,532
FTEs 70 66 70 71 71
----------------------------------------------------------------------------------------------------------------
Direct Broadband Telecommunications Loans--Treasury Rate--Stimulus, and Broadband Telecommunications Grants--
Stimulus.
----------------------------------------------------------------------------------------------------------------
Program Items:
Program Level $3,529,091 $0
Budget Authority $2,423,536 $0
S&E (a) (a)
----------------------------------------------------------------
Total Costs $2,423,536 $0
FTEs 0 0
----------------------------------------------------------------------------------------------------------------
a RUS is unable to provide a break out of S&E costs for Recovery Act implementation.

9. Eligibility Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eligible Areas Funding Limits Per Loan Terms, if
Program Eligibility (Entities) (Populations) Eligible Purpose Request Applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Distance Learning and Public body, Indian Areas outside In addition to the DLT Minimum loan-grant Loan interest rate is
Telemedicine Loans tribe, cooperative, incorporated or Combination Loan-Grant amount: $50,000 the Treasury interest
nonprofit, limited unincorporated cities Program purposes, loans Maximum amount: $10 rate at date of
dividend or mutual with population over may be used for certain Million advance; up to 10 year
association, 20,000. broadcasting and amortization,
municipality, operational costs, determined by useful
libraries, corporations except salaries and life of facilities
and other legally- administrative expenses financed.
organized entities.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Distance Learning and Public body, Indian Areas outside To provide end-user Minimum grant amount: 15 percent matching
Telemedicine Grant tribe, cooperative, incorporated or equipment and $50,000. funds required.
Program nonprofit, limited unincorporated cities programming that Maximum grant amount:
dividend or mutual with population over delivers distance $500,000.
association, 20,000. learning and
municipality, Smaller communities telemedicine services
libraries, corporations receive more points. into eligible areas.
and other legally-
organized entities.
RUS electric and
Telephone Loan
borrowers not eligible.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Distance Learning and Public body, Indian Areas outside In addition to the DLT Minimum loan-grant Loan interest rate is
Telemedicine tribe, cooperative, incorporated or Grant Program purposes, amount: $50,000 the Treasury interest
Combination Loan-Grant nonprofit, limited unincorporated cities loans may provide DLT Maximum amount: $10 rate at date of
Program dividend or mutual with population over across a single Million advance; up to 10 year
association, 20,000. facility, may provide amortization,
municipality, new building space, determined by useful
libraries, corporations including land, life of facilities
and other legally- buildings, and building financed.
organized entities. construction, and
RUS electric and telecommunications
Telephone Loan transmission
borrowers not eligible. facilities.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Television Public digital Areas outside Grant funds may be used Maximum amount: $ N/A
Digital Transition television stations incorporated or to acquire, lease, and/ 750,000 per applicant
Grant Program that serve rural areas unincorporated cities or install facilities per year
with population over and software necessary
20,000--station for transition to
applicants must digital signal
demonstrate core rural
coverage
--------------------------------------------------------------------------------------------------------------------------------------------------------
Delta Health Care Consortium of regional The distinct northwest The development of Minimum Grant amount: N/A
Services Grant Program institutions of higher section of the state of health care services, $50,000
education, academic Mississippi, known as health education
health and research the Delta Region, programs, health care
institutes and economic consisting of 18 job training programs
development entities counties and the development and
located in the Delta Further limited to expansion of public
region include only those health-related
areas in the Delta facilities
Region (a) not included
within the boundaries
of any incorporated or
unincorporated city,
village, or borough
having a population
greater than 50,000 and
(b) any urbanized area
contiguous and adjacent
to a city or town
described in (a).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural Broadband Access RUS makes broadband An eligible rural area
Loan and Loan Guarantee loans and loan means any area, as
Program guarantees to legally confirmed by the latest
and organized entities decennial census of the
Broadband Initiative providing, or proposing Bureau of the Census,
Program (Stimulus) to provide, broadband which is not located
services in eligible within
rural communities.
Types of eligible
entities include:
cooperative, nonprofit,
limited dividend or
mutual associations,
limited liability
companies, Indian
tribes and tribal
organizations, and
commercial
organizations.
Individuals or
partnerships are not
eligible.

Finance the Maximum loan amount: Interest rates:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weather Radio Public body; an Indian A single community To build broadband Min. $50,000 N/A
Transmitter Grant tribe; a cooperative, outside incorporated or infrastructure and Max. $1,000,000
Program nonprofit, limited unincorporated cities establish a community Amounts are published
dividend or mutual with population over center which offers in NOFAs and may vary
association; 20,000 which does not free public access to
municipality; have broadband broadband for 2 years.
corporations and other
legally organized
entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Community Connect Grant Public body; an Indian A single community To build broadband Min. $50,000 N/A
Program tribe; a cooperative, outside incorporated or infrastructure and Max. $1,000,000
nonprofit, limited unincorporated cities establish a community Amounts are published
dividend or mutual with population over center which offers in NOFAs and may vary
association; 20,000 which does not free public access to
municipality; have broadband broadband for 2 years.
corporations and other
legally organized
entities
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. Utilization (Participation) Data
DLT: As of September 30, 2010, there were 26 active
borrowers (no loan funds have been available).

There are 115 public television digital transition grant
awardees.

There have been no Delta Health grant awards to date. Awards
are expected September 2011.

For the Broadband Loan and Loan Guarantee Program, as of
September 30, 2010, there were 71 active borrowers.

There have been 217 NOAA Weather Radio grant awards.

There have been 197 Community Connect broadband grant
awards.
11. Duplication or Overlap with Other Programs
We are unaware of other Federal programs that fund distance
learning and telemedicine services with the same requirements and
eligibility as the USDA program.
Funding for emergency communications may also be available from
other agencies such as NOAA. USDA and NOAA work closely together.
In 2009-2010, the Department of Commerce was authorized under ARRA
to provide grant funding for broadband infrastructure. Extensive
coordination occurred between both Agencies.
Funding for DLT services may be available from other Federal
agencies such as FCC and HHS RUS coordinates closely with the Agencies
and we participate in each other's outreach events.
12. Waste, Fraud and Abuse
RUS closely monitors loan performance to ensure that there is no
fraud, waste, or abuse. If any is suspected, RUS officials work closely
with the OIG to investigate and, if necessary, prosecute any offender.
For example, Sequelle Communications, a pilot Broadband Loan Program
borrower, was referred to the OIG for investigation by RUS. With the
assistance of RUS, the former CEO of Sequelle was convicted of money
laundering and conspiracy, sentenced to 18 months in prison, and
required to pay approximately $848,000 in retribution. In addition,
another officer of Sequelle and another company pled guilty to money
laundering, received probation sentences, and were ordered to pay
restitution of $549,000 and $1.5 million, respectively. RUS is
beginning to receive some restitution payments and should continue to
receive them over many years as the court did not impose any deadline
for when the entire amount should be paid.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Electric Programs.
2. Subprograms/Department Initiatives
Subprograms include:

------------------------------------------------------------------------
2008 Farm
Description Bill RE Act Section U.S. Code 7
Section U.S.C.
------------------------------------------------------------------------
Hardship (Direct) Loan 6102 305(c)(1) 935(c)(1)
Program
Federal Financing Bank 6102 306 936
Guaranteed Loan Program
Renewable Loan Program 6108 317 940(g)
High Energy Cost Grants
& Loans Program:

High Energy 918(a)(1)
Cost Grants

Denali 918(a)(2)
Commission Grants

State Bulk 19 918(a)(3)
Fuel Revolving Fund
Grants

Bond and Note Guarantee 6106 313A 940(c)(1)
Program for Publicly
Issued Securities
------------------------------------------------------------------------

3. Brief History
The Rural Electrification Direct and Guaranteed Loan Programs and
the High Energy Cost Grant Program have permanent authorizations under
the Rural Electrification (RE) Act of 1936 (7 U.S.C. 901 et seq.) and
are not authorized under the farm bill. However, the farm bill can and
often does amend the permanent authorities. The bond and note guarantee
program under section 313A of the RE Act was authorized under the 2008
Farm Bill and is authorized through September 30, 2012.
Subtitle B of Title VI of the 2008 Farm Bill modified and added new
authority under the RE Act as follows:

Section 6101, Energy Efficiency Programs, amended sections 2
and 4 of the RE Act to explicitly authorize loans to electric
borrowers to implement energy efficiency programs, codifying
long-standing USDA policy.

