[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]








               THE FUTURE OF AMERICA'S SMALL FAMILY FARMS

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

                                HEARING

                               before the

             SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             MARCH 23, 2017
                               __________

   
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             Small Business Committee Document Number 115-011
               Available via the GPO Website: www.fdsys.gov
               
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                  HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                          DON BACON, Nebraska
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                                 VACANT
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

                   Kevin Fitzpatrick, Staff Director
                       Jan Oliver, Chief Counsel
                Adam Minehardt, Minority Staff Director
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Rod Blum....................................................     1
Hon. Brad Schneider..............................................     2

                               WITNESSES

John D. Lawrence, Ph.D., Associate Dean and Director for 
  Extension and Outreach, College of Agriculture and Life 
  Sciences, Iowa State University, Ames, IA......................     4
Mr. Tim White, Owner, TA White Farm LLC, Lexington, KY, 
  testifying on behalf of the National Cattlemen's Beef 
  Association....................................................     6
Ms. Sarah Rickelman, Manager, Degener-Juhl Farms, Hudson, IA, 
  testifying on behalf of the Iowa Farm Bureau...................     7
Mr. Chuck Conner, President & CEO, National Council of Farmer 
  Cooperatives, Washington, DC...................................     9

                                APPENDIX

Prepared Statements:
    John D. Lawrence, Ph.D., Associate Dean and Director for 
      Extension and Outreach, College of Agriculture and Life 
      Sciences, Iowa State University, Ames, IA..................    28
    Mr. Tim White, Owner, TA White Farm LLC, Lexington, KY, 
      testifying on behalf of the National Cattlemen's Beef 
      Association................................................    35
    Ms. Sarah Rickelman, Manager, Degener-Juhl Farms, Hudson, IA, 
      testifying on behalf of the Iowa Farm Bureau...............    42
    Mr. Chuck Conner, President & CEO, National Council of Farmer 
      Cooperatives, Washington, DC...............................    45
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Statement from Pete Gurr, Deputy Director of the American 
      Samoa Department of Agriculture............................    56

 
               THE FUTURE OF AMERICA'S SMALL FAMILY FARMS

                              ----------                              


                        THURSDAY, MARCH 23, 2017

                  House of Representatives,
               Committee on Small Business,
    Subcommittee on Agriculture, Energy, and Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Rod Blum 
[chairman of the Subcommittee] presiding.
    Present: Representatives Blum, Chabot, King, Radewagen, 
Comer, Bacon, Lawson, and Schneider.
    Chairman BLUM. I call this meeting to order.
    Welcome to the first hearing of the Subcommittee on 
Agriculture, Energy and Trade in the 115th Congress. This is my 
first hearing as chairman of the Subcommittee, and I am pleased 
to be focusing on a topic that is important to both my district 
and America's heartland, small family farms.
    Small farms have always been a part of our nation's fabric. 
It can not be stressed enough that the small family farm is 
also a small family business. Many of our country's Founding 
Fathers started out as small family farmers. In a letter to 
George Washington, Thomas Jefferson even referred to 
agricultural as, quote ``our Nation's wisest pursuit.'' 
Although the industry has changed over time, agriculture is 
still a driving force in American America's economy.
    Forty-one percent of all land in the United States is used 
for farming. U.S. agriculture has a $45 billion trade surplus 
with other countries. Let me repeat that. U.S. agriculture has 
a $45 billion trade surplus with other countries. While it may 
be surprising, over 93 percent of America's farms are still 
small family farms. Our nation's smallest farms continue to 
produce a significant amount of our nation's cattle, eggs, 
soybeans and other goods.
    Small family farms are also at the forefront of the 
emerging sectors of agriculture. For example, direct to 
consumer sales through farm stands and farmer's markets have 
greatly increased in recent years. And small family farms 
account for almost 60 percent of those sales.
    But more importantly, small family farms provide a living 
for people in places with limited opportunities and put food on 
the table for families across the world. And as I was saying 
earlier in discussions, sometimes I have to remind my 
colleagues from the cities that I like food and food is not 
grown in grocery stores.
    While small family farms are a vital part of America's 
economy and food supply, historically low food prices have made 
it harder than ever to run a family farm. Since 2013 net farm 
income has dropped by 50 percent. And while larger farms are 
better equipped to handle periods of lower prices, small family 
farms get hit the hardest. In addition to low prices, small 
family farms have a multitude of other issues to worry about, 
from high taxes, increasing regulations and trouble selling 
their products internationally, it would seem like government 
bureaucracy is only making it harder to run a small family 
farm.
    Today's hearing will be a tremendous opportunity to hear 
directly from the agriculture industry experts and even some 
firsthand accounts about what it is like to run a small family 
farm in 2017. Through the panel's testimony, this Subcommittee 
hopes to further understand how policies can be developed to 
help, not hurt, help small family farms succeed.
    I now yield to the ranking member for his opening 
statement, Mr. Schneider of Illinois.
    Mr. SCHNEIDER. Thank you, Mr. Chairman. And like you, this 
is my first hearing as ranking member. I am very excited not 
just to be on this Committee, but to be working with you, 
working to help small businesses and small farms across our 
country to continue to be the engine of our economy and I want 
to thank the witness for being here.
    Agriculture is one of America's oldest and most important 
industries where family farmers and small businesses serve as 
the lynchpin. Most importantly it is a vital part of the 
Nation's economy, providing food and natural resources to 
millions. Although production has shifted to larger farms, 
small farms maintain significance in our economy. Based on data 
from the 2012 Census on Agriculture, there were 2.1 million 
farms in the United States and 97 percent were small, family 
owned operations.
    U.S. farms income experienced a golden period from 2011 
through 2014, driven largely by the strong commodity prices and 
agricultural exports. But since then, the state of the farming 
economy has weakened. Low commodity prices and high costs have 
posed concerns for many farmers across the country, market 
forecasts predict that that these trends will continue. As a 
result of these concerns, small family farmers may face 
difficult choices in how to maintain their businesses.
    Small farmers experience many of the same concerns that 
other small businesses face. For example, even though USDA 
programs provide lending options specifically for farmers, 
access to capital remains difficult for certain subsets of 
agriculture, mainly startup and socially disadvantaged farmers 
and ranchers. Similarly, small farmers stress the need for 
comprehensive tax reform to reduce the complexity and burden 
that exists in the current tax system. And in order to continue 
to create jobs which drive the economy, many farms would 
benefit from sensible immigration policies to hire the workers 
they need. These policies are critical in helping our Nation's 
small farms remain competitive in domestic and global markets.
    Small farmers need a strong commitment from Congress to 
assure them that agriculture remains a viable industry, 
especially as the gap between small and large farms become more 
divided.
    Today's hearing offers the opportunity to gain a better 
understanding of their needs and the challenges they face. It 
is my hope that we will devise solutions today that will help 
small family farms thrive.
    I thank the witnesses again for being here today and I look 
forward to hearing your comments.
    I yield back.
    Chairman BLUM. I would just like to take a second to 
explain the opening statements and the timing. If Committee 
members have an opening statement prepared, I ask that it be 
submitted for the record.
    Your timing lights you should have in front of you. You 
will have 5 minutes to deliver your testimony. The light starts 
out as green and when you have 1 minute remaining, the light 
will turn to yellow. And at the end of your 5 minutes, the 
light will turn to red. And we ask that you try to adhere to 
your time limit. We are not going to shut your mike off, we are 
friendly here but try to stick to the 5 minutes.
    With that, I would like to introduces our distinguished 
panel of witnesses today. Our first witness is Dr. John 
Lawrence, Associate Dean and Director of the College of 
Agriculture and Life Sciences at Iowa State University. 
Welcome. Dr. Lawrence is also a director of the Iowa Nutrient 
Research Center at the Iowa State University Beginning Farming 
Center which coordinates educational programs and assess the 
needs of beginning and retiring farmers. He received his Ph.D. 
in economics from the University of Missouri, and received both 
his masters and bachelor's degree from Iowa State. Thank you 
for coming to testify today, doctor.
    Our next witness is Tim White, owner of White Farm, located 
in Lexington, Kentucky. He is vice president of the Kentucky 
Cattlemen's Association and will be testifying this morning on 
behalf of the National Cattlemen's Beef Association. White 
Farms have been operated by Mr. White and his wife for 27 years 
and is primarily a cattle operation with corn and soybean crops 
as well. Mr. White is a graduate of Eastern Kentucky University 
with a degree in beef cattle management. Thank you for 
testifying this morning, Mr. White, and welcome.
    Our third witness is Sarah Rickelman, a manager of Degener-
Juhl Farms--did I pronounce that right--a hog farm in my 
district in Hudson, Iowa. Last fall Ms. Rickelman was selected 
to participate in the Iowa Farm Bureau Agriculture Leaders 
Institute, congratulations, which brings Iowa's leaders in the 
agricultural industry to meet with agriculture policy experts 
here in Washington, D.C. She graduated from Iowa State 
University, in agricultural studies, and will be testifying 
this morning behalf of the Iowa Farm Bureau. Thank you very 
much for being here. It is always great to see one of my 
constituents.
    And I will now yield to Ranking Member Schneider to 
introduce the minority witness who I happen to know very well.
    Mr. SCHNEIDER. Thank you. It is my pleasure to welcome 
Chuck Conner. Mr. Conner is president and CEO of the National 
Council of Farmer Cooperatives where he oversees the 
organization's work to promote and protect the business and 
public policy interest of America's farmer owned cooperatives.
    Prior to joining NCFC, Mr. Conner served as deputy 
secretary at the U.S. Department of Agriculture. He also served 
as special assistant to President Bush and as an adviser to 
Senator Richard Lugar. Mr. Conner is a graduate of Purdue 
University, which I will mention is in the Sweet 16 and I 
welcome Mr. Conner, thank you for being here.
    Mr. CONNER. Thank you, Congressman.
    Chairman BLUM. Dr. Lawrence, you are now recognized for 5 
minutes.

   STATEMENTS OF JOHN D. LAWRENCE, PH.D, ASSOCIATE DEAN AND 
DIRECTOR FOR EXTENSION AND OUTREACH, COLLEGE OF AGRICULTURE AND 
  LIFE SCIENCES, IOWA STATE UNIVERSITY, AMES, IA; TIM WHITE, 
 OWNER, TA WHITE FARM LLC, LEXINGTON, KY, TESTIFYING OF BEHALF 
OF THE NATIONAL CATTLEMEN'S BEEF ASSOCIATION; SARAH RICKELMAN, 
 MANAGER, DEGENER-JUHL FARMS, HUDSON, IA, TESTIFYING ON BEHALF 
  OF THE IOWA FARM BUREAU; AND CHUCK CONNER, PRESIDENT & CEO, 
   NATIONAL COUNCIL OF FARMER COOPERATIVES, WASHINGTON, D.C.

              STATEMENT OF JOHN D. LAWRENCE, PH.D

    Mr. LAWRENCE. All right, thank you for the opportunity to 
speak to you today about family farms. You will be hearing from 
individual farmers this morning and their important 
perspectives on this panel. My comments are going to focus on 
the demographics and economics of family farms and the 
challenges they face, and then finally I will share with you 
some of the programming at Iowa State University that works to 
help sustain family farms across the generations.
    I am going to speak initially here using USDA definitions 
of farms on size. We are going to talk about resident farms, 
intermediate farms, and commercial farms, all of which would 
be, depending on your definition, may be small. Almost 
certainly most of them in Iowa are family owned.
    I don't want to get too much into the distinctions, but it 
is important to note that of the 87,000 farms in Iowa, nearly 
half of them are considered resident farms, meaning that they 
are not farmers. Their primary occupation is off farm or they 
are retired. They still live in communities, they still 
contribute to the farm economy.
    Intermediate farms, those that have gross sales less than 
$350,000, a year make up about 30 percent of our farms, 26,000 
of them. Yet 70 to 90 percent of their household income comes 
from our farms sources. The commercial farms, those with sales 
over about $350,000 or about 600 acres of corn-soybean 
rotation, make up about one-fourth of the farms, they control 
67 percent of the land, and they account for 80 percent of the 
value of production. Again, family owned, family operated, 
small on some scales but larger in others. They still have off 
farm income in their household of about $100,000 a year on 
average.
    The policy that impacts markets and helps farmers manage 
risk are going to be more important to these commercial farmers 
because they have more acres and more animals. Policies that 
impact rural employment are beneficial to all farmers but in 
particular those more dependent on off farm income.
    The rural businesses obviously need those people for 
employees. Thus it is a symbiotic relationship between farms 
and the rural businesses. The current conditions, and you will 
hear more about that from our farmers on the panel, but as was 
said commodity prices have dropped dramatically since their 
peak in either 2013 or in the case of livestock 2014. That has 
had an impact on financial conditions. I work with a ``canaries 
in the coal mine'' group that meets to discuss has financial 
health of farmers in recent years. Most farmers came into the 
situation in a strong equity position, yet that has been 
deteriorating. Many have been able to refinance to cover short-
term debt needs, and spread the debt out over a longer period 
of time, and most but not all have been able to get financing 
and continue to operate.
    If prices continue as forecast, farmer equity will continue 
to slowly deteriorate. Certainly the most vulnerable are the 
younger producers who did not have a cushion going into this 
downturn.
    As we look at the challenges to sustaining family farms I 
am going to talk about three of them.
    First, is just managing a business in a globally 
competitive environment such as agriculture, dealing with 
variable weather, variable markets, evolving technology, 
regulations and narrow margins.
    Second, is to be able to grow that business to not only 
support one family, but at times support two families as you 
think about a transfer of the business from one generation to 
the next.
    Third, and often the most difficult and challenging, is 
simply the communication about the future of the farm. Farmers 
by nature do not like to talk about things like this, and yet 
it is important to plan ahead so everybody has a common vision 
and a common timeframe.
    Iowa has the first in the Nation beginning farmers center, 
it was created by the Iowa legislature in 1994 to assist 
facilitating the transition of farming operations from 
established farmers to beginning farmers. That center is part 
of the extension program and the College of Agriculture and 
Life Sciences at Iowa State University.
    I want to talk about two programs in particular, one we 
call returning to the farm, which is for farmers who know who 
their successor will be, oftentimes a relative, a child--to get 
them together in a pair of two day workshops and really start 
the communication process that will set the footing for the 
coming years of discussion.
    A second one called ag link works with farmers who do not 
have an heir already identified but is a matching service of 
sorts. But unlike a dating service, where we simply give each 
others names, this is an interview process, a facilitated 
discussion over several months to make sure we pair up the 
right people and we continue to work with them into the future 
to try to move that business into the future intact rather than 
in pieces. There are many other programs working with these 
farmers and I look forward to answering questions about that, 
thank you.
    Chairman BLUM. Thank you, Dr. Lawrence. Mr. White, you are 
now recognized for 5 minutes.

                     STATEMENT OF TIM WHITE

    Mr. WHITE. Thank you, Chairman Blum, Ranking Member 
Schneider for allowing me to testify today on behalf of the 
future of America's small farm, family farms.
    My name is Tim White, my wife, Amy and I own and operate TA 
White Farm, LLC in Lexington, Kentucky. We have a pure bred 
Angus operation and a commercial cow calf operation, and I am 
currently the vice president of the Kentucky Cattlemen's 
Association.
    Cattle producers in this country are small business owners, 
by in large with the average cow herd in the United States at 
40 head. The current state of the farm economy is very much 
weakend. The cattle market has been in a slump. It has many 
producers struggling. According to the USDA's economic research 
service, this year marks the fourth consecutive year of farm 
income dropping on a national scale.
    Congress plays an important role in several areas that 
impact cattle producers, including regulation, tax, trade, and 
the farm bill. While these issues alone can be managed by 
producers, when combined with the losses of natural resources, 
urban encroachment and natural disaster we have a real hurdle 
that producers must overcome to be successful.
    The biggest concern of our small business is 
overregulation. The EPA's WOTUS rule is such an example. The 
overreach of this regulation would require many beef producers 
to get permits, and to comply with those permits, which would 
be a huge burden and not to mention it would open up lawsuits 
for activist groups.
    As a small-business owner, I am particularly concerned 
about the lack of outreach to the small business community by 
Federal agencies such as the EPA. As a family owned business, I 
know that this regulation would have had a negative impact on 
my operation. The positive news is President Trump signed an 
executive order requiring the EPA to go back and revise the 
WOTUS rule.
    We want to work together with the EPA so that we can get 
clarity, that we need, in the WOTUS replacement that works for 
cattle producers, protects our water quality, and follows the 
rule of the law.
    U.S. livestock producers understand and appreciate the role 
that taxes play in maintaining and improving our Nation. 
However, they also believe that the most effective Tax Code is 
a fair one. For this reason, a full immediate repeal of the 
estate tax must be a top priority as Congress considers 
comprehensive tax reform legislation.
    As you may know, in 2012 Congress permanently extended the 
estate tax exemption level to $5 million per individual and $10 
million per couple. While this was a positive step, the current 
state of our economy has left many agriculture producers 
guessing about the ability to plan for estate tax liabilities.
    When it comes to trade, cattlemen have always been strong 
believers in international trade. We support positions at open 
markets and remove trade barriers intended to keep our products 
out of foreign markets. The most dependable way to secure 
access to foreign consumers is through free trade agreements 
because they remove tariff and nontariff barriers.
    Another major item on the agenda for small family farms is 
the creation of the 2018 farm bill. With the farm bill in mind, 
cattle producers oppose the involvement of the Federal 
Government in determining how they market their cattle. We are 
strong in opposition to the GIPSA rule on competitive injury. 
If this rule is implemented we are led to believe that the 
packers would offer one price for all cattle regardless to the 
quality. As they are not willing to open themselves up to 
frivolous lawsuits.
    NCBA would also like to reiterate the opposition to the 
mandatory, government run, country of origin labeling or COOL. 
Repeal of the previous mandatory program was necessary as it 
provided no market benefit to producers or consumers.
    I also would like to mention today the need for a stronger, 
more sufficient foot and mouth disease vaccine bank. Estimates 
show that if an FMD outbreak happened in the United States, it 
would cost our livestock producers billions of dollars in the 
first 12 months. NCBA also requests the support for funding of 
$150 million a year over the next 5 years. This is important to 
the beef industry as countries across the globe continue to 
grapple with foot and mouth disease.
    Again I would like to thank you for your time today and I 
look forward to working with you and answering any questions 
that you might have.
    Chairman BLUM. Thank you for your testimony, Mr. White.
    Ms. Rickelman, you are now recognized for 5 minutes.

                  STATEMENT OF SARAH RICKELMAN

    Ms. RICKELMAN. Good morning. I am Sarah Rickelman, manager 
at Degener-Juhl Farms in Hudson, Iowa. Let me begin by thanking 
Chairman Blum, Ranking Member Schneider and members of the 
Committee for allowing me the opportunity to share my story 
with you today.
    I especially want to thank my House Member Representative 
Blum for inviting me to testify. Thank you for the warm 
introduction and this opportunity to talk about small family 
farms in Iowa.
    Iowa Farm Bureau members from Black Hawk County and rural 
Iowa, where I along with my husband, help manage a 1,700 head 
farrow to finish pig farm. My husband and I are two of several 
producers who provide the hands on daily work to generate a 
safe, nutritious and affordable product that is consumed by 
families across the United States and around the world.
    My passion for agriculture started as a young girl, growing 
up on a small acreage and being heavily involved in the local 
4-H club, learning about agriculture, caring for my animals and 
preparing them for county fair year after. This was the 
beginning of my love story with agriculture.
    Wanting to continue my education at agriculture I attended 
Iowa State University, taking classes in agricultural studies 
with an emphasis in swine production.
    ISU empowered me to learn the skills and obtain the 
knowledge that I use on the farm every single day. Some of my 
daily duties include animal observations, recordkeeping, and 
training employees on public relations work. I love being 
inside the barn every day, working closely with the animals and 
ensuring they are given the best possible care. From the early 
morning to late night, work on the farm is never done and I 
wouldn't want it any other way.
    My goal in college was to find a career that would balance 
farm work with local, State and national agriculture advocacy. 
I got involved with Farm Bureau 3 years ago and I really 
enjoyed the opportunity to share my story of how I got started 
in farming and how important agriculture is to my family and 
rural Iowa. I truly believe that being on the family farm is 
the best career choice I could have ever made.
    While I couldn't be happier with my decision to farm with 
my family, we face significant challenges and threats to our 
livelihood. Being a young farmer, I am concerned about the 
ability to continue this profession and one day pass it along 
to my children. I am concerned about the ability--excuse me, 
with commodity prices depressed over the past several years, 
net farm incomes have decreased by 46 percent over the past 3 
years with another 8 percent decrease projected for 2017. While 
grain and livestock prices have a major effect on our 
operations, the laws and policies that are enacted in D.C. also 
have a significant impact on the success of small family farms.
    In these challenging, economic times it is more important 
than ever that we have a strong and adequately funded farm 
bill. The farm bill provides a basic level of risk protection 
in bad economic times and in years with poor weather. Federal 
crop insurance in the farm bill has been successfully proven 
and essential safety net for family farms across the country. I 
hope that Congress will continue to appreciate the importance 
of the farm bill and pass it before the current farm bill 
expires.
    Another way that D.C. is affecting the family farm is 
through current tax policy. As Congress looks to reform our 
Nation's tax policy, I hope that lawmakers will consider the 
impact any change will have on the thousands of family farms 
across the country. While lowering individual tax rates is a 
positive reform, family farms will ultimately pay more taxes if 
essential tax policies for small businesses are eliminated.
    Agriculture is a capital intensive business and being able 
to deduct business expense a critical tool. This should include 
the ability to deduct interest expense. As a young farmer, I am 
extremely concerned about the ability for the next generation 
to purchase their first piece of ground or expand their 
operation if they can't deduct interest expense. A tax reform 
package that doesn't include these provisions will ultimately 
increase taxes on family farms. On that same note, I hope 
Congress will finally and permanently eliminate the death tax 
while maintaining stepped up basis. These tax provisions are 
essential to survival of the family farm.
    As I mentioned before, the pork we raise on the farm not 
only feeds families in Iowa but also feeds people across the 
world. I am blessed to farm in an area of the world that is 
immensely fertile and productive. Our country grows far more 
food than we could ever use, with 98 percent of the world's 
consumers living outside of our borders.
    Agriculture is a growth industry and expanding export 
opportunities is vitally important to the success and future of 
the family farm. I hope that Congress and this administration 
will push for expanded trade opportunities and work with other 
countries to negotiate trade deals that lower tariffs so we can 
sell more of products to those markets.
    We face many challenges as farmers grow fewer and the 
divide between the general population and agriculture grows 
wider, but I am optimistic that if we continue to share our 
story we can shine a light on the work we grow safe, 
affordable, and sustainable food for the world. Being a family 
farmer isn't just is a career, it is a lifestyle of which I am 
extremely proud.
    Now pregnant with my first child, I look forward to the day 
when our little one can come out to the barn to see the baby 
pigs with me and my husband, to enjoy agriculture as much as we 
do. With a strong safety net, progrowth tax policies, and 
increased trade opportunities I know America's small family 
farms have a bright future. Thank you.
    Chairman BLUM. Thank you for your insights, Ms. Rickelman, 
and congratulations.
    Ms. RICKELMAN. Thank you.
    Chairman BLUM. That is great news. I would also like to 
being a knowledge of the chairman of the full Small Business 
Committee, Representative Chabot down at the end there. Thank 
you, chairman, for honoring us with your presence at this 
Subcommittee meeting.
    Mr. CHABOT. Don't screw it up.
    Chairman BLUM. Tell that to the President today.
    Thank you, Ms. Rickelman. Mr. Conner, I would like to 
recognize you now for 5 minutes.