Section 6102, Direct Electric Loan Authority, amended
section 4 of the RE Act reinstating direct lending authority
for hardship loans and other direct loans. It deleted language
requiring the Federal Financing Bank (FFB) to make loans to
electric borrowers under the section 306 guaranteed loan
program. Funding levels will be set by appropriations. FFB loan
guarantees are still available as provided by appropriations.

Section 6103, Deferments for Energy Efficiency and Demand
Reduction, amended section 12 to allow electric borrowers to
defer principal and interest payments on direct loans for up to
60 months to make loans to residential, commercial, and
industrial customers for energy audits and installation of
energy efficiency, and/or demand reduction measures and
devices.

Section 6104, Definition of Rural Area, amended the section
13 definition of a ``rural area'' for purposes of electric
loans eligibility by cross reference to section 343(a)(13)(C)
of the Consolidated Farm and Rural Development Act (7 U.S.C.
1991(a)(13)(C)) to mean any area that excludes a city or town
of 20,000 or more, or is an area within the service area of a
borrower with an outstanding loan under titles I through V of
the RE Act. This amendment expands eligibility for electric
loans for rural areas from the prior limit to non-urbanized
places of less than 2,500 and codifies the ``once rural, always
rural'' policy under the RE Act.

Section 6105, Substantially Underserved Trust Areas,
provides new authority Secretary to adapt RUS loans and grants
requirements to facilitate the construction, acquisition, or
improvement of infrastructure projects in ``Substantially
underserved trust areas'' defined as Native American trust
lands where more than 20 percent of population does not have
electric, telecommunications, broadband, or water service.

Section 6106, Guarantees for Bonds and Notes Issued for
Electrification or Telephone Purposes, amended section 313A to
extend authority to guarantee bonds and notes issued by
nonprofit cooperative lenders to September 30, 2012 at an
annual authorization of $1 billion.

Section 6108, Electric Loans for Renewable Energy, added new
section 317 providing authority to make loans for electric
generation from renewable energy resources for resale to rural
and nonrural residents. Eligible renewable energy resources
include energy conversion systems fueled from solar, wind,
hydropower, biomass, or geothermal sources. The interest rate
for these loans is set at the average tax-exempt municipal bond
rate of similar maturities. Funding is dependent on
appropriations.

Since 2005, the electric loan programs have approved over $34.4
billion in financing for rural electric systems. In 2010, the
program approved 174 loans totaling $7.1 billion. The funds
were used by rural utilities to construct new or improved
electric distribution, transmission and generation facilities
to provide electric service in rural areas, supporting economic
development and modernizing community infrastructure. The
investment of the electric loan funds creates and maintains
jobs in rural communities. Interest in financing renewable
energy and energy efficiency programs through the electric
programs is growing. In 2010, the program approved over $313.3
million in loan guarantees for new renewable electric
generation projects. The electric programs have adopted a
progressive management approach by enhancing use of automated
systems to support loan and grant management and innovating new
products and procedures to support renewable energy
initiatives. The program continues its commitment to,
maintaining a workplace that values employees, and provides
high-quality service to its customers.
4. Purpose/Goals
The RE Act authorized assistance for rural electrification and for
furnishing and improving electric service in rural areas, including the
construction and operation of generating plants, electric transmission
and distribution lines, and assisting electric borrowers to implement
demand side management, energy efficiency and conservation programs,
and on-grid and off-grid renewable energy systems.
In support of this purpose, the RE Act authorizes a variety of
loan, loan guarantee, and grant programs, including the rural
electrification loan programs (RE Act, sections 4, 305 and 306), the
nonprofit lender bond and note guarantee program (section 313A), the
High Energy Cost Grant Program (section 19), and the Renewable Energy
Loan Program (section 317).

5. Success in Meeting Programmatic Purpose/Goals

The RUS electric loan programs have exceeded their targets from FY 2008 to FY 2010. In FY 2010, the electric programs approved 174 direct loans and
loan guarantees totaling $7.1 billion. USDA approved 160 distribution loans totaling about $3.5 billion, 13 power supply (generation and transmission)
Federal Financing Bank (FFB) loans totaling about $3.2 billion, and four direct hardship distribution loans totaling $100 million. In addition, USDA
approved one nonprofit lender bond and note guarantee of $0.5 billion for relending for eligible electric and telephone purposes.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Electric 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of program borrowers' consumers Target 2,390,000 7,125,000 6,125,000 7,100,000 6,125,000
receiving new or improved electric service Actual 8,000,000 7,130,000 7,100,000 9,420,832 N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------

6. Annual Budget Authority (FY 2007-FY 2011)
Budget Authority (in thousands)
----------------------------------------------------------------------------------------------------------------
Program 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Electric Loans $3,614 $119.2 $0 $0 $699
High Energy Cost Grants $25,740 $19,860 $17,500 $17,500 $11,976
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
Account
Account Name Number 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Target
----------------------------------------------------------------------------------------------------------------
Rural Electric and Telephone 1230 $160,070 $82,267 $799,017 $606,031 $400,013
Program 1
High Energy Cost Grants 2042 $31,550 $16,422 $22,347 $17,376 $37,000
----------------------------------------------------------------------------------------------------------------
1 Outlays are reported under one account which includes both the Electric and Telephone programs.

High Energy Cost Persons, For Profit and Extremely high energy Energy distribution, Administrative and N/A
Grants Not For Profit cost communities with transmission and planning costs may not
Businesses, State & annual average generation facilities exceed 4% of funds
Local Governments, and residential energy (including energy provided
Federally-Recognized expenditures is 275% of efficiency & renewable
Indian Tribes & Tribal national average. energy) serving
entities eligible communities
Denali Commission Denali Commission Extremely high energy Energy distribution, Administrative and N/A
Grants cost communities in transmission and planning costs may not
Alaska generation facilities exceed 4% of funds
(including energy provided
efficiency & renewable
energy) serving
eligible communities in
Alaska.
State Bulk Fuel State Entity existing as Rural areas where fuel Establishment of Fuel Administrative and N/A
Revolving Fund Grants of 11/9/2000 cannot be shipped by Purchase Revolving Fund planning costs may not
surface means exceed 4% of funds
provided
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. Utilization (Participation) Data
The electric programs services 667 active electric borrowers and
grantees in 46 states, Puerto Rico, American Samoa, and the Republic of
the Marshall Islands. During FY 2011, the Agency has approved more than
$1.9 billion in loan guarantees.
The High Energy Cost Grant Program's FY 2010 Notice of Funding
Availability for $15.5 million in competitive grants received over 100
applications from 18 states and eight eligible insular areas.
11. Duplication or Overlap with Other Programs
The Rural Electrification Loan programs are the primary source of
electric infrastructure financing for rural electric providers in 46
states. All RUS loans must demonstrate financial feasibility,
assurances of repayment, and adequate loan security. There is no
overlap between the electric loan program and other USDA energy loan
and grant programs because electric infrastructure is not an eligible
purpose under those programs. The U.S. Department of Energy Loan
Guarantee Programs are intended to provide incentives for high risk
technology innovation, advanced nuclear power generation, and advanced
clean energy technology projects, but does not support loans for
traditional electric infrastructure.
The High Energy Cost Grant Program differs from other USDA and
Department of Energy grant programs in that it is targeted at extremely
high cost rural communities, includes a broad range of eligible energy
project activities, including traditional infrastructure, renewable
energy and energy efficiency, and permits applications from tribes,
tribal entities, state and local governments, school districts, and
other for profit and not for profit entities, that are not eligible
under other loan or grant programs.
12. Waste, Fraud and Abuse
The Electric Programs does not have any outstanding issues with
respect to overpayments, waste, fraud, or abuse identified by the
Department or other government agency. There are no outstanding audits
for these programs.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Telecommunications Program.
2. Subprograms/Department Initiatives

------------------------------------------------------------------------
2008 Farm
Description Bill RE Act Section U.S. Code 7
Section U.S.C.
------------------------------------------------------------------------
Telecom Hardship Loan N/A 305 935(d)(1)
Program (Direct)
Telecom Treasury Rate N/A 305(d)(2) 935
Loan Program
Telecom Guaranteed Loan N/A 306 936
Program (FFB)
------------------------------------------------------------------------

3. Brief History
The Telecommunications Loan Program has permanent authorizations
under the Rural Electrification Act (REA) of 1936.
4. Purpose/Goals
The Telecommunications Program finances the improvement or
extension of telecommunications service in rural areas through
telecommunications borrowers. Borrowers can apply for direct (Treasury
rate) loans at an interest rate which is tied to the government's cost
of money. Borrowers can also request FFB loans and guaranteed loans.
Loans at five percent are available to borrowers that further qualify
under ``hardship'' conditions, which include subscriber density factors
and net income projections of the borrowers.