                   STATEMENT OF CHUCK CONNER

    Mr. CONNER. Chairman Blum, Ranking Member Schneider, and 
members of the Subcommittee, thank you for holding today's 
hearing on the future of the family farm.
    I am Chuck Conner, president and CEO of the National 
Council of Farmer Cooperatives and I am honored to be here 
today on behalf of America's nearly 3,000 farmer owned co-ops 
and their nearly 2 million producer owners.
    The focus on the future of America's family farms is 
especially timely today. As we work our way through the bottom 
of the price cycle, producers are looking to improve their 
margins in any way possible. In today's ag economy, the 
difference between making small profits or harboring very big 
losses is controlling your costs down to the very penny. 
Producers know that many of these costs are simply beyond their 
control, some are driven by markets, others by mother nature, 
but some costs are also driven by public policy. These policies 
can act either as investments that help lower costs or as 
regulatory hammers that raise them.
    Our common goal, ultimate goal, is to preserve the 
productivity of our farms. Today I would like to focus on three 
issues before Congress with a direct impact on our members and 
their farmer owners. Tax reform, immigration and trade.
    NCFC supports pro growth tax reform. However, some aspects 
of the House tax reform blueprint could profoundly impact 
farmer co-ops and their members. For example, the border 
adjustability tax, it includes a 20 percent tax on imported 
goods. This would be detrimental to cooperatives, cooperatives 
that import fertilizer, fuel, farm machinery components, other 
items.
    The blueprint also eliminates the deduction for net 
interest expense, repealing the deduction for interest on debt 
would cause harm to farmers and their co-ops by hindering 
business expansion, new hiring and product development.
    Additionally, the blueprint calls for the repeal of section 
199, the deduction for domestic production activities income. 
Section 199 promotes jobs, it promotes job creation and 
domestic production of goods. Section 199 benefits our returned 
to the economy through new job creation, as well as increased 
spending on agricultural production and in rural communities. 
We urge you to maintain this incentive for domestic production.
    An immediate threat to many of our farmers is the lack of 
available labor. As part of the agricultural workforce 
coalition, NCFC is seeking a legislative solution to address 
this threat. We must ensure our farmers have access to the 
labor they need to harvest crops and care for livestock. 
Unfortunately, instability in the ag labor workforce has 
reached critical levels today. Farmers face a shortage of 
legally authorized and experienced workers each year and the 
cumbersome H-2A visa program isn't serving as a safety net to 
meet the workforce demands today.
    We can and we must do better for our farmers by modernizing 
our immigration system. This includes work eligibility for our 
existing workforce and a farmer friendly program to provide for 
future guest workers for all of agriculture.
    Our farmers also depend heavily on foreign markets and 
trade is vital to the prosperity of our farming sector. While 
small farmers may not have access to international markets 
directly, the prices they receive for their commodities are 
clearly dependent on experts. Additionally, farmer owned co-ops 
offer farmers access to the global marketplace by providing 
services that would be more difficult, if not impossible to 
accomplish individually.
    The co-ops increased earnings due to foreign sales flow 
back to the farmer owners through increased patronage 
dividends, boosting farmers income well beyond the farm gate. 
With over 95 percent of the world's population living outside 
the United States, expanding access to foreign markets is 
essential to our future success, this includes maintaining and 
increasing access markets through existing and future trade 
agreements and leveraging export programs that serve as a 
catalyst for increased market access.
    In my written testimony I have highlighted a few more 
issues of importance to NCFC. We must reduce agriculture's 
regulatory burden, as well as make improvements to our Nation's 
transportation infrastructure, especially in rural America. 
This should be a high priority. I have also included 
information on a new sustainability initiative NCFC has 
launched.
    In conclusion, I realize this testimony covers a lot of 
ground, some of which may be outside the jurisdiction of this 
Subcommittee, but these issues are certainly no less impactful 
to the future of America's family farms.
    Thank you, Mr. Chairman, for the opportunity to testify 
today.
    Chairman BLUM. Thank you for your insights, Mr. Conner.
    I would now like to recognize myself for 5 minutes. And 
this is a question for the entire panel, in the last 4 years 
that I have been in politics I have met a lot of farmers in 
eastern Iowa, and I have yet to meet one farmer who started 
their family farm, starting out in farming that wasn't involved 
in a family farm, that didn't inherit the land and the farm 
from their parents or didn't purchase it at a severely reduced 
price, a less than marketplace price.
    I am concerned about the shrinking number of farmers. I 
don't want five mega corporations to control our food supply in 
this country. And where I am heading here is I would like to 
have everyone's insights on financing to start farms. Is there 
credit there? Is it reasonably priced? Can a young person start 
out without having parents in the business and make it in a 
family farm today?
    I am a small business person. I started out in software and 
made it. In almost every other industry you can start out in 
your basement or your garage and make it, potentially. But the 
family farm, I am very concerned about the dwindling numbers. 
So I would love to hear your insights on can a person, not 
inheriting the land or inheriting the farm, make it today?
    Maybe we will start with Dr. Lawrence.
    Mr. LAWRENCE. That is a difficult challenge. And it is not 
a new one. We have often said you either had to be born into 
it, marry into it and some have higher costs than others. So we 
do see in fact our beginning farmer center does work with 
nonrelated parties to maintain a family farm. It moves from one 
family to another, they just don't happen to be related to each 
other.
    We have a database that has over 700 young people that want 
to get into a farming operation, and about 35 existing farmers 
that want to find a young family to take over. So there is a 
bigger demand than there is a supply.
    The challenge is how do we encourage more of the existing 
generation to move their assets into the next generation 
intact? It is easy to have a farm machinery auction and rent 
the farm to the highest bidder down the road, but then you lose 
a family out of the community.
    There is a bit of a balancing act. If we are going to grow 
our businesses, oftentimes we have to acquire other assets. So 
where do they come from unless we can do value added or grow 
within our operations.
    Chairman BLUM. Mr. White?
    Mr. WHITE. You know, I think in our part of the world there 
is young guys that are struggling, because they are trying to 
get into the agriculture business and in our country cattle 
business. And several of them got in and it is high market, and 
now this market has gone the other way and it has really killed 
their equity and capital position if they had any to start 
with. So when we look at it, to get into this business one, it 
has to be a desire and a life's goal because this is not an 
industry that is easy, it is an industry you have to have 
discipline in, and you have to do things and the way we do it. 
In my operation is we have to think out of the box and try to 
do it in ways that other people aren't, kind of like a niche 
market. And to start on your own, it is tough. It is hard for 
these young people to come out. And there are regulations that 
are in place that are really--that do hinder.
    And as Dr. Lawrence was just saying we are talking about if 
there is any passing down, the estate taxes and stuff, our 
business like you said is capital rich, cash poor. And so it is 
really hard. I think young producers have to start out maybe 
working with others that are already in the business and work 
through that way.
    Chairman BLUM. Ms. Rickelman?
    Ms. RICKELMAN. I am going to go off what Mr. White said. My 
family did not farm. We had an acreage, but I had a passion and 
desire to be in the farming industry. I wanted to be a part of 
it somehow. I didn't have the capital. But I went to Iowa State 
and had the desire and the passion for it. And I started 
working in the barns, just doing little tasks. And I worked my 
way up to herdsman and managing positions and where I am part 
of teaching other employees.
    So I don't have any money invested in the farm, but I make 
the operation work. And this is how I think young people need 
to get into farming, not get so tied up with I need to raise 
corn, soybeans and I need to have a big green tractor. Maybe 
work on niche markets and partnering with others who already 
farming like I have done and work your way up and eventually 
take over or expand in different operations in the farm.
    Chairman BLUM. Thank you.
    Mr. Conner briefly.
    Mr. CONNER. I think there are opportunities for those who 
may not have been a farming operation to get in farming today, 
but the key point that has been made is you are not going to 
get into that farming operation because of great financial 
returns, there has to be a passion associated with the land, 
with food production in order to drive you with this.
    Because if you look historically the return on capital in 
agriculture just is never going to match other sectors, it just 
is not. We have highs and lows but it is never long term going 
to match it so there has to be something else driving you. And 
when you have that passion, I believe there are many, many 
opportunities to get involved in agriculture.
    Chairman BLUM. That is good to hear.
    My time has expired, I now yield to the ranking member, Mr. 
Schneider for 5 minutes.
    Mr. SCHNEIDER. Thank you, Mr. Chairman.
    And again, thank you to the witnesses for your very 
insightful testimony.
    Mr. Connor, in many industries I think they talk about 
psychic income and I think that is what you are touching on is 
that passion.
    Mr. CONNER. Yes.
    Mr. SCHNEIDER. I wish I had an hour to discuss some of the 
issues. We have covered so much from technology, to trade to 
immigration, some of the things that jump out at me is the 
importance of access to knowledge. When you talked about the 
know how of how to work a farm, that comes with a passion, the 
access to capital, the access to markets.
    But as this is titled the future of farming, America's 
future in farming, Dr. Lawrence, you said something in your 
remarks that struck me. I spent my career as a consultant to 
small business, family business, dealing with succession and it 
is hard and people don't talk about it. And if there is a way 
that perhaps working in public, private partnership we on this 
Committee might be able to help foster the opportunities for 
those discussions, the tools necessary to begin the 
conversation on succession, what might we do?
    Mr. LAWRENCE. Well, I can give you one example and this is 
a USDA beginning farmer and rancher development grant that Iowa 
State University received. One aspect is to train facilitators 
in both the public and private sector on how to start and carry 
out farm succession discussions with farmers. And so we certify 
these people. Some are extension professionals, others are 
attorneys, some are financial managers that are looking for 
business and see this as an opportunity to have an outside 
third party professional sit down with both generations and 
really help facilitate those discussions.
    It is not about choosing the right legal structure, it is 
not necessarily about what the numbers crank out. It is ok they 
have a common vision and can had they communicate on things.
    Mr. SCHNEIDER. Are there obstacles besides having the 
conversation to passing the farm on? What are some of those 
obstacles?
    Mr. LAWRENCE. Well you have heard some of those here today 
about tax issues and some of those types of things. The stepped 
up basis is really important, one that I believe should be 
maintained. As far as other obstacles, sometimes there isn't 
enough growth or opportunity in the business to support two 
families. And oftentimes that involves somebody working off the 
farm, maybe multiple somebodies to work into it as Ms. 
Rickelman has spoken about.
    Mr. SCHNEIDER. I will open it up to the rest of the panel. 
As you see the need for succession, Mr. White, is your farm a 
first generation, second generation, your cattle operation?
    Mr. WHITE. My cattle operation is a first generation. And 
at this point my kids--my son plans to come back, he is in 
college and he is planning to come back to the operation. And I 
am getting to the age that I am having to start to think about 
what I am going to do and how I am going to transition my 
operation in the future.
    We just went through this in my family about 15 years ago. 
And with my family, my father was sick and we went through some 
estate work. And that is why it is important to NCBA, and for 
me personally, and that is why I am here today. I have a bull 
sale Saturday morning which is a major portion of my income, 
but this is important to me. This will be the future of my 
operation and that is why I am here today.
    The estate tax is huge for us. We have to be able to pass 
this along because if we have to worry--if I have to worry the 
next 20 years about saving money to pay my liabilities for the 
estate taxes that takes away from my operation to build it 
where I can make room for my son to come in to my operation to 
sustain both families.
    Mr. SCHNEIDER. Thank you. Before we go further, Ms. 
Rickelman, congratulations to you and your husband. The next 
generation of farmers is important.
    The last thing I want to touch on in my 1 minute, we talked 
a little bit about immigration, Mr. Conner, you talked about 
the need for immigration. And I asked this question yesterday, 
at another hearing in this room, assuming we could come 
together across the aisle and find a solution that addresses 
border security, comprehensive immigration reform. The CBO 
estimates that would add $2 trillion to our economy. The 
stability, how positive of an impact would that have on each of 
your operations if we could get there?
    Mr. CONNER. Well, it is a great question and I would just 
say it would have a tremendous positive impact. And it would 
create jobs and economic growth in this country, because we 
currently cannot get the labor force that we need to do what we 
do for America today which is feed and clothe them every single 
day. It is getting to a dire circumstance.
    Just, very, very briefly we have what is estimated to be up 
to 70 percent of our hired labor force on our farms and ranches 
today are those who may not be here with legal documentation, 
up to 70 percent. That is an incredible number. We can't do 
what we do if we lose that labor force, it is just pure and 
simple.
    And the unfortunate part of that is, if we lose that labor 
force, consumers aren't going to feel it in grocery stores or 
at least not very much, because we are just simply just going 
to import that product. And that is a horrible, horrible 
thought to think that we are driving production overseas for 
products that we can very, very competitively produce here in 
the United States.
    Mr. SCHNEIDER. I thank you. With that, I am out of time, I 
yield back.
    Chairman BLUM. Thank you. The gentleman yields back. The 
gentleman from Iowa, Mr. King, is recognized for 5 minutes.
    Mr. KING. Thank you, Mr. Chairman. I appreciate you holding 
this here today. I would start out with this as sometimes Mr. 
Schneider needles me, but I wanted to just ask you, Ms. 
Rickelman, are you as happy about Purdue being in the Sweet 16 
as he is?
    Ms. RICKELMAN. I would have to say no.
    Mr. KING. And Dr. Lawrence has already expressed his unity 
with you. And so for those who are not watching, that it was at 
the expense of Iowa State. Perdue was in the Sweet 16.
    Mr. SCHNEIDER. With that Midwestern has taken their time 
and made it to their first ever.
    Mr. KING. Well, reclaiming my time. Hopefully that does set 
a good tone here in this Committee, but when I listen to your 
testimony, Ms. Rickelman, I am sitting here and I am smiling 
for a whole series of reasons, because you do embody much that 
we want to see come into agriculture and with an expanding 
family on top of it.
    I have long said if you want to do something great for our 
country have a lot of babies and raise them right. And the best 
place to do so is on a family farm. And so I am happy to hear 
your testimony.
    I had a question 1,700 head, how many sows is that? That is 
farrow to finish, right?
    Ms. RICKELMAN. Seventeen hundred sows, we finish 40,000 a 
year.
    Mr. KING. Okay. That resets my perspective on your 
operation and how busy you really are. So I hope you get a lot 
of cheap labor coming up in your family. And it reminds me when 
you talk about niche marketing also. And it would be about 15 
years ago I remember a discussion that I had in northwest Iowa 
with a family on the street of one of those communities I won't 
name here in the hearing. And at that time if you were going to 
lay out the gross receipt cash flow for corn it would be about 
$300 an acre gross receipts, roughly.
    And so they had 1,100--no excuse me, 1,099 acres of corn. 
One acre of what I would call a glorified garden, and out of 
that single acre that family took $28,000 worth of crop off of 
that single acre in probably the 2001 crop is what it was. And 
I remember framing that in my mind. And I gave a speech to Iowa 
State and said that out loud, a couple of kids in crowd that 
didn't know that. And they let me know there was probably 
$50,000 worth of cheap labor, child labor is how they described 
it. That was their joke and not an estimate.
    But someplace between $28,000 an acre for a labor intensive 
well managed, well marketed, irrigated crop rotational piece of 
ground at $28,000 an acre, and that $300 an acre is probably 
more like $700 an acre now. There are a lot of solutions for 
entrepreneurs that want to get into the business. And you had 
your eye on it and you found that niche to do that.
    So I am encouraged by that by your testimony on it and I--
the list of components here seems pretty universal and the 
death tax, it is a direct tax on the American Dream itself.
    When you think the people that came over to this country to 
plant their stake out on the prairie it was about leaving a 
farm or two or three for their--however many children that they 
had, and when it interrupts that. And also I didn't hear 
anybody say this, but I want to add, that it takes sometimes 
generations to put together a unit. And that unit might be row 
crop, and pasture, and hay ground, and drain leg and harvest 
stores and feed lots.
    All the balance of that package is artfully put together 
over one or two or three generations blown up by the death tax. 
And so that one really resonates with me. I think it hurts the 
family farm more than anything else. I hear the discussion on 
trade and I think that universal also, that we have a surplus 
and we need to promote the trade.
    So I think that I would--I want to point also out that we 
are taking a good look at the vaccine bank and that is an 
important piece. Maybe I will turn it back to you Ms. Rickelman 
and ask you was there anything your hogs, Mr. White's cattle, 
is there anything you heard that doesn't much up with what you 
think between of two of you? I will turn back to Mr. White if 
he has anything either.
    Ms. RICKELMAN. No, there is nothing I heard. I am in 
agreement.
    Mr. WHITE. I agree.
    Mr. KING. Okay. I will ask one then, Mr. White, could we 
open up trade with China if we did identification and 
traceability on our cattle, do you think that we would open up 
the beef trade in China if we did that?
    Mr. WHITE. I wouldn't say that that would be the 
backbreaking issue. I don't think it would hurt things. I don't 
think it wold hurt things at all, but I don't think it would be 
a big deal breaker. They are interested in knowing about where 
their product comes from, but they do know that the United 
States has the safest meat inspection and pricing. And we have 
the best commodities and they do know that.
    Mr. KING. Thank you.
    Mr. Chairman, indulge me for just a quick moment here in 
this hearing I would like to turn to Mr. Conner and make this 
point that there are 103 million Americans of working age who 
are not in the workforce. Roughly 82 million of them would be 
available if we mobilized it to World War II level.
    We have got over 70 different means tested welfare programs 
that is paying people not to work. And I think at the center of 
that out of 103 million we ought to be able to find some people 
to go to the farm and do some work. If you care to respond, I 
will give you an opportunity to do that.
    Mr. CONNER. I will respond, Mr. King. And you and I have 
had this conversation in hearings in the past as well. I will 
just say our evidence, time and time again and would be happy 
to provide some of that documentation evidence to the 
Committee, shows that these are jobs that Americans simply will 
not do. And I don't think it is fair to place it on the back of 
the farmer to sort of go out there and try and solicit jobs 
among people that again these are jobs that have been proven 
time and time again. It has been tried, it has been tested in a 
number of States and it just simply never works.
    Mr. KING. I promised you the last word.
    I yield back, Mr. Chairman.
    Chairman BLUM. Thank you. The gentleman yields.
    And now I recognize the gentleman from Florida, Mr. Lawson, 
for 5 minutes.
    Mr. LAWSON. Okay. Thank you very much. I think one thing 
too like I heard my colleagues say there the government is 
paying people not to work. And that is really not true if you 
have the opportunity to really look at the people who are 
disabled have all kinds of situations in their families. And so 
the government is not paying them, this is to sustain their 
livelihood.
    Now, I have some questions about immigration and I heard 
what you stated earlier about you couldn't actually get to 
market, you know, if you didn't have this, during the course of 
the campaign there was considerable amount of discussion about 
illegal immigrants how do you go about vetting them that work 
on your farm? Have you had any kind of problem because that is 
always where the biggest issue is.
    I would like have Mr. Conner to elaborate on it and maybe 
some of you all can.
    Mr. CONNER. Well, Congressman, let me just say that this is 
a sizable chunk of labor on our farms and ranches as I have 
noted estimates as high as 70 percent of our hired labor force. 
These are not people who come and go as a general rule. In many 
cases these are workers that have been on these farms for 10, 
15, perhaps even 20 years. They are skilled laborers, they are 
skilled workers. And that is on the economic side.
    On the human side in some cases they are part of the 
families of these family farming operations, been there a very, 
very long time, integrated into the community. And again, the 
key point here is if those people were not there, we would not 
do what we do for the American people in terms of food 
production and we would ship and it is already happening. I can 
cite numerous examples where we are importing a product from 
somewhere else that we used to grow and produce here 
domestically simply because we can not get the labor to do it.
    And I think that is awful. We ought to be growing and 
producing as much as we possibly can here in the United States, 
use that labor. We have a saying within our organization, your 
fruit and vegetables will be handled by foreign workers, the 
only question is, is that handling going to occur in the United 
States or in another country? We want it to be here in the 
United States.
    Mr. LAWSON. All right. I am trying--incidentally, Iowa 
State and I know the University of Iowa is a little bit 
different there. I had the opportunity to go to the University 
of Iowa to take a job, but I ended up going to Florida State 
and coaching. And in 1972 we played UCLA March Madness is all 
over me at this particular point, you know.
    But I will say one thing when you talked about the small 
farm, is my father and my grandfather, you know, pretty much 
farmed on weekends and worked into the city, you know, during 
the week in order to really make--I didn't really define it as 
being a small farm but I guess it was really a small farm.
    The problem that occurred is that if they had not been 
working in the city by the time guys like me grew up who wanted 
to play basketball and didn't want to go back and do it, the 
work, they probably wouldn't have had any kind of retirement 
benefits.
    And so my question was and I take Ms. Rickelman is that 
having to do other jobs, to bring in revenue, how does that 
affect your family in terms of when they reach age 65 or most 
farmers don't even care about that until they can't go any 
more, for retirement purposes because they will have to depend 
on Social Security and other means if they are not able to save 
any money. With you being much younger, how do you handle that 
in working in a family farm?
    Ms. RICKELMAN. Thank you. My situation is--might be a 
little unique in perspective. My parents did not farm. My 
father grew up in the city of Ceder Falls and he works for the 
University of Northern Iowa as a landscape groundskeeper. My 
mon was a stay-at-home mom.
    For me personally right now we have profit sharing at the 
work and we have a 401(k) program at our operation. As far as 
retirement, and I guess I honestly haven't thought about it 
yet, but our--the operation that we worked for that my husband 
and I both work for has an excellent profit sharing program and 
401(k) benefits. And that is where we are putting our money 
right now so other than that I can't speak on other operations.
    Mr. LAWSON. I know my time has expired, but I have always 
been concerned about farmers, especially cattle farmers how if 
you get a chance to, Mr. Chairman, how do you go about 
preparing for the future?
    Mr. WHITE. Well, to be honest, the way we look--my wife and 
I look at it, our retirement is what we are able to accumulate 
over the hopefully 50, 60 years that we farm. And we always 
tease, it is kind of a joke at my house, my retirement is the 
four legs of cows and equipment that I have running around. 
That is my retirement.
    And so there again is my concern. If my son wants to come 
back to the farm and he comes back and comes into the 
operation, when I get in my later years, we should be in a 
comfortable position that he can come into our farm, get into 
the operation and we be successful.
    But at the end when it comes--if I have to continue to 
worry about inheritance tax and estate planning, that makes it 
harder on my wife and I to be comfortable to have enough money 
that I can provide for my wife if something was to happen for 
me. So that is what is important to us on the estate tax. It 
let's us continue to do our business today the way it needs to 
be done and not manipulate the way we have to do business.
    Chairman BLUM. Thank you, the gentleman's time has expired.
    The gentleman from Missouri, Mr. Luetkemeyer, is now 
recognized for 5 minutes.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman. As somebody who 
raised hogs and cattle for about 20 years growing up I thank 
all of you for your testimony today. It brings back a lot of 
memories. I still have a farm, but don't do too much with it 
because I spend too much time here in D.C.
    Mr. Lawrence, you have in your testimony ongoing challenges 
list, and two of them is technology and information. And part 
of it is open access tools and broadband. This is a real 
concern. You know, these folks next to you here I am sure their 
businesses are such that they look at the commodities market 
every day and probably need to have access to that. And without 
broadband, it is very difficult to manage their operations in a 
way that is in their best interest.
    And so can you elaborate on that a little bit because I 
know this is a concern I have, I represent a very rural 
district as well?
    Mr. LAWRENCE. On a couple of notes. The one you just 
mentioned, access to information in a timely manner, the other 
is relates to small businesses and small entrepreneurs in these 
rural areas that may be the farmers themselves or hiring 
farmers.
    The other one about the technology really gets to data 
portability. We have machines collecting information now on 
acres and on animals. But who owns that data? If it is in a 
green machine and I want to put it in a red machine, do they 
talk to one another, do I have access to it.
    Those are some policy issues as well as some that the 
marketplace still trying to figure out. But as information is 
powerful and has value farmers being able to control that to 
their own best interest is absolutely essential.
    Mr. LUETKEMEYER. Mr. White and Ms. Rickelman, would you 
like to comment on that?
    Mr. WHITE. And technology, yes, I follow the market every 
day. We do also graze some yearling cattle. I follow the market 
because I try to contract and we have to do a lot of hedging. 
In this day in time if we are going to stay in time, the 
hedging is of utmost importance.
    Mr. LUETKEMEYER. Stockbroker is one of your most important 
people at this point, a commodities broker.
    Mr. WHITE. Yes.
    Mr. LUETKEMEYER. Like an accountant or a doctor or a 
veterinarian, that is part of your portfolio of folks who help 
you manage your business.
    Mr. WHITE. Yes, yes. And so if I could go back, we have to 
follow this every day. You watch the market, you have got to no 
this market moves so fast now that we--I mean it is almost like 
you have to sit and watch your phone or it can move $4 or $5 in 
seconds. It used to be $3 in a day and you had to quit.
    So things have changed in our lives. So it is not like--we 
can't go sit on a tractor anymore and just drive and enjoy the 
sunshine, you have to be doing this, looking at your phone, you 
know. You have to have the technology with you. What will we do 
without our phones?
    But it comes back. The one thing that does concern me with 
what you are asking, it comes back to the GIPSA rule. Because 
if competitive marketing goes away, I don't--I will no longer 
need that. I don't need my phone for marketing, because I am 
going to get one price for my product, like everybody else 
across the board.
    But that is the way I make my living, sitting and watching 
that market and hitting it at the right time.
    Mr. LUETKEMEYER. So access to broadband is very, very 
important----
    Mr. WHITE. Oh, yes, yes.
    Mr. LUETKEMEYER. Ms. Rickelman, would you like to comment?
    Ms. RICKELMAN. I would have to agree is what Dr. Lawrence 
and Mr. White said. The availability of knowledge and resources 
to make good marketing decisions is something that we need on a 
farm. And like Mr. White said, it is not something that you can 
decide what you are going to do in the morning and then look at 
it the next morning. It is something you have to be looking at 
and thinking about every day, every morning. So yes, I would 
just concur with what they have said.
    Mr. LUETKEMEYER. Thank you.
    Mr. Conner, you brought up and discussed, made several 
comments with regards to the border tax that is in the proposed 
plan at this point which is not necessarily much more than just 
a blueprint. It is pretty sketchy, rough structure. There is 
not a lot set in stone. But I was kind of curious, I mean can 
argue it either way. I don't really have any strong feelings 
either way on it, so don't take my remarks one way or the other 
here because I am still trying to gather information on this to 
ensure we do this right.
    But my understanding is that not only if you sell product 
you don't get charged tax on that either. Is that correct? And 
whenever you import, there's taxes charged on that. Is that 
correct.
    Mr. CONNER. That is my understanding, Congressman.
    Mr. LUETKEMEYER. So if you import other food products that 
compete with what farmers are producing here, that would have 
at this point I think a 20 percent tax on that product. That 
would help make our products more competitive. Is that not 
correct?
    Mr. CONNER. Well, I think our fear on the 20 percent tax--
and again we are in much the same--we are more than even you in 
the same position than obviously the details are sketchy. But I 
used for example the fertilizer that is essential on our farms 
and ranches. We import--I am going to use the figure roughly 90 
percent of our potash that is an essential fertilizer for 
agricultural production in this country.
    You throw a 20 percent tax on that, what is going to 
happen? The farmer is going it pay more, period. And his 
ability--you know there is an argument that they may get it 
back in terms of not taxing other things, but remember again 
the farmer is a price taker in that circumstance. And when you 
are raising his cost of production as a price taker, you are 
pretty much taking that out of his bottom line. And so there 
needs to be a lot of caution.
    And I say that as an organization that is a very strong 
proponent of tax reform in general. And we would like to figure 
out a way to make all these revenue numbers work, but that is 
one that could be a big problem.
    Mr. LUETKEMEYER. I appreciate your perspective.
    Thank you, Mr. Chairman. I yield back.
    Chairman BLUM. Thank you, the gentleman yield back. The 
gentlelady from American Samoa, Ms. Radewagen is now recognized 
for 5 minutes.
    Mrs. RADEWAGEN. Thank you, Mr. Chairman. I want to welcome 
and thank the panel for coming here today to testify before the 
subcommittee about the state of America's small family farms. I 
am proud to have been added to this subcommittee this Congress, 
because the majority of small businesses in my home district of 
American Samoa are small family farms.
    These farms are the soul of the local community, each run 
by a family who sell their produce at the market in the center 
of Pago Pago. Our farmers markets provide many of our families 
their only source of income. However, the only market these 
farmers have is the local market, which means that our farmers' 
income relies solely on the health of the American Samoan 
economy at large.
    What would you recommended for farmers like those in the 
territories whose incomes are more prone to shocks?
    Mr. LAWRENCE. I have to admit, I do not know much about 
your situation, but, it would clearly depend on the ability of 
your consumers to pay. So a healthy economy for your local 
consumers who are buying is a key part of it. And then the 
ability to export even if it is to other States as well as 
other countries. That likely gets at not only regulations but 
finding those markets, and what their quality demands, and 
types of specifications that they are asking for.
    Mrs. RADEWAGEN. Thank you. And if you have any 
recommendations, how we can promote the produce of really small 
farms to more than just their local areas?
    Mr. LAWRENCE. I would be happy to visit with you more about 
this later, because it would require more detail. But 
obviously, transportation, and perishability, works against 
you. So how do you preserve that in a way that can be shipped 
to other locations would be one of the first obstacles.
    Mrs. RADEWAGEN. Thank you.
    Mr. White? And you are very correct about the handheld 
devices in the middle--even out in those remote islands that I 
call my home district, our farmers are out there farming 
coconuts an tarrow on the mountainside, and they have got these 
handheld devices while they are planting the tarrow and 
everything. So do you have any perspective on these two 
questions I just asked?
    Mr. WHITE. Well, I mean, you know you are at a disadvantage 
because like you said, transportation is huge. But the other 
thing, something--adding a niche marketing and value marketing 
basis in your products would be something that I guess I would 
recommend. And this wouldn't be exactly the same, but in 
Kentucky we have what you call Kentucky Proud, and it is a 
marketing base, Statewide marketing base that is a value added 
program that they use to market across the country.
    And it goes--honestly, when consumers see that in today's 
time consumers like to know where their products are coming 
from. And so from that standpoint, I think that would help you 
from that standpoint.
    Mrs. RADEWAGEN. Thank. Ms. Rickelman?
    Ms. RICKELMAN. I would say, kind of going off of what Mr. 
White said, I had this written down, niche markets, and maybe a 
different crop or selling it to consumers in a different way. I 
know for us on our farm we try to be very transparent as 
showing consumers what we do, having tours of our farm and 
having them go through the barn before we put the pigs in the 
barn. Something like that could help consumers buy more, be 
more interested in what you have to offer at the market.
    Mrs. RADEWAGEN. Mr. Conner?
    Mr. CONNER. Congresswoman, I am going to be pretty self 
serving here and suggest to you that I don't think your 