5. Success in Meeting Programmatic Purpose/Goals

In FY 2010, the telecommunications program approved $690 million in infrastructure program loans. This funding will allow rural telecommunications
providers to deploy new or improved service to more than 136,694 rural subscribers. For the last 2 years, 90 percent of the loans financed have been
for fiber-to-the-home projects to provide fiber-optic service to rural homes and businesses.

(Dollars in thousands)

--------------------------------------------------------------------------------------------------------------------------------------------------------
Telecommunications 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of borrowers' subscribers receiving new Target 194,699 194,931 180,000 171,000 120,000
or improved service Actual 155,135 182,174 175,416 136,694
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Telecommunications includes broadband data. Rural Broadband Access chart also includes broadband data.

6. Annual Budget Authority (FY 2007-FY 2011)
Budget Authority (in thousands)
----------------------------------------------------------------------------------------------------------------
2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
$605 $3,595 $525 $0 $0
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
Account
Account Name Number 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Target
----------------------------------------------------------------------------------------------------------------
Rural Electric and Telephone 1230 $160,070 $82,267 $799,017 $606,031 $400,013
Program 1
----------------------------------------------------------------------------------------------------------------
1 Outlays are reported under one account which includes both the Electric and Telephone programs.

10. Utilization (Participation) Data
As of September 30, 2010, there were 481 active borrowers.
11. Duplication or Overlap with Other Programs
We are not aware of other Federal programs that provide funding for
broadband infrastructure with the same requirements and objectives as
this program. In 2009-2010, the Department of Commerce was authorized
under the American Recovery and Reinvestment Act to provide grant
funding for broadband infrastructure. Additionally, funding is provided
to RUS telecommunications borrowers from the Federal Communications
Commission (FCC) through the universal service fund. These funds are
used as revenue and are considered to be part of the RUS borrower's
ability to repay Federal debt.
12. Waste, Fraud and Abuse
We are not aware of any examples of waste, fraud or abuse under
this program. All previous GAO and OIG recommendations have been
completed. There are no outstanding audits for these programs.
13. Effect of Administrative PAYGO
None.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--Rural
Business-Cooperative Service
1. Program Name
Rural Business Opportunity Grants (RBOG).
2. Subprograms/Department Initiatives
None.
3. Brief History
RBOG was authorized by Section 306(a)(19)(C)(ii) of the
Consolidated Farm and Rural Development Act (7 U.S.C.
1926(a)(19)(C)(ii) and reauthorized by the Food, Conservation, and
Energy Act of 2008 (2008 Farm Bill), Section 6003 (Pub. L. 110-246).
In addition to a national pool of funds, the program has
historically operated two Congressionally Mandated set-asides--one for
Native Americans and another for Rural Economic Area Partnership (REAP)
zones.
4. Purpose/Goals
RBOG promotes sustainable economic development in rural communities
with exceptional needs through provision of training and technical
assistance for business development, entrepreneurs, and economic
development officials and to assist with economic development planning.
RBOG is primarily a training and technical assistance program.
Funds may be provided for development of export markets; feasibility
studies; development of long term trade strategies; community economic
development planning; business training and business based technical
assistance for rural entrepreneurs and business managers; establishment
of rural business incubators; and assistance with technology based
economic development. The types of projects that may be funded could
include identification and analysis of business opportunities that will
utilize local material and human resources; leadership development
training to existing or prospective rural entrepreneurs and managers;
business support centers; centers for training, technology and export
trade; and, economic development planning.
5. Success in Meeting Programmatic Purpose/Goals
In Fiscal Year (FY) 2010, the 27 grants awarded to residents and
businesses in 17 states totaled $2.6 million and created or saved more
than 990 jobs. A $249,340 grant was awarded to Ecotrust, an
organization based in Portland, Oregon, that seeks to create economic
opportunity, social equity and environmental well-being by
demonstrating new business models based on economic, social and
environmental principles, to support their FoodHub initiative, an
online directory and marketplace that makes it easy for regional food
buyers and sellers to find each other, connect and do business. The
grant will aid Ecotrust in increasing recruitment of producers and
buyers in rural communities and providing the training and assistance
necessary to ensure FoodHub supports their goals.
6. Annual Budget Authority (FY 2002-FY 2011)
RBOG budget authority includes:

RBOG
(in millions of dollars)
----------------------------------------------------------------------------------------------------------------
2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Budget Authority $2.97 $2.482 $2.483 $2.483 $2.478
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
RBOG annual outlays included:

------------------------------------------------------------------------
(in millions of dollars)
-------------------------------
Account Name Account Number 2007 2008 2009 2010
Actual Actual Actual Actual
------------------------------------------------------------------------
Rural Business 1902 (RBOG line $3.1 $4.1 $4.4 $2.9M
Program Ac- item)
count
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)
RBOG annual delivery costs were:

RBOG
(in millions of dollars)
----------------------------------------------------------------------------------------------------------------
2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Program Level $2.97 $2.482 $2.483 $2.483 $2.478
Budget Authority $2.97 $2.482 $2.483 $2.483 $2.478
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Rural public bodies, rural nonprofit corporations, rural Indian
tribes, and cooperatives with primarily rural members that conduct
activities for the mutual benefit of the membership are eligible
provided they have sufficient financial strength and expertise to carry
out the activity to be funded.
10. Utilization (Participation) Data
The program is annually over-subscribed (applications received
exceed available funding). Due to the limited amount of funding
available, Rural Development has limited the number of applications
individual states may submit and capped the maximum grant amount
(applies to the national pool only). In 2010 USDA received 424 eligible
applications totaling $60 million; only 27 awards totaling $2.6 million
could be funded.
11. Duplication or Overlap with Other Programs
The program is unique in that the focus is on provision of
technical assistance to priority communities (e.g., persistent poverty
and economic distress) as well as sponsoring best practices for
economic development activities that are transferable.
While the program objective is unique, RBOG complements multiple
other Rural Development (RD) programs including the Rural Business
Enterprise Grant, Community Facilities and Rural Community Development
Initiative programs. Further, the RBOG project activities can be
leveraged with other community development programs outside of the
Department.
12. Waste, Fraud and Abuse
There are no reports or audits from GAO and OIG on the RBOG
program.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Rural Cooperative Development Grants (RCDG).
2. Subprograms/Department Initiatives
Appropriate Technology Transfer for Rural Areas (ATTRA).
Cooperative Research Agreements.
The Small Socially-Disadvantaged Producer Grants (SSDPG).
Value-Added Agricultural Market Development Grant Program
(VAPG).
Agricultural Marketing Resource Center Grants (AgMRC).
3. Brief History
RCDG was authorized by section 310B(e) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1932(e)). Regulations are found in 7
CFR part 4284, subparts A and F.
ATTRA was authorized by P.L. 104-37 and amended by Section 6016 of
the farm bill. It was first authorized by the 1985 Farm Bill and the
Department received its first appropriation to start the project in FY
1987. In FY 1990, ATTRA was transferred to the U.S. Fish and Wildlife
Service and then in FY 1996 the authority to the Rural Business-
Cooperative Service (RBS) for administration. ATTRA is located on the
University of Arkansas campus at Fayetteville, Arkansas, and functions
as an information and technical assistance center staffed with
sustainable agriculture specialists accessible nationally by toll-free
telephone.
Cooperative Research Agreements were authorized by the Cooperative
Marketing Act of 1926, (7 U.S.C. 453).
Formerly known as the Small Minority Producer Grant program, SSDPG
was authorized by Public Law 109-97 under the rural cooperative
development grants authorized under 310(b) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1932). FY 2006 was the first year this
program was administered.
VAPG was authorized by the Agricultural Risk Protection Act of 2000
and amended by the 2002 and 2008 Farm Bill.
AgMRC was developed in 2001 and is operated by the Value-Added
Agriculture Program at Iowa State University Extension and the Arthur
Capper Cooperative Center at Kansas State University. AgMRC actively
recruits other institutions, particularly land-grant institutions and
USDA affiliated institutions for special grant projects or
subcontracts. More than 22 states have partnered with AgMRC since 2002,
and a map of those relationships is available.
4. Purpose/Goals
The purpose of RCDG is to establish and operate centers for
cooperative development to improve the economic condition of rural
areas through the development of new cooperatives and improving
operations of existing cooperatives. RCDG's improve the economic
condition of rural areas by promoting a range of cooperative
development activities.
Grants are made to nonprofit corporations and institutions of
higher education to operate centers for cooperative development. The
centers address rural economic problems in two ways. First, a center
brings together expertise in cooperative development and cooperative
business operations that would otherwise be more difficult to obtain.
Second, these experts in cooperative development facilitate new
cooperative businesses and improve the operations of existing
cooperatives through technical assistance and educational programs.
Consequently, RCDG's promote the creation or retention of jobs in rural
areas through the development of new rural cooperatives, value-added
processing and other rural businesses.
ATTRA provides information to farmers and other rural users on a
variety of sustainable agricultural practices that include both crop
and livestock operations. The program encourages agricultural producers
to adopt sustainable agricultural practices, which allow for them to
maintain or improve profits, produce high quality food and reduce
adverse impacts to the environment.
Cooperative Research Agreements Program is a partnership program
with the nation's colleges and universities that leverage our financial
and human resources to conduct research on the problems and
opportunities for the cooperative form of business. Cooperative
agreements are awarded to 1862 and 1890 Land-Grant Universities, other
institutions of higher education, and to nonprofits. Cooperative
agreements are used to encourage research on critical issues vital to
the development and sustainability of cooperatives as a means of
improving the quality of life in America's rural communities.
SSDPG provides grants to assist small, minority agricultural
producers in rural areas provides funding for cooperatives or
associations of cooperatives whose primary focus is to provide
assistance to such producers, and whose governing board and/or
membership is comprised of at least 75 percent socially disadvantaged
members. Grants may be used for developing business plans, conducting
feasibility studies, or developing marketing plans for farmers,
ranchers, loggers, agricultural harvesters, and fishermen.
VAPG enable producers of agricultural commodities to participate in
the economic returns found in the value-added market. Grants may be
used to develop business plans and develop strategies for creating
marketing opportunities. Grants may also be used for feasibility
studies and to provide capital to establish alliances or business
ventures allowing producers to better compete in domestic and
international markets. These grants for expansion, modernization or
start-up, enhance the local job market mix and improve the local tax
base. As a result, the overall local rural economy is stimulated, jobs
are created, and quality of life improves.
AgMRC answers questions and provides information to media,
investors, bankers, consultants and agricultural students on specific
topics.

5. Success in Meeting Programmatic Purpose/Goals

RCDG performance includes:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Performance Measures 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural Cooperative Development Grants:
Number of Cooperatives and prospective cooperative groups assisted 200 225 195 300 300
Program Dollars (in thousands) $6,217 $8,933 $8,765 $14,290 $14,487
Value-Added Producer Grants (discretionary):
Proposed, new, or expanded Value-Added businesses assisted 185 151 142 0 277
Program Dollars (in thousands) $21,203 $23,801 $19,389 $0 $37,736
--------------------------------------------------------------------------------------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)

Annual budget authority was:

--------------------------------------------------------------------------------------------------------------------------------------------------------
RBS Coop Grant Programs (in thousands) 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural Cooperative Development Grants, Appropriate Technology Transfer, $6,218 $8,934 $8,769 $14,293 $14,487
Cooperative Research Agreements, and Grants to Assist Minority
Producers
Value-Added Agricultural Market Development Grant Program and $23,801 $20,333 $20,657 $17,367 $20,367
Agricultural Marketing Resource Center Grants
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)

Annual outlays were:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Account Name Account Number 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cooperative Development Grants 1900 $31,488 $29,685 $26,955 $33,880 $31,732
--------------------------------------------------------------------------------------------------------------------------------------------------------

Annual obligations were:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Account Name Account Number 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cooperative Development Grants 1900 $29,875 $29,506 $32,399 $15,393 $48,589
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous years. Undisbursed balances are carried
forward for future year outlays.

8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Rural Cooperative Development Grants, Appropriate Technology Transfer, Cooperative Research Agreements, and
Grants to Assist Minority Producers.
----------------------------------------------------------------------------------------------------------------
Program Level $6,218 $8,934 $8,769 $14,293 $14,487
Budget Authority $6,218 $8,934 $8,769 $14,293 $14,487
Administrative Costs (Direct) $246 $214 $262 $157 $157
Administrative Costs (Indirect) N/A N/A N/A $403 $403
----------------------------------------------------------------
Total Costs $6,464 $9,148 $9,031 $14,853 $15,047
FTEs 2 2 2 2 2
----------------------------------------------------------------
Performance measure: No. Groups assisted 187 175 150 300 360
Cost per Measure (unit cost) $34.57 $52.27 $60.21 $49.51 $41.80
----------------------------------------------------------------------------------------------------------------
Value-Added Agricultural Product Market Development Grants & Agricultural Mtng. Res. Center Grants
----------------------------------------------------------------------------------------------------------------
Program Level $23,801 $20,333 $20,657 $17,367 $20,367
Budget Authority $23,801 $20,333 $20,657 $17,367 $20,367
Administrative Costs (Direct) $1,167 $1,171 $1,311 $468 $468
Administrative Costs (Indirect) $1,205 $1,205
----------------------------------------------------------------
Total Costs $24,968 $21,504 $21,968 $19,040 $22,040
FTEs 11 10 11 11 11
----------------------------------------------------------------
Performance Measure: No. of businesses assisted 151 150 192 127 150
Cost per Measure (unit cost) $165.35 $143.36 $114.42 $149.92 $146.93
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
Under RCDG, nonprofit corporations and institutions of higher
education are eligible.
For ATTRA, farmers and other rural users or anyone with a need for
agricultural related information are eligible.
Regarding Cooperative Research Agreements, research proposals are
solicited from institutions of higher education or nonprofit
organizations interested in applying for competitively awarded
cooperative agreements for research related to agricultural and
nonagricultural cooperatives serving rural communities.
For the SSDPG, socially disadvantaged persons or 100 percent
socially-disadvantaged producer-owned entities, including farmers,
ranchers, loggers, agricultural harvesters, and fishermen, that have
averaged $250,000 or less in annual gross sales of agricultural
products in the last 3 years are eligible. A socially-disadvantaged
producer for SSDPG purposes means individual agricultural producers who
have been subjected to racial, ethnic or gender prejudice because of
their identity as members of a group, without regard for their
individual qualities.
Under VAPG, eligible applicants are independent producers, farmer
and rancher cooperatives, agricultural producer groups, and majority-
controlled producer-based business ventures.
AgMRC services are available to independent producers, processors,
and service providers with critical information to build successful
value-added agricultural enterprises. In order to better serve our core
audience, the AgMRC website just completed a reorganization and new
graphical update, giving users a clean, contemporary design and giving
clear organization to files.
10. Utilization (Participation) Data
The last time funding for the Value-Added Grant Program was
announced, there were 550 applicants requesting $56.4 million, but only
196 projects totaling $22.7 million could be awarded.
11. Duplication or Overlap with Other Programs
The purposes of these programs are unique. RCDG and SSDPG focus on
providing technical assistance to existing, new, or developing
cooperative businesses. RBS is the sole provider of research,
information and technical assistance specifically targeted to support
cooperatives.
While these programs are unique, they can complement a number of
other programs within USDA, most notably, programs administered by
Agricultural Marketing Service (AMS). The AMS Federal-State Marketing
Improvement Program (FSMIP), Farmers Market Promotion Program (FMPP)
and Specialty Crop Block Grant programs can be used in conjunction with
RCDG programs to enhance or expand the scope or scale of a project.
Further, programs under RCDG can also compliment a number of other RD
programs including, but not limited to, the Rural Business Enterprise
Grant, Business and Industry Guaranteed Loan, Community Facilities, and
Renewable Energy for America Program.
12. Waste, Fraud and Abuse
There have been no reports of such problems with any of the
programs included under RCDG.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Rural Economic Area Partnership (REAP) Zones.
2. Subprograms/Department Initiatives
None.
3. Brief History
Many rural areas face economic and community development issues of
a very different character than communities whose needs are mainly
defined by poverty. Often, the defining features are geographic
isolation of communities separated by long distances, absence of large
metropolitan centers, low-density settlement patterns, historic
dependence on agriculture, continued population loss, out-migration,
and economic upheaval or economic distress.
To address these issues, USDA advocated a pilot concept for rural
revitalization and community development called REAP Zones. The REAP
Initiative was established to address critical issues related to
constraints in economic activity and growth, low density settlement
patterns, stagnant or declining employment, and isolation that has led
to disconnection from markets, suppliers, and centers of information
and finance.
Memoranda of Agreement between the REAP Zones and USDA established
the RD mission area as the lead Federal Agency to assist the zones in
the implementation of their programs. In 1995, two REAP Zones in North
Dakota were initially designated to participate.
Subsequently, in 1999, two areas in upstate New York were added as
the third and fourth REAP Zones. In 2000, an area in Vermont was
designated as the fifth REAP Zone. The North Dakota Zones and the
Vermont Zone are multi-county in size and the two REAP Zones in New
York are, for the most part, single counties. Each REAP Zone developed
a strategic plan for economic revitalization in their respective
geographic areas.
A Presidential Memorandum dated August 5, 1993; variously dated
Memoranda of Agreement; Pub. L. No. 106-387, Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies
Appropriations Act of 2001. 2008 Farm Bill, Section 6017 (J) extends
the current REAP Zones to 2012.
4. Purpose/Goals
This pilot project sets up a collaborative and citizen-led effort
to enhance economic development in the REAP Zones. This effort will
become the model for building a new rural economy for other rural areas
with similar problems. The Department of Agriculture has provided
modest amounts of money to REAP Zones for planning this program. This
contribution has been augmented by USDA community development technical
assistance across all areas of REAP Zone endeavor. Further, priority
consideration is afforded for REAP Zone applications submitted for
funding through RD.
A summary of the REAP Zones' locations includes:

------------------------------------------------------------------------
Status
REAP Zone State Counties Included Ends
------------------------------------------------------------------------
CONAC ND McHenry, Bottineau, 9/30/12
Rolette, Towner, Pierce
and Benson; and the Indian
reservations of the Turtle
Mountain Chippewa and
Spirit Lake Sioux
Southwest ND Dunn, Stark, Hettinger, 9/30/12
Adams, Bowman, Slope,
Golden Valley, Billings,
and part of the Fort
Berthold Indian
Reservation
Sullivan-Wawarsing NY Sullivan and the Town of 9/30/12
Wawarsing
Tioga NY Tioga 9/30/12
Northeast Kingdom VT Caledonia, Essex, Orleans 9/30/12
------------------------------------------------------------------------

5. Success in Meeting Programmatic Purpose/Goals
Each REAP Zone developed a strategic community & economic
development plan with a variety of projects that have been completed or
are in the process of being implemented. Given a modest amount of money
to develop a strategic, each of the five REAP Zones have continued on
in vary degrees with their economic development projects for better
than 10 years, with the oldest two dating back to 1995.
Leveraged funds from 1999-2011 include:

------------------------------------------------------------------------
As of: 4/1/2011
Grant from Designation................. 0
State Government....................... $62,302,055
Nonprofit.............................. $8,494,877
Local or Regional Gov't................ $12,053,461
Federal Gov't.......................... $221,896,363
Private Sector......................... $48,184,764
Tribal Gov't........................... $6,086,699
Other.................................. $4,502,286
REAP Zones............................. 5
------------------------------
Total................................ $3,633,398,005
==============================
Per Zone Average..................... $72,704,101.00
------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)
There is no direct budget authority for REAP Zones. Only funding
references in the budget are specific dollar amounts set aside in three
RD programs. If funding is not applied for by June 30, the funds are
returned to the general pool. Set aside funding for REAPS was
eliminated in FY 2011 for the Rural Business Enterprise and Rural
Business Opportunity programs, with the only set aside being under the
Intermediary Relending Program. This funding is in the form of loans.
7. Annual Outlays (FY 2002-FY 2011)
There were no outlays for REAP Zones during FY 2007 through FT
2011.
8. Annual Delivery Cost (FY 2002-FY 2011)
There is no direct funding for REAP zones, thus we cannot provide
delivery cost funding levels. Delivery costs are scattered throughout
all of the RBS programs; depending on what programs provide funding to
the areas in a given year.
9. Eligibility Criteria
The REAP Initiative is a USDA pilot program targeting areas of
economic distress not normally addressed by standard RD programs. In
some cases this included high population loss, and others sharp
economic downturns due to declining industries.
10. Utilization (Participation) Data
The communities and residents of 19 counties and three Indian
reservations in parts of three states: North Dakota, New York, and
Vermont.
11. Duplication or Overlap with Other Programs
Within RD, there are no other programs with similar purposes.
Within USDA, there are few programs that promote strategic planning on
a multi-community or multi-county basis. The closest program to the
REAP Initiative would be the Resource, Conservation & Development
Program. It also promotes multi-county strategic planning, but is
focused on natural resources and resource-based economic development.
12. Waste, Fraud and Abuse
Any actions in these areas around REAP Zones are covered by the
specific programs the Zones may have participated in. There is not any
direct USDA funding for REAP Zones. For the minimal initial planning
grants each Zone received, there were not any instances of waste,
fraud, and abuse.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Rural Business Programs.
2. Subprograms/Department Initiatives
Guaranteed Business and Industry Loans.
Guaranteed Business and Industry Loans 2008 Disasters Emergency
Supplemental.
North American Development Bank Guaranteed Business and
Industry Loans.
Guaranteed Business and Industry--Stimulus.
3. Brief History
The mission of the guaranteed Business and Industry (B&I) loan
program is to improve, develop, or finance business, industry, and
employment and improve the economic and environmental climate in rural
communities. This purpose is achieved by bolstering the existing
private credit structure through the guarantee of quality loans which
will provide lasting community benefits. USDA implements its part of
the Community Adjustment Investment Program under the North American
Development (NAD) Bank through the B&I Guaranteed Loan Program.
4. Purpose/Goals
The B&I loan guarantee program is authorized by Section 310B of
CONACT [7 U.S.C. 1921]. Access to capital is key to keeping and
increasing the number and size of businesses operating in rural areas.
The guaranteed loan program supports financing for business and
industrial acquisition, construction, conversion, enlargement, repair
or modernization outside a town or city with a population of less than
50,000. Loan funds are used to finance the purchase and development of
land, easements, rights-of-way, buildings, equipment, facilities,
machinery, supplies and materials, and fund to pay startup costs and
supply working capital. Individuals, as well as public, private, or
cooperative organizations, Indian tribes, and corporations are
eligible. The loan guarantee percentage drops from a maximum of 80
percent for loans of up to $5 million to 60 percent for loans between
$10 million and $40 million. The aggregate loan amount available to any
one borrower under this program is limited to $25 million. An exception
to the limit is for cooperative organizations when the facility is
located in a rural area and the facility provides value-added
processing of an agricultural commodity. The maximum amount in such
cases is $40 million which must be approved by the Secretary.
5. Success in Meeting Programmatic Purpose/Goals
The B&I loan program is RD's flagship job creation and capital
expansion business program. Through $1.379 billion in annual
appropriations and $1.561 billion appropriated through the ARRA, more
than 55,000 jobs were created and saved and 1,332 rural businesses were
impacted.
For example, Medora Environmental, Inc. (MEI) and its operating
company, SolarBee, Inc., manufacture the SolarBee, a solar powered high
volume water circulating system. The companies received a B&I
guaranteed loan for permanent working capital of $1,787,100 and
existing debt refinance in the amount of $1,212,900. The permanent
working capital allowed the business to supplement its cash needs on a
contingency basis. This loan also refinanced term debt which will save
the company approximately $6,700 each month to help retain 67 jobs
paying wages of approximately $28 per hour.
Another example is Ocean Classroom Foundation (OCF) which received
a $2.2 million B&I guaranteed loan on February 1, 2010. This loan
helped the organization restructure its debt and access much-needed
working capital. The project also created and saved 14 jobs. OCF is
located in Boothbay Harbor, Maine. The non-traditional school
contributes to preserving the state's maritime heritage, while
expanding students' horizons, by combining academic and nautical
curriculums with experience at sea. Accredited programs are offered to
teenaged and young-adult students as a means of providing academic and
technical training, along with life experiences.
The B&I Guaranteed Loan program helps create and maintain
employment and improve the economic climate in rural communities. This
is accomplished by providing loan guarantees to private lenders of up
to 80 percent that can be used to fund business and industrial
acquisition, construction, conversion, enlargement, repair or
modernization. The number of jobs created or saved in rural communities
is a key performance measure and a critical element in determining the
viability of a project for funding.
Performance data includes:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Performance Measures 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Performance Measure No. 1