circumstance, is probably too much different than our producers 
here on the mainland in terms of being able to find new markets 
and export those products.
    A lot of that happens here on the mainland through farmer-
owned cooperatives, doing as a group what each individual 
probably can't do themselves. And even among the largest 
farmers here, their ability to go and contract for example with 
the Chinese or the Mexicans, even the very largest can't do 
that. It is outside of their ability to sort of cobble all that 
together.
    But through a cooperative, through, joining together with 
our other producers they are able to do those kinds of things. 
And I think that kind of sector is right for farmer-owned co-
ops that control their own destiny, their own business and they 
are able collectively to do those kinds of things and find the 
markets outside of their own little community.
    Ms. RADEWAGEN. Very helpful.
    Thank you, Mr. Chairman. I yield back.
    Chairman BLUM. Thank you. The gentlelady yields back.
    The gentleman from Nebraska. Mr. Bacon is recognized for 5 
minutes.
    Mr. BACON. As you can you imagine with the name Bacon I 
have been taking this in real well.
    But thank you, Mr. Chairman, for the time. I thank each of 
you for being here.
    I was raised on a family farm, still extended family, corn, 
soybeans, we had about 50 head of cattle. And it was a good 
childhood for learning work ethic and prepared me well for 30 
years in the Air Force to follow.
    So, I wanted to talk a little bit about bilateral trade and 
also health care. I will start off with health care because I 
don't think we have talked much about it today. In Nebraska we 
had 51 percent increase in premiums this past year. It falls 
most heavily on self employed, small business and of course we 
are talking about the family farmer who is having to pay for 
their own premiums. And we have had a 45 percent 50 percent 
drop in prices, land values going down. Throw in a 51 percent 
cost in premiums.
    Could you talk about how ACA has impacted you in your 
income and expenses? And do you have any feedback on the bill 
we are getting ready to vote on today? We will start with Dr. 
Lawrence. We will go down the line.
    Thank you.
    Mr. LAWRENCE. I don't--I'm not in that situation. I have a 
benefit package through the university so I don't think it is 
fair for me to comment.
    Mr. BACON. Okay. Thank you, sir.
    Mr. White.
    Mr. WHITE. My health insurance for my family this year went 
up over 100 percent.
    Mr. BACON. One hundred percent?
    Mr. WHITE. One hundred percent.
    Mr. BACON. You are probably asking for relief, aren't you?
    Mr. WHITE. Well, it would be nice, because it does--you 
know, we talk about people not having insurance and that is--
you are not supposed to do that. You are supposed to have 
insurance.
    But it does come to a time that the economics of things 
make you do things that maybe you can't do. And we have to have 
health coverage. I mean I understand that, that is vital. 
Especially in farming, I have been injured. I know what it 
means to be--I know what a big hospital bill is.
    So it is an issue that we have to take care of on today's 
vote. I really couldn't give you an opinion one way or the 
other, other than in our State, giving our State an opportunity 
to have some competitive bidding on it.
    Mr. BACON. Right. And we voted on that yesterday out of the 
House. Will tax credits help you when you buy your insurance?
    Mr. WHITE. Sure, it would.
    Mr. BACON. It is in this bill. How about expanded has, 
where you get tax deductions. Would that help you?
    Mr. WHITE. I currently use.
    Mr. BACON. Thanks for answering the question that way.
    Ms. Rickelman?
    Ms. RICKELMAN. I don't think I have ever thought about 
insurance until was pregnant. I am 20 weeks pregnant. But yes, 
I buy my own insurance through Farm Bureau so does my husband. 
And the vote would be very, very helpful. We have a health 
savings account, but as this--the delivery comes, there is 
bills and things that we need to pay for.
    Mr. BACON. Right.
    Ms. RICKELMAN. And it definitely weighs heavy on our minds.
    Mr. BACON. If you don't mind me asking, if you feel 
comfortable, what is your deductible? Because I find people 
with their deductible so high they pay every cent to deliver 
their child. Are you in that boat?
    Ms. RICKELMAN. Yes.
    Mr. BACON. See, that is not right.
    Mr. Conner.
    Mr. CONNER. Congressman, the healthcare challenges for 
rural America are, everything that all of our urban 
counterparts face and then some. And I can't advise you on 
today's vote. I will tell you that farmer-owned co-ops do 
believe that one of the things that hinders co-ops from getting 
into this space of providing health care for their members is 
the fact that there are the state line limitations.
    Mr. BACON. Right.
    Mr. CONNER. I know that is something that has been part of 
that debate. But let me just say as well, a big issue for rural 
health care equally as much is just access to the doctors 
themselves, programs like the--I am outside of my expertise 
space here a little bit, but I know programs like the J-1 
program for bringing doctors to the rural areas, because in 
some cases at any cost there simply aren't doctors available. 
And that is as fundamental as the whole----
    Mr. BACON. We've been hearing the same thing in rural 
Nebraska as well. I think the current ACA bill has probably 
hurt the family farmer as much as anybody. And I think we have 
to work hard to get relief now. And HSAs and the tax credits 
for buying your own insurance will have a huge impact.
    I don't have a whole lot of time left, but on bilateral 
trade, Nebraska is a huge export State. Is there any advice if 
you guys got more insight versus another one. Are there 
particular countries we should be looking at more? How would 
you advise the administration to prioritize on bilateral trade, 
work that we need to be doing?
    Mr. LAWRENCE. Obviously don't screw up what you have, 
right? Go where the money is and the markets are. China 
continues to be a growing market so how do we continue to tap 
into that one while maintaining our other markets. Canada and 
Mexico, are two large trading partners and Japan and then open 
up more countries.
    Mr. BACON. Thank you.
    Mr. WHITE. And to add to that, from the aspect from the 
cattle industry, you know, 96 percent of the population is 
outside our borders. And a majority--you know, we see a premium 
of about $300 per fed steer to the cuts that are less desirable 
in the United States that other countries think are premium 
cuts. And so anything we can do to level the playing field 
where we can get our product out of this country and help us 
move product would be a benefit for us.
    Mr. CONNER. I would just say, Congressman, Japan. Japan 
would be a huge one. If we are indeed in an era of bilateral 
trade agreements versus multilateral, my advice to them is get 
to it.
    Mr. BACON. As I yield back, I will just say Japan has I 
think a 40 percent tariff on cattle so we have got to work on 
than.
    Thank you, chairman. I yield back.
    Chairman BLUM. Thank you. The gentleman yields back. The 
gentleman from the great State of Kentucky is recognized Mr. 
Comer for 5 minutes.
    Mr. COMER. Thank you, Mr. Chairman.
    And let me begin by thanking all the panel for testifying 
today.
    I want to single out Ms. Rickelman first. Thank you for 
your story, it is very inspiring. I grew up showing cattle at 
4-H and FFA events all over Kentucky and everywhere else, and 
went to Western Kentucky University, got a degree in 
agriculture and then started my farm and operation pretty much 
from scratch. And that is what I do, I am a full-time farmer.
    So I always love seeing people--the next generation of 
farmers decide to stay on the farm and hopefully pass it on to 
the next generation. So good luck, congratulations. And good 
look luck in your career.
    I want to welcome Mr. White, my fellow Kentucky cattleman, 
fellow Kentucky Cattlemen's Association member. I appreciate 
you being here. I have a few questions for you.
    Describe your experience with the estate tax. What are your 
thoughts on the need to permanently repeal the tax or whatever?
    Mr. WHITE. Well in my experience, like I alluded to, my 
father was sick 15 years ago. And as we started going through 
it, my father was in construction, and his CPA told him, said 
you need to start doing something because of what inheritance 
tax will do to the liability. And the farm that originally that 
I am farming now, my father did buy. And my wife and I ended up 
buying that back from him. And so the struggle that we had of 
one, paying an outside entity to put together a program for my 
family to pass this forward, it took--us several years and it 
worked out financially because we were far enough ahead of it 
and the industry stayed good, cash flow was good and everything 
worked.
    But when you look at the estate tax today how that would be 
detrimental to what we would have to do is just unbelievable. 
And so, you know, it is the only way--removing this tax is 
really the only way that we can continue as a small family farm 
to operate because our margins are so close. They are just 
pennies now. And so we just have to do everything, health care, 
have to do everything, but this is huge for us that we have to 
look at in the future.
    Mr. COMER. You mentioned country of origin labeling. Is 
there a legitimate push to reinstate that program? And if so by 
who? And why would they think it might work this time around?
    Mr. WHITE. No. There is not a push, not from us from 
producer's side, there is no push. Because we went through 6-1/
2 years of implementation of this program. And it showed us no 
benefit at all financially for the producer or, you know, for 
the consumers to do this.
    So we have been through the courts. We found out that we 
were not in compliance with the national law. And so this just 
needs to go on by. We don't need this to come back.
    Mr. COMER. Okay. You mentioned the foot and mouth disease 
vaccine bank. Can you talk about the need for a more adequate 
bank? And what would the economic impact be to the beef 
industry and many small family farming operations such as yours 
if there were an outbreak?
    Mr. WHITE. Well, you know, if foot and mouth disease comes 
to the United States with the way social media is today, it 
would be an instant crash of every market, not just the cattle 
market, not corn, not pigs, every market. What, that would turn 
around economically. So that trickles down to me and I can't 
sell my product. Then I can't turn out and pay my supplier who 
I bought supplies from, equipment from. It goes all the way 
back and it will go to the consumer. Eventually, this thing 
will tackle our whole Nation, because the food supply is 
something we have to have to be sustainable.
    Mr. COMER. When I was commissioner of agriculture in 
Kentucky, we were over the large animal veterinarians. The 
number one priority in our division of the Office of State 
veterinarians was to prevent livestock disease outbreak. So I 
appreciate your mention of this vaccine bank. And I appreciate 
your testimony.
    Thank you, Mr. Chairman.
    Chairman BLUM. Thank you, the gentleman yields back. The 
gentleman from Ohio. Chairman Chabot is recognized for 5 
minutes.
    Mr. CHABOT. Thank you very much. We pronounce it Chabot, 
but that is okay. I know, Mr. Chairman, I said don't screw it 
up. I am just kidding.
    But in any event, I thought that I would mention just a 
couple of things first.
    First of all the Sweet 16 came up so I have some bragging 
rights here too. Xavier University is in my district and they 
beat Maryland on the first round. And my apologies, Mr. Lawson, 
but they beat Florida State in the second round. And they are 
playing Arizona I understand this evening. I sent my wife the--
because they had all the Members in a writeup. It was Politico, 
or the Hill, or one of the local rags up here in Washington. So 
I sent it back to her to show her that I had both Xavier and 
Cincinnati. And she told me that I am the only Member that had 
two teams in March Madness so I thought that was kind of cool. 
But there is one left and it is Xavier.
    In any event, what I wanted to ask you, Mr. White, for some 
of the city folks I thought it was kind of interesting when you 
said you had a bull sale this Saturday, and that sounds like 
something that is much more interesting than what I will 
probably be doing this Saturday.
    So for us city folks, could you tell us what that entails, 
how much of your time and advertising, and just how you get the 
word out there and just all that kind of stuff?
    Mr. WHITE. Well, this is our third annual purebred Angus 
bull and female sale. This sale will bring in about 40 percent 
of my yearly income. It is a major part of our life. It is one 
section--we are a very diversified operation, but this is one 
major portion of it.
    What is entailed in it, we are selling service age breeding 
stock. The auction will be held at our farm, at our facility 
there in Lexington. We will have probably 200 producers from 
Kentucky. I do have several Ohio producers that come and 
purchase from us. They come down. And there is a lot of work to 
this, a lot of advertising, social media advertising, newspaper 
print advertising.
    And so the biggest thing--my biggest advertisement in my 
operation is my wife and I's determination that we are always 
honest, straightforward and we back up the product that we 
produce. And we are that way in everything that we produce. If 
it is grain or cattle or fed cattle or whatever it is, you 
know, it is something that is near and dear to us. This is a 
business. We love the cattle business. If we didn't, we 
probably wouldn't be in it to be honest. But we love what we 
do. And we are very passionate about what we do.
    Mr. CHABOT. Thank you very much.
    Ms. Rickelman, I think it was you that mentioned how much 
regulations can hinder success in your industry. Could you give 
us some examples of the kind of regulations that are either 
burdensome or, you know, don't make sense.
    President Trump for example recently talked about getting 
rid of two regulations for every new one that comes out, which 
I think seemed a like a pretty good idea. So in your industry 
are there some that you think are particularly egregious or 
that we ought to look at?
    Ms. RICKELMAN. Thank you for the question. The Waters of 
the U.S. regulation really threatened every farm in the country 
and every landowner as well. I am glad that the EPA will be 
writing this rule, but it is things like that that are enacted 
here in D.C. or thought about here in D.C. that they might not 
really know what is going on on the real farms in Iowa. These 
are the things that I worry about, EPA rules in general. Things 
like that are concerning to me and this is why I am here today 
to share my story of what really goes on in Iowa farms.
    Mr. CHABOT. Thank you. And in the time that I have left 
here, which isn't a whole lot, in the area of TPP and trade, I 
tend to be more of a free trader myself. And so I have been a 
bit disappointed in kind of the direction we have seen. The 
President talked about bilateral deals rather than regional, 
multi country deals. I hope he is right and I am wrong, and it 
will work.
    I know you all have already touched on this, but does one 
of you want to again touch on the importance of trade, 
especially with the agriculture industry and what it means?
    Mr. CONNER. Well Congressman, I will take a quick shot at 
that. It is fundamental to our livelihood in American 
agriculture. We already export a substantial percentage of our 
product, nearly half of our soybeans, approaching 60 percent, a 
large percentage of our pork production. Just you name the 
commodity, it is very, very export dependent. And as all have 
testified, most of the consumers of the world are living 
outside the United States.
    The upside demand potential for additional food consumption 
here in the United States is really pretty limited, but our 
productivity scale in American agriculture is on a very steep 
incline. And if we don't find new markets, there is absolutely 
no hope for the family farm, for the small family farm in 
particular because they just simply will not be needed, because 
we have limited ourselves it a relatively flat, domestic market 
only, and already a very small percent of the world's mouths to 
be fed. We can't do that.
    We have to export. And these trade deals, whether 
multilateral or bilateral again. We preferred the multilateral, 
but if it is bilateral now get to it and get the markets open 
so we can get prices back to profitable levels.
    Mr. CHABOT. Thank you very much. My time has expired.
    Chairman BLUM. Thank you, Chairman Chabot. Sheep and 
rabbit, correct?
    Mr. CHABOT. And I learned that it is Blum and not Bloom. 
Right? So there we go.
    Chairman BLUM. With the indulgence of the ranking member I 
would like to ask one more question.
    Mr. SCHNEIDER. Absolutely.
    Chairman BLUM. One last question for the panel and I am 
going to write your answers down and you can see this as a 
lighting round, if you will.
    We have trouble focusing in Washington I think, there is a 
lot of issues. I would just like to know, you give me the last 
word, what are the top two or three issues that the Federal 
Government can help the small family farmer? Top two or three 
issues and let's go right down the line and I am writing down 
what you say.
    Mr. LAWRENCE. I think access to the capital, technology and 
markets is key. Also I think it should support a strong rural 
economy. It may be broader than just commodity and conservation 
issues, but there is a strong synergy between small farms and 
small communities.
    Chairman BLUM. Mr. White?
    Mr. WHITE. Stop overregulation and the estate tax.
    Chairman BLUM. Thank you. Ms. Rickelman.
    Ms. RICKELMAN. Overregulation and strong and adequately 
funded farm bill.
    Chairman BLUM. Thank you. Mr. Conner?
    Mr. CONNER. Certainly regulatory reform would be at the top 
of our agenda. I would add as well, Congressman, that we expect 
a large infrastructure bill. Rural America should get its fair 
share of that infrastructure bill which would include things 
like broadband, the discussion we had earlier in the hearing. 
That would be very, very important and then finally tax reform.
    Chairman BLUM. Thank you very much.
    I would like to thank our witnesses today for your 
testimony. You all were excellent and congratulations once 
again, Ms. Rickelman, upcoming addition to your family. We 
appreciate it very much.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record.
    Without objection so ordered. This hearing is now 
adjourned.
    [Whereupon, at 11:27 a.m., the subcommittee was adjourned.]







                            A P P E N D I X



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    Thank you Chairman Blum and Ranking Member Schneider for 
allowing me to testify today on the future of America's small 
family farms.

    My name is Tim White. My wife, Amy, and I operate a small 
family farm - the T A White Farm LLC - a beef cattle farm in 
Jessamine and Fayette County, Kentucky. We have a purebred 
Angus heard along with a commercial cow/calf herd. We also run 
stockers on an annual basis and host an annual Angus bull sale, 
along with raising corn. I recently served as Regional Vice 
President for the National Cattlemen's Beef Association, I am 
currently Vice President of the Kentucky Cattlemen's 
Association, and I am a member of the Fayette County Ag 
Development Board.

    Cattle producers in this country are small business owners, 
by and large, with the country's average cattle herd size at 40 
head. The state of the farm economy is weakened. The cattle 
business is currently in a market slump that has many producers 
struggling. According to the USDA's Economic Research Service, 
this year marks the fourth consecutive year of farm income 
dropping significantly on a national scale, estimated to 
decrease by 10.5 percent this year alone.

    Congress plays an important role in several areas that 
impact cattle producers. Those areas include regulations, tax, 
trade, and the Farm Bill. While these issues alone can be 
managed by a cattle producers, when combined with other threats 
to our industry, like loss of natural resources, urban 
encroachment, and natural disaster, we have a real hurdle that 
producers must overcome in order to be successful. And that 
hurdle is especially large for new producers who are trying to 
get into the cattle business.

    Our biggest concern is over-regulation. The EPA's WOTUS 
Rule is one such example. WOTUS has been a big concern to 
producers. The overreach is that regulation would require many 
beef producers to get permits, and comply with those permits, 
which would be a huge burden. Not to mention it would open us 
up to citizen lawsuits from litigious activist groups.

    Producers pride themselves on being good stewards of our 
country's natural resources. At the White Farm, we employ a 
number of conservation practices, including rotational grazing, 
no-till practices, and a slicing technique for planting which 
is much less disruptive to the land. We maintain open spaces, 
healthy rangelands, provide wildlife habitat, and feed the 
world. But to provide all these important functions, we must be 
able to operate without excessive federal burdens, like the 
WOTUS Rule.

    As a small business owner, I am particularly concerned with 
the lack of outreach to the small business community by federal 
agencies such as EPA. As a family-owned business, and knowing 
the detrimental impact this regulation could have on my 
operation, it is appalling the agencies could assert that it 
would not have a significant economic impact on small 
businesses. It is clear to me that the rule's primary impact 
would do just that. There was not outreach to us in the 
agriculture community before the rule was proposed. There 
wasn't a meaningful dialogue with the small business community 
as a whole. And because of that, what we got was a WOTUS Rule 
that doesn't work for small businesses and doesn't work for 
animal agriculture.

    The positive news is that President Trump signed an 
Executive Order requiring the EPA to go back and revise the 
WOTUS Rule so it doesn't regulate every drop of water in this 
country. We want to work together with the EPA so we can get 
the clarity we need in a WOTUS replacement that works for 
cattle producers, protects water quality, and follows the rule 
of law.

    The positive news is that President Trump signed an 
Executive Order requiring the EPA to go back and revise the 
WOTUS Rule so it doesn't regulate every drop of water in this 
country. We want to work together with the EPA so we can get 
the clarity we need in a WOTUS replacement that works for 
cattle producers, protects water quality, and follows the rule 
of law.

    U.S. livestock producers understand and appreciate the role 
that taxes play in maintaining and improving our nation in many 
ways, however, they also believe that the most effective tax 
code is a fair one. For this reason, a full, immediate repeal 
of the estate tax must be a top priority as Congress considers 
comprehensive tax reform legislation. The federal estate tax is 
in direct conflict with the desire to preserve and protect our 
nation's family-owned farms and ranches. As a land-based, 
capital-intensive industry, many agricultural producers are 
asset-rich and cash-poor, with few options to pay off tax 
liabilities. Unfortunately, all too often at the time of death, 
farming and ranching families are forced to sell off land, farm 
equipment, parts of the operation or the entire ranch to pay 
the estate tax.

    As you may know, the American Taxpayer Relief Act of 2012 
(ATRA) permanently extended the estate tax exemption level to 
$5 million per person/$10 million per couple indexed for 
inflation, and maintained stepped up basis. While we are 
grateful for the relief provided by the ATRA, the current state 
of our economy, combined with the uncertain nature of our 
business, has left many agricultural producers guessing about 
their ability to plan for estate tax liabilities and unable to 
make prudent business decisions. Until the estate tax is fully 
repealed it will continue to threaten the economic viability of 
family farms and ranches, as well as the rural communities and 
businesses that agriculture supports.

    When it comes to trade, cattlemen have always been strong 
believers in international trade. We support aggressive 
negotiating positions to open markets and to remove spurious 
``health'' regulations and other trade barriers intended to 
keep our products out of foreign markets. As you are aware, we 
continue to fight to recover the market share we once had in 
many countries, including China and Japan. We need continual 
engagement from Congress to end pseudo-scientific trade 
barriers designed to exclude us from foreign markets.

    Most of the high-quality U.S. beef we produce is consumed 
domestically by American consumers. At the same time, Americans 
do not find all cuts of the beef carcass desirable--cuts like 
beef tongues, livers, and skirts--and that makes up the 10-15 
percent of our annual U.S. beef production that is exported. 
Last year we exported $6.3 million of U.S. beef across the 
globe, with three of our top five markets located in Asia. 
Exports alone accounted for roughly $300 per head of fed cattle 
last year. In a time of volatile cattle prices, we need secure 
and dependable access to foreign consumers who purchase our 
beef at a premium price which helps offset the swing in cattle 
prices. The most dependable way to secure access to foreign 
consumers is through free trade agreements because they remove 
tariff and non-tariff barriers that prevent us from meeting 
overseas demand for our product. We must continue to look at 
the 96 percent of the world population outside our borders as 
markets for our products. I ask this committee to continue to 
support the oversight and enforcement of our current trade 
agreements, and to push for further opportunities for the beef 
industry within the realm of international trade.

    Another major item of the agenda for small family farms is 
the creation of the 2018 Farm Bill and how that could 
positively or negatively affect many small family farms and 
ranches. Development of this next farm bill is an important 
process for small business owners like myself. Whether directly 
or indirectly, the programs that are included in this Farm Bill 
have lasting effects, and sometimes a dramatic impact on 
producers. NCBA will oppose agriculture policies that pit one 
industry group against another, distort market signals, and 
inadvertently cause economic harm to the livestock sector.

    The vast majority of my fellow livestock producers believe 
the livestock industry is best served by the process of free 
enterprise and free trade. Market freedom works better in our 
industry than government-regulated markets which deter 
innovation and distort production and market signals. We 
continue to oppose attempts to narrow the business options or 
limit the individual freedom of livestock producers to innovate 
in the marketing of their product.

    Cattle producers oppose the involvement of the federal 
government in determining how their cattle are marketed. The 
beef industry continues to transition toward more value-based 
marketing methods. These systems allow cattle producers to 
capture more of the value of their cattle, while also allowing 
producers to better market to the specific needs and requests 
for our consumers. We believe these market signals have helped 
drive a significant improvement in Quality Grade, a predictor 
of a satisfactory eating experience. It is vitally important 
that we continue to protect each individual producer's ability 
to market their cattle in the way that best benefits their 
business.

    With that being said, NCBA must reiterate our opposition to 
the Grain Inspection, Packers and Stockyards Administration 
(GIPSA) interim final rule on competitive injury. The rule has 
been opposed by the vast majority of cattle producers since it 
was first introduced in 2010. In issuing the interim final 
rule, GIPSA ignored the comments submitted by thousands of 
cattle producers in opposition to the rule, the decisions of 
eight separate federal appellate courts, and the intent of 
language included by Congress in the 2008 Farm Bill.

    Our analysis of the interim final rule leads us to believe 
that if this rule is implemented, the packers will offer one 
price for all cattle, regardless of quality. Packers have 
indicated that they are not willing to open themselves up to 
frivolous lawsuits and the legal risks this change in the 
competitive injury standard would create. GIPSA claims the rule 
is needed to protect producers. However, we believe, since it 
would eliminate value-based marketing programs, it would in 
fact negatively impact producers and make it more difficult to 
provide the types of beef products that consumers are clamoring 
for. We do not want to see any attempt to bring this, or a 
similar discussion, forward in a new Farm Bill.

    NCBA would also like to reiterate its opposition to 
mandatory, government-run country-of-origin labeling (COOL) and 
any mandatory COOL programs. Repeal of the previous mandatory 
program was necessary since, after six and a half years of 
implementation, it provided no market benefit to beef producers 
or consumers. On top of that, it also violated trade agreements 
with two of our largest and vital trading partners. I ask the 
committee to resist any attempt to reinstate this failed 
program within this Farm Bill or any other congressional 
vehicle.

    Overall, we believe that the Farm Bill is no place for 
activities which restrict our market freedoms and deter the 
growth of small businesses. Our priority for the 2018 Farm Bill 
is to finally have one that does not include provisions like 
the ones above, or any others similar to it.

    Another 2018 Farm Bill priority for NCBA is the protection 
of conservation programs. Several of these programs authorized 
in previous farm bills have played an important role in 
assisting farmers and ranchers in the enhancement of our 
nation's natural resources for food production, wildlife 
habitat, and water quality. In a number of states, the 
Environmental Quality Incentive Program (EQIP) is improving 
habitat for grassland-nesting birds under consideration for 
listing as threatened or endangered species, enhancing the 
health of grazing lands, improving water quality, improving 
soil quality, and reducing soil erosion., One important feature 
of EQIP has been its focus on livestock operations, and we 
would like to see continued funding to preserve this program. 
Federal funds spent on conservation are a good investment in 
our country's natural resources and the sustainability of 
agriculture and wildlife.

    I would like to mention today something that my fellow 
producer David Clawson discussed during a recent Senate 
Agriculture Committee Field Hearing in Manhattan, KS. He 
discussed the need for a stronger and more sufficient foot-and-
mouth disease (FMD) vaccine bank.

    Please let me be very clear, an FMD outbreak is of great 
concern to the beef industry. FMD is highly contagious and has 
the potential to spread widely and rapidly, debilitating 
cloven-hoofed animals, such as cattle, swine, and sheep. The 
rapid spread of FMD can cause severe meat production losses; 
therefore, a widespread outbreak of the disease would have 
disastrous economic consequences. Analysts estimate that an FMD 
outbreak in the United States could potentially cost our 
nation's livestock producers billions of dollars in the first 
12 months alone.

    An FMD outbreak has the potential to cause enormous 
economic losses to not only livestock producers, but also to 
auction markets, slaughterhouses, food processors and related 
industries, as well as consumers.

    NCBA will be requesting support for the creation of a 
larger and more adequate FMD vaccine bank within the 2018 Farm 
Bill. We feel that this vaccine bank is vitally important to 
the beef industry as FMD is still a threat as countries around 
the globe continue to grapple with this disease. APHIS has 
publicly stated that our current FMD vaccine supply is 
insufficient to deal with a large scale outbreak in the U.S. 
and that a larger vaccine bank is needed. APHIS has also noted 
that expanding the current FMD vaccine supply is not an 
inexpensive investment, however having sufficient quantities of 
vaccine readily available and deployable to control an FMD 
outbreak would appear to be a critical part of the USDA APHIS 
mission. Rapid control of FMD protects the security of the U.S. 
food supply, limiting the economic damage from livestock losses 
due to the disease, and also shortens disruptions to trade and 
commerce that would occur as long as FMD goes uncontrolled due 
to a lack of vaccine.

    For all of these reasons, we support additional funds 
dedicated to the development of a more adequate FMD vaccine 
bank. In addition, we support more work around Foreign Animals 
Disease preparedness that will continue to shed light on our 
response plans that recognize the limitations of current 
vaccination capabilities in an FMD outbreak.

    The cattlemen and women of this country look forward to 
working with the Small Business Committee to ensure that we 
have the ability to do what we do best - produce the world's 
safest, most nutritious, abundant and affordable protein, while 
giving consumers the choices they seek. Together we can sustain 
our country's excellence and prosperity, ensuring the viability 
of our way of life for future generations. I appreciate the 
opportunity to visit with you today. Thank you for your time 
and I look forward to answering any questions you may have.

                               Biography


    Tim and his wife Amy own the T A White Farm LLC, a 2,000-
acre cow/calf and backgrounding operation. They raise 400 cow/
calf pairs and background 1,000 stockers. Tim and Amy White are 
members of the Fayette and Kentucky Cattlemen's Associations as 
well as Kentucky Farm Bureau, the Kentucky and American Angus 
Associations, and the Lexington First Assembly Church. Beef 
farmers are active in local and state beef associations and 
some have served on the boards of national organizations such 
as the Beef Promotion and Operating Committee, which 
prioritizes and funds national and international market 
development programs for beef.

    The Whites have two children. Rod is 21 and he attends 
school at Eastern Kentucky University and plans to return to 
the farm after graduation. Addie is 16 and she is a sophomore 
at West Jessamine High School. The White family is involved in 
showing cattle, sports, and many church activities.
                          Testimony of

                        Sarah Rickelman, Manager


                           Degener-Juhl Farms


                              Hudson, Iowa


        ``The Future of America's Small Family Farms.''

             United States House of Representatives

   Committee on Small Business, Subcommittee on Agriculture, 
                       Energy, and Trade

                         March 23, 2017

                         Washington, DC
    Good morning. I'm Sarah Rickelman, manager at Deneger-Juhl 
Farms in Hudson, Iowa. Let me begin by thanking Chairman Blum, 
Ranking Member Schneider, and Members of the Committee for 
allowing me the opportunity to share my story with you today. I 
especially want to thank my House member Representative Blum 
for inviting me to testify - thank you for the warm 
introduction and this opportunity to talk about small family 
farms in Iowa.