a. Jobs created/saved * total

Guaranteed Business and Industry:

a. New or saved jobs 12,343 18,703 17,602 21,328 11,705
b. Program Dollars--Loans $830,525 $1,390,532 $949,010 $1,322,984 $813,824

Guaranteed Business and Industry Loans 2008 Disasters Emergency
Supplemental:

a. New or saved jobs 0 0 0 0
b. Program Dollars--Loans $0 $0 $246,197 $0 $0

Guaranteed NadBank Business and Industry:

a. New or saved jobs 0 0 0 0 0
b. Program Dollars--Loans $3,490 $0 $0 $0 $0

Guaranteed Business and Industry--Stimulus:

a. New or saved jobs 0 0 0 0 0
b. Program Dollars--Loans $0 $0 $49,412 $0 $0
--------------------------------------------------------------------------------------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)
(Dollars in Thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Account Name 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Guaranteed Business and Industry Loans:
Budget Authority $36,211 $60,071 $49,350 $70,515 $41,179
Subsidy Rate 4.36% 4.32% 4.35% 5.33% 5.06%
Program Level $830,525 $1,390,532 $949,010 $1,322,984 $813,824
Guaranteed NadBank Business and Industry:
Budget Authority $319 $0 $351 $0 $0
Subsidy Rate 9.15% 7.69% 10.36%
Program Level $3,490 $0 $0 $0 $0
Guaranteed Business and Industry Loans 2008 Disasters Emergency
Supplemental:
Budget Authority $0 $0 $19,400 $3,046 $0
Subsidy Rate 4.35% 5.33%
Program Level $0 $0 $445,977 $57,157 $0
Guaranteed Business and Industry--Stimulus:
Budget Authority $0 $0 $26,100 $125,241 $0
Subsidy Rate 4.35% 5.33%
Program Level $0 $0 $2,898,851 $1,557,725 $0
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)

Annual outlays were:

--------------------------------------------------------------------------------------------------------------------------------------------------------
2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual
Account Name ($000) ($000) ($000) ($000) ($000)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Guaranteed Business and Industry * $100,400 $119,464 $133,671 $263,067 $244,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous years. Undisbursed balances are carried
forward for future year outlays. Also, outlays reflect non-farm bill accounts as well.

8. Annual Delivery Cost

Business and Cooperative Programs
Full Cost by Department Strategic Goal

Strategic Goal: Assist Rural Communities to Create Prosperity so They Are Self-Sustaining, Repopulating and Economically Thriving.

FY 2007 Amount FY 2008 Amount FY 2009 Amount FY 2010 Amount FY 2011 Amount
($000) ($000) ($000) ($000) ($000)

Program
Program Items

Guaranteed Business and Industry
Loans
Program Level $830,525 $1,390,532 $949,010 $1,322,984 $813,824
Budget Authority $36,211 $60,071 $41,282 $70,515 $41,179
Admin Costs (Direct) -- -- -- $13,637 $12,982
Admin Costs (Indirect) -- -- -- $35,066 $33,381
Total Admin Costs $49,978 $43,523 $47,435 $48,703 $46,363
-------------------------------------------------------------------------------
Total Costs $86,189 $103,594 $88,717 $119,218 $87,542
-------------------------------------------------------------------------------
Guaranteed NadBank Business and
Industry Loans
Program Level $3,490 $0 $0 $0 $0
Budget Authority $319 $0 $351 $0 $0
Admin Costs (Direct) $0 $0 $0 $0 $0
Admin Costs (Indirect) $0 $0 $0 $0 $0
S&E $0 $0 $0 $0 $0
-------------------------------------------------------------------------------
Total Costs $319 $0 $351 $0 $0
-------------------------------------------------------------------------------
Business and Industry Guaranteed
Loans--Stimulus
Program Level $0 $0 $2,898,851 $1,557,725 $0
Budget Authority $0 $0 $126,100 $125,241 $0
Admin Costs (Direct) $0 $0 $0 $0 $0
Admin Costs (Indirect) $0 $0 $0 $0 $0
S&E $0 $0 $0 $0 $0
-------------------------------------------------------------------------------
Total Costs $0 $0 $126,100 $125,241 $0
-------------------------------------------------------------------------------
Guaranteed Business and Industry
Loans 2008 Disasters Emergency
Supplemental
Program Level $0 $0 $445,977 $57,157 $0
Budget Authority $0 $0 $19,400 $3,046 $0
Admin Costs (Direct) $0 $0 $0 $0 $0
Admin Costs (Indirect) $0 $0 $0 $0 $0
S&E $0 $0 $0 $0 $0
-------------------------------------------------------------------------------
Total Costs $0 $0 $19,400 $3,046 $0