    I am a Farm Bureau member from Black Hawk County in rural 
Iowa where I, along with my husband, help manage a 1,700 
farrow-finish pig farm. My husband and I are two of several 
producers who provide the hands-on daily work to generate a 
safe, nutritious, and affordable product that is consumed by 
families across the United States and around the world.

    My passion for agriculture started as a young girl growing 
up on a small acreage and being heavily involved in the local 
4-H club - learning about agriculture, caring for my animals, 
and preparing them for the county fair year after year. This 
was the beginning of my love story with agriculture.

    Wanting to continue my education in agriculture I attended 
Iowa State University taking classes in agricultural studies 
with an emphasis in swine production. ISU empowered me to learn 
the skills and obtain the knowledge that I use on the farm 
every single day. Some of my daily duties include; animal 
observations, record keeping, training employees, and public 
relations work. I love being inside the barn every day, working 
closely with the animals and ensuring they are given the best 
possible care. From early mornings to late nights, work on the 
farm is never done, and I wouldn't want it any other way.

    My goal in college was to find a career that would balance 
farm work with local, state and national agriculture advocacy. 
I got involved with Farm Bureau three years ago, and have 
really enjoyed the opportunity to share my story of how I got 
started in farming and how important agriculture is to my 
family and rural Iowa. I truly believe that being on the family 
farm is the best career choice I could ever make.

    While I couldn't be happier with my decision to farm with 
my family, we face significant challenges and threats to our 
livelihood. Being a young farmer, I'm concerned about my 
ability to continue this profession and one day pass it along 
to my children. With commodity prices depressed over the past 
several years, net farm incomes have decreased by 46% over the 
past three years--with another 8% decrease predicted for 2017.

    While grain and livestock prices have a major effect on our 
operations, the laws and policies that are enacted in D.C. also 
have a significant impact on the success of small family farms.

    In these challenging economic times, it is more important 
than ever that we have a strong and adequately funded Farm 
Bill. The Farm Bill provides a basic level of risk protection 
in bad economic times and in years with poor weather. Federal 
crop insurance in the Farm Bill has been successfully providing 
an essential safety net for family farms across the country. I 
hope that Congress will continue to appreciate the importance 
of the Farm Bill and pass it before the current Farm Bill 
expires.

    Another way that D.C. is effecting the family farm is 
through current tax policy. As Congress looks to reform our 
nation's tax policy I hope that lawmakers will consider the 
impact any change will have on the thousands of family farms 
across the country. While lowering individual tax rates is a 
positive reform, family farmers will ultimately pay more taxes 
if essential tax policies for small businesses are eliminated. 
Agriculture is a capital-intensive business and being able to 
deduct business expenses is a critical tool - this should 
include the ability of the next generation to purchase their 
first piece4 of ground or expand their operation if they can't 
deduct interest expense. A tax reform package that doesn't 
include these provisions will ultimately increase taxes on 
family farms. On that same note, I hope Congress will finally 
and permanently eliminate the death tax while maintaining 
stepped-up basis. These tax provisions are essential to the 
survival of the family farm.

    As I mentioned before, the pork we raise on the farm not 
only feeds families in Iowa but also feeds people across the 
world. I'm blessed to farm in an area of the world that is 
immensely fertile and productive. Our country grows far more 
food than we could ever consumer with 98% of the world 
consumers living outside of our borders. Agriculture is a 
growth industry and expanding export opportunities is vitally 
important to the success and future of the family farm. I hope 
that Congress and this administration will push for expanded 
trade opportunities and work with other countries to negotiate 
trade deals that lower tariffs so we can sell more of our 
products to those markets.

    We face many challenges as farmers grow fewer and the 
divide between the general population and agriculture grows 
wider. But I am optimistic that if we continue to share our 
story we can shine a light on the work we do to grow safe, 
affordable, and sustainable food for the world. Being a family 
farmer isn't just a career, it is a lifestyle of which I am 
extremely proud. Now pregnant with my first child, I look 
forward to the day when our little one can come out to the barn 
to see the baby pigs with me and my husband - to enjoy 
agriculture as much as we do. With a strong safety net, pro-
growth tax policies, and increased trade opportunities I know 
American's small family farms have a bright future.

    Thank you.
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Chairman Blum, Ranking Member Schneider, and members of the 
Subcommittee, thank you for holding today's hearing on the 
future of America's family farms.

    I am Chuck Conner, president and chief executive officer of 
the National Council of Farmer Cooperatives (NCFC). NCFC 
represents the interests of America's farmer-owned 
cooperatives. With nearly 3,000 farmer cooperatives across the 
United States, the majority of our nation's more than 2 million 
farmers and ranchers belong to one or more farmer co-ops. NCFC 
members also include 21 state and regional councils of 
cooperatives.

    Farmer-owned cooperatives are central to America's 
abundant, safe, and affordable food, feed, fiber, and fuel 
supply. Cooperatives are owned by the farmers who have been 
producing food and responsibly caring for their land and 
animals for generations. Through cooperatives, farmers 
marketplace, allowing individual producers to compete globally 
in a way that would be impossible to replicate as individual 
producers. In short, cooperatives share the financial value 
they create with their farmer-owners.

    By pooling the buying power of hundreds or thousands of 
individual producers, farmer cooperatives are able to supply 
their members--at a competitive price--with nearly every input 
necessary to run a successful farming operation, including 
access to a dependable source of credit. Furthermore, farmer 
cooperative members can capitalize on new marketplace 
opportunities, including value-added processing to meet 
changing consumer demand. Cooperatives also create and sustain 
quality jobs, businesses, and consumer spending in their local 
communities.

    On behalf of my members, I thank this Subcommittee for 
supporting public policy that continues to protect and 
strengthen the ability of farmers and ranchers to join together 
in cooperative efforts in order to maintain and promote the 
economic well-being of farmers, ensure access to competitive 
markets, and help capitalize on market opportunities.

    I also applaud this Subcommittee for taking a deeper dive 
into the factors influencing the current and future farm 
economy. It is imperative that federal policies promote an 
economically healthy and competitive U.S. agriculture sector.

    In examining the dynamics of the farm economy and future 
needs of family farmers across the country. I remind you that 
numerous influences--some of which are out of our control--come 
into play. Extremely volatile weather and global markets result 
in equally volatile farm gate prices, yields, and production 
costs. Agricultural commodities currently face tight margins, 
and farm income has retreated significantly from the highs it 
reached just a few years ago.

    Our common, ultimate goal is to preserve the productive 
capacity of our farms. In today's testimony, I wish to 
highlight legislative and regulatory efforts that will have a 
direct impact on our members and their farmer-owners as well as 
initiatives by our members to ensure the future of American 
agriculture remains strong.

    Tax Reform

    NCFC supports pro-growth tax reform and wants to work with 
Congress to achieve this result. However, certain aspects of 
tax reform must be coordinated with the special circumstances 
of agriculture in general and cooperatives in particular.

    Farmer cooperatives calculate their taxable income under 
Subchapter T of the Internal Revenue Code. Under Subchapter T, 
earnings from business conducted with or for a cooperative's 
members are subject to single tax treatment as income of farmer 
members, provided the cooperative pays or allocates the 
earnings to its members. If the earnings are used to support 
the cooperative's capital funding or other needs, the earnings 
are taxed at regular corporate rates when retained and taxed a 
second time when distributed to the farmer members. 
Additionally, earnings from sources other than business with or 
for the cooperative's members are taxed at corporate rates. 
This method of taxation has been in use for nearly a century 
and was codified more than 50 years ago. NCFC supports the 
continuation of Subchapter T and related regulations.

    The House GOP Blueprint would reduce the top individual 
marginal rate from 39.6 percent to 33 percent, and it would 
reduce the top pass-through rate to 25 percent on non-wage 
income. For cooperatives to thrive, the Blueprint should 
provide that patronage distributions from cooperatives are 
subject to the 25 percent maximum pass-through rate. Currently, 
patronage distributions are subject to individual tax rates, 
which max out at 39.6 percent. This is the same rate that 
currently applies to pass-through income from partnerships, 
limited liability companies, and S corporations. If the 25 
percent rate is applied to income from these entities but not 
cooperatives, the maximum tax rate on patronage distributions 
will be 33 percent, placing cooperatives and their members at a 
disadvantaged. It is essential that the rate on pass-through 
income apply to patronage distributions from cooperatives.

    NCFC members also feel concern about the Border 
Adjustability Tax (BAT). The provision would make exports tax-
free, a benefit to exporters. However, farmer cooperatives 
would need a way to pass that benefit through to their farmer 
members who produce the exported goods. The BAT also would 
disallow the business expense deduction for imported goods, 
resulting in essentially a 20 percent tax on imported goods 
(assuming a 20 percent corporate tax rate). For agriculture, a 
tax on imported fertilizer, fuel, farm machinery components, 
and retail goods would be extremely detrimental.

    Tax experts say the BAT should cause a rise in the dollar's 
value, which would offset the loss of the deduction for imports 
by making imported goods cheaper. However, there is no 
guarantee on the timing or extent of the rise in value of the 
dollar. Also, consideration should be given to the effects of 
the strengthening of the dollar, which would increase costs for 
U.S. trading partners and likely result in retaliatory tariffs 
on farm exports.

    The Blueprint also would eliminate the deduction for net 
interest expense and would allow for immediate expensing of 
capital investments, other than land. In many cases, farmers do 
not have the resources to satisfy all of their cooperatives' 
capital needs. As a result, cooperatives often rely on debt to 
finance growth. The repeal of the deduction for interest on 
debt would cause harm to farmer cooperatives and their farmer 
members by impeding business expansion, new hiring, and product 
development.

    Immediate expensing of capital investments is also a 
challenge for farmer cooperatives. By not spreading the cost of 
an investment over the life of the asset, the provision will 
cause net operating losses that cannot be equitably shared 
among current and future members. Additionally, the Blueprint 
would repeal Section 199, the Deduction for Domestic Production 
Activities Income. The Section 199 deduction was enacted as a 
jobs creation measure in The American Jobs Creation Act of 
2004. The deduction applies to proceeds from agriculture or 
horticultural products that are manufactured, produced, grown, 
or extracted by cooperatives, or that are marketed through 
cooperatives, including dairy, grains, fruits, nuts, soybeans, 
sugar beets, oil and gas refinding, and livestock.

    Cooperatives may choose to pass the Section 199 deduction 
through to their members or to keep it at the cooperative 
level, making it extremely beneficial to both. Section 199 
benefits return to the economy through job creation as well as 
increased spending on agricultural production and in rural 
communities. Some have suggested lowering corporate rates to 
offset the impact losing of the deduction. However, because 
farmer cooperatives' income is passed through to farmer 
members, a corporate rate reduction would not benefit 
cooperatives and their farmers. NCFC opposes the repeal of this 
incentive for domestic production.

    If tax reform retains the requirement to maintain inventory 
records for tax purposes, NCFC supports the continued viability 
of the last-in, first-out (LIFO) accounting method. The LIFO 
method is a widely accepted accounting method and is used by 
some farmer cooperatives. Taxpayers using LIFO assume for 
accounting purposes that inventory most recently acquired is 
sold first. If LIFO is repealed and replaced with the first-in, 
first-out (FIFO) method, farmer cooperatives and other 
businesses would be taxed as though they had sold all of their 
inventory assets, even though they would have received no cash. 
Obtaining the funds necessary to pay the tax on this deemed 
sale would cause severe strain on cooperatives' capital 
budgets. Taxation of LIFO reserves would be the equivalent of a 
retroactive tax on the savings of a cooperative.

    NCFC also supports reinstating the alternative fuel mixture 
credit, which expired on December 31, 2016. The credit 
incentivizes use of propane, a clean-burning, low-carbon, 
domestic, and economical alternative to gasoline and diesel.

    Immigration Reform

    As part of the Agriculture Workforce Coalition (AWC) 
Steering Committee, NCFC has long advocated for immigration 
reform that meets both the short- and long-term workforce 
requirements of all of agriculture. Our primary objective 
remains legislation that fully addresses agriculture's 
workforce crisis.

    The economic health of farmers, and the rural communities 
in which they live, is currently being threatened by the lack 
of a reliable, stable, and legal workforce. Our farmers face 
growing shortages of legally authorized and experienced workers 
each year, which in turn results in millions of dollars in 
economic loss. A 2012 survey found that 71 percent of tree 
fruit growers, and nearly 80 percent of raisin and berry 
growers, were unable to find an adequate number of employees to 
prune trees or vines or pick the crop.

    The current uncertainty and unpredictability is causing 
many American farmers to shift production away from labor 
intensive crops, which include many fruits and vegetables. In 
fact, Texas A&M reported that 77 percent of vegetable farmers 
reported scaling back operations and more than 80,000 acres of 
fresh produce that used to be grown in California have moved to 
other countries. These production shifts make America 
increasingly dependent on imported food which threatens both 
food safety and our national security.

    Jobs in agriculture are not easy; they are physically 
demanding, conducted in all seasons, and are often transitory. 
Most U.S. residents seeking employment do not find these 
conditions attractive. In response to a lack of a domestic 
farmworkers labor force, farmers have relied on workers 
admitted under a government sponsored temporary worker program 
known as H-2A and on workers who appear to have legal status to 
work in the United States.

    The H-2A program contains significant and growing 
challenges. Capacity and infrastructure issues at the 
Departments of State (DOS), Homeland Security (DHS), and Labor 
(DOL) has led to greater processing delays than ever before. 
This means bureaucratic red tape and interruptions in the 
program seriously impact the viability and profitability of 
farmers and ranchers as workers show up to the farm well after 
the date they were needed, resulting with millions of dollars 
in agricultural production lost in the interim.

    H-2A is the sole legal visa program available to production 
agriculture; however, it is limited to labor of a ``temporary 
or seasonal nature.'' Thus, leaving industries such as dairy 
and livestock left without any legal channel to find workers. 
Employment of H-2A workers has nearly tripled in the past five 
years; yet, it still only accounts for less than 10 percent of 
all seasonal farmworkers. This growth has occurred despite the 
program's extreme regulatory hurdles, government 
inefficiencies, and high costs. In fact, an entire industry 
exists solely for helping farmers navigate the H-2A process. 
For many small farmers, accessing these services are 
financially out of reach, leaving them with limited options for 
hiring workers.

    Despite farmers' best efforts, many if not most, of the 
agricultural workforce is in the U.S. without proper work 
authority. There is no other industry with greater workforce 
demographic challenges and foreign labor reliance than 
agriculture.

    While many foreign-born workers hold farmworker jobs, each 
farmworker creates many American held jobs. In fact, every 
farmworker engaged in high-value, labor-intensive crop and 
livestock production sustains two to three off-farm, but farm 
dependent jobs. The activities that occur on domestic farms 
support not only farmworkers, but also an entire supply chain 
of transportation providers, input suppliers, processors, and 
consumer retail functions.

    It is important for the subcommittee to know that many of 
those American jobs will be lost if access to agriculture's 
current workforce is jeopardized. Based on a farm labor study 
conducted by the American Farm Bureau Federation in 2014, the 
impact of an enforcement-only approach to immigration that 
causes agriculture to lose access to its workforce would result 
in agricultural output falling by $30 to $60 billion. 
Therefore, we must work together to ensure our agricultural 
economy stays strong by ensuring immigration legislation 
provides farmers and ranchers, across all of agriculture, 
access to a legal and stable workforce.

    In summary, instability in the agriculture labor force has 
reached critical levels. Farmers face a shortage of legally 
authorized and experienced workers each year, and the 
cumbersome H-2A visa program cannot serve as a safety net to 
meet the workforce demands. We can and must do better for our 
farmers, our economy and country by modernizing our immigration 
system to include work eligibility for our current existing 
workforce and farmer-friendly programs to provide future guest 
workers for all of agriculture. If not, the future of America's 
family farms is in jeopardy.

    International Markets

    The U.S. food and agriculture sector is heavily dependent 
on international markets, and trade is vital to the continued 
prosperity of cooperatives and their farmer and rancher 
members. While small farmers may not have access the 
international market directly, the prices they receive for 
their commodities are dependent on exports. For example, 
approximately half of the U.S. wheat, soybean, and rice crop is 
exported. The percentage is even higher for crops such as 
cotton and tree nuts. Over the past few years, foreign markets 
have also become increasingly important to supporting the dairy 
industry, with exports now accounting for one out of every 
seven days of U.S. milk production. Clearly, without those 
markets, commodity prices received by producers would suffer.

    By their nature, cooperatives bring together groups of 
farmers and ranchers, many are operators of small and medium-
sized operations structured as family farms. By banding 
together, members of cooperatives can accomplish what would be 
more difficult, if not impossible, to do individually. In this 
case, cooperatives offer farmers opportunities to market their 
products internationally, by providing services such as 
consolidating, branding, marketing, processing, and 
transportation. This allows farmers access to the global 
marketplace. The increased earnings of the cooperative due to 
international sales flow back to the farmer-owners in increased 
patronage dividends, boosting farmers' income from beyond the 
farm gate.

    With over 95 percent of the world's population living 
outside of the United States, expanding access to international 
markets is essential for our future success. This includes 
maintaining and increasing access to markets through existing 
and future trade agreements, and leveraging export programs 
that serve as catalysts to increased market access.

    Market Access Program

    The Market Access Program (MAP) is of particular 
importance, both because it is a vital tool used by producers 
and their cooperatives to market products overseas, and because 
it represents such a good investment of taxpayer dollars with a 
24 to 1 return on every dollar spent under the program.

    Many specialty crop producers view MAP, above all other 
programs, as their ``farm safety net'' program. The ability of 
cooperatives to use MAP helps give individual farmers the 
opportunity to market their products overseas, which they 
otherwise would not be able to do on their own.

    U.S. Department of Agriculture (USDA) Value Added Producer 
Grants (VAPG) and Cooperatives

    As mentioned earlier, cooperatives by their nature bring 
many producers together who individually do not have the size, 
expertise, and resources to take advantage of the value chain 
beyond the farm gate and gives them the opportunity to profit 
from those down-stream activities. Value-Added Producer Grant 
(VAPG) funds empowers cooperatives to capitalize on new value-
added business opportunities that would otherwise go 
unexplored. VAPG helps cooperatives differentiate and expand 
production, in turn helping them improve the value of their 
products through processing and marketing. Their successful, 
self-sustaining products have translated into greater and more 
stable income for producers from the marketplace. This also has 
served to promote economic development and create jobs.

    The VAPG also assists independent producers at the farm 
level, many small and medium-sized, to market new and 
innovative products on a smaller scale. Of the 326 grants 
awarded in 2016, 287 were to independent producers (86 
classified as small or medium-sized, 55 to beginning farmers, 
and 68 to socially disadvantaged farmers), and 21 to 
cooperatives. Based on information gleaned from cooperatives' 
applications, 5,890 farmer-members of cooperatives, many being 
small and medium-sized farmers, benefited from the 21 grants to 
cooperatives in 2016.

    The program is administered on a matching-fund basis, 
thereby doubling the impact of such grants and helping 
encourage investment in ventures that ultimately benefit rural 
America. As a cost-share program, it is as an excellent example 
of an effective public-private partnership bringing a number of 
self-sustaining products to market.

    Other USDA Programs Assisting Small Farms

    Funds provided by Rural Cooperative Development Grant 
(RCDG) program, helps fund non-profit groups, such as rural 
cooperative development centers to develop and expand 
cooperatives. These grants help provide the training and 
technical assistance rural cooperatives need to be sustainable. 
This helps strengthen the rural economy by creating jobs and 
building assets that create infrastructure, especially in low 
income rural communities.

    The Outreach and Assistance for Socially Disadvantaged 
Farmers and Ranchers Program (2501 Program). The 2501 Program 
assists socially disadvantaged and veteran farmers and ranchers 
in owning and operating farms and ranches while increasing 
their participation in agricultural programs and services 
provided by USDA. The program assists community-based and non-
profit organizations, higher education institutions, and tribal 
entities in providing outreach and technical assistance to 
socially disadvantaged and veteran farmers and ranchers.

    Infrastructure

    Improving our nation's transportation infrastructure must 
be a national priority that deserves urgent attention. Capacity 
constraints, structurally deficient bridges, deteriorating 
roads, and locks and dams long past their expected useful life 
require the necessary investment to efficiently move the 
country's freight now and into the future. As Congress prepares 
infrastructure investment legislation, we implore you to 
address the infrastructure needs in rural America.

    Rural communities have seen their infrastructure 
deteriorate, jeopardizing jobs, our agricultural 
competitiveness, and the health of rural families. Past 
infrastructure initiatives often focused on urban and suburban 
infrastructure while not adequately addressing the unique needs 
of rural communities. We ask that you address this as part of 
any comprehensive infrastructure renewal efforts.

    Our nation's ability to produce food and fiber and 
transport it efficiently across the globe is a critical factor 
in U.S. competitiveness internationally. Infrastructure that 
supports rural communities and links them to global markets has 
helped make the U.S. the unquestioned leader in agricultural 
production. Our deteriorating infrastructure threatens that 
leadership position.

    Transportation infrastructure improvement is the most 
obvious need in rural communities, but not the only one. 
Highways, bridges, railways, locks and dams, harbors, and port 
facilities all need major investment to continue efficiently 
getting our agricultural products to market. For example, one-
quarter of our road system's bridges require significant 
repair, or cannot efficiently handle today's traffic and many 
of the 240 locks and dams along the inland waterways need 
modernization. In addition, critical needs exist in providing 
clean water for rural families, expanding broadband to connect 
rural communities to the outside world, and enhancing the 
ability to supply affordable, reliable, and secure power for 
the rural economy.

    The scope of the investment needed is staggering. Clearly 
the federal government must continue to play an important role 
in providing funding and those federal investments should 
increase. However, federal resources, likely cannot fill the 
need entirely. Creative solutions that pair federal investment 
with state/local government investment and private sources of 
capital hold promise for raising a portion of the funds 
necessary to do the job.

    Regulatory Impacts on Cost of Production

    We must also ensure that our public policy does not hurt 
the economic viability of farm and ranch families across the 
country. Often outside traditional farm policy, these issues 
come from corners of the federal government that may not 
understand production agriculture. Yet a broad range of 
regulatory actions--those pending at federal agencies or in the 
pipeline and coming soon to a farm near you--have the potential 
to increase the costs and reduce the margins of cooperatives 
and their farmer and rancher member-owners. Whether the 
regulations deal with the environment, immigration and labor, 
food safety, or financial reform, they can create an 
uncertainty that threatens to hold back investment and growth 
across the agricultural sector.

    Over 20 million jobs across the country are directly or 
indirectly dependent on agriculture, and account for nearly $1 
trillion or 13 percent of Gross National Product. If our 
agricultural sector can preserve its competitiveness in the 
global marketplace, we can grow this number and be a strong 
contributor to a growing economy.

    Congress and the administration must ensure that the 
marketplace, not the federal government, determines the cost of 
production for America's farmers, ranchers, and the 
cooperatives that they own. If our farms, ranches, and 
cooperatives are weighed down with costs imposed by either 
regulatory actions or delays in the regulatory process, farm 
income will decrease and market share will be lost to our 
competitors.

    Sustainability

    I also want to highlight NCFC's effort to ensure farmer 
cooperatives are a part of the sustainability conversation 
happening in today's marketplace. Organizations ranging from 
Wal-Mart and Whole Foods to NASCAR and the United Nations have 
embraced sustainability over the past decade. In turn, the 
concepts, definitions, and terminology have also evolved and 
standard-setting programs have proliferated. In many cases, 
these efforts vary considerably in their approaches to 
sustainability. Individual companies face substantial 
challenges in this environment, and ultimately, the farmers and 
ranchers do as well.

    Our membership consists of more than 60 farmer co-ops, and 
that results in just as many different definitions of 
sustainable agriculture. The truth is, sustainability means 
different things to different people. It may not even matter if 
everyone agrees on a single definition, but one thing we can 
all agree on, as owner-members and managers of the nation's 
cooperative system, is that sustainability is an important 
concept to a growing number of our customers, both at home and 
abroad.

    Sustainability is a topic that has gained momentum among 
the many companies who buy our agricultural products and who 
are ultimately being pushed toward sustainable sourcing by 
their own customers.

    When many of our farmer-members hear the word 
``sustainability,'' the conversation often turns to 
environmental issues and additional government regulation. As a 
cooperative organization, it's important to understand that 
protecting our natural resources is only one part of 
sustainable agriculture. As Merriam Webster reminds us, the 
word ``sustainable'' can and should apply to our financial, 
human, and community resources as well.

    Farmers and ranchers have been working over generations to 
ensure their own family businesses are sustainable. Likewise, 
cooperatives have been part of the rural landscape for 
generations and provide a historical perspective on the 
farmer's legacy of stewardship of the land and involvement in 
the community.

    Cooperatives have an intrinsic orientation toward 
engagement, shared economic participation, and community that 
provides a particularly strong foundation for conducting 
effective sustainability programs. In fact, our business model 
of farmer-ownership is inherently sustainable?

           The governance and ownership structure of 
        cooperatives creates a strong foundation of stakeholder 
        involvement among co-op members.

           Member participation fosters a shared 
        economic interest in the cooperative's performance, 
        through patronage and dividend distribution, that is 
        further reflected in the shared stake that co-ops have 
        in the sustainability of their local communities.

           Cooperative precepts also include a strong 
        commitment to education and training for cooperative 
        members and for sharing knowledge among cooperatives.

    Taken together, cooperatives have an intrinsic orientation 
toward engagement, shared economic participation, and community 
that provides a particularly strong foundation for conducting 
effective sustainability programs.

    Sustainability also is in the soul of every good farmer and 
at the heart of co-op success, and it always will be. 
Cooperatives represent a connection to farmers that consumers 
value, and the close relationships with farmers help connect 
consumers to the farms that produce their food. In fact, 
because of their position in the food supply chain, 
cooperatives can help farmers and consumers better understand 
each other.

    Our members believe that fostering collaboration among 
cooperatives and all segments of the supply chain is 
fundamental to furthering sustainability and continuous 
improvement in handling, processing, and marketing food, fiber, 
and fuel.

    Cooperatives also offer a unique view of accountability, 
traceability, and transparency from farm to plate:

           Accountability - Cooperatives hold their 
        members to high standards and can provide education and 
        information on approved farming and animal care 
        practices.

          Local Sourcing - Cooperatives serve as a 
        conduit between the farm and the consumer and can offer 
        transparency regarding food production by explaining 
        sustainability practices their members use on their 
        farms.

    In order to be more productive, efficient and profitable, 
farmer cooperatives and their member-owners are continuously 
improving the ways they run their businesses. Cooperatives 
provide farmers and ranchers with the education, technology, 
innovative products, and services needed to help them 
continually improve the quality of the land they farm and the 
crops, produce, meat, milk, and eggs they produce. This 
continual progress is the driving component of sustainable 
agriculture.

    NCFC's sustainability initiative is guided by principles 
fundamental to farmer-ownership that are integral to 
sustainably producing food, fiber, and fuel for America and the 
world. Our work is grounded in the core values on which farmer 
cooperatives were founded--shared economic participation, 
democratic member control, cooperation, and a lasting 
commitment to community. From those values, the work of NCFC 
and its member cooperatives, through their own individual 
commitments to sustanability, is based on the following 
principles:

           Economic viability - Providing safe and 
        affordable food, goods, and services for our customers 
        while supporting the long-term vitality of our members' 
        family farms.

           Environmental stewardship - Managing our 
        natural resources carefully and efficiently to help 
        ensure the quality and integrity of the environment 
        today and for future generations.

           Community well-being - Conducting our 
        businesses responsibly, maintaining a safe, healthy, 
        and respectful workplace for our employees, and 
        fostering vibrant rural communities.

    In conclusion, I realize this testimony covers a lot of 
ground, some of which may be outside the jurisdiction of the 
Subcommittee, but these issues are no less important and 
impactful to the future of America's family farms and are 
worthy of your attention. Especially at a time when farmers 
across the country face a touch economy and tight margins, we 
must identify ways for our agriculture sector to prosper.

    Thank you again for the opportunity to testify today, and I 
look forward to your questions.


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