9. Eligibility Criteria
In order to issue a guarantee on a particular project, there are
various levels of eligibility that must be satisfied under the program.
First, the project must be eligible. A list of eligible projects
can be found in RD Instruction 4279-B, section 4279.113 and they range
from small manufacturing plants and hotels to convenience stores and
biofuels refineries. One of the major advantages of the program is the
variety of projects that are considered eligible.
Second, the project must have an eligible lender willing to offer
financing. An eligible lender is any Federal or state chartered bank,
Farm Credit Bank, other Farm Credit System institution with direct
lending authority, Bank for Cooperatives, Savings and Loan Association,
or mortgage company that is part of a bank-holding company. These
entities must be subject to credit examination and supervision by
either an agency of the United States or a state. Eligible lenders may
also include credit unions provided, they are subject to credit
examination and supervision by either the National Credit Union
Administration or a state agency, and insurance companies provided they
are regulated by a state or national insurance regulatory agency.
Third, the project must have an eligible borrower. An eligible
borrower is one that is a cooperative organization, corporation,
partnership, or other legal entity organized and operated on a profit
or nonprofit basis; an Indian tribe on a Federal or state reservation
or other federally recognized tribal group; a public body; or an
individual.
10. Utilization (Participation) Data
Since the program's inception in 1974, the USDA B&I Guaranteed Loan
Program has guaranteed over 16,000 loans, totaling approximately $24
billion, promoting business activity and entrepreneurship in rural
areas.
11. Duplication or Overlap with Other Programs
A number of programs serve to stimulate economic development in
rural communities. These include: the Small Business Administration's
(SBA) 7(a) and Community Development (504) programs, the Economic
Development Administration, the Tennessee Valley Authority's Economic
Development Loan Fund, and other USDA programs that support business
and community development. For example, an applicant from the
Appalachian region may apply to programs administered by HUD, USDA, and
ARC to obtain financing for building construction. In other cases, two
agencies may explicitly have the same goals and serve similar
applicants both SBA and USDA measure the number of jobs created.
However, in some specific cases, programs can be differentiated. For
example, SBA's 7(a) loan levels are limited to $5 million. Although
there are a variety of state programs that serve a similar purpose,
they also vary in degree of funding and rural availability.
12. Waste, Fraud and Abuse
Though there have been only a few examples of waste, fraud and
abuse. All cases are investigated by the Department's Office of the
Inspector General, and if necessary, the Federal Bureau of
Investigation.
The guarantee is supported by the full faith and credit of the
United States and is incontestable except under the circumstances of
fraud or misrepresentation of which the lender has actual knowledge at
the execution of the guarantee or of which the lender participates in
or condones.
In the event the state office becomes aware of willful lender
noncompliance with any provision of the Loan Agreement, Lender's
Agreement, Loan Note Guarantee, or other similar document, the lender
is to be notified in writing of the Full Faith and Credit provisions as
they relate to the enforceability of the Loan Note Guarantee, with a
copy of the letter to be included in the case file.
Some examples of the lender noncompliance include:
Hermitage Tomato Cooperative--fraud and misrepresentation--a total
of $9.6 million, 90 percent B&I Guaranteed Loans were made to the
Hermitage Tomato Cooperative Association (Hermitage Tomato). The
borrower defaulted on the loan payments, and the assets of the
cooperative were liquidated in October 2002 by the lender, Farmers Bank
of Hamburg (Farmers Bank). The Agency reduced the loss claim based on
negligent serving and diversion of funds from the Cooperative.
Catfish INT, Inc.--negligent servicing--On June 5, 1998, the Agency
approved a $5 million, 70 percent B&I guaranteed loan for this borrower
through its lender, Enterprise National Bank of Palm Beach. The lender
foreclosed on the account on June 4, 2002. The borrower filed
bankruptcy on May 19, 2000. The Agency discovered that the building
construction was not to specs as in the Conditional Commitment. The
Agency issued Adverse Decision Letter to reduce guarantee and OIG
Investigation was initiated. NAD and Federal Court upheld Agency
determination to reduce loss claim by $3,030,000.
Bill Russell Oil--negligent servicing--on June 21, 2000, the Agency
issued a $3 million Loan Note Guarantee to Business Loan Express, now
known as Ciena Capital Corporation, for this borrower. The operation
soon failed with the last payment received from this borrower in
January 2001. On December 19, 2007, the U.S. Attorney sent a draft
complaint asserting the False Claims Act and Financial Institution
Reform Recovery and Enforcement Act. As a result the loss claim was
reduced and a settlement in the amount of $2.5 million was paid.
The National Office continues to remind the state offices through
training sessions, webinars, monthly conference calls, etc., of their
responsibility to monitor the lender's actions. The Agency will work
with the Office of the Inspector General in those instances where
fraud, misrepresentation, or negligent servicing is suspected in an
attempt to collect from the lender.
In addition, when the Agency suspects fraud and misrepresentation,
the Agency consults with the Office of General Counsel and the U.S.
Attorney's Office as appropriate to pursue matters for the best
possible outcome for the government and taxpayer.
13. Effect of Administrative PAYGO
None.
______

1. Program Name
Rural Microentrepreneur Assistance Program (RMAP).
2. Subprograms/Department Initiatives
None.
3. Brief History
RMAP is authorized under section 379E of the Consolidated Farm and
Rural Security Act, as amended by the Food, Conservation, and Energy
Act of 2008 (2008 Farm Bill). The 2008 Farm Bill provided mandatory
funding for this program totaling $15 million from FY 2009 through FY
2012. An interim rule was published for RMAP on May 28, 2010 to
implement the program. A Notice of Funding Availability (NOFA) was
published on June 3, 2010, announcing $45.1 million in funding in FY
2010 for direct loans and grants. This available program level includes
mandatory and discretionary funding. No funding was provided in FY 2011
through annual appropriations; however, $4 million in mandatory funding
is available. The President's 2012 budget requests $5.7 million in
budget authority for RMAP, in addition to $3 million in mandatory funds
provided by the 2008 Farm Bill.
4. Purpose/Goals
RMAP provides rural microentrepreneurs the opportunity to gain the
skills necessary to establish new rural microenterprises, gain
training, and receive continuing technical and financial assistance
related to the successful operation of rural microenterprises. Loans
and grants are made to qualified Microenterprise Development
Organizations (MDO's) for the purposes of: (1) providing microloans to
rural microentrepreneurs, and (2) providing training and technical
assistance to current and/or potential micro entrepreneurs to establish
new or sustain existing micro businesses in rural areas.
5. Success in Meeting Programmatic Purpose/Goals
In FY 2010, USDA announced $45.1 million in program level in FY
2010, this level of funding supported 63 loans and 74 grants; about
$13.6 million of the announced amount was unutilized in FY 2010 and is
available for use in FY 2011. RBS continues to accept and fund
applications from the FY 2010 carryover funding. A NOFA for the FY 2011
mandatory funding is under development. MDO's are projecting to assist
574 microentrepreneurs and create or save 1,391 jobs.
6. Annual Budget Authority (FY 2002-FY 2011)

RMAP--Discretionary and Mandatory
(in millions of dollars)
------------------------------------------------------------------------
2007 2008 2009 2010 2011
------------------------------------------------------------------------
Budget Authority N/A N/A $4.0 $4.0 $4.0
(Mandatory)
Budget Authority N/A N/A $0 $5.0 $0
(Discretionary)
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)

RMAP--Discretionary and Mandatory Outlays
(in millions of dollars)
------------------------------------------------------------------------
2007 2008 2009 2010 2011
------------------------------------------------------------------------
Outlays N/A N/A $0 $9.7 $7.3
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

RMAP--Discretionary and Mandatory
(in thousands of dollars)
------------------------------------------------------------------------
2007 2008 2009 2010 2011
------------------------------------------------------------------------
Program Level N/A N/A N/A $31,628 $24,961
Budget Authority N/A N/A N/A $9,654 $7,346
Administrative Costs $130 $130
(Direct)
Administrative Costs $333 $333
(Indirect)
-------------------------------------------------
Total Cost $10,117 $7,809
FTEs 4 4
------------------------------------------------------------------------
Note: Annual delivery costs are presented consistent with the FY 2012
Budget Explanatory Notes.

9. Eligibility Criteria
Loans and grants are provided to MDOs who, in turn, assist rural
micro enterprises and microentrepreneurs. RMAP applicants are nonprofit
entities, Indian tribes, and public institutions of higher education
that, for the benefit of rural microentrepreneurs and microenterprises,
provides training and technical assistance, makes microloans or
facilitates access to capital or another related service, and/or has
demonstrated record of delivering, or an effective plan to develop a
program to deliver such services.
10. Utilization (Participation) Data
The RMAP program was implemented in FY 2010 and made 63 loans and
74 grants. Applications are accepted throughout the year and to date
165 loans and/or grants have been awarded.
11. Duplication or Overlap with Other Programs
Small Business Administration administers a newly-implemented Micro
Loan program, which is very similar in nature. As is the case with all
of the programs operated by RD, RMAP is specifically designed to
assistance microentrepreneurs in rural areas. The Rural Business
Service also operates the intermediary relending program and the rural
economic development program under similar intermediary concepts. While
these programs utilize the same basic operational platform, each
program is targeted to a specific group of applicants. Streamlining
these activities within existing authorizes could generate savings from
implementation activities.
12. Waste, Fraud and Abuse
Not applicable as this is a newly-implemented program and has not
yet undergone an audit or test of controls
13. Effect of Administrative PAYGO
None.
______

House Committee on Agriculture Farm Bill Audit Questionnaire--Rural
Housing Service
1. Program Name
Community Facilities (CF) Programs Direct and Guaranteed Loans and
Grants.
2. Subprograms/Department Initiatives
CF Direct Loans.
CF Guaranteed Loans.
CF Grants.
CF Economic Impact Initiative Grants.
CF Tribal College and University Grants.
3. Brief History
USDA's CF Programs are implemented under Rural Development's Rural
Housing Service (RHS). The programs provide access to capital for
critical civic infrastructure investments primarily in the area of
rural health care, public safety, and educational facilities. These
investments are creating jobs and economic growth and are also funding
technology and infrastructure such as health information technology
that will lay the groundwork for future economic growth.
In 1972, Congress amended the Consolidated Farm and Rural
Development Act (CON Act) to authorize the CF direct loan program to
address the need for an agency devoted to providing essential community
facilities in rural areas. Other Federal agencies were located in
metropolitan cities and historically most of their activities were
within cities with populations far exceeding the size of rural
communities. Authority to implement the CF Programs was delegated to
the predecessor to RHS, the Farmers Home Administration, which had an
established field staff based in rural communities with the capacity to
address local rural issues and concerns, assist those communities in
assembling applications and providing supervised credit.
All applicants must demonstrate that they are unable to obtain
credit from commercial sources at reasonable rates and terms.
Applicants are required to be units of government, federally-recognized
Indian tribes, or nonprofit entities with significant community support
and ties to the local community, which helps to assure that the
services are affordable for low- and moderate-income rural Americans.
In 1990, the CF authority was expanded to include the capability to
guarantee loans made by commercial lenders. Authority for the CF grant
program was added in 1997. The direct and guaranteed loan repayment
terms are limited to the useful life of the facility, state statute, or
40 years, whichever is less.
Since its inception, more than 40 percent of RD's CF Programs'
portfolio is invested in rural health care facilities. Since 2009 to
June 30, 2011, the CF direct and guaranteed loan and grant programs
invested over $3.1 billion in 4,207 essential community facilities.
These investments are estimated to directly create 9,996 jobs and save
22,384 jobs. Of this amount over $1.66 billion has been invested in 464
rural health care facilities which is estimated to create 4,124 jobs
and save 10,319 jobs. The President's FY 2012 Budget proposes to fund
the CF direct loan program at $1 billion, more than triple the historic
funding level. In addition, the budget proposes to eliminate funding
for the CF guaranteed loan program which has had higher defaults than
projected, making it more expensive than the direct loan program. The
proposed increase in the CF direct loan program will mitigate any
effects of ending the guaranteed loan program. The CF direct loan
program has a negative subsidy rate in FY 2012. This means that the $1
billion in CF direct loan assistance can be provided without the need
to request subsidy budget authority. This is a win-win for taxpayers
and rural residents working to strengthen their rural communities.
4. Purpose/Goals
CF Programs direct and guaranteed loans and grants provide
financing to units of local government, nonprofit organizations, or
federally-recognized Indian tribes for the development of essential
community facilities in rural areas. Eligible purposes include:

Health care facilities;

Fire, rescue, and public safety buildings, vehicles, and
equipment;

Educational and cultural facilities;

Town halls, community centers, and libraries; and

Adult and child day care facilities.

Public buildings and civic infrastructure.
5. Success in Meeting Programmatic Purpose/Goals
CF Programs' performance includes:

------------------------------------------------------------------------
2007 2008 2009 2010 2011
Performance Measure Actual Actual Actual Actual Actual
------------------------------------------------------------------------
Percentage of rural
population with new
or improved:

Health 5.2 5.3 5.4 3.2 3.2
Care

Public 2.7 2.8 5.0 3.2 3.2
Safety

Education N/A N/A 3.5 3.8 3.0
al facilities

Program Level (in $755.0 $672.0 $639.3 $948.4 $488.3
millions)
------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)
Annual budget authority included:

CF Programs Direct and Guaranteed Loans and Grants
(dollars in thousands)
------------------------------------------------------------------------
2007 2008 2009 2010 2011
------------------------------------------------------------------------
Direct CF Loans $11,130 $16,369 $16,871 $3,864 $3,856
Guaranteed CF Loans $322 $7,596 $6,358 $6,626 $6,613
CF Grants $16,714 $20,373 $20,373 $20,373 $14,970
Rural Community $8,021 $6,256 $6,256 $6,256 $4,990
Development
Initiative
Economic Impact $17,123 $13,902 $10,000 $13,902 $6,986
Initiative Grants
Tribal College and $4,592 $3,972 $3,972 $3,972 $3,964
University Grants
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
Annual outlays included:

(Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
Account 2008 2009 2010 2011
Account Name Number 2007 Actual Actual Actual Actual Target
----------------------------------------------------------------------------------------------------------------
CF Program 1951 1 $112,098 $109,417 $235,410 $145,409 $175,000
----------------------------------------------------------------------------------------------------------------
1 Funded through RCAP.
Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous
years. Undisbursed balances are carried forward for future year outlays. Also, outlays reflect non-farm bill
accounts as well.

8. Annual Delivery Cost (FY 2002-FY 2011)
Annual delivery costs included:

CF Programs Direct and Guaranteed Loans and Grants
(dollars in thousands)
------------------------------------------------------------------------
2007 2008 2009 2010 2011
------------------------------------------------------------------------
Program Level $609,103 $640,889 $435,502 $948,423 $488,266
Budget Authority $77,397 $78,199 $56,921 $69,455 $41,379
S&E $114,578 $113,299 $117,408 $119,993 $119,993
------------------------------------------------------
Total Costs $169,630 $191,498 $174,329 $189,448 $161,372
FTE 1,079 1,012 970 1,028 1,028
------------------------------------------------------------------------

9. Eligibility Criteria
CF Programs can make and guarantee loans to develop essential
community facilities in rural areas and towns of up to 20,000 in
population. Loans and guaranteed loans are available to public entities
such as municipalities, counties, and special-purpose districts, as
well as to nonprofit corporations and tribal governments.
CF Programs provide grants to assist in the development of
essential community facilities in rural areas and towns of up to 20,000
in population. Grants are authorized on a graduated scale. Applicants
located in small communities with low populations and low incomes will
receive a higher percentage of grants. Grants are available to public
entities such as municipalities, counties, and special-purpose
districts, as well as nonprofit corporations and tribal governments.
10. Utilization (Participation) Data
Number of Loans and Grants

FY 2011 to date--1,032;

FY 2010--2,754;

FY 2009--2,377

FY 2008--1,840;

FY 2007--1,766.
11. Duplication or Overlap with Other Programs
There are a broad range of essential community facilities which may
be financed through the CF Programs, and there are other agencies that
finance some of the same types of community facilities within that
range that could be located in rural areas. HUD's CDBG grant program is
the main program that funds similar types of projects, albeit not
through Federal loans or loan guarantees and not specifically for rural
areas.
The RD agencies were created by Congress specifically to serve
rural communities. In those cases where there are shared interests, RD
has developed partnerships. We have long standing partnerships with the
Health Resources and Services Administration, the Economic Development
Administration, and the Appalachian Regional Commission which have
included Memoranda of Understanding that set forth the ways in which
the agencies collaborate and leverage resources to improve access to
critical health care, education, and public safety facilities.
At the RD State Office level, we have extensive partnerships with
the individual state's economic development, health, and water and
sewage treatment agencies. RD has also developed partnerships over the
years with organizations representing some of our major constituency
groups, including lenders, fire fighters, and rural hospitals. Newer
relationships include those with the Delta Regional Authority and the
Federal Interagency Partnership on the Southwest Border Region.
12. Waste, Fraud and Abuse
There are numerous reviews performed on the CF program, such as
state internal reviews, management control reviews, improper payments
risk assessment, OMB Circular A-123 assessment, project reviews and
reviews by external agencies such as the Office of Inspector General
and the General Accountability Office. Senior management is also
required to provide an annual assurance statement which is senior
management's judgment as to the overall adequacy and effectiveness of
internal control within the agency. CF has had no significant findings
in any of the reviews or assessments. Effective internal controls are
one of the CF program's main objectives to achieve results through
improved accountability and to ensure the overall success of the
program.
CF Programs have established internal controls to ensure that: (1)
obligations and costs are in compliance will applicable law; (2) funds,
property, and other assets are safeguarded against waste, loss,
unauthorized use or misappropriation; and (3) revenues and expenditures
applicable to agency operations are properly recorded and accounted for
to permit the preparation of accounts and reliable financial and
statistical reports and to maintain accountability over the assets.
These controls are effective in guarding against overspending,
operational failure, fraud, waste, abuse, or violations of law. They
provide a reasonable assurance of effectiveness and efficiency of
operations, reliability of financial reporting, and compliance with
laws and regulations.
13. Effect of Administrative PAYGO
None.